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Current Status Bill Number:View additional legislative information at the LPITS web site.5210 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:20020430 Primary Sponsor:Govan All Sponsors:Govan, Allen, Bales, Breeland, G. Brown, Delleney, Freeman, Gourdine, J. Hines, M. Hines, Hosey, Lee, Lloyd, Mack, McCraw, Moody-Lawrence, Neilson, Parks, Phillips, Scott and Stille Drafted Document Number:l:\council\bills\dka\4052mm01.doc Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Consumer Protection Code, fair and respectful consumer credit reporting History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ House 20020430 Introduced, read first time, 26 HLCI referred to Committee Versions of This Bill
TO AMEND CHAPTER 5, TITLE 37, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO REMEDIES AND PENALTIES IN CONNECTION WITH THE CONSUMER PROTECTION CODE, BY ADDING PART 4 SO AS TO PROVIDE FOR FAIR AND RESPECTFUL CONSUMER CREDIT REPORTING, ESTABLISH PROCEDURES FOR CORRECTING INACCURATE OR INCOMPLETE REPORT INFORMATION, AND PROVIDE FOR CIVIL PENALTIES FOR NEGLIGENT AND WILFUL VIOLATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) the use of consumer reporting agencies is increasing rapidly as consumer credit transactions become the rule rather than the exception in everyday consumer purchasing;
(2) a consumer reporting agency reports on a consumer's creditworthiness, credit standing, credit capacity, debts, character, general reputation, personal characteristics, or mode of living as factors to establish a consumer's eligibility for credit insurance or employment;
(3) a consumer reporting agency undertakes a business that has the potential to affect profoundly an individual consumer's life, whether for good or ill;
(4) it is incumbent upon that agency to ensure that the information it provides is accurate;
(5) inaccurate consumer credit reports directly impair the efficiency of the banking system and unfair credit reporting methods undermine the public confidence in the banking system;
(6) there is a need to ensure that consumer reporting agencies exercise their responsibilities with fairness, impartiality, and respect for the consumer's rights; and
(7) if information provided by a consumer reporting agency in a consumer credit report is inaccurate, the consumer must have the right to direct the correction of that information in a swift and uncomplicated way.
SECTION 2. Chapter 5, Title 37 of the 1976 Code is amended by adding:
Section 37-5-401. This part may be cited as the 'South Carolina Consumer Credit Reporting Act'.
Section 37-5-402. As used in this part, unless the context otherwise requires:
(1) 'Adverse action' includes:
(a) the denial of, increase in charge for, or reduction in the amount of insurance for personal, family, or household purposes;
(b) the denial of employment or other decision for employment purposes that adversely affects a current or prospective employee; and
(c) an action or determination with respect to a consumer's application for credit pursuant to a credit arrangement that is adverse to the consumer's interests.
(2) 'Consumer' means a natural person residing in the State of South Carolina who undertakes a transaction for personal, family, or household purposes.
(3)(a) 'Consumer report' means any written, oral, or other communication or information by a consumer reporting agency regarding a consumer's creditworthiness, credit standing, credit capacity, debts, 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 employment purposes, for the purpose of establishing a consumer's eligibility for consumer credit or consumer insurance, or for another purpose authorized pursuant to the federal 'Fair Credit Reporting Act'.
(b) 'Consumer report' does not include:
( i) a report containing information as to a transaction between the consumer and the person making the report;
( ii) an authorization or approval by the issuer of a credit card or similar device, directly or indirectly, of a specific extension of credit; or
(iii) a report in which a person conveys an adverse decision in response to a request from a third party to make a specific extension of credit, directly or indirectly, to the consumer, 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 required disclosures to the consumer pursuant to the provisions of the federal "Fair Credit Reporting Act'.
(4)(a) 'Consumer reporting agency' means a person who, for monetary fees or dues or on a cooperative nonprofit basis, regularly engages in the practice of assembling or evaluating consumer credit information or other information about consumers for the purpose of furnishing consumer reports to third parties.
(b) 'Consumer reporting agency' does not include a business entity that provides only check verification or check guarantee services.
