South Carolina General Assembly
117th Session, 2007-2008

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H. 4313

STATUS INFORMATION

General Bill
Sponsors: Reps. Kirsh, Duncan, Hosey and Cotty
Document Path: l:\council\bills\agm\18922mm08.doc

Introduced in the House on January 8, 2008
Currently residing in the House Committee on Judiciary

Summary: Consumer Credit Report Security Freeze Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
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   12/5/2007  House   Prefiled
   12/5/2007  House   Referred to Committee on Judiciary
    1/8/2008  House   Introduced and read first time HJ-29
    1/8/2008  House   Referred to Committee on Judiciary HJ-29

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

12/6/2007

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING PART 5 TO CHAPTER 5, TITLE 37 SO AS TO ENACT THE SOUTH CAROLINA CONSUMER CREDIT REPORT SECURITY FREEZE ACT, PROVIDING FOR A FREEZE ON THE RELEASE OF A CONSUMER FILE BY A CONSUMER CREDIT REPORTING AGENCY UPON THE REQUEST OF A CONSUMER WHO HAS REASON TO BELIEVE HE IS THE VICTIM OF FINANCIAL IDENTITY FRAUD, PROCEDURES FOR IMPLEMENTING AND REMOVING THE FREEZE, APPLICABILITY OF AND EXEMPTIONS FROM THE FREEZE, AND PENALTIES FOR VIOLATION OF THESE PROVISIONS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Chapter 5 of Title 37 of the 1976 Code is amended by adding:

"Part 5

Consumer Credit Report Security Freeze

Section 37-5-501.    For purposes of this part:

(1)    'Consumer' means an individual residing in the State of South Carolina who undertakes a transaction for personal, family, or household purposes.

(2)    'Consumer credit-reporting agency' means a person that, for monetary fees or dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information about consumers for the purpose of furnishing consumer reports to third parties.

(3)    'Consumer report' or 'credit report' means any written, oral, electronic, or other communication of information by a consumer credit-reporting agency regarding a consumer's creditworthiness, credit standing, credit capacity, character, debts, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for the purpose of establishing a consumer's eligibility for any of the following:

(a)    credit to be used primarily for personal, family, or household purposes;

(b)    employment purposes means the use of a consumer report for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee;

(c)    any other purpose authorized pursuant to 15 U.S.C. Section 168lb.

'Consumer report' or 'credit report' does not include a report containing information as to a transaction between the consumer and the person making the report; an authorization or approval by the issuer of a credit card or similar device, directly or indirectly, of a specific extension of credit; or a report in which a person conveys an adverse decision in response to a request from a third party to make a specific extension of credit, directly or indirectly, to the consumer, if the third party advises the consumer of the name and address of the person to whom the request was made and the person makes the required disclosures to the consumer pursuant to the provisions of the federal 'Fair Credit Reporting Act'.

(4)    'File' means all information on a consumer that is recorded and retained by a consumer credit-reporting agency, regardless of how the information is stored.

(5)    'Financial identity fraud' is as defined in Section 16-13-510.

(6)    'Person' means an individual, sole proprietorship, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.

(7)    'Security freeze' means a notice placed in a consumer credit report, at the request of the consumer and subject to certain exceptions, that prohibits the consumer credit-reporting agency from releasing a credit report containing all or any part of the consumer's credit report or any information derived from it without the express authorization of the consumer.

Section 37-5-502.    (A)    A consumer who has reason to believe he is the victim of financial identify fraud, as evidenced by a copy of a valid police report, investigative report, or complaint made pursuant to Section 16-13-510, may place a security freeze on his credit report by making a request in writing by certified mail to a consumer credit-reporting agency. A security freeze prohibits the consumer credit-reporting agency from releasing the consumer's credit report or information from it without the express authorization of the consumer. If a security freeze is in place, a consumer credit-reporting agency may not release the consumer's credit report or information to a third party without prior express authorization from the consumer. This subsection does not prevent a consumer credit-reporting agency from advising a third party that a security freeze is in effect with respect to the consumer's credit report.

(B)    A consumer credit-reporting agency shall place a security freeze on a consumer's credit report no later than five business days after receiving a written request from the consumer.

(C)    The consumer credit-reporting agency shall send a written confirmation of the security freeze to the consumer within ten business days of placing the freeze and, at the same time, provide the consumer with a unique personal identification number or password, other than the consumer's social security number, to be used by the consumer when providing authorization for the release of the consumer's credit report for a specific period of time.

(D)    If the consumer wishes to allow the consumer's credit report to be accessed for a specific period of time while a freeze is in place, the consumer shall communicate to the consumer credit-reporting agency:

(1)    proper identification;

(2)    the unique personal identification number or password provided by the consumer credit-reporting agency pursuant to subsection (C) of this section;

(3)    the request that the freeze be lifted temporarily and proper information regarding the time period for which the report must be available to users of the credit report or to only a properly identified user.

(E)    A consumer credit-reporting agency may develop procedures involving the use of telephone, facsimile machine, the Internet, or another electronic medium to receive and process a request from a consumer to temporarily lift a freeze on a credit report pursuant to this section.

(F)    A consumer credit-reporting agency that receives a request from a consumer to lift temporarily a freeze on a credit report pursuant to this section shall comply with the request no later than three business days after receiving the request.

(G)    A consumer credit-reporting agency shall remove or lift temporarily a freeze placed on a consumer's credit report only:

(1)    upon the consumer's request, pursuant to this section;

(2)    if the consumer's credit report was frozen due to a material misrepresentation of fact by the consumer. If a consumer credit-reporting agency intends to remove a freeze upon a consumer's credit report pursuant to this item, the consumer credit-reporting agency shall notify the consumer in writing five business days before removing the freeze on the consumer's credit report.

