SENATE, No. 1914
STATE OF NEW JERSEY
INTRODUCED OCTOBER 4, 2004
Senator SHIRLEY K. TURNER
District 15 (Mercer)
Permits security freezes upon consumer credit reports.
CURRENT VERSION OF TEXT
(Sponsorship Updated As Of: 6/10/2005)
An Act concerning consumer credit reports, amending and supplementing P.L.1997, c.172.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1997, c.172 (C.56:11-30) is amended to read as follows:
3. As used in this act:
"Adverse action" has the same meaning as in subsection (k) of section 603 of the federal "Fair Credit Reporting Act," 15 U.S.C. s.1681a.
"Consumer" means an individual.
"Consumer report" (1) means any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for:
(a) credit or insurance to be used primarily for personal, family or household purposes;
(b) employment purposes; or
(c) any other purpose authorized under section 4 of this act.
(2) The term "consumer report" does not include:
(i) report containing information solely on transactions or experiences between the consumer and the person making the report;
(ii) communication of that information among persons related by common ownership or affiliated by corporate control; or
(iii) communication of other information among persons related by common ownership or affiliated by corporate control, if it is clearly and conspicuously disclosed to the consumer that the information may be communicated among those persons and the consumer is given the opportunity, before the time that the information is initially communicated, to direct that the information not be communicated among those persons;
(b) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device;
(c) any report in which a person, who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer, conveys his decision with respect to that request, if the third party advises the consumer of the name and address of the person to whom the request was made, and the person makes the disclosures to the consumer required under 15 U.S.C. s.1681m; or
(d) communication excluded from the definition of consumer report pursuant to subsection (o) of section 603 of the federal "Fair Credit Reporting Act," 15 U.S.C. s.1681a.
"Consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility for the purpose of preparing or furnishing consumer reports.
"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.
"Division" means the Division of Consumer Affairs in the Department of Law and Public Safety.
"Employment purposes" means, when used in connection with a consumer report, a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.
"File" means, when used in connection with information on any consumer, all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.
"Investigative consumer report" means a consumer report or a portion thereof in which information on a consumer's character, general reputation, personal characteristics or mode of living is obtained through personal interviews with neighbors, friends or associates of the consumer who is the subject of the report or with others with whom the consumer is acquainted or who may have knowledge concerning any of those items of information. However, this information shall not include specific factual information on a consumer's credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when the information was obtained directly from a creditor of the consumer or from the consumer.
"Medical information" means information or records obtained, with the consent of the individual to whom it relates, from licensed physicians or medical practitioners, hospitals, clinics, or other medical or medically related facilities.
"Security freeze" means a notice placed in a consumer's consumer report, at the request of the consumer, that prohibits the consumer reporting agency from releasing the report or any information from it without the express authorization of the consumer, but does not prevent a consumer reporting agency from advising a third party that
a security freeze is in effect with respect to the consumer report.
(cf: P.L.1997, c.172, s.3)
2. (New section) a. A consumer may elect to place a security freeze on his consumer report by making a request in writing by certified mail to a consumer reporting agency.
b. A consumer reporting agency shall place a security freeze on a consumer report no later than five business days after receiving a written request from the consumer.
c. The consumer reporting agency shall send a written confirmation of the security freeze to the consumer within 10 business days and shall provide the consumer with a unique personal identification number or password to be used by the consumer when providing authorization for the release of his credit for a specific party or period of time.
d. If the consumer wishes to allow his consumer report to be accessed for a specific party or period of time while a freeze is in place, he shall contact the consumer reporting agency, request that the freeze be temporarily lifted, and provide the following:
(1) Information generally deemed sufficient to identify a person;
(2) The unique personal identification number or password provided by the consumer reporting agency pursuant to subsection c. of this section; and
(3) The proper information regarding the third party who is to receive the consumer report or the time period for which the consumer report shall be available to users of the consumer report.
e. A consumer reporting agency that receives a request from a consumer to temporarily lift a freeze on a consumer report pursuant to subsection d. of this section shall comply with the request no later than three business days after receiving the request.
f. A consumer reporting agency may develop procedures involving the use of telephone, fax, the Internet, or other electronic media to receive and process a request from a consumer to temporarily lift a freeze on a consumer report pursuant to subsection d. of this section in an expedited manner.
g. A consumer reporting agency shall remove or temporarily lift a freeze placed on a consumer report only in the following cases:
(1) Upon consumer request, pursuant to subsection d. or j. of this section; or
(2) If the consumer report was frozen due to a material misrepresentation of fact by the consumer. If a consumer reporting agency intends to remove a freeze upon a consumer report pursuant to this paragraph, the consumer reporting agency shall notify the consumer in writing prior to removing the freeze on the consumer report.