(5) 'Creditworthiness' means an entry in a consumer's credit file that affects the ability of a consumer to obtain and retain credit, employment, business or professional licenses, investment opportunities, or insurance. Entries affecting creditworthiness include, but are not limited to, payment information, defaults, judgments, liens, bankruptcies, collections, records of arrest and indictments, and multiple credit inquiries.
(6) 'Employment purposes' means the use of a consumer report for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee.
(7) 'File' means all information on a consumer that is recorded and retained by a consumer reporting agency, regardless of how the information is stored.
(8)(a) 'Investigative consumer report' means a consumer report or portion of it containing information on a consumer's character, general reputation, personal characteristics, or mode of living obtained through personal interviews with neighbors, friends, or associates of the consumer or others with whom the consumer is acquainted or who may have knowledge of that information about the consumer.
(b) 'Investigative consumer report' does 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 is obtained directly from a creditor of the consumer or from the consumer.
(9) 'Person' means a natural person, firm, corporation, or partnership.
Section 37-5-403. (A) A consumer reporting agency may furnish a consumer report only:
(1) in response to an order of a court having jurisdiction to issue the order;
(2) in accordance with the written instructions of the consumer to whom it relates; or
(3) to a person the consumer reporting agency reasonably believes intends to use the information in connection with:
( i) a credit transaction involving an extension of credit to, or review or collection of an account of, the consumer;
( ii) employment purposes, but only if an applicant or employee is informed that a credit report may be requested with an application for employment and the consumer first consents, in writing, to the report;
(iii) the underwriting or rating of insurance involving the consumer and the person establishes that the consumer has received written notification that a credit report may be requested with an application for insurance;
( iv) a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status;
( v) a legitimate business need for the information arising from a business transaction involving the consumer; or
( vi) a purpose allowed by the federal 'Fair Credit Reporting Act'.
(B) A consumer reporting agency may not prohibit a user of a consumer report or investigative consumer report from disclosing and explaining the contents of the report or providing a copy of the report to the consumer to whom it relates if adverse action against the consumer is taken or is contemplated by the user.
(C) Merely disclosing or providing a copy of a consumer report or investigative consumer report does not make the user a consumer reporting agency.
(D) If the consumer chooses to provide his social security number to the user, the user shall include the social security number with, or as a supplement to, a request for a consumer report, and include the social security number when transmitting later credit information to a consumer reporting agency.
Section 37-5-404. (A) A consumer reporting agency shall disclose to the consumer, upon written or verbal request and proper identification, in writing and in a clear, accurate, and understandable manner, all information pertaining to him in its files at the time of the request including, but not limited to:
(1) the names of all persons requesting credit information pertaining to the consumer during the previous twelve-month period and the date of each request;
(2) a set of instructions describing how information is disclosed in the file; and
(3) a toll-free number for use in resolving a dispute if the consumer submits a written dispute to the consumer reporting agency.
(B)(1) A consumer reporting agency shall notify a consumer by first-class mail that the consumer may have a copy of his consumer file at no charge, and of a toll-free telephone number to call to request the copy, if, within a twelve-month period:
(a) the consumer reporting agency has received three credit inquiries pertaining to the consumer; or
(b) the consumer reporting agency has received a report adding negative information to a consumer's file.
(2) A consumer reporting agency shall send only one letter to a consumer in a twelve-month period even if more than one of the events described in item (1) of this subsection occurs in that period.
(3) A letter mailed to a consumer pursuant to this subsection may not contain identifying information particular to that consumer including, but not limited to, social security number, place of employment, date of birth, or mother's maiden name.
(4) A letter mailed to a consumer pursuant to this subsection may be a form letter, except that the letter must advise the consumer of the number and types of events, as described in item (1) of this subsection, relating to the consumer. The letter must include a notice or separate form the consumer may complete and return to the consumer reporting agency to request a free copy of the consumer's credit report.
(5) Each consumer reporting agency, upon request of a consumer, shall provide the consumer with one disclosure copy of his file each year at no charge, whether or not the consumer has made the request pursuant to item (1) of this subsection.
