senate Bill S3278

Implements provisions to protect credit reports of certain consumers

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 31 / Jan / 2013
    • REFERRED TO CONSUMER PROTECTION
  • 08 / Jan / 2014
    • REFERRED TO CONSUMER PROTECTION

Summary

Implements provisions to protect credit reports of certain consumers.

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Bill Details

Versions:
S3278
Legislative Cycle:
2013-2014
Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Amd §380-a, rel §380-u to be §380-v, add §380-u, Gen Bus L
Versions Introduced in 2011-2012 Legislative Cycle:
S7363

Sponsor Memo

BILL NUMBER:S3278

TITLE OF BILL: An act to amend the general business law, in relation
to implementing provisions to protect credit reports of certain
consumers

PURPOSE: This bill authorizes specified representatives to request a
security freeze on the consumer credit report of children under the
age of 16 and individuals under guardianship; requires a consumer
credit reporting agency to place a security freeze for a specified
protected consumer under specified circumstances and within a
specified period of time; authorizes consumer credit reporting agency
to create a credit report for a protected consumer who does not have a
credit report.

SUMMARY OF PROVISIONS:

Section 1 of the bill amends Section 380-a, subsection (m) of the
General Business Law by adding definitions:

Section 3 amends the general business law by adding a new section,

Section 380-u, to read as follows:

Subsection A excludes various entities from the provisions of this
bill Subsection 15 requires:

1. a consumer credit reporting agency to place a freeze on a protected
consumer's account if said protected consumer's representative
requests a security freeze on the account; and provides sufficient
identification that they are authorized to do so on behalf of the
protected consumer

2. a consumer credit reporting agency to create a credit report for
the protected consumer if he or she does not already have one.

Subsection C sets the time requirements for a consumer credit
reporting agency to place a security freeze once a request has been
received; requires a consumer credit reporting agency to send a
written confirmation of the placement of a security freeze to the
protected consumer's representative

Subsection D relates to the release of a protected consumer's credit
report.

Subsection E relates to specific instances under which a security
freeze on a protected consumer's credit report may be removed.

Subsection F relates to the procedure by which .a security freeze can
be removed.

Subsection G required a consumer credit reporting agency to remove a
security freeze within 30 days of receiving an authorized request to
do so.


Subsection H prohibits a consumer credit reporting agency from
charging a fee for any services performed under this section except
for the placement or removal of a security freeze; allows for a charge
not to exceed $5.

Subsection I allows a consumer credit reporting agency to remove a
security freeze for a protected consumer or delete a record of a
protected consumer if the security freeze was placed or the record was
created based on a material misrepresentation of fact by the protected
consumer or the protected consumer's representative.

Subsection J requires that when a consumer credit reporting agency
erroneously releases a protected consumer's consumer credit report
subject to a security freeze or any information contained in such
consumer credit report, the consumer credit reporting agency shall
send written notification to the affected protected consumer's
representative within three business days following discovery or
notification of such erroneous release.

Subsection K relates to penalties associated with violations of this
section.

Section 4 adds the effective date.

JUSTIFICATION: At a time when identity theft is an increasing threat
to New Yorkers, children and those unable to care for themselves face
an even greater risk of having their identity stolen. Under current
state law, credit agencies must place a security freeze on the credit
of anyone who requests it. However, they can refuse to freeze the
credit of those who do not have a pre-existing credit report. When
credit bureaus collect data for people applying for credit from
lending partners, they get a name and. Social Security number, but
they don't have data to double check someone's actual age due to a
lack of information sharing between credit reporting agencies and the
Social Security Administration.

Since most children do not have a line of credit or other credit
history, they do not have a preexisting credit report. Thus, the only
way a credit report can be created is if the child opens a line of
credit, which is unlikely, or someone fraudulently opens a line of
credit under their name and social security number, which is becoming
increasingly common. A study released last year by ID Analytics, a
California-based consumer risk management firm, found that about
140,000 identity frauds against minors occur each year. Additionally,
a study by researchers at Carnegie Mellon found that children are more
likely than adults to be targeted for identity theft. Parents cannot
protect their children from identity theft and sometimes, a child
won't even realize they have been the victim of identity theft until
years later.when they try to get a loan or open a credit card account.

