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Committee Passes FCRA Bill

The House Financial Services Committee passed H.R. 2622, the Fair and Accurate Credit Transactions Act, on Thursday, July 24 by a vote of 61-3. The...
July 29, 2003

The House Financial Services Committee passed H.R. 2622, the Fair and Accurate Credit Transactions Act, on Thursday, July 24 by a vote of 61-3. The legislation provides consumers with greater identity theft protection and establishes permanent national credit reporting standards.

The legislation was the result of several hearings in which it became clear that the expiration of the uniform, national consumer protection standards in the FCRA would be detrimental to consumer access to credit. According to Representative Spencer Bachus (R-AL), Chairman of the Financial Institutions Subcommittee, "The national uniform credit reporting system has lowered the cost and increased choice and convenience for American consumers."

Of primary concern for the insurance industry is an amendment authored by Representative Luis Gutierrez (D-IL) that calls for a study on the effect of credit scores and insurance scoring on the availability of financial products. The study is to be conducted by the Federal Trade Commission (FTC) in consultation with the Department of Housing and Urban Development (HUD).

The Gutierrez amendment is extremely troubling to the insurance industry. First, the industry argues that neither the FTC nor HUD have jurisdiction over insurance. Second, a number of existing studies demonstrate a strong correlation between credit based insurance scores and insurance risk. Finally, the industry argues that the cost of the study would be enormous, especially when one considers everything that would be involved.

What it Means to Agents:  Until (and if) this bill becomes law, individual state law in conjunction with existing FCRA regulations will continue to apply, and PIA members continue to be responsible for complying with the laws of each state in which they write/service business. If this becomes law, PIA members will enjoy the protections expressed for identity just as other consumers, but may need to add some minor revisions to their current practices when accepting credit cards as a form of premium payment.

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