Sec. 1601. Congressional findings and declaration of purpose
(a) Informed use of credit The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.
(b) Terms of personal property leases
The Congress also finds that there has been a recent trend toward leasing automobiles and other durable goods for consumer use as an alternative to installment credit sales and that these leases have been offered without adequate cost disclosures. It is the purpose of this subchapter to assure a meaningful disclosure of the terms of leases of personal property for personal, family, or household purposes so as to enable the lessee to compare more readily the various lease terms available to him, limit balloon payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and to assure meaningful and accurate disclosures of lease terms in advertisements.
Sec. 1602. Definitions and rules of construction
(a) The definitions and rules of construction set forth in this section are applicable for the purposes of this subchapter.
(b) The term ''Board'' refers to the Board of Governors of the Federal Reserve System.
(c) The term ''organization'' means a corporation, government or governmental subdivision or agency, trust, estate, partnership, cooperative, or association.
(d) The term ''person'' means a natural person or an organization.
(e) The term ''credit'' means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.
(f) The term ''creditor'' refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. Notwithstanding the preceding sentence, in the case of an open-end credit plan involving a credit card, the card issuer and any person who honors the credit card and offers a discount which is a finance charge are creditors. For the purpose of the requirements imposed under part D of this subchapter and sections 1637(a)(5), 1637(a)(6), 1637(a)(7), 1637(b)(1), 1637(b)(2), 1637(b)(3), 1637(b)(8), and 1637(b)(10) of this title, the term ''creditor'' shall also include card issuers whether or not the amount due is payable by agreement in more than four installments or the payment of a finance charge is or may be required, and the Board shall, by regulation, apply these requirements to such card issuers, to the extent appropriate, even though the requirements are by their terms applicable only to creditors offering open-end credit plans. Any person who originates 2 or more mortgages referred to in subsection (aa) of this section in any 12-month period or any person who originates 1 or more such mortgages through a mortgage broker shall be considered to be a creditor for purposes of this subchapter.
(g) The term ''credit sale'' refers to any sale in which the seller is a creditor. The term includes any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the property and services involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the property upon full compliance with his obligations under the contract.
(h) The adjective ''consumer'', used with reference to a credit transaction, characterizes the transaction as one in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes.
(i) The term ''open end credit plan'' means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time.
(j) The term ''adequate notice,'' as used in section 1643 of this title, means a printed notice to a cardholder which sets forth the pertinent facts clearly and conspicuously so that a person against whom it is to operate could reasonably be expected to have noticed it and understood its meaning. Such notice may be given to a cardholder by printing the notice on any credit card, or on each periodic statement of account, issued to the cardholder, or by any other means reasonably assuring the receipt thereof by the cardholder.
(k) The term ''credit card'' means any card, plate, coupon book or other credit device existing for the purpose of obtaining money, property, labor, or services on credit.
(l) The term ''accepted credit card'' means any credit card which the cardholder has requested and received or has signed or has used, or authorized another to use, for the purpose of obtaining money, property, labor, or services on credit.
(m) The term ''cardholder'' means any person to whom a credit card is issued or any person who has agreed with the card issuer to pay obligations arising from the issuance of a credit card to another person.
(n) The term ''card issuer'' means any person who issues a credit card, or the agent of such person with respect to such card.
(o) The term ''unauthorized use,'' as used in section 1643 of this title, means a use of a credit card by a person other than the cardholder who does not have actual, implied, or apparent authority for such use and from which the cardholder receives no benefit.
(p) The term ''discount'' as used in section 1666f of this title means a reduction made from the regular price. The term ''discount'' as used in section 1666f of this title shall not mean a surcharge.
(q) The term ''surcharge'' as used in this section and section 1666f of this title means any means of increasing the regular price to a cardholder which is not imposed upon customers paying by cash, check, or similar means.''
(r) The term ''State'' refers to any State, the Commonwealth of Puerto Rico, the District of Columbia, and any territory or possession of the United States.
(s) The term ''agricultural purposes'' includes the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures those agricultural products, including but not limited to the acquisition of farmland, real property with a farm residence, and personal property and services used primarily in farming.
(t) The term ''agricultural products'' includes agricultural, horticultural, viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised or produced on farms and any processed or manufactured products thereof.
(u) The term ''material disclosures'' means the disclosure, as required by this subchapter, of the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number and amount of payments, the due dates or periods of payments scheduled to repay the indebtedness, and the disclosures required by section 1639(a) of this title.
(v) The term ''dwelling'' means a residential structure or mobile home which contains one to four family housing units, or individual units of condominiums or cooperatives.
