2005-2006 Bill 76: Consumer Credit Report Rights Act; Fair Credit Reporting Act - South

1 South Carolina General Assembly 2 116th Session, 2005-2006 3 4 S. 76 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Senators Knotts and Elliott 10 Document Path: l:\council\bills\ms\7016mm05.doc 11 Companion/Similar bill(s): 3508 12 13 Introduced in the Senate on January 11, 2005 14 Currently residing in the Senate Committee on Banking and Insurance 15 16 Summary: Consumer Credit Report Rights Act; Fair Credit Reporting Act 17 18 19 HISTORY OF LEGISLATIVE ACTIONS 20 21 Date Body Action Description with journal page number 22 12/8/2004 Senate Prefiled 23 12/8/2004 Senate Referred to Committee on Banking and Insurance 24 1/11/2005 Senate Introduced and read first time SJ-116 25 1/11/2005 Senate Referred to Committee on Banking and Insurance SJ-116 26 27 28 VERSIONS OF THIS BILL 29 30 12/8/2004 31 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING CHAPTER 46 TO TITLE 15 SO AS TO 13 ENACT THE SOUTH CAROLINA FAIR CREDIT-REPORTING 14 ACT, TO PROVIDE THAT UNFAIR METHODS OF 15 REPORTING CREDIT HISTORY AND UNFAIR OR 16 DECEPTIVE ACTS IN THE CONDUCT OF CREDIT 17 REPORTING ARE UNLAWFUL, TO PROVIDE THAT THE 18 FEDERAL FAIR CREDIT REPORTING ACT AS 19 INTERPRETED BY THE FEDERAL TRADE COMMISSION 20 AND FEDERAL COURTS MUST FURNISH GUIDANCE IN 21 CONSTRUING THIS CHAPTER, TO PROVIDE PENALTIES 22 FOR WILFUL AND NEGLIGENT NONCOMPLIANCE WITH 23 THE TERMS OF THIS CHAPTER, TO PROVIDE FOR THE 24 JURISDICTION OF THE STATE COURTS TO HEAR 25 ACTIONS BROUGHT PURSUANT TO THIS CHAPTER, AND 26 TO PROVIDE, WITH EXCEPTIONS, A TWO-YEAR STATUTE 27 OF LIMITATIONS TO SEEK RELIEF PURSUANT TO THIS 28 CHAPTER; AND BY ADDING PART 4 TO CHAPTER 5, 29 TITLE 37 SO AS TO ENACT THE SOUTH CAROLINA 30 CONSUMER CREDIT REPORT RIGHTS ACT AND TO 31 PROVIDE FOR DEFINITIONS, THE RELEASE OF A FREE 32 WRITTEN OR ELECTRONIC DISCLOSURE COPY OF A 33 CONSUMER’S CREDIT REPORT, WRITTEN NOTICE TO A 34 CONSUMER OF HIS RIGHT TO REQUEST A REPORT, A 35 TOLL-FREE TELEPHONE NUMBER FOR A DISCLOSURE 36 REQUEST, AND CIVIL PENALTIES FOR VIOLATIONS AND 37 FOR FAILURE TO CORRECT INACCURACIES IN THE 38 REPORT. 39 40 Whereas, the General Assembly finds that: 41 (1) the banking system depends upon fair and accurate credit 42 reporting. Inaccurate credit reports directly impair the efficiency

1 [76] 1 1 of the banking system and unfair credit-reporting methods 2 undermine the public confidence essential to the continued 3 functioning of the banking system; 4 (2) an elaborate mechanism has been developed for 5 investigating and evaluating the creditworthiness, credit standing, 6 credit capacity, character, and general reputation of consumers; 7 (3) consumer credit-reporting agencies have assumed a vital 8 role in assembling and evaluating consumer credit and other 9 information on consumers; 10 (4) the need exists to ensure that consumer credit-reporting 11 agencies exercise their grave responsibilities with fairness, 12 impartiality, and a respect for the consumer’s privacy; 13 (5) the need exists also to ensure both access of the consumer 14 to his credit report and the ability to enforce corrections to it; and 15 Whereas, the purpose of this act is to require consumer 16 credit-reporting agencies to adopt reasonable procedures for 17 meeting the needs of commerce for consumer credit, personnel, 18 insurance, and other information in a manner which is fair and 19 equitable to the consumer and with due regard to the 20 confidentiality, accuracy, relevancy, and proper utilization of this 21 information in accordance with the requirements of this act and the 22 federal Fair Credit Reporting Act, 15 U.S. Code 1681; and 23 Whereas, the further purpose of this act is to afford the citizens 24 of South Carolina access to their credit reports and the opportunity 25 to enforce liability established pursuant to this act in the courts of 26 this State. 27 28 Be it enacted by the General Assembly of the State of South 29 Carolina: 30 31 SECTION 1. Title 15 of the 1976 Code is amended by adding: 32 33 “CHAPTER 46 34 35 Fair Credit Reporting 36 37 Section 15-46-10. This chapter may be cited as the ‘South 38 Carolina Fair Credit Reporting Act’. 39 40 Section 15-46-20. (A) Unfair methods of reporting credit 41 history and unfair or deceptive acts or practices in the conduct of 42 credit reporting are unlawful.

