FACTA Preemption: Expansion of Prior Qualified Immunity

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FACTA Preemption: Expansion of Prior Qualified Immunity

Postby Administrator » Sun Oct 02, 2005 7:03 pm

Expansion of the preexisting qualified immunity provision.

The prior version of the FCRA explicitly provided that consumers could not enforce the provisions of §623(a), which requires furnishers to provide accurate information to agencies, through the liability provisions of the FCRA, §616 (willful noncompliance) and §617 (negligent noncompliance). The FCRA additionally limited liability for violations of the FCRA with a qualified immunity provision that allowed consumers to bring one of the following state law claims only if the consumer showed that the information was furnished with “malice or willful intent to injure”:

(1) A claim “in the nature of defamation, invasion of privacy, or negligence,” (2) Brought against any agency, user, or furnisher; (3) Based in whole or in part on a consumer report; and (4) Based on any of the following:

(a) Disclosures made pursuant to §609 [Disclosures to consumers];(b) Disclosures made pursuant to §610 [Conditions and form of disclosure to consumers];(c) Disclosures made pursuant to §615 [Requirements on users of consumer reports]; or (d) Disclosures by a user of a consumer report to or for a consumer against whom the user has taken adverse action, where the disclosure is based on the report.

FACTA did not amend that provision; however, by expanding the sections referred to in the provision FACTA provided qualified immunity for disclosures that violate the following new provisions:

§609(a)(1)(A), requiring agencies to withhold the last 5 digits of a consumer’s SSN from the disclosure of the consumer’s file if the consumer so requests.

The amendment to §609(c) that requires agencies to provide certain information with their disclosure of a file to a consumer, including the FTC’s summary of consumers’ rights to obtain and dispute information in consumer reports and to obtain and dispute credit scores.

§609(d), requiring agencies to provide consumers who believe they are or may be the victim of identity theft with an FTC-issued summary of their right to use the FCRA’s new procedures for remedying the fraud.

§609(e), allowing identity theft victims to obtain business transaction information from businesses that have done business with the thief.

§609(f), requiring agencies to disclose credit scores and certain related information.

§609(g), requiring mortgage lenders to disclose credit scores to loan applicants and to provide them with a designated notice.

§615(d)2), requiring that users making credit or insurance solicitations present the required prescreening notice in a format, size, type, and manner to be established by the FTC.

§615(h), requiring creditors to issue risk-based pricing notices.

New incorporations into the existing limitation of liability provision for furnishers. The following new furnisher responsibilities which were added to §623(a), are protected from enforcement by consumers pursuant to the limitation of liability provision in §623(c):

§623(a)(6), requiring furnishers to have procedures for responding to identity theft notifications from agencies and prohibiting furnishers from re-submitting fraudulent information.

§623(a)(7), requiring financial institutions to notify customers that they are furnishing negative information to agencies about that customer.

§623(a)(8), allowing consumers to dispute information directly with a furnisher and requiring furnishers to reinvestigate a dispute when it meets certain conditions, to complete the investigation within the designated time, and to notify each agency to whom the furnisher furnished the information if the furnisher finds that it was inaccurate.

§623(a)(9), requiring persons in the business of providing medical services, products, or devices and who furnish information to agencies to notify the agencies of their status as medical information furnishers.

New limitation of liability provisions of the FCRA. FACTA also added the following limitations on liability for new responsibilities under the FCRA.

§609(e)(6), providing that identity theft victims may not enforce their new rights to business transaction information from businesses that have done business with the thief.

§615(h)(8), providing that consumers may not enforce the new obligations of users to provide risk-based pricing notices.

§623(c)(2), providing that consumers may not enforce the obligation of the federal banking agencies, the National Credit Union Administration, and the FTC to establish accuracy and integrity guidelines for furnishers and to prescribe regulations requiring furnishers to establish reasonable policies and procedures for implementing those guidelines.

§623(c)(3), providing that consumers may not enforce the obligation of agencies to issue red flag guidelines and regulations.

Return to “FCRA Statute And Amendments: 15 U.S.C. 1681, et. seq.”

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