A1972

ASSEMBLY, No. 1972

STATE OF NEW JERSEY

INTRODUCED MAY 6, 1996

By Assemblyman ARNONE

An Act concerning credit reports and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).

Be It ENacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

"Consumer" means a natural person.

"Consumer report" means any written, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing or credit capacity which is collected and used or expected to be collected and used in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for: (1) credit or insurance to be used primarily for personal, family or household purposes; (2) employment purposes; or (3) other purposes authorized under section 2 of this act. The term does not include any report containing information solely as to transactions or experiences between the consumer and the person making the report or any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device.

"Consumer reporting agency" or "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.

"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 a consumer, all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.

"Firm offer of credit" means any offer of credit to a consumer that will be honored if, based on information in a consumer report on the consumer and other information relative to the creditworthiness of the consumer, the consumer is determined to meet the criteria used to select the consumer for the offer.

"Investigative consumer report" means a consumer report or 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 reported on, or with others with whom he is acquainted or who may have knowledge concerning any such 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 such information was obtained directly from a creditor of the consumer or from the consumer.

"Medical information" means information or records obtained after the consent of the individual to whom it relates, from physicians or other health care practitioners, hospitals, clinics, or other medical or medically related facilities.

"Prescreening" means a process by which a consumer reporting agency compiles or edits for a client a list of consumers who meet specific criteria and provides that list to the client or third party on behalf of the client for the purpose of making a firm offer of credit.

"User" means any person seeking or obtaining a consumer report for purposes authorized in section 2 of this act.

2. a. A consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(1) in response to the order of a court of competent jurisdiction;

(2) in accordance with the written instructions of the consumer to whom it relates; or

(3) to a person which it reasonably believes:

(a) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

(b) intends to use the information for employment purposes or

(d) intends to use the information in connection with a determination of the consumer's eligibility, or continuing eligibility, for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or

(e) intends to use the information in connection with a transaction either entered into or being negotiated with a consumer, if by the terms of the transaction either party transfers an interest in real or personal property, pays money or renders services, or becomes obligated to transfer property, pay money or render services; so long as the consumer who is the subject of the report, except in the case of the rental or lease of residential property, has provided permission in writing or in the same manner in which the transaction was negotiated or entered into, that a consumer report may be requested in connection with the transaction; or

(f) intends to use the information for investigating child support cases pursuant to Title IV-D of the Social Security Act, 42 U.S.C.§ 651 et seq., and P.L.1981, c.417 (C.2A:17-56.7 et seq.); or

b. A consumer reporting agency may furnish information for the purposes of a credit transaction under subparagraph (a) of paragraph (3) of subsection a. of this section when the credit transaction is not initiated by the consumer, only if the consumer authorizes the consumer reporting agency to furnish the consumer credit report to the person.

3. a. Except as authorized under subsection b. of this section, no consumer reporting agency shall make any consumer report containing any of the following items of information:

(1) Bankruptcies which, from the date of adjudication of the most recent bankruptcy, antedate the report by more than 14 years;

(2) Suits and judgments which, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period;

(3) Paid tax liens which, from the date of payment, antedate the report by more than seven years;

(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years;

(5) Records of arrest, indictment, conviction of crime which, from date of disposition, release or parole, antedate the report by more than seven years; or

(6) Any other adverse item of information which antedates the report by more than seven years.

b. The provisions of subsection a. of this section are not applicable in the case of any consumer credit report to be used in connection with:

(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $50,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $50,000 or more; or

(3) the employment of any individual at an annual salary which equals or which may reasonably be expected to equal $20,000 or more.

c. Notwithstanding the provisions of subsection b. of this section, no consumer reporting agency shall make any consumer report containing any of the items included under subsection a. of this section unless the source providing that information has identified the person on whom information is being provided by using that person's social security number and the agency determines that the number provided matches the social security number of the consumer on whom the agency is making a consumer report.

4. a. A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer's ability to obtain employment shall, at the time that public record information is reported to the user of the consumer report, notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom the information is being reported; or maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer's ability to obtain employment is reported, it is complete and up to date. For purposes of this section, items of public record relating to arrests, indictments, convictions, suits, tax liens and outstanding judgments shall be considered up to date if: the current public record status of the item at the time of the report is reported; and the source of that information has identified the person involved by using that person's social security number and the consumer reporting agency has determined that the number provided matches the social security number of the consumer on whom a consumer report is being furnished. Nothing contained in this section shall permit the use of public record information otherwise prohibited by section 3 of this act.

b. A consumer reporting agency which furnishes a consumer report for employment purposes shall enter into an agreement with the user of the consumer report which provides that no consumer report may be requested by the user unless the user has provided written notice to the employee or prospective employee that a consumer report regarding the employee or prospective employee will be requested. For current employees, notification in an employee manual shall be sufficient for the purpose of this subsection.

