FCRA Bills Advance in Congress

Both the U.S. House and Senate took major steps in September to strengthen the Fair Credit Reporting Act, and preserve its core features from erosion by conflicting state and local privacy statutes. The House of Representatives passed its version of a reform bill in mid-September by an overwhelming vote of 392 to 30. On September 23, 2003 the Senate Banking Committee approved on a voice vote its own version of the bill, titled the National Consumer Credit Reporting System Act. The bill is scheduled for debate and vote in the full Senate in early October.

Both bills include language that permanently preempts state and local governments from legislating in seven key areas of the FCRA. Those areas had been protected under federal preemption language since 1996, but the provision was set to expire at the end of 2003. An important difference between the House and Senate versions involves limits on the sharing of personal information among affiliated companies. The current FCRA, and the House bill, does not restrict so-called affiliate sharing of personal information. The Senate bill requires companies to give consumers that opportunity to opt-out of such sharing and use for marketing purposes. The original version of the Senate bill, sponsored by Banking Committee chairman Richard Shelby (R-AL) required that consumers be given the chance to opt-out of all affiliate sharing. The financial services industry objected on the grounds that by opting out, many consumers could inadvertently hamper a companies ability to provide basic customer service and other functions. The bill was revised prior to the vote so that the opt-out provision applies only to the use of information across affiliates for marketing purposes.