(H)    If a third party requests access to a consumer credit report on which a security freeze is in effect and this request is in connection with an application for credit or other use and the consumer does not allow the consumer's credit report to be accessed for that specific period of time, the third party may treat the application as incomplete.

(I)    If a consumer requests a security freeze pursuant to this section, the consumer credit-reporting agency shall disclose to the consumer the process for placing and temporarily lifting a security freeze and the process for allowing access to information from the consumer's credit report for a specific period of time while the security freeze is in place.

(J)    A security freeze must remain in place until the consumer requests that the security freeze be removed. A consumer credit-reporting agency shall remove a security freeze within three business days of receiving a request for removal from the consumer, who provides:

(1)    proper identification;

(2)    the unique personal identification number or password provided by the consumer credit-reporting agency pursuant to subsection (C) of this section.

(K)    A consumer credit-reporting agency shall require proper identification of the person making a request to place or remove a security freeze.

(L)    If a security freeze is in place, a consumer credit-reporting agency may not change any of the following official information in a credit report without sending a written confirmation of the change to the consumer within thirty days of the change being posted to the consumer's file: name, date of birth, social security number, and address. Written confirmation is not required for technical modifications of a consumer's official information, including name and street abbreviations, complete spellings, or transposition of numbers or letters. In the case of an address change, the written confirmation must be sent to both the new address and the former address.

(M)    The provisions of this section do not apply to the use of a consumer credit report by a:

(1)    person, or the person's subsidiary, affiliate, agent, subcontractor, or assignee with which the consumer has, or before assignment had, an account, contract, or debtor-creditor relationship for the purposes of reviewing the account or collecting the financial obligation owing for the account, contract, or debt;

(2)    subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom access has been granted pursuant to subsection (D) of this section for purposes of facilitating the extension of credit or other permissible use;

(3)    person acting pursuant to a court order, warrant, or subpoena;

(4)    state or local agency, or its agents or assigns, which administers a program for establishing and enforcing child support obligations;

(5)    state or local agency, or its agents or assigns, acting to investigate fraud, including Medicaid fraud, or acting to investigate or collect delinquent taxes or assessments, including interest and penalties, unpaid court orders or to fulfill any of its other statutory responsibilities;

(6)    federal, state, or local governmental entity, including law enforcement agency or court, their agent or assigns;

(7)    person for the purposes of prescreening as defined by the federal Fair Credit Reporting Act;

(8)    person for the sole purpose of providing for a credit file monitoring subscription service to which the consumer has subscribed;

(9)    consumer reporting agency for the purpose of providing a consumer with a copy of the consumer's credit report upon the consumer's request;

(10)    depository financial institution for checking, savings, and investment accounts.

(N)    The following persons are not required to place in a credit report a security freeze pursuant to this section; except that any person exempt pursuant to the provisions of item (3) of this subsection is subject to a security freeze placed on a credit report by another consumer credit-reporting agency from which it obtains information:

(1)    a check services or fraud prevention services company, which reports on incidents of fraud or issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers, or similar methods of payments;

(2)    a deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, ATM abuse, or other similar negative information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a deposit account at the inquiring bank or financial institution;

(3)    a consumer reporting agency that:

(a)    acts only to resell credit information by assembling and merging information contained in a database of one or more credit-reporting agencies; and

(b)    does not maintain a permanent database of credit information from which new credit reports are produced.

(O)    A consumer credit-reporting agency may not charge a fee to a victim of identity theft who has submitted a copy of a valid investigative or incident report or complaint with a law enforcement agency about the unlawful use of the victim's personal identifying information by another person.

(P)    At any time that a consumer is required to receive a summary of rights required pursuant to Section 609 of the federal Fair Credit Reporting Act, the following notice must be included: 'South Carolina Consumers Have the Right to Obtain a Security Freeze. You have a right to place a security freeze on your credit report pursuant to South Carolina law. The security freeze prohibits a consumer credit-reporting agency from releasing information in your credit report without your express authorization. A security freeze must be requested in writing by certified mail. The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent. However, you should be aware that using a security freeze to take control over who gains access to the personal and financial information in your credit report may delay, interfere with, or prohibit the timely approval of a later request or application you make regarding new loans, credit, mortgage, insurance, rental housing, employment, investment, license, cellular phone, utilities, digital signature, Internet credit card transactions, or other services, including an extension of credit at point of sale. You can remove a freeze or authorize temporary access for a specific period of time by contacting the consumer reporting agency and providing all of the following:

(1)    your personal identification number or password provided to you by the agency;

(2)    proper identification to verify your identity; and

(3)    proper information regarding the period of time you want your report available to users of the credit report. The consumer credit-reporting agency may not charge any amount to a victim of identify theft who has submitted a copy of a valid investigative or incident report or complaint with a law enforcement agency about the unlawful use of the victim's identifying information by another person. You have a right to bring a civil action against a consumer credit-reporting agency who violates your rights pursuant to the credit reporting laws.'

(Q)(1)    A consumer credit-reporting agency that wilfully violates a provision of this section is liable for three times the amount of actual damages or one thousand dollars for each incident, whichever is greater, as well as reasonable attorney's fees and costs.

(2)    A consumer credit-reporting agency that negligently violates this section is liable for the greater of actual damages or one thousand dollars for each incident, as well as reasonable attorney's fees and costs.

(3)    In addition to the damages assessed pursuant to items (1) and (2), if the injury is to the consumer's creditworthiness, credit standing, credit capacity, character, general reputation, employment options, or eligibility for insurance, and results from the failure to place and enforce the security freeze and the failure is not corrected by the consumer credit-reporting agency within ten days after the entry of a judgment for damages, the assessed damages must be increased to one thousand dollars each day until the security freeze is imposed."

SECTION    2.    This act takes effect upon approval by the Governor.

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