This legislation would seek to correct this problem by requiring
consumer credit reporting agencies to create a credit report for a
child under 16 years of age when requested by the childts parent or
guardian. The child's representative could also place a security
freeze on the child's credit report, which will allow parents to be
proactive in protecting their children from identity theft. In


addition, these same protections will be provided to incapacitated
individuals under the care of a guardianship.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect on the ninetieth day after
it has become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3278

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer Protection

AN ACT to amend the general business law, in  relation  to  implementing
  provisions to protect credit reports of certain consumers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision (m) of section 380-a of  the  general  business
law,  as  added by chapter 63 of the laws of 2006, is amended to read as
follows:
  (m) The term "security freeze" or "freeze" means:
  1. a notice placed in the consumer credit report of or relating  to  a
consumer,  at  the  request  of  such  consumer  and  subject to certain
exceptions, that prohibits the consumer  credit  reporting  agency  from
releasing the consumer credit report, the contents of such report or the
credit score of such consumer[.];
  2. IF A CONSUMER CREDIT REPORTING AGENCY DOES NOT HAVE A FILE PERTAIN-
ING TO A PROTECTED CONSUMER, A RESTRICTION THAT:
  A. IS PLACED ON THE PROTECTED CONSUMER'S RECORD IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION; AND
  B.  PROHIBITS  THE  CONSUMER CREDIT REPORTING AGENCY FROM RELEASING TO
PROTECTED CONSUMER'S RECORD EXCEPT AS PROVIDED IN SECTION THREE  HUNDRED
EIGHTY-U OF THIS ARTICLE; OR
  3.  IF A CONSUMER CREDIT REPORTING AGENCY HAS A FILE PERTAINING TO THE
PROTECTED CONSUMER, A RESTRICTION THAT:
  A. IS PLACED ON THE PROTECTED CONSUMER'S CONSUMER REPORT IN ACCORDANCE
WITH SECTION THREE HUNDRED EIGHTY-U OF THIS ARTICLE; AND
  B. PROHIBITS THE CONSUMER CREDIT REPORTING AGENCY FROM  RELEASING  THE
PROTECTED  CONSUMER'S  CONSUMER CREDIT REPORT OR ANY INFORMATION DERIVED
FROM THE PROTECTED CONSUMER'S CONSUMER CREDIT REPORT EXCEPT AS  PROVIDED
IN SECTION THREE HUNDRED EIGHTY-U OF THIS ARTICLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01044-01-3