(w) The term ''residential mortgage transaction'' means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against the consumer's dwelling to finance the acquisition or initial construction of such dwelling.
(x) As used in this section and section 1666f of this title, the term ''regular price'' means the tag or posted price charged for the property or service if a single price is tagged or posted, or the price charged for the property or service when payment is made by use of an open-end credit plan or a credit card if either (1) no price is tagged or posted, or (2) two prices are tagged or posted, one of which is charged when payment is made by use of an open-end credit plan or a credit card and the other when payment is made by use of cash, check, or similar means. For purposes of this definition, payment by check, draft, or other negotiable instrument which may result in the debiting of an open-end credit plan or a credit cardholder's open-end account shall not be considered payment made by use of the plan or the account.
(y) Any reference to any requirement imposed under this subchapter or any provision thereof includes reference to the regulations of the Board under this subchapter or the provision thereof in question.
(z) The disclosure of an amount or percentage which is greater than the amount or percentage required to be disclosed under this subchapter does not in itself constitute a violation of this subchapter.
(aa)
(1) A mortgage referred to in this subsection means a consumer credit transaction that is secured by the consumer's principal dwelling, other than a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open end credit plan, if -
(A) the annual percentage rate at consummation of the
transaction will exceed by more than 10 percentage points the
yield on Treasury securities having comparable periods of
maturity on the fifteenth day of the month immediately preceding
the month in which the application for the extension of credit is
received by the creditor; or
(B) the total points and fees payable by the consumer at or
before closing will exceed the greater of -
(i) 8 percent of the total loan amount; or
(ii) $400.
(2)
(A) After the 2-year period beginning on the effective date of the regulations promulgated under section 155 of the Riegle Community Development and Regulatory Improvement Act of 1994, and no more frequently than biennially after the first increase or decrease under this subparagraph, the Board may by regulation increase or decrease the number of percentage points specified in paragraph (1)(A), if the Board determines that the increase or decrease is -
(i) consistent with the consumer protections against abusive
lending provided by the amendments made by subtitle B of title I
of the Riegle Community Development and Regulatory Improvement
Act of 1994; and
(ii) warranted by the need for credit.
(B) An increase or decrease under subparagraph (A) may not result in the number of percentage points referred to in subparagraph (A) being -
(i) less that 8 percentage points; or
(ii) greater than 12 percentage points.
(C) In determining whether to increase or decrease the number of percentage points referred to in subparagraph (A), the Board shall consult with representatives of consumers, including low-income consumers, and lenders.
(3) The amount specified in paragraph (1)(B)(ii) shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index, as reported on June 1 of the year preceding such adjustment.
(4) For purposes of paragraph (1)(B), points and fees shall include -
(A) all items included in the finance charge, except interest
or the time-price differential;
(B) all compensation paid to mortgage brokers;
(C) each of the charges listed in section 1605(e) of this title
(except an escrow for future payment of taxes), unless -
(i) the charge is reasonable;
(ii) the creditor receives no direct or indirect
compensation; and
(iii) the charge is paid to a third party unaffiliated with
the creditor; and
(D) such other charges as the Board determines to be
appropriate.
(5) This subsection shall not be construed to limit the rate of interest or the finance charge that a person may charge a consumer for any extension of credit.
(bb) The term ''reverse mortgage transaction'' means a nonrecourse transaction in which a mortgage, deed of trust, or equivalent consensual security interest is created against the consumer's principal dwelling -
(1) securing one or more advances; and
(2) with respect to which the payment of any principal,
interest, and shared appreciation or equity is due and payable
(other than in the case of default) only after -
(A) the transfer of the dwelling;
(B) the consumer ceases to occupy the dwelling as a principal
dwelling; or
(C) the death of the consumer.
Sec. 1603. Exempted transactions
This subchapter does not apply to the following:
(1) Credit transactions involving extensions of credit
primarily for business, commercial, or agricultural purposes, or
to government or governmental agencies or instrumentalities, or
to organizations.
(2) Transactions in securities or commodities accounts by a
broker-dealer registered with the Securities and Exchange
Commission.
(3) Credit transactions, other than those in which a security
interest is or will be acquired in real property, or in personal
property used or expected to be used as the principal dwelling of
the consumer, in which the total amount financed exceeds $25,000.
(4) Transactions under public utility tariffs, if the Board
determines that a State regulatory body regulates the charges for
the public utility services involved, the charges for delayed
payment, and any discount allowed for early payment.
(5) Transactions for which the Board, by rule, determines that
coverage under this subchapter is not necessary to carry out the
purposes of this subchapter.
