BILL ANALYSIS Ó AB 1220 Page 1 Date of Hearing: May 15, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1220 (Skinner) - As Amended: May 6, 2013 Policy Committee: Banking and Finance Vote: 7-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires a contract between a consumer reporting agency (CRA) and a user of a consumer credit report to include a statement that federal law prohibits a CRA from requiring a user (a retailer for example) of a consumer credit report from disclosing the contents of the report to a consumer who has had an adverse credit action. Requires users to share any information with a consumer if an adverse action is taken. Authorizes the Attorney General or district attorneys to bring a civil action for violations. FISCAL EFFECT Negligible fiscal impact. COMMENTS 1)Purpose . Credit reports describe consumers' credit worthiness and detail their credit history. These reports are requested by banks when consumers apply for loans, by credit card companies when consumers apply for credit cards, by landlords when consumer apply for housing and by employers when consumer apply for jobs. The author contends, due to the scope and significance of credit reports, it is vital that reports are accurate and that consumers see complete versions of their credit reports to verify their accuracy. The author notes, according to a recent study by the Federal Trade Commission, 40 million Americans report inaccuracies on their credit reports. 2)Background . A December 2012 study by the Federal Trade AB 1220 Page 2 Commission (FTC) found widespread problems with the accuracy of credit reports. According to the FTC report, the three national credit reporting agencies (NCRAs) received approximately eight million contacts from consumers in 2011 to initiate disputes about the accuracy of one or more items on their credit files. Some were minor and did not result in a change in score, but an alarming number were significant in the FTC report, one in four consumers identified errors on their credit reports that might affect their credit scores; and four out of five consumers who filed disputes had their credit report modified. 3)Federal regulation. There is federal regulation of financial services and the applicable federal law in this case is the Fair Credit Reporting Act (FCRA). FCRA specifically preempts state regulation of certain topics, for example duties placed on the furnishers of credit information. The state is allowed to regulate if not inconsistent with FCRA. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081