1 [76] 2 1 (B) It is the intent of the General Assembly that in construing 2 subsection (A) the courts be guided by the interpretations given by 3 the Federal Trade Commission and the federal courts to the federal 4 Fair Credit Reporting Act, 15 U.S. Code 1681, as amended. 5 6 Section 15-46-30. For purposes of this chapter, a person acting 7 as a consumer credit-reporting agency shall furnish a consumer 8 credit report only pursuant to the circumstances permitted in the 9 federal Fair Reporting Act, 15 U.S. Code 1681. Also, for 10 purposes of this chapter, a ‘person’ means a natural person, firm, 11 corporation, partnership, or other business entity. 12 13 Section 15-46-40. A person who wilfully fails to comply with a 14 requirement of this chapter is liable to the consumer for: 15 (1) actual damages sustained by the consumer as a result of the 16 wilful failure to comply or damages of not less than one hundred 17 dollars and not more than one thousand dollars; 18 (2) punitive damages as allowed by law; and 19 (3) reasonable attorney’s fees and costs as determined by the 20 court in a successful action to enforce liability pursuant to this 21 section. 22 23 Section 15-46-50. A person who is negligent in failing to 24 comply with a requirement imposed by this chapter is liable to the 25 consumer for: 26 (1) actual damages sustained by the consumer as a result of the 27 failure; and 28 (2) reasonable attorney’s fees and costs as determined by the 29 court in a successful action to enforce liability pursuant to this 30 section. 31 32 Section 15-46-60. A person who obtains a consumer credit 33 report from a consumer credit-reporting agency under false 34 pretenses or knowingly without a permissible purpose is liable to 35 the consumer credit-reporting agency for: 36 (1) actual damages sustained by the consumer 37 credit-reporting agency or one thousand dollars, whichever is 38 greater; 39 (2) punitive damages as allowed by law; and 40 (3) reasonable attorney’s and costs as determined by the 41 court in a successful action to enforce liability pursuant to this 42 section. 43

1 [76] 3 1 Section 15-46-70. Upon a finding by the court that an 2 unsuccessful pleading, motion, or other paper was filed in 3 connection with an action pursuant to this chapter in bad faith or 4 for the purposes of harassment, the court shall award to the 5 prevailing party attorney’s fees reasonable in relation to the work 6 expended in responding to the pleading, motion, or other paper. 7 8 Section 15-46-80. An action to enforce liability established 9 pursuant to this chapter may be brought in a South Carolina state 10 court of record in the county where the plaintiff resides. The 11 action may be brought within two years from the date on which the 12 liability arises, except that if a defendant materially and wilfully 13 has misrepresented information which is required to be disclosed 14 to an individual pursuant to this chapter and the misrepresented 15 information is material to the establishment of the defendant’s 16 liability to that individual pursuant to this chapter, the action may 17 be brought within two years after the discovery of the 18 misrepresentation by the individual. 19 20 Section 15-46-90. The remedies established pursuant to this 21 chapter are cumulative and in addition to all other remedies 22 provided by law.” 23 24 SECTION 2. Chapter 5, Title 37 of the 1976 Code is amended by 25 adding: 26 27 “Part 4 28 29 Consumer Credit Report Rights 30 31 Section 37-5-401. This part may be cited as the ‘South Carolina 32 Consumer Credit Report Rights Act’. 33 34 Section 37-5-402. As used in this part, unless the context 35 otherwise requires: 36 (1) ‘Adverse action’ includes: 37 (a) the denial of, increase in charge for, or reduction in the 38 amount of insurance for personal, family, or household purposes; 39 (b) the denial of employment or other decision for 40 employment purposes that adversely affects a current or 41 prospective employee; and