S. 3278                             2

  S  2.  Section  380-a of the general business law is amended by adding
five new subdivisions (o), (p), (q), (r) and (s) to read as follows:
  (O) THE TERM "PROTECTED CONSUMER" MEANS AN INDIVIDUAL WHO IS:
  1. UNDER THE AGE OF SIXTEEN YEARS AT THE TIME A REQUEST FOR THE PLACE-
MENT OF A SECURITY FREEZE IS MADE; OR
  2.  AN  INCAPACITATED PERSON OR A PROTECTED PERSON FOR WHOM A GUARDIAN
OR CONSERVATOR HAS BEEN APPOINTED.
  (P) THE TERM "RECORD" MEANS A COMPILATION OF INFORMATION THAT:
  1. IDENTIFIES A PROTECTED CONSUMER;
  2. IS CREATED BY A CONSUMER CREDIT REPORTING  AGENCY  SOLELY  FOR  THE
PURPOSE  OF  COMPLYING WITH SECTION THREE HUNDRED EIGHTY-U OF THIS ARTI-
CLE; AND
  3. MAY NOT BE CREATED OR USED TO  CONSIDER  THE  PROTECTED  CONSUMER'S
CREDIT  WORTHINESS, CREDIT STANDING, CREDIT CAPACITY, CHARACTER, GENERAL
REPUTATION, PERSONAL CHARACTERISTICS, OR MODE OF LIVING.
  (Q) THE TERM "REPRESENTATIVE" MEANS A PERSON WHO PROVIDES TO A CONSUM-
ER CREDIT REPORTING AGENCY SUFFICIENT  PROOF  OF  AUTHORITY  TO  ACT  ON
BEHALF  OF  A  PROTECTED  CONSUMER;  INCLUDES,  BUT IS NOT LIMITED TO, A
PARENT OR LEGAL GUARDIAN.
  (R) THE TERM "SUFFICIENT PROOF OF AUTHORITY" MEANS DOCUMENTATION  THAT
SHOWS  A  REPRESENTATIVE  HAS  AUTHORITY TO ACT ON BEHALF OF A PROTECTED
CONSUMER; INCLUDES:
  1. AN ORDER ISSUED BY A COURT OF LAW; OR
  2. A LAWFULLY EXECUTIVE AND VALID POWER OF ATTORNEY; OR
  3. A WRITTEN, NOTARIZED STATEMENT  SIGNED  BY  A  REPRESENTATIVE  THAT
EXPRESSLY DESCRIBES THE AUTHORITY OF THE REPRESENTATIVE TO ACT ON BEHALF
OF A PROTECTED CONSUMER.
  (S) THE TERM "SUFFICIENT PROOF OF IDENTIFICATION" MEANS INFORMATION OR
DOCUMENTATION  THAT  IDENTIFIES A PROTECTED CONSUMER OR A REPRESENTATIVE
OF A PROTECTED CONSUMER; INCLUDES:
  1. A SOCIAL SECURITY NUMBER OR A COPY OF A SOCIAL SECURITY CARD ISSUED
BY THE SOCIAL SECURITY ADMINISTRATION;
  2. A CERTIFIED OR OFFICIAL COPY OF A BIRTH CERTIFICATE ISSUED  BY  THE
ENTITY AUTHORIZED TO ISSUE THE BIRTH CERTIFICATE; OR
  3.  A COPY OF A DRIVER'S LICENSE, AN IDENTIFICATION CARD ISSUED BY THE
DEPARTMENT OF MOTOR VEHICLES, OR ANY OTHER GOVERNMENT-ISSUED IDENTIFICA-
TION.
  S 3. Section 380-u of the general business law, as relettered by chap-
ter 63 of the laws of 2006,  is  relettered  section  380-v  and  a  new
section 380-u is added to read as follows:
  S  380-U.  PROTECTED  CONSUMER CREDIT REPORTING. (A) THIS SECTION DOES
NOT APPLY TO THE USE OF A PROTECTED CONSUMER'S CONSUMER CREDIT REPORT OR
RECORD BY:
  1. A  PERSON  ADMINISTERING  A  CREDIT  FILE  MONITORING  SUBSCRIPTION
SERVICE TO WHICH:
  (I) THE PROTECTED CONSUMER HAS SUBSCRIBED; OR
  (II)  THE  REPRESENTATIVE  OF THE PROTECTED CONSUMER HAS SUBSCRIBED ON
BEHALF OF THE PROTECTED CONSUMER;
  2. A PERSON PROVIDING THE PROTECTED CONSUMER OR THE PROTECTED  CONSUM-
ER'S  REPRESENTATIVE  WITH  A  COPY OF THE PROTECTED CONSUMER'S CONSUMER
CREDIT REPORT ON REQUEST OF THE  PROTECTED  CONSUMER  OR  THE  PROTECTED
CONSUMER'S REPRESENTATIVE; OR
  3. AN ENTITY LISTED IN PARAGRAPH ONE, TWO, THREE, FOUR, FIVE OR SIX OF
SUBDIVISION (M) OF SECTION THREE HUNDRED EIGHTY-T OF THIS ARTICLE.
  (B) 1. A CONSUMER REPORTING AGENCY SHALL PLACE A SECURITY FREEZE FOR A
PROTECTED CONSUMER IF:

