Amended in Senate June 10, 2013

Amended in Assembly April 1, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1169


Introduced by Assembly Member Daly

February 22, 2013


begin deleteAn act to amend Section 1785.3 of the Civil Code, relating to consumer credit reports. end deletebegin insertAn act to add and repeal Chapter 3.6 (commencing with Section 1785.28) of Title 1.6 of Part 4 of Division 3 of the Civil Code, relating to escrow agent credit.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1169, as amended, Daly. begin deleteConsumer credit reports: escrow agents: real estate. end deletebegin insertEscrow agent rating service: escrow agents.end insert

begin insert

Existing law, the Consumer Credit Reporting Agencies Act, requires a consumer credit reporting agency, upon request and proper identification of any consumer, to allow the consumer to visually inspect all files maintained regarding that consumer at the time of the request. Existing law requires every consumer reporting agency to advise the consumer of the agency’s obligation to provide a decoded written version of the file. Existing law grants the consumer the right to request a receive a written copy of the file. Existing law requires a consumer credit reporting agency to disclose the recipients of any consumer credit report on the consumer which the consumer credit reporting agency has furnished.

end insert
begin insert

Under existing law, a consumer credit reporting agency is required to furnish a consumer credit report only under certain circumstances, including in accordance with the written instructions of the consumer to whom it relates. Existing law prohibits a consumer credit reporting agency from making any consumer credit report containing specified information. If the completeness or accuracy of any item of information in a consumer’s file is disputed by the consumer, existing law requires the consumer credit reporting agency to reinvestigate and record the current status of the disputed information within a specified period of time. Existing law requires each consumer credit reporting agency that compiles and reports items of information that are matters of public record to specify the source from which that information was obtained. Existing law requires a person that procures a consumer credit report for the purpose of reselling the report to take specified actions.

end insert
begin insert

Existing law authorizes a consumer suffering damages as a result of a violation of the Consumer Credit Reporting Agencies Act by any person to bring a court action for damages or injunctive relief, as specified.

end insert
begin insert

This bill would, until January 1, 2017, require an escrow agent rating service, as defined, to comply with the provisions described above. The bill would make an escrow agent rating service subject to the requirements applicable to a reseller of credit information if it acts in that capacity, as specified. The bill would also require an escrow agent rating service to establish policies and procedures to protect the personal information it obtains from escrow agents. The bill would authorize an escrow agent who suffers damages as a result of the failure of an escrow agent rating service to comply with these provisions to bring a court action for specified damages.

end insert
begin delete

Existing law defines and regulates consumer credit reporting agencies and investigative consumer reporting agencies. Existing law defines a consumer credit report as a written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer’s credit worthiness, credit standing, or credit capacity, which is used or is expected to be used, or collected in whole or in part, for the purpose of serving as a factor in establishing the consumer’s eligibility for certain purposes, as specified.

end delete
begin delete

This bill would revise the definition of a consumer credit report to include a communication of information by a consumer credit reporting agency used for the purpose of serving as a factor in establishing the consumer’s eligibility for a proprietary database and rating evaluation. This bill would define a proprietary database and rating evaluation as a report prepared for a fee and provided to a furnisher of credit, for the purpose of evaluating a consumer in the consumer’s capacity as a person performing specified services within real estate transactions.

end delete

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertChapter 3.6 (commencing with Section 1785.28)
2is added to Title 1.6 of Part 4 of Division 3 of the end insert
begin insertCivil Codeend insertbegin insert, to
3read:end insert

begin insert

4 

5Chapter  begin insert3.6.end insert Escrow Agent Rating Service
6

 

7

begin insert1785.28.end insert  

(a) For the purposes of this chapter, the following
8definitions shall apply:

9(1) An escrow agent is any of the following:

10(A) A person described in Section 17004 of the Financial Code
11who performs escrow agent services pursuant to the Escrow Law
12contained in Division 6 (commencing with Section 17000) of the
13Financial Code.

14(B) A person performing escrow services for a title insurer or
15underwritten title company licensed pursuant to Article 3.7
16(commencing with Section 12389) of Chapter 1 of Part 6 of
17Division 2 of the Insurance Code.

18(C) A person performing escrow services for a controlled escrow
19company, as defined in Section 12340.6 of the Insurance Code.

20(D) A person licensed pursuant to Division 4 (commencing with
21Section 10000) of the Business and Professions Code, who
22performs escrow services, as described in Section 17006 of the
23Financial Code.

24(2) An escrow agent rating service is a person or entity that
25prepares a report, for compensation or in expectation of
26compensation, for use by a creditor in evaluating the capacity of
27an escrow agent to perform settlement services in connection with
28an extension of credit.

