BILL NUMBER: SB 1384	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Simitian

                        FEBRUARY 24, 2012

   An act to amend Sections 1785.2, 1785.3, 1785.11.2, and 1785.11.3
of, and to amend the heading of Title 1.6 (commencing with Section
1785.1) of Part 4 of Division 3 of, the Civil Code, relating to
consumer information privacy.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1384, as introduced, Simitian. Consumer information privacy.
   Existing state and federal law define and regulate consumer credit
reports. Existing federal law regulates consumer file information
that is compiled and maintained by a nationwide specialty consumer
reporting agency, which is defined as a consumer reporting agency
that compiles and maintains files on consumers on a nationwide basis
relating to medical records or payments, residential or tenant
history, check writing history, employment history, or insurance
claims. Existing state law permits a consumer to place and to remove
a security on his or her credit report by following a specified
procedure.
   This bill would define a nationwide specialty consumer reporting
agency and consumer file for purposes of California law and would
authorize a consumer to place a freeze on his or her consumer file
that is compiled and maintained by a nationwide specialty consumer
reporting agency. The bill would also make conforming changes.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The heading of Title 1.6 (commencing with Section
1785.1) of Part 4 of Division 3 of the Civil Code is amended to read:


      TITLE 1.6.  CONSUMER  CREDIT  REPORTING
AGENCIES ACT


  SEC. 2.  Section 1785.2 of the Civil Code is amended to read:
   1785.2.  This act may be referred to as the Consumer 
Credit  Reporting Agencies Act.
  SEC. 3.  Section 1785.3 of the Civil Code is amended to read:
   1785.3.  The following terms as used in this title have the
meaning expressed in this section:
   (a) "Adverse action" means a denial or revocation of credit, a
change in the terms of an existing credit arrangement which is
adverse to the interests of the consumer, or a refusal to grant
credit in substantially the amount or on substantially the terms
requested. "Adverse action" includes all of the following:
   (1) Any denial of, increase in any charge for, or reduction in the
amount of, insurance for personal, family, or household purposes
made in connection with the underwriting of insurance.
   (2) Any denial of employment or any other decision made for
employment purposes which adversely affects any current or
prospective employee.
   (3) Any action taken, or determination made, with respect to a
consumer (A) for an application for an extension of credit, or an
application for the hiring of a dwelling unit, and (B) that is
adverse to the interests of the consumer.
   "Adverse action" does not include (A) a refusal to extend
additional credit to a consumer under an existing credit arrangement
if (i) the applicant is delinquent or otherwise in default under that
credit arrangement or (ii) the additional credit would exceed a
credit limit previously established for the consumer or (B) a refusal
or failure to authorize an account transaction at a point of sale.
   (b) "Consumer" means a natural individual.
   (c) "Consumer credit report" means any written, oral, or other
communication of any information by a consumer credit reporting
agency bearing on a consumer's credit worthiness, credit standing, or
credit capacity, which is used or is expected to be used, or
collected in whole or in part, for the purpose of serving as a factor
in establishing the consumer's eligibility for: (1) credit to be
used primarily for personal, family, or household purposes, or (2)
employment purposes, or (3) hiring of a dwelling unit, as defined in
subdivision (c) of Section 1940, or (4) other purposes authorized in
Section 1785.11.
   The term does not include (1) any report containing information
solely as to transactions or experiences between the consumer and the
person making the report, (2) any communication of that information
or information from a credit application by a consumer that is
internal within the organization that is the person making the report
or that is made to an entity owned by, or affiliated by corporate
control with, that person; provided that the consumer is informed by
means of a clear and conspicuous written disclosure that information
contained in the credit application may be provided to these persons;
however, where a credit application is taken by telephone,
disclosure shall initially be given orally at the time the
application is taken, and a clear and conspicuous written disclosure
shall be made to the consumer in the first written communication to
that consumer after the application is taken, (3) any authorization
or approval of a specific extension of credit directly or indirectly
by the issuer of a credit card or similar device, (4) any report by a
person conveying a decision whether to make a specific extension of
credit directly or indirectly to a consumer in response to a request
by a third party, 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 disclosures to the consumer required under Section
1785.20, (5) any report containing information solely on a consumer's
character, general reputation, personal characteristics, or mode of
living which is obtained through personal interviews with neighbors,
friends, or associates of the consumer reported on, or others with
whom he is acquainted or who may have knowledge concerning those
items of information, (6) any communication about a consumer in
connection with a credit transaction which is not initiated by the
consumer, between persons who are affiliated (as defined in Section
150 of the Corporations Code) by common ownership or common corporate
control (as defined by Section 160 of the Corporations Code), if
either of those persons has complied with paragraph (2) of
subdivision (b) of Section 1785.20.1 with respect to a prequalifying
report from which the information communicated is taken and provided
the consumer has consented to the provision and use of the
prequalifying report in writing, or (7) any consumer credit report
furnished for use in connection with a transaction which consists of
an extension of credit to be used solely for a commercial purpose.
   (d) "Consumer credit reporting agency" means any person who, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly
engages in whole or in part in the business of assembling or
evaluating consumer credit information or other information on
consumers for the purpose of furnishing consumer credit reports to
third parties, but does not include any governmental agency whose
records are maintained primarily for traffic safety, law enforcement,
or licensing purposes. 
   (e) "Consumer file" means a file compiled and maintained on
consumers by a nationwide specialty consumer reporting agency. 