S. 3278                             3

  (I)  THE  CONSUMER CREDIT REPORTING AGENCY RECEIVES A REQUEST FROM THE
PROTECTED CONSUMER'S REPRESENTATIVE FOR THE PLACEMENT  OF  THE  SECURITY
FREEZE UNDER THIS SECTION; AND
  (II) THE PROTECTED CONSUMER'S REPRESENTATIVE:
  (A) SUBMITS THE REQUEST TO THE CONSUMER CREDIT REPORTING AGENCY AT THE
ADDRESS  OR  OTHER  POINT  OF  CONTACT AND IN THE MANNER SPECIFIED UNDER
SUBDIVISION (A) OF THIS SECTION;
  (B) PROVIDES TO THE CONSUMER CREDIT REPORTING AGENCY SUFFICIENT  PROOF
OF IDENTIFICATION OF THE CONSUMER AND THE REPRESENTATIVE;
  (C)  PROVIDES TO THE CONSUMER CREDIT REPORTING AGENCY SUFFICIENT PROOF
OF AUTHORITY TO ACT ON BEHALF OF THE PROTECTED CONSUMER; AND
  (D) PAYS TO THE CONSUMER CREDIT REPORTING AGENCY A FEE AS PROVIDED  IN
SUBDIVISION (H) OF THIS SECTION.
  2. IF A CONSUMER CREDIT REPORTING AGENCY DOES NOT HAVE A FILE PERTAIN-
ING  TO  A  PROTECTED CONSUMER WHEN THE CONSUMER CREDIT REPORTING AGENCY
RECEIVES A REQUEST UNDER PARAGRAPH ONE OF THIS SUBDIVISION, THE CONSUMER
CREDIT REPORTING AGENCY SHALL CREATE A RECORD FOR THE PROTECTED  CONSUM-
ER.
  (C)  1.  WITHIN  THIRTY  DAYS AFTER RECEIVING A REQUEST THAT MEETS THE
REQUIREMENTS OF PARAGRAPH ONE OF SUBDIVISION  (B)  OF  THIS  SECTION,  A
CONSUMER  CREDIT  REPORTING AGENCY SHALL PLACE A SECURITY FREEZE FOR THE
PROTECTED CONSUMER.
  2. THE CONSUMER CREDIT REPORTING AGENCY SHALL SEND A WRITTEN CONFIRMA-
TION OF THE PLACEMENT OF THE SECURITY FREEZE TO A  PROTECTED  CUSTOMER'S
REPRESENTATIVE WITHIN FIVE BUSINESS DAYS OF PLACING SUCH FREEZE.
  (D)  UNLESS  A  SECURITY FREEZE FOR A PROTECTED CONSUMER IS REMOVED IN
ACCORDANCE WITH SUBDIVISION (F) OR (I) OF THIS SECTION, A CONSUMER CRED-
IT REPORTING AGENCY MAY NOT RELEASE THE  PROTECTED  CONSUMER'S  CONSUMER
CREDIT  REPORT,  ANY  INFORMATION  DERIVED FROM THE PROTECTED CONSUMER'S
CONSUMER CREDIT REPORT, OR ANY RECORD CREATED FOR THE PROTECTED  CONSUM-
ER.
  (E)  A  SECURITY FREEZE FOR A PROTECTED CONSUMER PLACED UNDER SUBDIVI-
SION (C) OF THIS SECTION SHALL REMAIN IN EFFECT UNTIL:
  1. THE PROTECTED CONSUMER OR THE PROTECTED  CONSUMER'S  REPRESENTATIVE
REQUESTS  THE  CONSUMER  CREDIT  REPORTING AGENCY TO REMOVE THE SECURITY
FREEZE IN ACCORDANCE WITH SUBDIVISION (F) OF THIS SECTION; OR
  2. THE SECURITY FREEZE IS REMOVED IN ACCORDANCE WITH  SUBDIVISION  (I)
OF THIS SECTION.
  (F)  IF  A PROTECTED CONSUMER OR A PROTECTED CONSUMER'S REPRESENTATIVE
WISHES TO REMOVE A SECURITY  FREEZE  FOR  THE  PROTECTED  CONSUMER,  THE
PROTECTED CONSUMER OR THE PROTECTED CONSUMER'S REPRESENTATIVE SHALL:
  1.  SUBMIT  A  REQUEST  FOR  THE REMOVAL OF THE SECURITY FREEZE TO THE
CONSUMER CREDIT REPORTING AGENCY  AT  THE  ADDRESS  OR  OTHER  POINT  OF
CONTACT  AND  IN  THE  MANNER SPECIFIED BY THE CONSUMER CREDIT REPORTING
AGENCY;
  2. PROVIDE TO THE CONSUMER CREDIT REPORTING AGENCY:
  (I) IN THE CASE OF A REQUEST BY THE PROTECTED CONSUMER:
  (A) PROOF THAT THE SUFFICIENT PROOF OF  AUTHORITY  FOR  THE  PROTECTED
CONSUMER'S  REPRESENTATIVE TO ACT ON BEHALF OF THE PROTECTED CONSUMER IS
NO LONGER VALID; AND
  (B) SUFFICIENT PROOF OF IDENTIFICATION OF THE PROTECTED CONSUMER; OR
  (II) IN THE CASE OF A REQUEST BY THE  REPRESENTATIVE  OF  A  PROTECTED
CONSUMER:
  (A)  SUFFICIENT  PROOF OF IDENTIFICATION OF THE PROTECTED CONSUMER AND
THE REPRESENTATIVE; AND