h. If a third party requests access to a consumer report on which a security freeze is in effect, and this request is in connection with an application for credit or any other use, and the consumer does not allow his consumer report to be accessed for that specific party or period of time, the third party may treat the application as incomplete.
i. If a consumer requests a security freeze, the consumer reporting agency shall disclose the process of placing and temporarily lifting a freeze, and the process for allowing access to information from the consumer report for a specific party or period of time while the freeze is in place.
j. A security freeze shall remain in place until the consumer requests that the security freeze be removed. A consumer reporting agency shall remove a security freeze within three business days of receiving a request for removal from the consumer, who provides the following:
(1) Proper identification; and
(2) The unique personal identification number or password provided by the consumer reporting agency pursuant to subsection c. of this section.
k. A consumer reporting agency shall require proper identification of the person making a request to place or remove a security freeze.
l. The provisions of this section do not apply to the use of a consumer report by the following:
(1) A person, or subsidiary, affiliate, or agent of that person, or an assignee of a financial obligation owing by the consumer to that person, or a prospective assignee of a financial obligation owing by the consumer to that person in conjunction with the proposed purchase of the financial obligation, with which the consumer has or had prior to assignment an account or contract, including a demand deposit account, or to whom the consumer issued a negotiable instrument, for the purposes of reviewing the account or collecting the financial obligation owing for the account, contract, or negotiable instrument. For purposes of this paragraph, "reviewing the account" includes activities related to account maintenance, monitoring, credit line increases, and account upgrades and enhancements;
(2) A subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom access has been granted under subsection d. of this section, for purposes of facilitating the extension of credit or other permissible use.
(3) Any State or local agency, law enforcement agency, trial court, or private collection agency acting pursuant to a court order, warrant, or subpoena;
(4) A State or local child support enforcement agency; or
(5) The use of credit information for the purposes of prescreening as provided for by the federal "Fair Credit Reporting Act," 15 U.S.C. s.1681 et seq.
m. Nothing in this act shall prevent a consumer reporting agency from charging a reasonable fee, not to exceed $10, to a consumer who elects to freeze, remove the freeze, or temporarily lift the freeze regarding access to a consumer report.
3. (New section) If a security freeze is in place, a consumer reporting agency shall not change any of the following official information in a consumer report without sending a written confirmation of the change to the consumer within 30 days of the change being posted to the consumer's file: name; date of birth; Social Security number and address. Written confirmation is not required for technical modifications of a consumer's official information, including name and street abbreviations, complete spellings, or transposition of numbers or letters. In the case of an address change, the written confirmation shall be sent to both the new address and to the former address.
4. (New section) The provisions of this act shall not apply to a consumer reporting agency that acts only as a reseller of credit information by assembling and merging information contained in the data base of another consumer reporting agency or multiple consumer reporting agencies, and does not maintain a permanent data base of credit information from which new consumer reports are produced, except that such a reseller of credit information shall honor any security freeze placed on a consumer report by another consumer reporting agency.
5. (New section) The following entities are not required to place a security freeze in a consumer report, pursuant to section 2 of this act:
a. A check services company, which issues authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers, or similar methods of payments; and
b. A demand deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, ATM abuse, or similar negative information regarding a consumer, to inquiring banks or other financial institutions for use only in reviewing a consumer request for a demand deposit account at the inquiring bank or financial institution.
6. This act shall take effect on the 180th day following enactment.
This bill amends and supplements the "New Jersey Fair Credit Reporting Act," to require that a consumer reporting agency place a security freeze on a consumer credit report within five business days of receiving a request to do so in writing by certified mail, and prohibits the release of information from the report while the freeze is in place, except as provided by the bill. As defined in the bill, "security freeze" means a notice placed in a consumer's credit report, at the request of the consumer, that prohibits the consumer reporting agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer, but does not prevent a consumer reporting agency from advising a third party that a security freeze is in effect with respect to the consumer's credit report.
The bill requires a consumer reporting agency to provide a consumer an identification number to be used for temporarily lifting a freeze upon a consumer credit report or authorizing the subsequent release of information from a consumer credit report that is subject to a security freeze. Further, the bill stipulates that a security freeze shall remain in place until either the consumer requests to have the security freeze removed, or upon discovery by the consumer reporting agency that the consumer's credit report was frozen due to a material misrepresentation by the consumer. Also, if a third party requests access to a consumer credit report on which a security freeze is in effect, and this request is in connection with an application for credit or any other benefit, and the consumer does not allow the report to be accessed, the third party may treat the application as incomplete.
The bill provides that when a security freeze is in place, a consumer reporting agency shall not modify any of the consumer's basic identifying information in the report without sending a written confirmation of the change to the consumer, including, in the case of an address change, a written confirmation sent to both the new and the former address. Also, the bill permits a consumer reporting agency to charge a reasonable fee to freeze, remove a freeze, or temporarily lift a freeze regarding access to a consumer credit report.