California Legislature—2015–16 Regular Session

Assembly Bill No. 1553

Introduced by Assembly Member Irwin

(Coauthors: Assembly Members Burke, Chiu, Low, and Williams)

January 4, 2016

An act to amend Section 1785.11.2 of the Civil Code, relating to consumer credit reports.

LEGISLATIVE COUNSEL’S DIGEST

AB 1553, as introduced, Irwin. Consumer credit reports: security freezes: protected person.

Existing state law defines and regulates consumer credit reports and authorizes a consumer to place a security freeze on his or her credit report by making a request in writing by mail to a consumer credit reporting agency. Existing state law requires a consumer credit reporting agency to place the security freeze on the consumer’s credit report no later than 3 business days after receiving the consumer’s request.

This bill would additionally authorize a representative of a protected person, defined as an individual who is under 16 years of age at the time a request for the placement of a security freeze is made or an incapacitated person or a protected individual for whom a guardian or conservator has been appointed, to place a security freeze on the credit report of the protected person by making a request in writing by mail to a consumer credit reporting agency. However, irrespective of whether the security freeze was requested by a representative, the bill would authorize an individual who is under 16 years of age or an individual over 16 years of age for whom a security freeze was requested by a representative to act on behalf of himself or herself with respect to temporarily lifting the freeze for a specific party or removing the freeze.

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.  

Section 1785.11.2 of the Civil Code is amended
to read:

1785.11.2.  

(a) begin insert   end insert begin insert (1) end insert  A consumer may elect to place a security
freeze on his or her credit report by making a request in writing
by mail to a consumer credit reporting agency. begin insert A representative
of a protected person who is a consumer may elect to place a
security freeze on the credit report of a protected person by making
a request in writing by mail to a consumer credit reporting agency. end insert
“Security freeze” means a notice placed in a consumer’s credit
report, at the request of the begin delete consumer, end delete begin insert consumer or representative, end insert
and subject to certain exceptions, that prohibits the consumer credit
reporting agency from releasing the consumer’s credit report or
any information from it without the express authorization of the
consumer. If a security freeze is in place, information from a
consumer’s credit report may not be released to a third party
without prior express authorization from the begin delete consumer. end delete begin insert consumer
or representative. end insert This subdivision does not prevent a consumer
credit reporting agency from advising a third party that a security
freeze is in effect with respect to the consumer’s credit report.

begin insert

(2) For the purposes of this section, the following definitions
shall apply:

end insert begin insert

(A) “Protected person” means an individual who is under 16
years of age at the time a request for the placement of a security
freeze is made or an incapacitated person or a protected individual
for whom a guardian or conservator has been appointed.

end insert begin insert

(B) “Representative” means a person who provides to a
consumer credit reporting agency sufficient proof of authority to
act on behalf of a protected person.

end insert begin insert

(C) “Sufficient proof of authority” means documentation that
shows a representative has authority to act on behalf of a protected
person and includes an order issued by a court of law, a lawfully
executed and valid power of attorney, or a written, notarized
statement signed by a representative that expressly describes the
authority of the representative to act on behalf of a protected
person.

end insert

(b) A consumer credit reporting agency shall place a security
freeze on a consumer’s credit report no later than three business
days after receiving a written request from the begin delete consumer. end delete begin insert consumer
or representative. end insert

(c) The consumer credit reporting agency shall send a written
confirmation of the security freeze to the consumer begin insert or
representative end insert within 10 business days and shall provide the
consumer begin insert or representative end insert with a unique personal identification
number or password to be used by the consumer begin insert or representative end insert
when providing authorization for the release of his or her credit
for a specific party or period of time.

(d) If the consumer begin insert or representative end insert wishes to allow his or her
credit report to be accessed for a specific party or period of time
while a freeze is in place, he or she shall contact the consumer
credit reporting agency, request that the freeze be temporarily
lifted, and provide the following:

(1) Proper identification, as defined in subdivision (c) of Section
1785.15.

(2) The unique personal identification number or password
provided by the credit reporting agency pursuant to subdivision
(c).

(3) The proper information regarding the third party who is to
receive the credit report or the time period for which the report
shall be available to users of the credit report.

(e) A consumer credit reporting agency that receives a request
from a consumer begin insert or representative end insert to temporarily lift a freeze on
a credit report pursuant to subdivision (d) shall comply with the
request no later than three business days after receiving the request.

(f) A consumer credit reporting agency may develop procedures
involving the use of telephone, fax, the Internet, or other electronic
media to receive and process a request from a consumer begin insert or
representative end insert to temporarily lift a freeze on a credit report pursuant
to subdivision (d) in an expedited manner.

(g) A consumer credit reporting agency shall remove or
temporarily lift a freeze placed on a consumer’s credit report only
in the following cases:

(1) Upon consumer begin insert or representative end insert request, pursuant to
subdivision (d) or (j).

