BILL NUMBER: AB 1169 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 10, 2013
AMENDED IN ASSEMBLY APRIL 1, 2013
AMENDED IN ASSEMBLY MARCH 21, 2013
INTRODUCED BY Assembly Member Daly
FEBRUARY 22, 2013
An act to amend Section 1785.3 of the Civil Code,
relating to consumer credit reports. An 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.
LEGISLATIVE COUNSEL'S DIGEST
AB 1169, as amended, Daly. Consumer credit reports:
escrow agents: real estate. Escrow agent rating
service: escrow agents.
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.
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.
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.
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.
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.
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.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 3.6 (commencing with Section
1785.28) is added to Title 1.6 of Part 4 of Division 3 of the
Civil Code , to read:
CHAPTER 3.6. ESCROW AGENT RATING SERVICE
1785.28. (a) For the purposes of this chapter, the following
definitions shall apply:
(1) An escrow agent is any of the following:
(A) A person described in Section 17004 of the Financial Code who
performs escrow agent services pursuant to the Escrow Law contained
in Division 6 (commencing with Section 17000) of the Financial Code.
(B) A person performing escrow services for a title insurer or
underwritten title company licensed pursuant to Article 3.7
(commencing with Section 12389) of Chapter 1 of Part 6 of Division 2
of the Insurance Code.
(C) A person performing escrow services for a controlled escrow
company, as defined in Section 12340.6 of the Insurance Code.
(D) A person licensed pursuant to Division 4 (commencing with
Section 10000) of the Business and Professions Code, who performs
escrow services, as described in Section 17006 of the Financial Code.
(2) An escrow agent rating service is a person or entity that
prepares a report, for compensation or in expectation of
compensation, for use by a creditor in evaluating the capacity of an
escrow agent to perform settlement services in connection with an
extension of credit.
(3) An escrow agent rating service shall be considered a reseller
of credit information within the meaning of Section 1785.22 if it
assembles and merges information contained in the database or
databases maintained by a consumer credit reporting agency.
(4) "Consumer" also means escrow agent.
(b) An escrow agent rating service shall comply with and be
subject to the following sections of this title applicable to a
consumer credit reporting agency:
(1) Subdivision (a) of Section 1785.10.
(2) Subdivision (b) of Section 1785.10, limited to the obligation
to advise a consumer of his or her right to a decoded written version
of a file.
(3) Subdivision (d) of Section 1785.10.
(4) Paragraph (2) of subdivision (a) of Section 1785.11.
(5) Section 1785.13.
(6) Paragraph (1) of subdivision (a) of Section 1785.15, limited
to the right to request and receive a decoded written version of the
file.
(7) Section 1785.16.
(8) Section 1785.18.
(c) An escrow agent rating service that acts as a reseller of
credit information as described in paragraph (3) of subdivision (a)
shall comply with and be subject to Section 1785.22.
(d) An escrow agent rating service shall establish policies and
procedures reasonably intended to safeguard from theft or misuse any
personally identifiable information it obtains from an escrow agent.
(e) An escrow agent who suffers damages as a result of the failure
of a escrow agent rating service to comply with subdivision (b),
(c), or (d) may bring an action in a court of competent jurisdiction
pursuant to Section 1785.31 of the Civil Code.
(f) If an escrow agent rating service is also a consumer credit
reporting agency as defined in subdivision (d) of Section 1785.3,
nothing in this chapter shall be construed to suggest that an escrow
agent reporting service that is also a consumer credit reporting
agency is not otherwise required to comply with other provisions of
this title applicable to consumer credit reporting agencies.
(g) This chapter shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
SECTION 1. Section 1785.3 of the Civil Code is
amended to read:
1785.3. The following terms as used in this title have the
meaning expressed in this section:
(a) "Adverse action" means a denial or revocation of credit, a
change in the terms of an existing credit arrangement which is
adverse to the interests of the consumer, or a refusal to grant
credit in substantially the amount or on substantially the terms
requested. "Adverse action" includes all of the following:
(1) Any denial of, increase in any charge for, or reduction in the
amount of, insurance for personal, family, or household purposes
made in connection with the underwriting of insurance.
(2) Any denial of employment or any other decision made for
employment purposes which adversely affects any current or
prospective employee.
(3) Any action taken, or determination made, with respect to a
consumer (A) for an application for an extension of credit, or an
application for the hiring of a dwelling unit, and (B) that is
adverse to the interests of the consumer.
"Adverse action" does not include (A) a refusal to extend
additional credit to a consumer under an existing credit arrangement
if (i) the applicant is delinquent or otherwise in default under that
credit arrangement or (ii) the additional credit would exceed a
credit limit previously established for the consumer or (B) a refusal
or failure to authorize an account transaction at a point of sale.
(b) "Consumer" means a natural individual.