29(3) An escrow agent rating service shall be considered a reseller
30of credit information within the meaning of Section 1785.22 if it
31assembles and merges information contained in the database or
32databases maintained by a consumer credit reporting agency.

33(4) “Consumer” also means escrow agent.

P4    1(b) An escrow agent rating service shall comply with and be
2subject to the following sections of this title applicable to a
3consumer credit reporting agency:

4(1) Subdivision (a) of Section 1785.10.

5(2) Subdivision (b) of Section 1785.10, limited to the obligation
6to advise a consumer of his or her right to a decoded written
7version of a file.

8(3) Subdivision (d) of Section 1785.10.

9(4) Paragraph (2) of subdivision (a) of Section 1785.11.

10(5) Section 1785.13.

11(6) Paragraph (1) of subdivision (a) of Section 1785.15, limited
12to the right to request and receive a decoded written version of
13the file.

14(7) Section 1785.16.

15(8) Section 1785.18.

16(c) An escrow agent rating service that acts as a reseller of
17credit information as described in paragraph (3) of subdivision
18(a) shall comply with and be subject to Section 1785.22.

19(d) An escrow agent rating service shall establish policies and
20procedures reasonably intended to safeguard from theft or misuse
21any personally identifiable information it obtains from an escrow
22agent.

23(e) An escrow agent who suffers damages as a result of the
24failure of a escrow agent rating service to comply with subdivision
25(b), (c), or (d) may bring an action in a court of competent
26jurisdiction pursuant to Section 1785.31 of the Civil Code.

27(f) If an escrow agent rating service is also a consumer credit
28reporting agency as defined in subdivision (d) of Section 1785.3,
29nothing in this chapter shall be construed to suggest that an escrow
30agent reporting service that is also a consumer credit reporting
31agency is not otherwise required to comply with other provisions
32of this title applicable to consumer credit reporting agencies.

33(g) This chapter shall remain in effect only until January 1,
342017, and as of that date is repealed, unless a later enacted statute,
35that is enacted before January 1, 2017, deletes or extends that
36date.

end insert
begin delete
37

SECTION 1.  

Section 1785.3 of the Civil Code is amended to
38read:

39

1785.3.  

The following terms as used in this title have the
40meaning expressed in this section:

P5    1(a) “Adverse action” means a denial or revocation of credit, a
2change in the terms of an existing credit arrangement which is
3adverse to the interests of the consumer, or a refusal to grant credit
4in substantially the amount or on substantially the terms requested.
5“Adverse action” includes all of the following:

6(1) Any denial of, increase in any charge for, or reduction in
7the amount of, insurance for personal, family, or household
8purposes made in connection with the underwriting of insurance.

9(2) Any denial of employment or any other decision made for
10employment purposes which adversely affects any current or
11prospective employee.

12(3) Any action taken, or determination made, with respect to a
13consumer (A) for an application for an extension of credit, or an
14application for the hiring of a dwelling unit, and (B) that is adverse
15to the interests of the consumer.

16“Adverse action” does not include (A) a refusal to extend
17additional credit to a consumer under an existing credit
18arrangement if (i) the applicant is delinquent or otherwise in default
19under that credit arrangement or (ii) the additional credit would
20exceed a credit limit previously established for the consumer or
21(B) a refusal or failure to authorize an account transaction at a
22point of sale.

23(b) “Consumer” means a natural individual.

24(c) “Consumer credit report” means any written, oral, or other
25communication of any information by a consumer credit reporting
26agency bearing on a consumer’s credit worthiness, credit standing,
27or credit capacity, which is used or is expected to be used, or
28collected in whole or in part, for the purpose of serving as a factor
29in establishing the consumer’s eligibility for: (1) credit to be used
30primarily for personal, family, or household purposes, or (2)
31employment purposes, or (3) hiring of a dwelling unit, as defined
32in subdivision (c) of Section 1940, (4) a proprietary database and
33rating evaluation, or (5) other purposes authorized in Section
341785.11.

