CUNA Comment Letter

Interim Final Rules for the FACT Act

January 12, 2004

Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

Re: Docket No. R-1171 - Interim Final Rules for the FACT Act

Dear Ms. Johnson:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the interim final and proposed rules regarding the effective dates of various provisions of the Fair and Accurate Credit Transactions (FACT) Act. CUNA represents more than 90 percent of our nation’s 10,000 federal and state- chartered credit unions.

The FACT Act was enacted last month and permanently extends the federal preemptions for credit reporting under the Fair Credit Reporting Act. It also creates a number of important new consumer protections designed to help prevent identity theft and assist consumers who become victims of this rapidly growing crime.

The FACT Act also requires the Federal Reserve Board (Board) and the Federal Trade Commission (FTC) to issue rules establishing effective dates for provisions of the FACT Act that do not already have specific dates. Under the interim final and proposed rules, the Board and the FTC will establish December 31, 2003 as the effective date for the preemption provisions of the FACT Act. For other provisions, December 1, 2004 will be the effective date for provisions that may require significant changes to business procedures, and March 31, 2004 will be the date for a small number of provisions that will not require such changes.

CUNA generally supports the approach of the Board and FTC with regard to the effective dates. The December 1, 2004 effective date for a number of these provisions provides the maximum amount of time permitted under the FACT Act, which we believe is the proper approach given the scope and complexity of the Act. Credit unions will need as much time as possible in order to comply with these provisions, as well as provide appropriate training for their staffs.

We also appreciate the recent clarification from the Board and FTC that the state laws on identity theft will remain in effect until the FACT Act provisions regarding identity theft become effective. This clarification was issued after the interim final and proposed rules were issued in response to concerns from consumer organizations that the December 31, 2003 effective date for the preemption provisions could result in situations in which state consumer protection laws would be preempted prior to the effective date of the corresponding FACT Act provisions. This would leave a gap in consumer protection from December 31, 2003 until the date that these provisions are effective. We agree with the Board, FTC, and consumer organizations that the state laws should be effective during this time period to ensure that there are consumer protections in place.

Thank you for the opportunity to comment on the interim final and proposed rules regarding the effective dates of various provisions of the FACT Act. If you or other Board staff have questions about our comments, please give Associate General Counsel Mary Dunn or me a call at (202) 638-5777.

Sincerely,

Jeffrey Bloch
Assistant General Counsel