(c) "Consumer credit report" means any 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: (1) credit to be
used primarily for personal, family, or household purposes, or (2)
employment purposes, or (3) hiring of a dwelling unit, as defined in
subdivision (c) of Section 1940, (4) a proprietary database and
rating evaluation, or (5) other purposes authorized in Section
1785.11.
The term does not include (1) any report containing information
solely as to transactions or experiences between the consumer and the
person making the report, (2) any communication of that information
or information from a credit application by a consumer that is
internal within the organization that is the person making the report
or that is made to an entity owned by, or affiliated by corporate
control with, that person; provided that the consumer is informed by
means of a clear and conspicuous written disclosure that information
contained in the credit application may be provided to these persons;
however, where a credit application is taken by telephone,
disclosure shall initially be given orally at the time the
application is taken, and a clear and conspicuous written disclosure
shall be made to the consumer in the first written communication to
that consumer after the application is taken, (3) any authorization
or approval of a specific extension of credit directly or indirectly
by the issuer of a credit card or similar device, (4) any report by a
person conveying a decision whether to make a specific extension of
credit directly or indirectly to a consumer in response to a request
by a third party, 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 disclosures to the consumer required under Section
1785.20, (5) any report containing information solely on a consumer's
character, general reputation, personal characteristics, or mode of
living which is obtained through personal interviews with neighbors,
friends, or associates of the consumer reported on, or others with
whom he is acquainted or who may have knowledge concerning those
items of information, (6) any communication about a consumer in
connection with a credit transaction which is not initiated by the
consumer, between persons who are affiliated (as defined in Section
150 of the Corporations Code) by common ownership or common corporate
control (as defined by Section 160 of the Corporations Code), if
either of those persons has complied with paragraph (2) of
subdivision (b) of Section 1785.20.1 with respect to a prequalifying
report from which the information communicated is taken and provided
the consumer has consented to the provision and use of the
prequalifying report in writing, or (7) any consumer credit report
furnished for use in connection with a transaction which consists of
an extension of credit to be used solely for a commercial purpose.
(d) "Consumer credit reporting agency" means any person who, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly
engages in whole or in part in the business of assembling or
evaluating consumer credit information or other information on
consumers for the purpose of furnishing consumer credit reports to
third parties, but does not include any governmental agency whose
records are maintained primarily for traffic safety, law enforcement,
or licensing purposes.
(e) "Credit transaction that is not initiated by the consumer"
does not include the use of a consumer credit report by an assignee
for collection or by a person with which the consumer has an account
for purposes of (1) reviewing the account or (2) collecting the
account. For purposes of this subdivision, "reviewing the account"
includes activities related to account maintenance and monitoring,
credit line increases, and account upgrades and enhancements.
(f) "Employment purposes," when used in connection with a consumer
credit report, means a report used for the purpose of evaluating a
consumer for employment, promotion, reassignment, or retention as an
employee.
(g) "File," when used in connection with information on any
consumer, means all of the information on that consumer recorded and
retained by a consumer credit reporting agency, regardless of how the
information is stored.
(h) "Firm offer of credit" means any offer of credit to a consumer
that will be honored if, based on information in a consumer credit
report on the consumer and other information bearing on the
creditworthiness of the consumer, the consumer is determined to meet
the criteria used to select the consumer for the offer and the
consumer is able to provide any real property collateral specified in
the offer. For purposes of this subdivision, the phrase "other
information bearing on the creditworthiness of the consumer" means
information that the person making the offer is permitted to consider
pursuant to any rule, regulation, or formal written policy statement
relating to the federal Fair Credit Reporting Act, as amended (15
U.S.C. Sec. 1681 et seq.), promulgated by the Federal Trade
Commission or any federal bank regulatory agency.
(i) "Item of information" means any of one or more informative
entries in a credit report which causes a creditor to deny credit to
an applicant or increase the cost of credit to an applicant or deny
an applicant a checking account with a bank or other financial
institution.
(j) "Person" means any individual, partnership, corporation,
trust, estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(k) "Prequalifying report" means a report containing the limited
information permitted under paragraph (2) of subdivision (b) of
Section 1785.11.
(l) The term "proprietary database and rating evaluation" means 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 an
"escrow agent," as that term is defined in Section 17004 of the
Financial Code, or as a person performing the services authorized
pursuant to subdivision (c) of Section 12340.3 of the Insurance Code,
or as a real estate broker, or his or her employee, performing the
services described in subdivision (e) of Section 10131 of the
Business and Professions Code. Information stored or retained by a
person, or a person's agent, used to prepare a proprietary database
and rating evaluation constitutes a file, as defined in subdivision
(g).
(m) "State or local child support enforcement agency" means the
Department of Child Support Services or local child support agency
acting pursuant to Division 17 (commencing with Section 17000) of the
Family Code to establish, enforce or modify child support
obligations, and any state or local agency or official that succeeds
to these responsibilities under a successor statute.