5. A consumer reporting agency which compiles and reports items of information on consumers which are matters of public record, for purpose of furnishing a consumer report, shall:

a. Maintain reasonable procedures designed to insure that whenever public record information is reported in a consumer report, it is complete and up to date to the extent practicable. It shall be deemed a reasonable procedure for a consumer reporting agency to accurately report the status of public record information as of the date recorded in its files so long as the information is updated on a regular basis.

b. Not compile information on consumers with respect to the issuance of a consumer report pursuant to section 2 of this act, if the source providing the information has not also identified the person involved in that record by using that person's social security number and the credit reporting agency has determined that the social security number provided matches the social security number of the consumer on whom a file is being compiled or updated.

6. a. A consumer reporting agency may request, in writing, from a consumer on which it has a file, the consumer's social security number.

b. In the written request, the consumer reporting agency shall inform the consumer that the provision of the consumer's social security number is voluntary; that the request is being made pursuant to the authority granted it under this act; and that the social security number will be used only for purposes of verifying that information being provided on the consumer actually belongs to the consumer to whom it is alleged to belong by the provider of that information.

c. A consumer reporting agency shall use a consumer's social security number only for the purposes of verifying that information sent to it actually belongs to the person to whom it is alleged to belong by the provider of the information. No consumer reporting agency shall disclose a consumer's social security number in any consumer report or otherwise to any other credit reporting agency or source of information, regardless of affiliation.

7. a. A furnisher of information to consumer reporting agencies may request, in writing, from a consumer on which it is providing information to a consumer reporting agency, the consumer's social security number.

b. In the written request, the furnisher of information shall inform the consumer that the provision of the consumer's social security number is voluntary; that the request is being made pursuant to the authority granted it under this act; and that the social security number will be used only by the consumer reporting agency for purposes of verifying that the information it is providing on the consumer actually belongs to the consumer to whom it is alleged to belong by the furnisher of such information.

c. No person who furnishes information to a consumer reporting agency and who receives a social security number from a consumer for the purpose stated under subsection b. of this section, or gains the social security number from other records already containing that number, shall use the number in any way other than as permitted under this act.

8. a. If the completeness or accuracy of any item of information in his file is disputed by a consumer, and that dispute is directly conveyed to the consumer reporting agency by the consumer, the consumer reporting agency shall, within 30 business days of the date the consumer reporting agency receives notice from the consumer, reinvestigate and record the current status of that information unless it has reasonable grounds to believe that the dispute is frivolous or irrelevant; including by reason of a failure of the consumer to provide sufficient information, as requested by the consumer reporting agency, to resolve the dispute. Unless the consumer reporting agency determines that the dispute is frivolous or irrelevant within five business days of the date the consumer reporting agency receives notice of the dispute under this section, the agency shall notify any person who provided the information in dispute at the address provided by the person. A consumer reporting agency may require that disputes by consumers be in writing.

b. If the consumer reporting agency determines that the dispute is frivolous or irrelevant, it shall notify the consumer by mail or, if authorized by the consumer for that purpose, by any other means available to the consumer reporting agency, within five business days after its decision to terminate its reinvestigation of the item of information. In this notification the consumer reporting agency shall state the specific reasons why it has determined that the consumer's dispute is frivolous or irrelevant. The presence of contradictory information in the consumer's file shall not, in and of itself, constitute grounds for determining the dispute to be frivolous or irrelevant.

c. If after reinvestigation of the information, it is found to be inaccurate or can no longer be verified, the consumer reporting agency shall within three business days delete the information.

d. If the reinvestigation does not resolve the dispute, the consumer may file a statement setting forth the nature of the dispute.

e. Within 10 business days after the completion of a reinvestigation, the agency shall provide the consumer with written information, free of charge, that includes:

(1) a statement that the reinvestigation is completed;

(2) a consumer report that is based on the consumer's file as that file is revised as a result of the reinvestigation;

(3) a description or indication of any changes made in the consumer report as a result of the revisions;

(4) notice that, if requested by the consumer, a description of the procedure used to determine the accuracy and completeness of the information shall be provided to the consumer by the consumer reporting agency, including the business name, address and telephone number of any person who furnished information contacted in connection with the information;

