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
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            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