   (e) 
    (f) "Credit transaction that is not initiated by the
consumer" does not include the use of a consumer credit report by an
assignee for collection or by a person with which the consumer has an
account for purposes of (1) reviewing the account or (2) collecting
the account. For purposes of this subdivision, "reviewing the account"
includes activities related to account maintenance and monitoring,
credit line increases, and account upgrades and enhancements.

   (f) 
    (g)  "Employment purposes," when used in connection with
a consumer credit report, means a report used for the purpose of
evaluating a consumer for employment, promotion, reassignment, or
retention as an employee. 
   (g) 
    (h)  "File," when used in connection with information on
any consumer, means all of the information on that consumer recorded
and retained by a consumer credit reporting agency, regardless of
how the information is stored. 
   (h) 
    (i)  "Firm offer of credit" means any offer of credit to
a consumer that will be honored if, based on information in a
consumer credit report on the consumer and other information bearing
on the creditworthiness of the consumer, the consumer is determined
to meet the criteria used to select the consumer for the offer and
the consumer is able to provide any real property collateral
specified in the offer. For purposes of this subdivision, the phrase
"other information bearing on the creditworthiness of the consumer"
means information that the person making the offer is permitted to
consider pursuant to any rule, regulation, or formal written policy
statement relating to the federal Fair Credit Reporting Act, as
amended (15 U.S.C. Sec. 1681 et seq.), promulgated by the Federal
Trade Commission or any federal bank regulatory agency. 
   (i) 
    (j)  "Item of information" means any of one or more
informative entries in a credit report which causes a creditor to
deny credit to an applicant or increase the cost of credit to an
applicant or deny an applicant a checking account with a bank or
other financial institution. 
   (k) "Nationwide specialty consumer reporting agency" means a
consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis relating to any of the following:
 