(2) If the consumer’s credit report was frozen due to a material
misrepresentation of fact by the consumer begin insert or representative end insert . If a
consumer credit reporting agency intends to remove a freeze upon
a consumer’s credit report pursuant to this paragraph, the consumer
credit reporting agency shall notify the consumer begin insert or representative end insert
in writing prior to removing the freeze on the consumer’s credit
report.

(h) A third party who requests access to a consumer credit report
in connection with an application for credit or any other use may
treat the application as incomplete if a security freeze is in effect
and the consumer begin insert or representative end insert does not allow his or her credit
report to be accessed for that specific party or period of time.

(i) If a consumer begin insert or representative end insert requests a security freeze,
the consumer credit reporting agency shall disclose the process of
placing and temporarily lifting a freeze and the process for allowing
access to information from the consumer’s credit report for a
specific party or period of time while the freeze is in place.

(j) A security freeze shall remain in place until the consumer
begin insert or representative end insert requests that the security freeze be removed. A
consumer credit reporting agency shall remove a security freeze
within three business days of receiving a request for removal from
the consumer begin insert or representative end insert if the consumer begin insert or representative end insert
provides both of the following:

(1) Proper identification, as defined in subdivision (c) of Section
1785.15.

(2) The unique personal identification number or password
provided by the credit reporting agency pursuant to subdivision
(c).

(k) A consumer credit reporting agency shall require proper
identification, as defined in subdivision (c) of Section 1785.15, of
the person making a request to place or remove a security freeze.

(l) The provisions of this section do not apply to the use of a
consumer credit report by any of the following:

(1) (A) (i) A person or entity with which the consumer has or
had, prior to any assignment, an account or contract, including a
demand deposit account, or to which the consumer issued a
negotiable instrument, for the purpose of reviewing the account
or collecting the financial obligation owing for the account,
contract, or negotiable instrument.

(ii) A subsidiary, affiliate, or agent of a person or entity
described in clause (i), an assignee of a financial obligation owing
by the consumer to such a person or entity, or a prospective
assignee of a financial obligation owing by the consumer to such
a person or entity in conjunction with the proposed purchase of
the financial obligation, for the purpose of reviewing the account
or collecting the financial obligation owing for the account,
contract, or negotiable instrument.

(B) For purposes of this paragraph, “reviewing the account”
includes activities related to account maintenance, monitoring,
credit line increases, and account upgrades and enhancements.

(2) A subsidiary, affiliate, agent, assignee, or prospective
assignee of a person to whom access has been granted under
subdivision (d) for purposes of facilitating the extension of credit
or other permissible use.

(3) Any state or local agency, law enforcement agency, trial
court, or private collection agency acting pursuant to a court order,
warrant, or subpoena.

(4) A child support agency acting pursuant to Chapter 2
(commencing with Section 17400) of Division 17 of the Family
Code or Title IV-D of the Social Security Act (42 U.S.C. et seq.).

(5) The State Department of Health Care Services or its agents
or assigns acting to investigate Medi-Cal fraud.

(6) The Franchise Tax Board or its agents or assigns acting to
investigate or collect delinquent taxes or unpaid court orders or to
fulfill any of its other statutory responsibilities.

(7) The use of credit information for the purposes of
prescreening as provided for by the federal Fair Credit Reporting
Act.

(8) Any person or entity administering a credit file monitoring
subscription service to which the consumer has subscribed.

(9) Any person or entity for the purpose of providing a consumer
with a copy of his or her credit report upon the consumer’s request.

(m) (1) Except as provided in paragraph (2), this title does not
prevent a consumer credit reporting agency from charging a fee
of no more than ten dollars ($10) to a consumer begin insert or representative end insert
for the placement of each freeze, the removal of the freeze, the
temporary lift of the freeze for a period of time, or the temporary
lift of the freeze for a specific party, regarding access to a consumer
credit report, except that a consumer credit reporting agency may
not charge a fee to a victim of identity theft who has submitted a
valid police report or valid Department of Motor Vehicles
investigative report that alleges a violation of Section 530.5 of the
Penal Code.

(2) With respect to a consumer who is 65 years of age or older
and who has provided identification confirming his or her age, a
consumer credit reporting agency shall not charge a fee for the
placement of an initial security freeze, but may charge a fee not
to exceed five dollars ($5) for the removal of the freeze, the
temporary lift of the freeze for a period of time, the temporary lift
of the freeze for a specific party, or replacing the freeze.

(n) Regardless of the existence of a security freeze, a consumer
reporting agency may disclose public record information lawfully
obtained by, or for, the consumer reporting agency from an open
public record to the extent otherwise permitted by law. This
subdivision does not prohibit a consumer reporting agency from
electing to apply a valid security freeze to the entire contents of a
credit report.

begin insert

(o) Notwithstanding any other law and irrespective of whether
the security freeze was requested by a representative pursuant to
subdivision (a), an individual who is under 16 years of age or an
individual for whom a security freeze was requested by a
representative who is over 16 years of age may act on behalf of
himself or herself with respect to subdivisions (d) and (j).

end insert