Section 37-5-405. (A) A consumer reporting agency may not impose a charge for:
(1) a request for a copy of the consumer's file made within sixty days after adverse action is taken;
(2) notice to a person designated by the consumer, pursuant to the applicable provisions of the federal 'Fair Credit Reporting Act', of the deletion of inaccurate or unverifiable information;
(3) instructions for understanding the information presented on the consumer report and a toll-free telephone number for consumers to obtain additional assistance concerning the consumer report; or
(4) the first copy of a consumer disclosure provided to a consumer each calendar year pursuant to Section 37-5-404(B)(5).
(B) If the consumer requests more than one disclosure copy of his file during a year, the consumer reporting agency may charge the consumer not more than eight dollars for each additional disclosure copy.
Section 37-5-406. (A) Except as authorized in subsection (B) of this section, a consumer reporting agency may not make a consumer report containing:
(1) cases pursuant to Title 11 of the United States Code that predate the report by more than ten years from the date of entry of the order for relief or the date of adjudication;
(2) suits and judgments that predate the report by more than seven years from the date of entry of the judgment, or by more than the governing statute of limitations, whichever is the longer period;
(3) paid tax liens that predate the report by more than seven years from the date of payment;
(4) accounts placed for collection or charged to profit and loss that predate the report by more than seven years;
(5) records of arrest, indictment, or conviction of a crime that predate the report by more than seven years from the date of disposition, release, or parole; or
(6) another adverse item of information that predates the report by more than seven years.
(B) The provisions of subsection (A) of this section do not apply to a consumer report used in connection with:
(1) a credit transaction involving, or reasonably expected to involve, a face amount of one hundred fifty thousand dollars or more;
(2) the underwriting of life insurance involving, or reasonably expected to involve, a face amount of one hundred fifty thousand dollars or more; or
(3) the employment of an individual at an annual salary that equals, or is reasonably expected to equal, seventy-five thousand dollars or more.
(C) A consumer reporting agency may not furnish a consumer report that contains medical information about a consumer unless the consumer consents to the furnishing of that information in connection with an employment decision, a credit or insurance transaction, or a direct marketing operation.
(D) A consumer reporting agency may not include in a consumer report made to a person requesting credit information about a consumer the names of other persons who have requested credit information about that consumer or the number of inquires made more than one year before the date of the consumer report, except that information must be retained for two years and made available to the consumer as provided in this part.
Section 37-5-407. (A) If a consumer directly notifies the consumer reporting agency that he disputes the completeness or accuracy of an item of information contained in the consumer's file, the agency shall reinvestigate the item free of charge and record the current status of the disputed information within thirty business days of the date the agency receives the notice. The consumer reporting agency shall offer the consumer the opportunity to speak directly to a representative of the agency to notify the agency of disputed information.
(B) The agency shall provide notice of the dispute to all persons who provided a disputed item of information within five business days of its receipt of notice from the consumer.
(C) A consumer reporting agency may terminate a reinvestigation of information pursuant to subsection (A) if the agency reasonably determines that the dispute is frivolous or irrelevant. That determination and the reasons for it must be communicated promptly to the consumer by mail. The presence of contradictory information in the file is not reasonable grounds for determining the dispute is frivolous or irrelevant.
(D) If a reinvestigation finds information that is inaccurate or cannot be verified, the consumer reporting agency immediately shall delete the information from the consumer's file, revise the file, provide the consumer with the revised consumer report, and refrain from reporting the deleted information in later reports. The consumer reporting agency shall advise the consumer that he may require a copy of the revised consumer report be sent by the consumer reporting agency to a person who requested the disputed information within the last twelve months.
(E) Information deleted pursuant to subsection (D) may not be reinserted in the consumer's file unless the person who furnishes the information reinvestigates and states in writing or by electronic record to the consumer reporting agency that the information is complete and accurate.