(6) Repealed. Pub. L. 96-221, title VI, Sec. 603(c)(3), Mar.
31, 1980, 94 Stat. 169.
(7) Loans made, insured, or guaranteed pursuant to a program
authorized by title IV of the Higher Education Act of 1965 (20
U.S.C. 1070 et seq., 42 U.S.C. 2751 et seq.).
Sec. 1604. Disclosure guidelines
(a) Promulgation, contents, etc., of regulations
The Board shall prescribe regulations to carry out the purposes of this subchapter. Except in the case of a mortgage referred to in section 1602(aa) of this title, these regulations may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.
(b) Model disclosure forms and clauses; publication, criteria,
compliance, etc.
The Board shall publish model disclosure forms and clauses for common transactions to facilitate compliance with the disclosure requirements of this subchapter and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. In devising such forms, the Board shall consider the use by creditors or lessors of data processing or similar automated equipment. Nothing in this subchapter may be construed to require a creditor or lessor to use any such model form or clause prescribed by the Board under this section. A creditor or lessor shall be deemed to be in compliance with the disclosure provisions of this subchapter with respect to other than numerical disclosures if the creditor or lessor (1) uses any appropriate model form or clause as published by the Board, or (2) uses any such model form or clause and changes it by (A) deleting any information which is not required by this subchapter, or (B) rearranging the format, if in making such deletion or rearranging the format, the creditor or lessor does not affect the substance, clarity, or meaningful sequence of the disclosure.
(c) Procedures applicable for adoption of model forms and clauses
Model disclosure forms and clauses shall be adopted by the Board after notice duly given in the Federal Register and an opportunity for public comment in accordance with section 553 of title 5.
(d) Effective dates of regulations containing new disclosure
requirements
Any regulation of the Board, or any amendment or interpretation thereof, requiring any disclosure which differs from the disclosures previously required by this part, part D, or part E of this subchapter or by any regulation of the Board promulgated thereunder shall have an effective date of that October 1 which follows by at least six months the date of promulgation, except that the Board may at its discretion take interim action by regulation, amendment, or interpretation to lengthen the period of time permitted for creditors or lessors to adjust their forms to accommodate new requirements or shorten the length of time for creditors or lessors to make such adjustments when it makes a specific finding that such action is necessary to comply with the findings of a court or to prevent unfair or deceptive disclosure practices. Notwithstanding the previous sentence, any creditor or lessor may comply with any such newly promulgated disclosure requirements prior to the effective date of the requirements.
(f) [1] Exemption authority [1] So in original. No subsec. (e) has been enacted.
(1) In general
The Board may exempt, by regulation, from all or part of this
subchapter any class of transactions, other than transactions
involving any mortgage described in section 1602(aa) of this
title, for which, in the determination of the Board, coverage
under all or part of this subchapter does not provide a
meaningful benefit to consumers in the form of useful information
or protection.
(2) Factors for consideration
In determining which classes of transactions to exempt in whole
or in part under paragraph (1), the Board shall consider the
following factors and publish its rationale at the time a
proposed exemption is published for comment:
(A) The amount of the loan and whether the disclosures, right
of rescission, and other provisions provide a benefit to the
consumers who are parties to such transactions, as determined
by the Board.
(B) The extent to which the requirements of this subchapter
complicate, hinder, or make more expensive the credit process
for the class of transactions.
(C) The status of the borrower, including -
(i) any related financial arrangements of the borrower, as
determined by the Board;
(ii) the financial sophistication of the borrower relative
to the type of transaction; and
(iii) the importance to the borrower of the credit, related
supporting property, and coverage under this subchapter, as
determined by the Board;
(D) whether the loan is secured by the principal residence of
the consumer; and
(E) whether the goal of consumer protection would be
undermined by such an exemption.
(g) Waiver for certain borrowers
(1) In general
The Board, by regulation, may exempt from the requirements of
this subchapter certain credit transactions if -
(A) the transaction involves a consumer -
(i) with an annual earned income of more than $200,000; or
(ii) having net assets in excess of $1,000,000 at the time
of the transaction; and
(B) a waiver that is handwritten, signed, and dated by the
consumer is first obtained from the consumer.
(2) Adjustments by the Board
The Board, at its discretion, may adjust the annual earned
income and net asset requirements of paragraph (1) for inflation.
(a) Duty of creditor or lessor respecting one or more than one obligor.
(b) Creditor or lessor required to make disclosure.
(c) Estimates as satisfying statutory requirements; basis of disclosure for per diem interest.
