Amended in Assembly February 29, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1553

Introduced by Assembly Member Irwin

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

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January 4, 2016

begin delete An act to amend Section 1785.11.2 of the Civil Code, relating to consumer credit reports. end delete begin insert An act to amend Sections 4875 and 4877 of the Welfare and Institutions Code, relating to taxation. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1553, as amended, Irwin. begin delete Consumer credit reports: security freezes: protected person. end delete begin insert Savings plans: qualified ABLE program. end insert

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Existing federal law, the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act), encourages and assists individuals and families to save private funds for the purpose of supporting persons with disabilities to maintain their health, independence, and quality of life by excluding from gross income distributions used for qualified disability expenses by a beneficiary of a qualified ABLE program established and maintained by a state, as specified.

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Existing law conforms to these federal income tax law provisions relating to the ABLE Act under the Personal Income Tax Law and the Corporation Tax Law, as provided. Existing law establishes in state government the ABLE program trust for purposes of implementing the federal ABLE Act. Existing law also establishes the ABLE Act Board and authorizes the board to adopt regulations to implement the program.

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This bill would authorize the ABLE Act Board to enter into a multistate contract with an account servicer in order to implement these provisions and to enter into a long-term contract with an account servicer, as provided.

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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.

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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.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

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begin insert Section 4875 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

4875.  

For purposes of this chapter:

(a) “ABLE account” or “account” means the account established
and owned by a designated beneficiary pursuant to this chapter
for the purpose of meeting the qualified disability expenses of the
designated beneficiary of the account.

(b) “Administrative fund” means the fund used to administer
this chapter.

(c) “Board” means the California ABLE Act Board established
under this chapter.

(d) “California ABLE Program Trust” or “ABLE program trust”
means the trust created pursuant to this chapter.

(e) “Designated beneficiary” means the eligible individual who
established an ABLE account and is the owner of the account.

(f) “Eligible individual” means an individual who is eligible
under the program for a taxable year if during that taxable begin delete year
both of the following criteria are met: end delete begin insert year: end insert

(1)  begin delete The end delete begin insert the end insert individual is entitled to benefits based on blindness
or disability under Title II or XVI of the federal Social Security
Act, and that blindness or disability occurred before the date on
which the individual attained 26 years of begin delete age. end delete begin insert age; or end insert

(2)  begin delete A end delete begin insert a end insert disability certification, as defined in the federal ABLE
Act, with respect to the individual is filed pursuant to the
requirements set forth in the federal ABLE Act.

(g) “Federal ABLE Act” means the federal Stephen Beck, Jr.,
Achieving a Better Life Experience Act of 2014.

(h) “Investment management” means the functions performed
by a manager contracted to perform functions delegated by the
board.

(i) “Investment manager” means a manager contracted to
perform functions delegated by the board.

(j) “Program fund” means the program fund established by this
chapter, which shall be held as a separate fund within the California
ABLE Program Trust.

(k) “Qualified ABLE Program” or “program” means the program
established by this chapter to implement the federal ABLE Act
pursuant to Section 529A of the Internal Revenue Code.

(l) “Qualified disability expenses” means any expenses related
to the eligible individual’s blindness or disability that are made
for the benefit of an eligible individual who is the designated
beneficiary, including begin delete expenses related to end delete begin insert the following expenses: end insert
education, housing, transportation, employment training and
support, assistive technology and personal support services, health,
prevention and wellness, financial management and administrative
services, legal fees, expenses for oversight and monitoring, funeral
and burial expenses, and other expenses, which are approved by
the Secretary of the Treasury under regulations and consistent with
the purposes of the federal ABLE Act.

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begin insert SEC. 2. end insert   

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begin insert Section 4877 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

4877.  

(a) There is hereby created an instrumentality of the
State of California to be known as the California ABLE Program
Trust.

(b) The purposes, powers, and duties of the California ABLE
Program Trust are vested in, and shall be exercised by, the board.

(c) The board, in the capacity of trustee, shall have the power
and authority to do all of the following:

(1) Sue and be sued.

(2) Make and enter into contracts necessary for the
administration of the ABLE program trust, and engage personnel,
including consultants, actuaries, managers, counsel, and auditors,
as necessary for the purpose of rendering professional, managerial,
and technical assistance and advice.

(3) Adopt a corporate seal and change and amend it from time
to time.

(4) Cause moneys in the program fund to be held and invested
and reinvested.

(5) Accept any grants, gifts, appropriations, and other moneys
from any unit of federal, state, or local government or any other
person, firm, partnership, or corporation for deposit to the
administrative fund or the program fund.

(6) Enter into agreements with designated beneficiaries or
eligible individuals to establish and maintain an ABLE account.

(7) Make provisions for the payment of costs of administration
and operation of the ABLE program trust.

(8) Carry out the duties and obligations of the ABLE program
trust pursuant to this chapter and the federal ABLE Act pursuant
to Section 529A of the Internal Revenue Code and federal
regulations issued pursuant to that code, and have any other powers
as may be reasonably necessary for the effectuation of the purposes,
objectives, and provisions of this chapter.

(9) Carry out studies and projections in order to advise
designated beneficiaries or eligible individuals regarding present
and estimated future qualified disability expenses and the levels
of financial participation in the ABLE program trust required in
order to assist designated beneficiaries or eligible individuals.

(10) Participate in any other way in any federal, state, or local
governmental program for the benefit of the ABLE program trust.

(11) Promulgate, impose, and collect administrative fees and
charges in connection with transactions of the ABLE program
trust, and provide for reasonable service charges, including
penalties for cancellations.

(12) Set minimum and maximum investment levels.

(13) Administer the funds of the ABLE program trust.

(14) Procure insurance against any loss in connection with the
property, assets, or activities of the ABLE program trust.

(15) Procure insurance indemnifying any member of the board
from personal loss or liability resulting from a member’s action
or inaction as a member of the board.

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(d) (1) The board may enter into a multistate contract with an
account servicer in order to implement this chapter.

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(2) The board may enter into a long-term contract with an
account servicer that allows the account servicer to recoup costs
from administering ABLE accounts in the first years of
administration.

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(3) Subdivision (a) of Section 10365.5 of the Public Contract
Code does not apply to this subdivision.

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(d)

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begin insert (e) end insert  The Treasurer shall, on behalf of the board, appoint an
executive director, who shall not be a member of the board and
who shall serve at the pleasure of the board. The Treasurer shall
determine the duties of the executive director and other staff as
necessary and set his or her compensation. The board may authorize
the executive director to enter into contracts on behalf of the board
or conduct any business necessary for the efficient operation of
the board.

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SECTION 1.  

Section 1785.11.2 of the Civil Code is amended
to read:

1785.11.2.  

(a) (1) 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. 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.
“Security freeze” means a notice placed in a consumer’s credit
report, at the request of the consumer or representative, 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 consumer or
representative. 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.

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

(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.

(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.

(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.

(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 consumer or
representative.

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

(d) If the consumer or representative 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 or representative 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 or
representative 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 or representative 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 or representative. 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 or representative
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 or representative does not allow his or her credit
report to be accessed for that specific party or period of time.

(i) If a consumer or representative 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
or representative 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 or representative if the consumer or representative
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 or representative
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.

(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).

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