1 [76] 4 1 (c) an action or determination with respect to a consumer’s 2 application for credit pursuant to a credit arrangement that is 3 adverse to the consumer’s interests. 4 (2) ‘Consumer’ means a natural person residing in the State of 5 South Carolina who undertakes a transaction for personal, family, 6 or household purposes. 7 (3)(a) ‘Consumer report’ means any written, oral, electronic, or 8 other communication or information by a consumer 9 credit-reporting agency regarding a consumer’s creditworthiness, 10 credit standing, credit capacity, debts, character, general 11 reputation, personal characteristics, or mode of living that is used 12 or expected to be used or collected, in whole or in part, for 13 employment purposes, for the purpose of establishing a 14 consumer’s eligibility for consumer credit or consumer insurance, 15 or for another purpose authorized pursuant to the federal ‘Fair 16 Credit Reporting Act’. 17 (b) ‘Consumer report’ does not include: 18 ( i) a report containing information as to a transaction 19 between the consumer and the person making the report; 20 ( ii) an authorization or approval by the issuer of a credit 21 card or similar device, directly or indirectly, of a specific extension 22 of credit; or 23 (iii) a report in which a person conveys an adverse decision 24 in response to a request from a third party to make a specific 25 extension of credit, directly or indirectly, to the consumer, if the 26 third party advises the consumer of the name and address of the 27 person to whom the request was made and the person makes the 28 required disclosures to the consumer pursuant to the provisions of 29 the federal ‘Fair Credit Reporting Act’. 30 (4)(a) ‘Consumer credit-reporting agency’ means a person who, 31 for monetary fees or dues or on a cooperative nonprofit basis, 32 regularly engages in the practice of assembling or evaluating 33 consumer credit information or other information about consumers 34 for the purpose of furnishing consumer reports to third parties. 35 (b) ‘Consumer credit-reporting agency’ does not include a 36 business entity that provides only check verification or check 37 guarantee services. 38 (5) ‘Creditworthiness’ means an entry in a consumer’s credit 39 file that affects the ability of a consumer to obtain and retain 40 credit, employment, business or professional licenses, investment 41 opportunities, or insurance. Entries affecting creditworthiness 42 include, but are not limited to, payment information, defaults,

1 [76] 5 1 judgments, liens, bankruptcies, collections, records of arrest and 2 indictments, and multiple credit inquiries. 3 (6) ‘Employment purposes’ means the use of a consumer 4 report for the purpose of evaluating a consumer for employment, 5 promotion, reassignment, or retention as an employee. 6 (7) ‘File’ means all information on a consumer that is recorded 7 and retained by a consumer credit-reporting agency, regardless of 8 how the information is stored. 9 (8) ‘Person’ means a natural person, firm, corporation, or 10 partnership. 11 12 Section 37-5-403. (A) A consumer credit-reporting agency, 13 upon the written or oral request of a consumer, shall provide the 14 consumer with one disclosure copy of his file each year at no 15 charge. 16 (B) Upon the written, electronic, or oral request of the 17 consumer and proper identification, a consumer credit-reporting 18 agency shall disclose in writing or by electronic mail and in a 19 clear, accurate, and understandable manner, all information 20 pertaining to the consumer in its files at the time of the request 21 including, but not limited to: 22 (1) the names of all persons requesting credit information 23 pertaining to the consumer during the previous twelve-month 24 period and the date of each request; 25 (2) a set of instructions describing how information is 26 disclosed in the file; and 27 (3) a toll-free number for use in resolving a dispute if the 28 consumer submits a written dispute to the consumer 29 credit-reporting agency. 30 (C)(1) A consumer credit-reporting agency shall notify a 31 consumer by first-class mail that the consumer may have a copy of 32 his consumer file at no charge, and of a toll-free telephone number 33 to call to request the copy, if, within a twelve-month period: 34 (a) the consumer credit-reporting agency receives three 35 credit inquiries pertaining to the consumer; or 36 (b) the consumer credit-reporting agency receives a report 37 adding negative information to a consumer’s file. 38 (2) A consumer credit-reporting agency shall send only one 39 letter to a consumer in a twelve-month period even if more than 40 one of the events described in item (1) of this subsection occurs in 41 that period. 42 (3) A letter mailed to a consumer pursuant to this subsection 43 may not contain identifying information particular to that