(d) Tolerances for numerical disclosures.
§ 1632. Form of disclosure; additional information.
(a) Information clearly and conspicuously disclosed; ''annual percentage rate'' and ''finance charge''; order of disclosures and use of different terminology.
(b) Optional information by creditor or lessor.
(c) Tabular format required for certain disclosures under section 1637(c).
§ 1633. Exemption for State-regulated transactions.
(a) Individual or class action for damages; amount of award; factors determining amount of award.
(b) Correction of errors.
(c) Unintentional violations; bona fide errors.
(d) Liability in transaction or lease involving multiple obligors.
(e) Jurisdiction of courts; limitations on actions; State attorney general enforcement.
(f) Good faith compliance with rule, regulation, or interpretation of Board or with interpretation or approval of duly authorized official or employee of Federal Reserve System.
(g) Recovery for multiple failures to disclose.
(h) Offset from amount owed to creditor or assignee; rights of defaulting consumer.
§ 1666e. Notification of credit card issuer by seller of return of goods, etc., by obligor; credit for account of obligor.
§ 1666f. Inducements to cardholders by sellers of cash discounts for payments by cash, check or similar means; credit card surcharge prohibition; finance charge for sales transactions involving cash discounts.
(a) Cash discounts.
(b) Finance charge.
§ 1666g. Tie-in services prohibited for issuance of credit card.
§ 1666h. Offset of cardholder's indebtedness by issuer of credit card with funds deposited with issuer by cardholder; remedies of creditors under State law not affected.
(a) Offset against consumer's funds.
(b) Attachments and levies.
§ 1666i. Assertion by cardholder against card issuer of claims and defenses arising out of credit card transaction; prerequisites; limitation on amount of claims or defenses.
Sec. 1681. Congressional findings and statement of purpose
(a) Accuracy and fairness of credit reporting
The Congress makes the following findings:
(1) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
(2) An elaborate mechanism has been developed for investigating and evaluating the credit worthiness,credit standing, credit capacity, character, and general reputation of consumers.
(3) Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.
(4) There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.
(b) Reasonable procedures
It is the purpose of this subchapter to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this subchapter.
Sec. 1681b. Permissible purposes of consumer reports
(a) In general
Subject to subsection (c) of this section, any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.
(2) In accordance with the written instructions of the consumer to whom it relates.
(3) To a person which it has reason to believe -
(A) intends to use the information in connection with a credit
transaction involving the consumer on whom the information is to
be furnished and involving the extension of credit to, or review
or collection of an account of, the consumer; or
(B) intends to use the information for employment purposes; or
(C) intends to use the information in connection with the
underwriting of insurance involving the consumer; or
(D) intends to use the information in connection with a
determination of the consumer's eligibility for a license or
other benefit granted by a governmental instrumentality required
by law to consider an applicant's financial responsibility or
status; or
(E) intends to use the information, as a potential investor or
servicer, or current insurer, in connection with a valuation of,
or an assessment of the credit or prepayment risks associated
with, an existing credit obligation; or
(F) otherwise has a legitimate business need for the
information -
(i) in connection with a business transaction that is
initiated by the consumer; or
(ii) to review an account to determine whether the consumer
continues to meet the terms of the account.
(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that -
(A) the consumer report is needed for the purpose of
establishing an individual's capacity to make child support
payments or determining the appropriate level of such payments;
(B) the paternity of the consumer for the child to which the
obligation relates has been established or acknowledged by the
consumer in accordance with State laws under which the obligation
arises (if required by those laws);
(C) the person has provided at least 10 days' prior notice to
the consumer whose report is requested, by certified or
registered mail to the last known address of the consumer, that
the report will be requested; and
(D) the consumer report will be kept confidential, will be used
solely for a purpose described in subparagraph (A), and will not
be used in connection with any other civil, administrative, or
criminal proceeding, or for any other purpose.
(5) To an agency administering a State plan under section 654 of title 42 for use to set an initial or modified child support award.
(b) Conditions for furnishing and using consumer reports for
employment purposes
(1) Certification from user
A consumer reporting agency may furnish a consumer report for
employment purposes only if -
(A) the person who obtains such report from the agency
certifies to the agency that -
(i) the person has complied with paragraph (2) with respect
to the consumer report, and the person will comply with
paragraph (3) with respect to the consumer report if
paragraph (3) becomes applicable; and
(ii) information from the consumer report will not be used
in violation of any applicable Federal or State equal
employment opportunity law or regulation; and
(B) the consumer reporting agency provides with the report,
or has previously provided, a summary of the consumer's rights
under this subchapter, as prescribed by the Federal Trade
Commission under section 1681g(c)(3) of this title.
