The Fair and Accurate
Credit Transactions Act, signed into law on Dec. 4, 2003,
gives every American the right to a free credit report every
year from each of the three major credit bureaus -- Equifax,
Experian and TransUnion. But most major provisions in the
sprawling new law, which carves national credit reporting
standards into stone and beefs up consumer protections against
identity theft, won't take effect for a year.
And that includes
those much sought-after freebie credit reports. Under the
law, the Federal Trade Commission has six months to write
the regulations for distributing free credit reports and credit
bureaus have another six months to comply with the new rules.
If all goes well, by this time next year you'll be able to
add a free credit report to your holiday wish list.
Until then, unless
you live in the handful of states that offer free credit reports,
you'll need to pay as much as $9 to take a gander at your
credit record. There's a lot more to the Fair and Accurate
Credit Transactions Act than free credit reports. Regulators
have proposed an effective date of Dec. 1, 2004 for several
sections of the new law. The actual effective dates for these
sections must be finalized by Feb. 4, 2004.
Here's a quick summary
of other key provisions and consumer protections in the new
law.
Uniform credit
standards
In 1996, Congress set uniform national standards on credit
reporting. These standards set clear rules on what credit
agencies could include in consumer credit reports. This new
law makes these standards permanent Dec. 31.
Safeguarding receipts
To help ward off identity theft, retailers must hide credit
card and debit card information on customer receipts. Only
the last five digits of a card number will be listed. As of
Jan. 1, 2005, all new cash registers and point-of-sale terminals
must print these safeguarded receipts. Merchants have until
Dec. 4, 2006 to phase out any existing registers or terminals
that print full account numbers on receipts.
New opt-out rules
Consumers will have the right to "opt-out" and block
solicitations from affiliates of companies that they do business
with. These new opt-out rules won't take effect until late
2004 or early 2005.
Disclosing bad
credit news
Thanks to the new law, a bank will have to tell you if it
reports any negative information about you to the credit bureaus.
A bank will also have to tell you if it grants you credit
at less favorable terms than those received by most other
consumers. These provisions are scheduled to kick in on Dec.
1, 2004.
Reporting of false
credit news
Any debt collector that learns that information on a consumer's
credit report is fraudulent must inform the creditor that
the information is false. No retailer or creditor may report
credit information to credit bureaus that is known or believed
to stem from fraud. These provisions are scheduled to begin
in December 2004.
More power for
identity theft victims
Identity theft victims that file police reports will be able
to block fraudulent information from appearing on their credit
reports. And fraud victims will also get more help from businesses
in tracking down impostors. Under the new law, an identity
theft victim will be able to obtain copies of business records
that list fraudulent transactions carried out by an identity
thief. Pumped-up powers for identity theft victims are scheduled
to arrive on Dec. 1, 2004.
Beefed-up fraud
alerts
A fraud alert is a statement that's placed on your credit
report to alert creditors that your private financial information
has been or may be compromised. Identity theft victims put
fraud alerts on their credit files after they learn impostors
are ringing up charges in their names.
Under the new law,
once a credit bureau receives a fraud alert, it must take
steps to ensure that the consumer and not the thief will be
granted credit in the future. This extra step could be something
as simple as calling the phone number listed in a consumer
fraud alert whenever a new application for credit pops up.
Muscled-up fraud alerts are scheduled to hit the scene in
December 2004.
Special alerts
for the military
Americans in the armed forces will be able to place special
alerts in their credit files while they are serving overseas
to help minimize their chances of becoming victims of identity
theft. These alerts are scheduled to begin in December 2004.
Preemption of
State laws
Certain sections of the new FACT act will allow federal coverage
rather than all the individual state laws that often confuse
credit issues. While this may help in many areas it may lower
a consumers protection especially if their state offered more
protection for identity theft. More to come on this issue
in 2004.
The main purposes of the
FACT Act are:
To amend the Fair
Credit Reporting Act
To prevent identity theft
To improve resolution of consumer disputes
To improve the accuracy of consumer records
To make improvements in the use of, and consumer access to,
credit information
Effective Dates:
A reasonable time must be permitted for banks and other creditors
to adopt procedures and policies but compliance must be effective
no more than 10 months after the final regulations are issued.
This means that by December 2004, creditors and credit reporting
agencies must be in compliance at that time.