   (1) Medical records or payments.  
   (2) Residential or tenant history.  
   (3) Check writing history.  
   (4) Employment history.  
   (5) Insurance claims.  
   (j) 
    (l)  "Person" means any individual, partnership,
corporation, trust, estate, cooperative, association, government or
governmental subdivision or agency, or other entity. 
   (k) 
    (m)  "Prequalifying report" means a report containing
the limited information permitted under paragraph (2) of subdivision
(b) of Section 1785.11. 
   (  l  )
    (n)  "State or local child support enforcement agency"
means the Department of Child Support Services or local child support
agency acting pursuant to Division 17 (commencing with Section
17000) of the Family Code to establish, enforce or modify child
support obligations, and any state or local agency or official that
succeeds to these responsibilities under a successor statute.
  SEC. 4.  Section 1785.11.2 of the Civil Code is amended to read:
   1785.11.2.  (a) A consumer may elect to place a security freeze on
his or her credit report  or consumer file  by making a
request in writing by mail to a consumer credit reporting agency 
or n   ationwide specialty consumer reporting agency 
. "Security freeze" means a notice placed in a consumer's credit
report  or consumer file  , at the request of the consumer,
and subject to certain exceptions, that prohibits the consumer credit
reporting agency  or nationwide specialty consumer reporting
agency  from releasing the consumer's credit report  or
consumer file  or any information from it without the express
authorization of the consumer. If a security freeze is in place,
information from a consumer's credit report  or consumer file
 may not be released to a third party without prior express
authorization from the consumer. This subdivision does not prevent a
consumer credit reporting agency  or nationwide specialty
consumer reporting agency  from advising a third party that a
security freeze is in effect with respect to the consumer's credit
report  or consumer file  .
   (b) A consumer credit reporting agency  or nationwide
specialty consumer reporting agency  shall place a security
freeze on a consumer's credit report  or consumer file  no
later than three business days after receiving a written request from
the consumer.
   (c) The consumer credit reporting agency  or nationwide
specialty consumer reporting agency  shall send a written
confirmation of the security freeze to the consumer within 10
business days and shall provide the consumer with a unique personal
identification number or password to be used by the consumer when
providing authorization for the release of his or her credit  or
consumer file information  for a specific party or period of
time.
   (d) If the consumer wishes to allow his or her credit report 
or consumer file  to be accessed for a specific party or period
of time while a freeze is in place, he or she shall contact the
consumer credit reporting agency  or nationwide specialty
consumer reporting agency  , request that the freeze be
temporarily lifted, and provide the following:
   (1) Proper identification, as defined in subdivision (c) of
Section 1785.15.
   (2) The unique personal identification number or password provided
by the credit reporting agency  or nationwide specialty consumer
reporting agency  pursuant to subdivision (c).
   (3) The proper information regarding the third party who is to
receive the credit report  or consumer file  or the time
period for which the report shall be available to users of the credit
report  or consumer file  .
   (e) A consumer credit reporting agency  or nationwide
specialty consumer reporting agency  that receives a request
from a consumer to temporarily lift a freeze on a credit report 
or consumer file  pursuant to subdivision (d) shall comply with
the request no later than three business days after receiving the
request.
   (f) A consumer credit reporting agency  or nationwide
specialty consumer reporting agency  may develop procedures
involving the use of telephone, fax, the Internet, or other
electronic media to receive and process a request from a consumer to
temporarily lift a freeze on a credit report  or consumer file
 pursuant to subdivision (d) in an expedited manner.
   (g) A consumer credit reporting agency  or nationwide
specialty consumer reporting agency  shall remove or temporarily
lift a freeze placed on a consumer's credit report  or consumer
file  only in the following cases:
   (1) Upon consumer request, pursuant to subdivision (d) or (j).
   (2) If the consumer's credit report  or consumer file 
was frozen due to a material misrepresentation of fact by the
consumer. If a consumer credit reporting agency  or nationwide
specialty consumer reporting agency  intends to remove a freeze
upon a consumer's credit report  or consumer file  pursuant
to this paragraph, the consumer credit reporting agency  or
nationwide specialty consumer reporting agency  shall notify the
consumer in writing prior to removing the freeze on the consumer's
credit report  or consumer file  .
   (h) A third party who requests access to a consumer credit report
 or consumer file  in connection with an application for