(2) Disclosure to consumer
(A) In general
Except as provided in subparagraph (B), a person may not
procure a consumer report, or cause a consumer report to be
procured, for employment purposes with respect to any consumer,
unless -
(i) a clear and conspicuous disclosure has been made in
writing to the consumer at any time before the report is
procured or caused to be procured, in a document that
consists solely of the disclosure, that a consumer report may
be obtained for employment purposes; and
(ii) the consumer has authorized in writing (which
authorization may be made on the document referred to in
clause (i)) the procurement of the report by that person.
(B) Application by mail, telephone, computer, or other similar
means
If a consumer described in subparagraph (C) applies for
employment by mail, telephone, computer, or other similar
means, at any time before a consumer report is procured or
caused to be procured in connection with that application -
(i) the person who procures the consumer report on the
consumer for employment purposes shall provide to the
consumer, by oral, written, or electronic means, notice that
a consumer report may be obtained for employment purposes,
and a summary of the consumer's rights under section
1681m(a)(3) of this title; and
(ii) the consumer shall have consented, orally, in writing,
or electronically to the procurement of the report by that
person.
(C) Scope
Subparagraph (B) shall apply to a person procuring a consumer
report on a consumer in connection with the consumer's
application for employment only if -
(i) the consumer is applying for a position over which the
Secretary of Transportation has the power to establish
qualifications and maximum hours of service pursuant to the
provisions of section 31502 of title 49, or a position
subject to safety regulation by a State transportation
agency; and
(ii) as of the time at which the person procures the report
or causes the report to be procured the only interaction
between the consumer and the person in connection with that
employment application has been by mail, telephone, computer,
or other similar means.
(3) Conditions on use for adverse actions
(A) In general
Except as provided in subparagraph (B), in using a consumer
report for employment purposes, before taking any adverse
action based in whole or in part on the report, the person
intending to take such adverse action shall provide to the
consumer to whom the report relates -
(i) a copy of the report; and
(ii) a description in writing of the rights of the consumer
under this subchapter, as prescribed by the Federal Trade
Commission under section 1681g(c)(3) of this title.
(B) Application by mail, telephone, computer, or other similar
means
(i) If a consumer described in subparagraph (C) applies for
employment by mail, telephone, computer, or other similar
means, and if a person who has procured a consumer report on
the consumer for employment purposes takes adverse action on
the employment application based in whole or in part on the
report, then the person must provide to the consumer to whom
the report relates, in lieu of the notices required under
subparagraph (A) of this section and under section 1681m(a) of
this title, within 3 business days of taking such action, an
oral, written or electronic notification -
(I) that adverse action has been taken based in whole or in
part on a consumer report received from a consumer reporting
agency;
(II) of the name, address and telephone number of the
consumer reporting agency that furnished the consumer report
(including a toll-free telephone number established by the
agency if the agency compiles and maintains files on
consumers on a nationwide basis);
(III) that the consumer reporting agency did not make the
decision to take the adverse action and is unable to provide
to the consumer the specific reasons why the adverse action
was taken; and
(IV) that the consumer may, upon providing proper
identification, request a free copy of a report and may
dispute with the consumer reporting agency the accuracy or
completeness of any information in a report.
(ii) If, under clause (B)(i)(IV), the consumer requests a
copy of a consumer report from the person who procured the
report, then, within 3 business days of receiving the
consumer's request, together with proper identification, the
person must send or provide to the consumer a copy of a report
and a copy of the consumer's rights as prescribed by the
Federal Trade Commission under section 1681g(c)(3) of this
title.
(C) Scope
Subparagraph (B) shall apply to a person procuring a consumer
report on a consumer in connection with the consumer's
application for employment only if -
(i) the consumer is applying for a position over which the
Secretary of Transportation has the power to establish
qualifications and maximum hours of service pursuant to the
provisions of section 31502 of title 49, or a position
subject to safety regulation by a State transportation
agency; and
(ii) as of the time at which the person procures the report
or causes the report to be procured the only interaction
between the consumer and the person in connection with that
employment application has been by mail, telephone, computer,
or other similar means.