35The term does not include (1) any report containing information
36solely as to transactions or experiences between the consumer and
37the person making the report, (2) any communication of that
38information or information from a credit application by a consumer
39that is internal within the organization that is the person making
40the report or that is made to an entity owned by, or affiliated by
P6    1corporate control with, that person; provided that the consumer is
2informed by means of a clear and conspicuous written disclosure
3that information contained in the credit application may be
4provided to these persons; however, where a credit application is
5taken by telephone, disclosure shall initially be given orally at the
6time the application is taken, and a clear and conspicuous written
7disclosure shall be made to the consumer in the first written
8communication to that consumer after the application is taken, (3)
9any authorization or approval of a specific extension of credit
10 directly or indirectly by the issuer of a credit card or similar device,
11(4) any report by a person conveying a decision whether to make
12a specific extension of credit directly or indirectly to a consumer
13in response to a request by a third party, if the third party advises
14the consumer of the name and address of the person to whom the
15request was made and the person makes the disclosures to the
16consumer required under Section 1785.20, (5) any report containing
17information solely on a consumer’s character, general reputation,
18personal characteristics, or mode of living which is obtained
19through personal interviews with neighbors, friends, or associates
20of the consumer reported on, or others with whom he is acquainted
21or who may have knowledge concerning those items of
22information, (6) any communication about a consumer in
23connection with a credit transaction which is not initiated by the
24consumer, between persons who are affiliated (as defined in Section
25150 of the Corporations Code) by common ownership or common
26corporate control (as defined by Section 160 of the Corporations
27Code), if either of those persons has complied with paragraph (2)
28of subdivision (b) of Section 1785.20.1 with respect to a
29prequalifying report from which the information communicated
30is taken and provided the consumer has consented to the provision
31and use of the prequalifying report in writing, or (7) any consumer
32credit report furnished for use in connection with a transaction
33which consists of an extension of credit to be used solely for a
34commercial purpose.

35(d) “Consumer credit reporting agency” means any person who,
36for monetary fees, dues, or on a cooperative nonprofit basis,
37regularly engages in whole or in part in the business of assembling
38or evaluating consumer credit information or other information on
39consumers for the purpose of furnishing consumer credit reports
40to third parties, but does not include any governmental agency
P7    1whose records are maintained primarily for traffic safety, law
2enforcement, or licensing purposes.

3(e) “Credit transaction that is not initiated by the consumer”
4does not include the use of a consumer credit report by an assignee
5for collection or by a person with which the consumer has an
6account for purposes of (1) reviewing the account or (2) collecting
7the account. For purposes of this subdivision, “reviewing the
8account” includes activities related to account maintenance and
9monitoring, credit line increases, and account upgrades and
10enhancements.

11(f) “Employment purposes,” when used in connection with a
12consumer credit report, means a report used for the purpose of
13evaluating a consumer for employment, promotion, reassignment,
14or retention as an employee.

15(g) “File,” when used in connection with information on any
16consumer, means all of the information on that consumer recorded
17and retained by a consumer credit reporting agency, regardless of
18how the information is stored.

19(h) “Firm offer of credit” means any offer of credit to a
20consumer that will be honored if, based on information in a
21consumer credit report on the consumer and other information
22bearing on the creditworthiness of the consumer, the consumer is
23determined to meet the criteria used to select the consumer for the
24offer and the consumer is able to provide any real property
25collateral specified in the offer. For purposes of this subdivision,
26the phrase “other information bearing on the creditworthiness of
27the consumer” means information that the person making the offer
28is permitted to consider pursuant to any rule, regulation, or formal
29written policy statement relating to the federal Fair Credit
30Reporting Act, as amended (15 U.S.C. Sec. 1681 et seq.),
31promulgated by the Federal Trade Commission or any federal bank
32regulatory agency.

33(i) “Item of information” means any of one or more informative
34entries in a credit report which causes a creditor to deny credit to
35an applicant or increase the cost of credit to an applicant or deny
36an applicant a checking account with a bank or other financial
37institution.

38(j) “Person” means any individual, partnership, corporation,
39trust, estate, cooperative, association, government or governmental
40subdivision or agency, or other entity.

P8    1(k) “Prequalifying report” means a report containing the limited
2information permitted under paragraph (2) of subdivision (b) of
3Section 1785.11.

4(l) The term “proprietary database and rating evaluation” means
5a report prepared for a fee and provided to a furnisher of credit for
6the purpose of evaluating a consumer in the consumer’s capacity
7as an “escrow agent,” as that term is defined in Section 17004 of
8the Financial Code, or as a person performing the services
9authorized pursuant to subdivision (c) of Section 12340.3 of the
10Insurance Code, or as a real estate broker, or his or her employee,
11performing the services described in subdivision (e) of Section
1210131 of the Business and Professions Code. Information stored
13or retained by a person, or a person’s agent, used to prepare a
14proprietary database and rating evaluation constitutes a file, as
15defined in subdivision (g).

16(m) “State or local child support enforcement agency” means
17the Department of Child Support Services or local child support
18agency acting pursuant to Division 17 (commencing with Section
1917000) of the Family Code to establish, enforce or modify child
20support obligations, and any state or local agency or official that
21succeeds to these responsibilities under a successor statute.

end delete


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