CUNA Regulatory Comment Call


December 19, 2003

Fed and FTC’s Interim Final and Proposed Rules on FCRA Effective Dates
(Not a Major Rule)

EXECUTIVE SUMMARY

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.coop and to Assistant General Counsel Jeff Bloch at jbloch@cuna.coop; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you would like a copy of the rules, or you may access them on the Internet at the following address: http://www.federalreserve.gov/boarddocs/press/bcreg/2003/20031216/default.htm

BACKGROUND

President Bush early this month signed into law the FACT Act that permanently extends the federal preemptions for credit reporting under the FCRA. The new law 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. It also contains new restrictions on information sharing and creates a new federal commission that will coordinate financial education efforts at the national, state, and local levels.

The FACT Act will be implemented through a number of new rules that will be developed next year. Access below for a special issue of RegWatch that describes the significant provisions of the FACT Act: http://www.cuna.org/reg_advocacy/member/regwatch/regwatch.html

The FACT Act requires the Fed and the FTC to adopt final rules establishing the effective dates for provisions of the FACT Act that do not already have specific effective dates. These rules must be adopted within two months after the enactment of the FACT Act, which will be by February 4, 2004.

DESCRIPTION OF THE INTERIM FINAL AND PROPOSED RULES

The Fed and FTC are requesting comment on interim final and proposed rules that will establish effective dates for certain provisions of the FACT Act. The interim final rules will establish December 31, 2003 as the effective date for the preemption provisions of the FACT Act, as Congress had intended.

The proposed rules establish effective dates for other provisions of the FACT Act that do not already have effective dates. These rules will establish March 31, 2004 as the effective date for provisions of the FACT Act that do not require significant changes to business procedures. With regard to other provisions that will likely entail significant changes to business procedures, the proposed rules will make these provisions effective on December 1, 2004 to allow a reasonable time to establish systems to comply with the statute.

Many of the significant provisions of the FACT Act that impact credit unions will have an effective date of December 1, 2004. This is generally the latest effective date permitted under the FACT Act. The provisions with an effective date of March 31, 2004 are a small number of those that clarify or address issues that are self-effectuating and do not need significant preparation. These include certain statutes of limitation provisions, definitions, clerical amendments, certain liability and enforcement provisions for those that furnish information on delinquent accounts, actions that can be taken against credit bureaus, and provisions that address certain sharing of information in connection with employee investigations.

QUESTIONS TO CONSIDER REGARDING THE FED AND FTC INTERIM AND FINAL RULES REGARDING FACT ACT EFFECTIVE DATES

Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com