(4) Exception for national security investigations
(A) In general
In the case of an agency or department of the United States
Government which seeks to obtain and use a consumer report for
employment purposes, paragraph (3) shall not apply to any
adverse action by such agency or department which is based in
part on such consumer report, if the head of such agency or
department makes a written finding that -
(i) the consumer report is relevant to a national security
investigation of such agency or department;
(ii) the investigation is within the jurisdiction of such
agency or department;
(iii) there is reason to believe that compliance with
paragraph (3) will -
(I) endanger the life or physical safety of any person;
(II) result in flight from prosecution;
(III) result in the destruction of, or tampering with,
evidence relevant to the investigation;
(IV) result in the intimidation of a potential witness
relevant to the investigation;
(V) result in the compromise of classified information;
or
(VI) otherwise seriously jeopardize or unduly delay the
investigation or another official proceeding.
(B) Notification of consumer upon conclusion of investigation
Upon the conclusion of a national security investigation
described in subparagraph (A), or upon the determination that
the exception under subparagraph (A) is no longer required for
the reasons set forth in such subparagraph, the official
exercising the authority in such subparagraph shall provide to
the consumer who is the subject of the consumer report with
regard to which such finding was made -
(i) a copy of such consumer report with any classified
information redacted as necessary;
(ii) notice of any adverse action which is based, in part,
on the consumer report; and
(iii) the identification with reasonable specificity of the
nature of the investigation for which the consumer report was
sought.
(C) Delegation by head of agency or department
For purposes of subparagraphs (A) and (B), the head of any
agency or department of the United States Government may
delegate his or her authorities under this paragraph to an
official of such agency or department who has personnel
security responsibilities and is a member of the Senior
Executive Service or equivalent civilian or military rank.
(D) Report to the Congress
Not later than January 31 of each year, the head of each
agency and department of the United States Government that
exercised authority under this paragraph during the preceding
year shall submit a report to the Congress on the number of
times the department or agency exercised such authority during
the year.
(E) Definitions
For purposes of this paragraph, the following definitions
shall apply:
(i) Classified information
The term ''classified information'' means information that
is protected from unauthorized disclosure under Executive
Order No. 12958 or successor orders.
(ii) National security investigation
The term ''national security investigation'' means any
official inquiry by an agency or department of the United
States Government to determine the eligibility of a consumer
to receive access or continued access to classified
information or to determine whether classified information
has been lost or compromised.
(c) Furnishing reports in connection with credit or insurance
transactions that are not initiated by consumer
(1) In general
A consumer reporting agency may furnish a consumer report
relating to any consumer pursuant to subparagraph (A) or (C) of
subsection (a)(3) of this section in connection with any credit
or insurance transaction that is not initiated by the consumer
only if -
(A) the consumer authorizes the agency to provide such report
to such person; or
(B)
(i) the transaction consists of a firm offer of credit or
insurance;
(ii) the consumer reporting agency has complied with
subsection (e) of this section; and
(iii) there is not in effect an election by the consumer,
made in accordance with subsection (e) of this section, to have
the consumer's name and address excluded from lists of names
provided by the agency pursuant to this paragraph.
(2) Limits on information received under paragraph (1)(B)
A person may receive pursuant to paragraph (1)(B) only -
(A) the name and address of a consumer;
(B) an identifier that is not unique to the consumer and that
is used by the person solely for the purpose of verifying the
identity of the consumer; and
(C) other information pertaining to a consumer that does not
identify the relationship or experience of the consumer with
respect to a particular creditor or other entity.
(3) Information regarding inquiries
Except as provided in section 1681g(a)(5) of this title, a
consumer reporting agency shall not furnish to any person a
record of inquiries in connection with a credit or insurance
transaction that is not initiated by a consumer.
(d) Reserved
(e) Election of consumer to be excluded from lists
(1) In general
A consumer may elect to have the consumer's name and address
excluded from any list provided by a consumer reporting agency
under subsection (c)(1)(B) of this section in connection with a
credit or insurance transaction that is not initiated by the
consumer, by notifying the agency in accordance with paragraph
(2) that the consumer does not consent to any use of a consumer
report relating to the consumer in connection with any credit or
insurance transaction that is not initiated by the consumer.
(2) Manner of notification
A consumer shall notify a consumer reporting agency under
paragraph (1) -
(A) through the notification system maintained by the agency
under paragraph (5); or
(B) by submitting to the agency a signed notice of election
form issued by the agency for purposes of this subparagraph.
(3) Response of agency after notification through system
Upon receipt of notification of the election of a consumer
under paragraph (1) through the notification system maintained by
the agency under paragraph (5), a consumer reporting agency shall
-
(A) inform the consumer that the election is effective only
for the 2-year period following the election if the consumer
does not submit to the agency a signed notice of election form
issued by the agency for purposes of paragraph (2)(B); and
(B) provide to the consumer a notice of election form, if
requested by the consumer, not later than 5 business days after
receipt of the notification of the election through the system
established under paragraph (5), in the case of a request made
at the time the consumer provides notification through the
system.
