California Legislature—2015–16 Regular Session

Assembly Bill No. 1581

Introduced by Assembly Member Rodriguez

January 5, 2016

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

LEGISLATIVE COUNSEL’S DIGEST

AB 1581, as introduced, Rodriguez. Consumer credit reports: security freezes: fees.

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. Existing law authorizes a consumer credit reporting agency to charge a specified fee to a consumer 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 as specified. Under existing law, with regard to a consumer who is 65 years of age or older, a consumer credit reporting agency is prohibited from charging a fee for the placement of an initial security freeze, but is authorized to charge a fee not to exceed a specified amount 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.

This bill would prohibit a consumer credit reporting agency from charging any of those fees.

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

(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.

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

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

(i) If a consumer 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
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
if the consumer 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)  begin delete (1) Except as provided in paragraph (2), this title does not
prevent a end delete begin insert A end insert consumer credit reporting agency begin delete from charging a fee
of no more than ten dollars ($10) end delete begin insert shall not charge a fee end insert to begin delete a
consumer end delete begin insert any consumer 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 begin delete report, except that a
consumer credit reporting agency may not charge a fee end delete begin insert report. A
consumer credit reporting agency shall also not charge a fee end insert 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.

begin delete

(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.

end delete

(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.