(5) notice that the consumer has the right to add a statement to the consumer's file disputing the accuracy or completeness of the information;

(6) notice that the consumer has the right to request that the consumer reporting agency furnish notifications under subsections g. and i. of this section; and

(7) notice that the consumer has a right to obtain all information required to be disclosed under the provisions of the federal "Fair Credit Reporting Act," 15 U.S.C.§1681 et seq.

f. Whenever a statement of dispute is filed, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by the consumer and provide the consumer's statement as part of its report.

g. Following any deletion of information which is found not to be accurate, or whose accuracy can no longer be verified, the consumer reporting agency shall, within 15 business days, furnish notification to any person who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted item, that the item has been deleted.

h. A consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall report the results of a reinvestigation initiated by a consumer pursuant to this section that finds in the consumer's file information that is incomplete or inaccurate or information that cannot be verified, to any other consumer reporting agency that compiles and maintains files on consumers on a nationwide basis to which a consumer report on the consumer was provided within the preceding two year period for purposes of resale by that other agency or to which a consumer report on the consumer was provided within the preceding seven year period for purposes of merging that report to that other agency's proprietary files.

i. If a consumer reporting agency receives a report pursuant to subsection h. of this section, the agency shall change the data in its files in accordance with the report, delete data from its proprietary files in accordance with the report, or, if the agency has other sources for the data in dispute, reinvestigate the disputed data that is the subject of the report in accordance with the provisions of this section. j. A consumer reporting agency shall accept the consumer's version of the disputed information and correct or delete the disputed item when the consumer submits to the consumer reporting agency documentation obtained from the source of the item in dispute or from public records confirming that the report was inaccurate or incomplete, unless the consumer reporting agency in good faith has substantial reason to doubt the authenticity of the documentation, or the completeness of the information provided.

k. No information may be reinserted in a consumer's file after having been deleted pursuant to this section unless the person who furnishes the information to be reinserted verifies that the information is accurate. If any information so deleted from a consumer's file is reinserted in the file, the consumer reporting agency shall promptly notify the consumer of the reinsertion in writing or, if authorized by the consumer for that purpose, by any other means available to the consumer reporting agency. As part of, or in addition to, the notice, the consumer reporting agency shall, within five business days of reinserting the information, provide, in writing to the consumer:

(1) a statement that the disputed information has been reinstated;

(2) a notice that the agency will provide to the consumer, within 15 days following a request, the name, address and telephone number of any person who furnished information in connection with the reinsertion;

(3) the toll-free telephone number of the consumer reporting agency that the consumer may use to obtain the name, address and telephone number; and

(4) a notice that the consumer has the right to add a statement to his file disputing the accuracy or completeness of the information.

9. This act shall take effect on the 180th day following enactment.

STATEMENT

This bill requires credit reporting agencies and persons providing information on a consumer to use the consumer's social security number to identify the consumer. Persons with common names have often found that consumer reports have included information on a person with the same name. If the social security number is required to be provided with information on a consumer and the credit reporting agency is required to match that number against the social security number of the consumer on file, information on persons having the same name but different social security numbers will not be placed in the same file.

Since the provision of a social security number is protected under the federal Privacy Act, 5 U.S.C.§552a, a consumer reporting agency or a furnisher of information to be included in a consumer's file is permitted under this bill to request, in writing, from a consumer, the consumer's social security number. In the written request, the consumer is to be informed that the provision of the consumer's social security number is voluntary, that such request is made pursuant to the authority granted the requester under this act, and the use which will be made of the social security number. In addition, a credit reporting agency and a person furnishing information for inclusion in a consumer's file is prohibited from using the social security number of a consumer in any way other than as permitted by this bill.

Under the bill, a consumer reporting agency, which upon a reinvestigation deletes any information which is found not to be accurate, or whose accuracy can no longer be verified, is required to notify, within 15 business days, any person who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted item, that the item has been deleted. In addition, this same information concerning data deleted from a consumer's file is to be provided other consumer reporting agencies that compile and maintain files on consumers on a nationwide basis and to which the consumer reporting agency had provided a consumer report on the consumer within the preceding two year period for purpose of resale by the other agency or to which a consumer report has been provided within the preceding seven year period for purposes of merging that report to that other agency. Upon receipt of such information, the consumer reporting agency is required to delete the information from its files in accordance with the report, delete the data from its proprietary file in accordance with the report, or, if the agency received the information to be deleted from another source, reinvestigate the disputed data that is the subject of the report in accordance with the provisions set forth for reinvestigations of consumer disputes under this bill.

Requires use of social security number with credit reports.