(4) Effectiveness of election
An election of a consumer under paragraph (1) -
(A) shall be effective with respect to a consumer reporting
agency beginning 5 business days after the date on which the
consumer notifies the agency in accordance with paragraph (2);
(B) shall be effective with respect to a consumer reporting
agency -
(i) subject to subparagraph (C), during the 2-year period
beginning 5 business days after the date on which the
consumer notifies the agency of the election, in the case of
an election for which a consumer notifies the agency only in
accordance with paragraph (2)(A); or
(ii) until the consumer notifies the agency under
subparagraph (C), in the case of an election for which a
consumer notifies the agency in accordance with paragraph
(2)(B);
(C) shall not be effective after the date on which the
consumer notifies the agency, through the notification system
established by the agency under paragraph (5), that the
election is no longer effective; and
(D) shall be effective with respect to each affiliate of the
agency.
(5) Notification system
(A) In general
Each consumer reporting agency that, under subsection
(c)(1)(B) of this section, furnishes a consumer report in
connection with a credit or insurance transaction that is not
initiated by a consumer, shall -
(i) establish and maintain a notification system, including
a toll-free telephone number, which permits any consumer
whose consumer report is maintained by the agency to notify
the agency, with appropriate identification, of the
consumer's election to have the consumer's name and address
excluded from any such list of names and addresses provided
by the agency for such a transaction; and
(ii) publish by not later than 365 days after September 30,
1996, and not less than annually thereafter, in a publication
of general circulation in the area served by the agency -
(I) a notification that information in consumer files
maintained by the agency may be used in connection with
such transactions; and
(II) the address and toll-free telephone number for
consumers to use to notify the agency of the consumer's
election under clause (i).
(B) Establishment and maintenance as compliance
Establishment and maintenance of a notification system
(including a toll-free telephone number) and publication by a
consumer reporting agency on the agency's own behalf and on
behalf of any of its affiliates in accordance with this
paragraph is deemed to be compliance with this paragraph by
each of those affiliates.
(6) Notification system by agencies that operate nationwide
Each consumer reporting agency that compiles and maintains
files on consumers on a nationwide basis shall establish and
maintain a notification system for purposes of paragraph (5)
jointly with other such consumer reporting agencies.
(f) Certain use or obtaining of information prohibited
A person shall not use or obtain a consumer report for any purpose unless -
(1) the consumer report is obtained for a purpose for which the
consumer report is authorized to be furnished under this section;
and
(2) the purpose is certified in accordance with section 1681e
of this title by a prospective user of the report through a
general or specific certification.
(g) Furnishing reports containing medical information
A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information about a consumer, unless the consumer consents to the furnishing of the report.
§ 1681c. Requirements relating to information contained in consumer reports.
(a) Information excluded from consumer reports.
(b) Exempted cases.
(c) Running of reporting period.
(d) Information required to be disclosed.
(e) Indication of closure of account by consumer.
(f) Indication of dispute by consumer.
§ 1681d. Disclosure of investigative consumer reports.
(a) Disclosure of fact of preparation.
(b) Disclosure on request of nature and scope of investigation.
(c) Limitation on liability upon showing of reasonable procedures for compliance with provisions.
(c) ''Firm offer of credit or insurance'' defined.
(d) Limitations.
§ 1681u. Disclosures to FBI for counterintelligence purposes.
(a) Identity of financial institutions.
(b) Identifying information.
(c) Court order for disclosure of consumer reports.
(d) Confidentiality.
(e) Payment of fees.
(f) Limit on dissemination.
(g) Rules of construction.
(h) Reports to Congress.
(i) Damages.
(j) Disciplinary actions for violations.
(k) Good-faith exception.
(l) Limitation of remedies.
(m) Injunctive relief.
SUBCHAPTER IV - EQUAL CREDIT OPPORTUNITY
Sec. 1691. Scope of prohibition
(a) Activities constituting discrimination
It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction -
(1) on the basis of race, color, religion, national origin, sex
or marital status, or age (provided the applicant has the
capacity to contract);
(2) because all or part of the applicant's income derives from
any public assistance program; or
(3) because the applicant has in good faith exercised any right
under this chapter.