S. 3278                             4

  (B) SUFFICIENT PROOF OF AUTHORITY TO ACT ON BEHALF  OF  THE  PROTECTED
CONSUMER; AND
  (C)  PAY  TO THE CONSUMER CREDIT REPORTING AGENCY A FEE AS PROVIDED IN
SUBDIVISION (H) OF THIS SECTION.
  (G) WITHIN THIRTY DAYS  AFTER  RECEIVING  A  REQUEST  THAT  MEETS  THE
REQUIREMENTS  OF  SUBDIVISION  (F)  OF THIS SECTION, THE CONSUMER CREDIT
REPORTING AGENCY SHALL REMOVE THE  SECURITY  FREEZE  FOR  THE  PROTECTED
CONSUMER.
  (H)  1.  EXCEPT  AS  PROVIDED  IN PARAGRAPH TWO OF THIS SUBDIVISION, A
CONSUMER CREDIT REPORTING AGENCY MAY NOT CHARGE A FEE  FOR  ANY  SERVICE
PERFORMED UNDER THIS SECTION.
  2. A CONSUMER CREDIT REPORTING AGENCY MAY CHARGE A REASONABLE FEE, NOT
EXCEEDING  FIVE  DOLLARS,  FOR  EACH  PLACEMENT OR REMOVAL OF A SECURITY
FREEZE FOR A PROTECTED CONSUMER.
  3. NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH TWO  OF  THIS  SUBDIVI-
SION,  A  CONSUMER  CREDIT REPORTING AGENCY MAY NOT CHARGE ANY FEE UNDER
THIS SECTION IF THE PROTECTED CONSUMER'S REPRESENTATIVE:
  (I) HAS OBTAINED A  REPORT  OF  ALLEGED  IDENTITY  FRAUD  AGAINST  THE
PROTECTED CONSUMER; AND
  (II)  PROVIDES  A  COPY OF THE REPORT TO THE CONSUMER CREDIT REPORTING
AGENCY.
  (I) A CONSUMER CREDIT REPORTING AGENCY MAY REMOVE  A  SECURITY  FREEZE
FOR  A  PROTECTED CONSUMER OR DELETE A RECORD OF A PROTECTED CONSUMER IF
THE SECURITY FREEZE WAS PLACED OR THE RECORD  WAS  CREATED  BASED  ON  A
MATERIAL  MISREPRESENTATION  OF  FACT  BY  THE PROTECTED CONSUMER OR THE
PROTECTED CONSUMER'S REPRESENTATIVE.
  (J) WHEN A CONSUMER CREDIT REPORTING  AGENCY  ERRONEOUSLY  RELEASES  A
PROTECTED CONSUMER'S CONSUMER CREDIT REPORT SUBJECT TO A SECURITY FREEZE
OR ANY INFORMATION CONTAINED IN SUCH CONSUMER CREDIT REPORT, THE CONSUM-
ER  CREDIT  REPORTING  AGENCY  SHALL  SEND  WRITTEN  NOTIFICATION TO THE
AFFECTED PROTECTED CONSUMER'S REPRESENTATIVE WITHIN THREE BUSINESS  DAYS