1 [76] 6 1 consumer including, but not limited to, social security number, 2 place of employment, date of birth, or mother’s maiden name. 3 (4) A letter mailed to a consumer pursuant to this subsection 4 may be a form letter, except that the letter must advise the 5 consumer of the number and types of events, as described in item 6 (1) of this subsection, relating to the consumer. The letter must 7 include a notice or separate form the consumer may complete and 8 return to the consumer credit-reporting agency to request a free 9 copy of the consumer’s credit report. 10 11 Section 37-5-404. (A) A consumer credit-reporting agency 12 may not impose a charge for: 13 (1) a request for a copy of the consumer’s file made within 14 sixty days after adverse action is taken; 15 (2) notice to a person designated by the consumer, pursuant 16 to the applicable provisions of the federal ‘Fair Credit Reporting 17 Act’, of the deletion of inaccurate or unverifiable information; 18 (3) instructions for understanding the information presented 19 on the consumer report and a toll-free telephone number for 20 consumers to obtain additional assistance concerning the consumer 21 report; or 22 (4) the first copy of a consumer disclosure provided to a 23 consumer each calendar year pursuant to Section 37-5-403(A). 24 (B) If the consumer requests more than one disclosure copy of 25 his file during a year, the consumer credit-reporting agency may 26 charge the consumer not more than eight dollars for each 27 additional disclosure copy. 28 29 Section 37-5-405. (A) A consumer credit-reporting agency 30 that wilfully violates a provision of this part is liable for three 31 times the amount of actual damages or one thousand dollars for 32 each incident, whichever is greater, as well as reasonable 33 attorney’s fees and costs. 34 (B) A consumer credit-reporting agency that negligently 35 violates this part is liable for the greater of actual damages or one 36 thousand dollars for each incident, as well as reasonable attorney’s 37 fees and costs. 38 (C) In addition to the damages assessed pursuant to subsections 39 (A) and (B), if the injury is to the consumer’s creditworthiness, 40 credit standing, credit capacity, character, general reputation, 41 employment options, or eligibility for insurance, and results from 42 inaccuracies in the consumer’s file and the consumer’s file is not 43 corrected by the consumer credit-reporting agency within ten days

1 [76] 7 1 after the entry of a judgment for damages, the assessed damages 2 must be increased to one thousand dollars each day for each 3 inaccurate entry that remains in the consumer’s file until the 4 inaccurate entry is corrected. 5 6 Section 37-5-406. The provisions of this part are cumulative, 7 and an action taken pursuant to this part is not an election to take 8 that action to the exclusion of other action authorized by law.” 9 10 SECTION 3. The repeal or amendment by this act of any law, 11 whether temporary or permanent or civil or criminal, does not 12 affect pending actions, rights, duties, or liabilities founded thereon, 13 or alter, discharge, release or extinguish any penalty, forfeiture, or 14 liability incurred under the repealed or amended law, unless the 15 repealed or amended provision shall so expressly provide. After 16 the effective date of this act, all laws repealed or amended by this 17 act must be taken and treated as remaining in full force and effect 18 for the purpose of sustaining any pending or vested right, civil 19 action, special proceeding, criminal prosecution, or appeal existing 20 as of the effective date of this act, and for the enforcement of 21 rights, duties, penalties, forfeitures, and liabilities as they stood 22 under the repealed or amended laws. 23 24 SECTION 4. If any section, subsection, paragraph, subparagraph, 25 sentence, clause, phrase, or word of this act is for any reason held 26 to be unconstitutional or invalid, such holding shall not affect the 27 constitutionality or validity of the remaining portions of this act, 28 the General Assembly hereby declaring that it would have passed 29 this chapter and this part, and each and every section, subsection, 30 paragraph, subparagraph, sentence, clause, phrase, and word 31 thereof, irrespective of the fact that any one or more other sections, 32 subsections, paragraphs, subparagraphs, sentences, clauses, 33 phrases, or words hereof may be declared to be unconstitutional, 34 invalid, or otherwise ineffective. 35 36 SECTION 5. This act takes effect upon approval by the 37 Governor. 38 ----XX---- 39

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