(b) Activities not constituting discrimination
It shall not constitute discrimination for purposes of this subchapter for a creditor -
(1) to make an inquiry of marital status if such inquiry is for
the purpose of ascertaining the creditor's rights and remedies
applicable to the particular extension of credit and not to
discriminate in a determination of credit-worthiness;
(2) to make an inquiry of the applicant's age or of whether the
applicant's income derives from any public assistance program if
such inquiry is for the purpose of determining the amount and
probable continuance of income levels, credit history, or other
pertinent element of credit-worthiness [1] as provided
in regulations of the Board;
(3) to use any empirically derived credit system which
considers age if such system is demonstrably and statistically
sound in accordance with regulations of the Board, except that in
the operation of such system the age of an elderly applicant may
not be assigned a negative factor or value; or
(4) to make an inquiry or to consider the age of an elderly
applicant when the age of such applicant is to be used by the
creditor in the extension of credit in favor of such applicant.
(c) Additional activities not constituting discrimination
It is not a violation of this section for a creditor to refuse to extend credit offered pursuant to -
(1) any credit assistance program expressly authorized by law
for an economically disadvantaged class of persons;
(2) any credit assistance program administered by a nonprofit
organization for its members or an economically disadvantaged
class of persons; or
(3) any special purpose credit program offered by a
profit-making organization to meet special social needs which
meets standards prescribed in regulations by the Board; if such refusal is required by or made pursuant to such program.
(d) Reason for adverse action; procedure applicable; ''adverse
action'' defined
(1) Within thirty days (or such longer reasonable time as specified in regulations of the Board for any class of credit transaction) after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application.
(2) Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor. A creditor satisfies this obligation by -
(A) providing statements of reasons in writing as a matter of
course to applicants against whom adverse action is taken; or
(B) giving written notification of adverse action which
discloses (i) the applicant's right to a statement of reasons
within thirty days after receipt by the creditor of a request
made within sixty days after such notification, and (ii) the
identity of the person or office from which such statement may be
obtained. Such statement may be given orally if the written
notification advises the applicant of his right to have the
statement of reasons confirmed in writing on written request.
(3) A statement of reasons meets the requirements of this section only if it contains the specific reasons for the adverse action taken.
(4) Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this subsection may be made directly by such creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed.
(5) The requirements of paragraph (2), (3), or (4) may be satisfied by verbal statements or notifications in the case of any creditor who did not act on more than one hundred and fifty applications during the calendar year preceding the calendar year in which the adverse action is taken, as determined under regulations of the Board.
(6) For purposes of this subsection, the term ''adverse action'' means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. Such term does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit.
(e) Appraisals; copies of reports to applicants; costs
Each creditor shall promptly furnish an applicant, upon written request by the applicant made within a reasonable period of time of the application, a copy of the appraisal report used in connection with the applicant's application for a loan that is or would have been secured by a lien on residential real property. The creditor may require the applicant to reimburse the creditor for the cost of the appraisal.
(a) Requests for signature of husband and wife for creation of valid lien, etc.
(b) State property laws affecting creditworthiness.
(c) State laws prohibiting separate extension of consumer credit to husband and wife.
(d) Combining credit accounts of husband and wife with same creditor to determine permissible finance charges or loan ceilings under Federal or State laws.
(e) Election of remedies under subchapter or State law; nature of relief determining applicability.
(f) Compliance with inconsistent State laws; determination of inconsistency.
(g) Exemption by regulation of credit transactions covered by State law; failure to comply with State law.
(a) Individual or class action for actual damages.
(b) Recovery of punitive damages in individual and class action for actual damages; exemptions; maximum amount of punitive damages in individual actions; limitation on total recovery in class actions; factors determining amount of award.
(c) Action for equitable and declaratory relief.
(d) Recovery of costs and attorney fees.
(e) Good faith compliance with rule, regulation, or interpretation of Board or interpretation or approval by an official or employee of Federal Reserve System duly authorized by Board.
(f) Jurisdiction of courts; time for maintenance of action; exceptions.
(g) Request by responsible enforcement agency to Attorney General for civil action.
(h) Authority for Attorney General to bring civil action; jurisdiction.
(i) Recovery under both subchapter and fair housing enforcement provisions prohibited for violation based on same transaction.
(a) Individual or class action for damages; amount of award.
(b) Factors determining amount of award.
(c) Unintentional violations; bona fide error.
(d) Good faith compliance with rule, regulation, or interpretation of Board or approval of duly authorized official or employee of Federal Reserve System.
(e) Notification to consumer prior to action; adjustment of consumer's account.
(f) Action in bad faith or for harassment; attorney's fees.
(g) Jurisdiction of courts; time for maintenance of action.
(a) Violations respecting giving of false or inaccurate information, failure to provide information, and failure to comply with provisions of this subchapter.
(b) Violations affecting interstate or foreign commerce.
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