FOLLOWING  DISCOVERY  OR  NOTIFICATION  OF  SUCH ERRONEOUS RELEASE. SUCH
NOTIFICATION SHALL ALSO INFORM THE PROTECTED CONSUMER OF THE  NATURE  OF
THE  INFORMATION  RELEASED  AND IDENTIFY AND PROVIDE CONTACT INFORMATION
FOR THE RECIPIENT OF SUCH INFORMATION OR CONSUMER CREDIT REPORT.
  (K) WHENEVER THERE SHALL BE A VIOLATION OF THIS  SECTION,  APPLICATION
MAY  BE  MADE  BY  THE ATTORNEY GENERAL IN THE NAME OF THE PEOPLE OF THE
STATE OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION BY A SPECIAL
PROCEEDING TO ISSUE AN INJUNCTION, AND UPON NOTICE TO THE  DEFENDANT  OF
NOT  LESS THAN FIVE DAYS, TO ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH
VIOLATIONS; AND IF IT SHALL APPEAR TO THE SATISFACTION OF THE  COURT  OR
JUSTICE  THAT  THE  DEFENDANT  HAS,  IN  FACT, VIOLATED THIS SECTION, AN
INJUNCTION MAY BE  ISSUED  BY  SUCH  COURT  OR  JUSTICE,  ENJOINING  AND
RESTRAINING  ANY  FURTHER  VIOLATION,  WITHOUT  REQUIRING PROOF THAT ANY
PERSON HAS, IN FACT, BEEN  INJURED  OR  DAMAGED  THEREBY.  IN  ANY  SUCH
PROCEEDING,  THE  COURT  MAY  MAKE ALLOWANCES TO THE ATTORNEY GENERAL AS
PROVIDED IN PARAGRAPH SIX OF SUBDIVISION  (A)  OF  SECTION  EIGHTY-THREE
HUNDRED  THREE  OF THE CIVIL PRACTICE LAW AND RULES, AND DIRECT RESTITU-
TION. WHENEVER THE COURT  SHALL  DETERMINE  THAT  A  VIOLATION  OF  THIS
SECTION  HAS  OCCURRED, THE COURT MAY IMPOSE A CIVIL PENALTY OF NOT MORE
THAN FIVE THOUSAND DOLLARS FOR EACH VIOLATION. IN  CONNECTION  WITH  ANY
SUCH  PROPOSED  APPLICATION,  THE ATTORNEY GENERAL IS AUTHORIZED TO TAKE
PROOF AND MAKE A DETERMINATION  OF  THE  RELEVANT  FACTS  AND  TO  ISSUE
SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRACTICE LAW AND RULES.
  S  4.  This  act shall take effect on the ninetieth day after it shall
have become a law.

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