BILL NUMBER: AB 1399 CHAPTERED 08/01/03 CHAPTER 146 FILED WITH SECRETARY OF STATE AUGUST 1, 2003 APPROVED BY GOVERNOR JULY 31, 2003 PASSED THE ASSEMBLY JULY 21, 2003 PASSED THE SENATE JULY 15, 2003 AMENDED IN SENATE JULY 8, 2003 AMENDED IN ASSEMBLY MAY 8, 2003 AMENDED IN ASSEMBLY APRIL 23, 2003 INTRODUCED BY Assembly Member Longville FEBRUARY 21, 2003 An act to amend Sections 1786.20 and 1786.50 of the Civil Code, relating to investigative consumer reports. LEGISLATIVE COUNSEL'S DIGEST AB 1399, Longville. Investigative consumer reporting agencies. Existing law regulates the activities of investigative consumer reporting agencies and requires these agencies to establish reasonable procedures to ensure that specified, prohibited items of information concerning consumers are not part of the reports they furnish. Existing law generally provides that an investigative consumer reporting agency or user of information that fails to comply with any requirement under these provisions with respect to an investigative consumer report is liable to the consumer who is the subject of the report for the sum of the greater of actual damages or $10,000, the costs of the action, reasonable attorney's fees, and, in certain cases, punitive damages, as specified. However, existing law also requires investigative consumer reporting agencies to keep records of the purposes for which information is sought by users and to keep investigative consumer reports for two years after the reports are provided, among other things. Existing law provides that an investigative consumer reporting agency that violates these provisions is liable to the consumer affected for damages in an amount of not less than $25,000, and for the costs of the action and reasonable attorney's fees in a successful action to enforce liability as the court may award. This bill would delete the latter liability provisions described above. The bill would instead provide that an investigative consumer reporting agency is subject to the general liability provisions governing the activities of these entities. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1786.20 of the Civil Code is amended to read: 1786.20. (a) An investigative consumer reporting agency shall maintain reasonable procedures designed to avoid violations of Section 1786.18 and to limit furnishing of investigative consumer reports for the purposes listed under Section 1786.12. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought and that the information will be used for no other purposes, and make the certifications described in paragraph (4) of subdivision (a) of Section 1786.16. From the effective date of this title, the investigative consumer reporting agency shall keep a record of the purposes for which information is sought, as stated by the user. The investigative consumer reporting agency may assume that the purpose for which a user seeks information remains the same as that which a user has previously stated. The investigative consumer reporting agency shall inform the user that the user is obligated to notify the agency of any change in the purpose for which information will be used. An investigative consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by the prospective user prior to furnishing the user any investigative consumer reports. An investigative consumer reporting agency may not furnish an investigative consumer report to a person unless it has a written agreement that the investigative consumer reports will be used by that person only for purposes listed in Section 1786.12. (b) Whenever an investigative consumer reporting agency prepares an investigative consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. An investigative consumer reporting agency shall retain the investigative consumer report for two years after the report is provided. (c) An investigative consumer reporting agency may not make an inquiry for the purpose of preparing an investigative consumer report on a consumer for employment purposes if the making of the inquiry by an employer or prospective employer of the consumer would violate applicable federal or state equal employment opportunity law or regulation. SEC. 2. Section 1786.50 of the Civil Code is amended to read: 1786.50. (a) An investigative consumer reporting agency or user of information that fails to comply with any requirement under this title with respect to an investigative consumer report is liable to the consumer who is the subject of the report in an amount equal to the sum of all the following: (1) Any actual damages sustained by the consumer as a result of the failure or, except in the case of class actions, ten thousand dollars ($10,000), whichever sum is greater. (2) In the case of any successful action to enforce any liability under this chapter, the costs of the action together with reasonable attorney's fees as determined by the court. (b) If the court determines that the violation was grossly negligent or willful, the court may, in addition, assess, and the consumer may recover, punitive damages. (c) Notwithstanding subdivision (a), an investigative consumer reporting agency or user of information that fails to comply with any requirement under this title with respect to an investigative consumer report shall not be liable to a consumer who is the subject of the report where the failure to comply results in a more favorable investigative consumer report than if there had not been a failure to comply.