CUNA Comment Letter

Letter to FTC on Fair Credit Reporting Act (FCRA) Proposed Rule

January 31, 2001

The Honorable Robert Pitofsky
Federal Trade Commission, Room H-159
600 Pennsylvania Avenue, N.W.
Washington, DC 20580

RE: Proposed Commentary Regarding Interpretation of the Fair Credit Reporting Act, 16 CFR Part 600

Dear Chairman Pitofsky:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the Federal Trade Commission’s (FTC’s) proposed commentary regarding the interpretation of the Fair Credit Reporting Act (FCRA). The FTC and other regulators issued privacy rules last year that implement the privacy provisions of the Gramm-Leach-Bliley Act, and the proposed commentary is intended to conform certain requirements of the FCRA with these privacy rules to the extent possible. CUNA represents more than 90 percent of our nation’s 10,500 state and federal credit unions.

The FTC proposed commentary will apply to approximately 4,200 state-chartered credit unions. CUNA is also interested in the FTC commentary because it will apply to certain credit union service organizations (CUSOs). CUSOs are limited partnerships, corporations, or limited liability companies in which a credit union has made an investment and/or loan. CUSOs provide services that primarily serve credit unions or members of affiliated credit unions.

While the proposed commentary applies to all state-chartered credit unions, the FTC privacy rules that were issued last year only apply to the approximately 400 of these state-chartered credit unions that are not federally insured. In the Supplementary Information portion of these rules, the FTC recognized that the National Credit Union Administration (NCUA) had also issued privacy rules that are specifically tailored for federal credit unions. In recognition of these NCUA rules, 16 CFR § 313.2 of the FTC privacy rules states that compliance by non-federally insured credit unions with credit union examples in the NCUA rules will constitute compliance with the FTC rules.

On October 19, 2000, the NCUA Board approved proposed rules regarding the FCRA that will apply to federal credit unions only and parallel the proposed commentary that was issued by the FTC. Similar to the approach contained in the FTC privacy rules that were issued last year, we suggest that the FTC allow all state-chartered credit unions to follow the final FCRA rules that will be issued by NCUA, while preserving the FTC’s enforcement authority over these credit unions.

As with the privacy rules, NCUA’s FCRA rules will address the unique membership features of credit unions, as well as determine the ownership interest that federal credit unions must have in CUSOs in order for these entities to be considered "affiliates." As with the privacy rules, NCUA’s proposed FCRA rules currently allow CUSOs to be considered affiliates of all the credit unions that have an ownership interest in the CUSO, regardless of the size of the ownership interest, if the CUSO is at least 67% owned by federal or state-chartered credit unions.

This unique provision recognizes that CUSOs are subject to restrictions that do not apply to other types of affiliates. However, this change will not apply to information that is disclosed by the CUSO to the credit union. We suggest that FTC’s commentary be modified accordingly with regard to the CUSOs that are subject to the FTC’s jurisdiction.

This and other variations by NCUA will be important to the cooperative nature of the credit union movement and will be compatible with the intent of Congress that agencies should take into consideration any adverse competitive effects upon small commercial banks, thrifts, and credit unions. We also believe that allowing all credit unions to rely on the same language will improve compliance because all credit unions can be provided the same training opportunities and supervisory oversight by their examiners.

We have also attached our comment letter to NCUA in response to the proposed FCRA rules that will apply to federal credit unions. This letter contains a number of other comments that you may want to consider prior to issuing a final version of the commentary.

Thank you for the opportunity to comment on the FTC’s proposed commentary regarding the interpretation of the FCRA. If you or agency staff have questions about our comments, please give me a call at 202-218-7795.


Jeffrey Bloch
Assistant General Counsel

Click here for CUNA's comment letter to NCUA.