(F) A consumer reporting agency shall provide written notice of the results of a reinvestigation or reinsertion made pursuant to subsection (E) within five business days of the completion of the reinvestigation or reinsertion. The notice must include a:
(1) statement that the reinvestigation is complete;
(2) statement of the determination as to the completeness or accuracy of the disputed information;
(3) copy of the consumer's file or report and a description of the results of the reinvestigation;
(4) notice that the consumer may require the consumer reporting agency to provide a description of the procedure used to determine the accuracy and completeness of the information including the name, business, address, and telephone number of a person contacted about the information;
(5) notification that the consumer, pursuant to the provisions of the federal 'Fair Credit Reporting Act', may have a statement added to his file disputing the accuracy or completeness of the information; and
(6) notification of the consumer's right to dispute resolution as provided in Section 37-5-408 after he has complied with this section and upon receipt of the notice described in this subsection.
(G) This section does not require a person who obtains a consumer report for resale to alter or correct an inaccuracy in the consumer report if the report was not assembled or prepared by the person.
(H)(1) The consumer reporting agency shall offer a person who provides credit information to the agency the opportunity to speak directly with a representative of the agency or to submit corrections to previously reported information by facsimile or other automated means when inaccurate or incomplete information he reported appears in a consumer's file. The credit information provider's communication must include information established by the consumer reporting agency that identifies him as the credit information provider who provided the original inaccurate information.
(2) Within five business days of the receipt of the information regarding the corrections, the consumer reporting agency shall correct the inaccuracies in the consumer's file and communicate the corrections to the person who submitted the initial request for corrections.
(3) This subsection does not prohibit a consumer reporting agency from correcting inaccurate information in a consumer's file or a consumer report at any time.
Section 37-5-408. (A) An action to enforce an obligation of a consumer reporting agency to a consumer pursuant to this part may be brought in a court of competent jurisdiction as provided by the federal 'Fair Credit Reporting Act' or submitted to binding arbitration after the consumer has complied with Section 37-5-407 and has received the notice described in subsection (F) of that section.
(B) A consumer may not submit more than one action to arbitration against a consumer reporting agency during a one hundred twenty-day period.
(C) If an arbitration determination is made in favor of the consumer, adverse information in the consumer's file or record must be removed or stricken in a timely manner, and the consumer may bring an action against a noncomplying agency pursuant to this section notwithstanding the one hundred twenty-day waiting period.
(D) The results of an arbitration against a consumer reporting agency doing business in this State must be communicated in a timely manner to all other consumer reporting agencies doing business in this State.
(E) A successful party to an arbitration proceeding must be compensated for the costs and attorney's fees of the proceeding as determined by the court or arbitration.
(F) A decision by an arbitrator pursuant to this section does not affect the validity of an underlying debt owed to any party.
Section 37-5-409. (A) A consumer reporting agency that wilfully violates a provision of this part or the federal 'Fair Credit Reporting Act' is liable for three times the amount of actual damages or one thousand dollars for each inaccurate entry in the consumer's file that was disputed successfully by the consumer, whichever is greater, reasonable attorney's fees, and costs.
(B)(1) A consumer reporting agency that negligently violates this part or the federal 'Fair Credit Reporting Act' is liable for the greater of actual damages or one thousand dollars for each inaccurate entry in the consumer's file that was disputed successfully by the consumer and affects the consumer's creditworthiness, reasonable attorney's fees, and costs. If the negligent violation does not affect the creditworthiness of the consumer, the consumer reporting agency is liable for the greater of actual damages or one thousand dollars for each inaccurate entry in the consumer's file that was disputed successfully by the consumer but does not affect the consumer's creditworthiness, reasonable attorney's fees, and costs.
(2) In addition to the damages assessed pursuant to item (1) of this subsection, if the consumer's file is not corrected by the consumer reporting agency within ten days after the entry of a judgment for damages, the assessed damages must be increased to one thousand dollars each day for each inaccurate entry that remains in the consumer's file until the inaccurate entry is corrected.
Section 37-5-410. The provisions of this part are cumulative, and an action taken pursuant to this part is not an election to take that action to the exclusion of other action authorized by law, except that a credit reporting agency is not subject to suit with respect to an issue that was disposed of during an arbitration proceeding brought pursuant to Section 37-5-408."
SECTION 3. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
SECTION 4. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this part, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 5. This act takes effect upon approval by the Governor.
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