credit or any other use may treat the application as incomplete if a
security freeze is in effect and the consumer does not allow his or
her credit report  or consumer file  to be accessed for that
specific party or period of time.
   (i) If a consumer requests a security freeze, the consumer credit
reporting agency  or nationwide specialty consumer reporting
agency  shall disclose the process of placing and temporarily
lifting a freeze and the process for allowing access to information
from the consumer's credit report  or consumer file  for a
specific party or period of time while the freeze is in place.
   (j) A security freeze shall remain in place until the consumer
requests that the security freeze be removed. A consumer credit
reporting agency  or   nationwide specialty consumer
reporting agency  shall remove a security freeze within three
business days of receiving a request for removal from the consumer if
the consumer provides both of the following:
   (1) Proper identification, as defined in subdivision (c) of
Section 1785.15.
   (2) The unique personal identification number or password provided
by the credit reporting agency  or nationwide specialty consumer
reporting agency  pursuant to subdivision (c).
   (k) A consumer credit reporting agency  or nationwide
specialty consumer reporting agency  shall require proper
identification, as defined in subdivision (c) of Section 1785.15, of
the person making a request to place or remove a security freeze.
   (l) The provisions of this section do not apply to the use of a
consumer credit report  or consumer file  by any of the
following:
   (1) (A) (i) A person or entity with which the consumer has or had,
prior to any assignment, an account or contract, including a demand
deposit account, or to which the consumer issued a negotiable
instrument, for the purpose of reviewing the account or collecting
the financial obligation owing for the account, contract, or
negotiable instrument.
   (ii) A subsidiary, affiliate, or agent of a person or entity
described in clause (i), an assignee of a financial obligation owing
by the consumer to such a person or entity, or a prospective assignee
of a financial obligation owing by the consumer to such a person or
entity in conjunction with the proposed purchase of the financial
obligation, for the purpose of reviewing the account or collecting
the financial obligation owing for the account, contract, or
negotiable instrument.
   (B) For purposes of this paragraph, "reviewing the account"
includes activities related to account maintenance, monitoring,
credit line increases, and account upgrades and enhancements.
   (2) A subsidiary, affiliate, agent, assignee, or prospective
assignee of a person to whom access has been granted under
subdivision (d) for purposes of facilitating the extension of credit
or other permissible use.
   (3) Any state or local agency, law enforcement agency, trial
court, or private collection agency acting pursuant to a court order,
warrant, or subpoena.
   (4) A child support agency acting pursuant to Chapter 2
(commencing with Section 17400) of Division 17 of the Family Code or
Title IV-D of the Social Security Act (42 U.S.C. et seq.).
   (5) The State Department of Health Care Services or its agents or
assigns acting to investigate Medi-Cal fraud.
   (6) The Franchise Tax Board or its agents or assigns acting to
investigate or collect delinquent taxes or unpaid court orders or to
fulfill any of its other statutory responsibilities.
   (7) The use of credit information for the purposes of prescreening
as provided for by the federal Fair Credit Reporting Act.
   (8) Any person or entity administering a credit file monitoring
subscription service to which the consumer has subscribed.
   (9) Any person or entity for the purpose of providing a consumer
with a copy of his or her credit report    or consumer
file  upon the consumer's request.
   (m) (1) Except as provided in paragraph (2), this title does not
prevent a consumer credit reporting agency  or nationwide
specialty consumer reporting agency  from charging a fee of no
more than ten dollars ($10) to a consumer for the placement of each
freeze, the removal of the freeze, the temporary lift of the freeze
for a period of time, or the temporary lift of the freeze for a
specific party, regarding access to a consumer credit report, except
that a consumer credit reporting agency  or nationwide specialty
consumer reporting agency  may not charge a fee to a victim of
identity theft who has submitted a valid police report or valid
Department of Motor Vehicles investigative report that alleges a
violation of Section 530.5 of the Penal Code.
   (2) With respect to a consumer who is 65 years of age or older and
who has provided identification confirming his or her age, a
consumer credit reporting agency  or nationwide specialty
consumer reporting agency  may charge a fee not to exceed five
dollars ($5) for the placement of each freeze, the removal of the
freeze, the temporary lift of the freeze for a period of time, or the
temporary lift of the freeze for a specific party.
   (n) Regardless of the existence of a security freeze, a consumer
reporting agency  or nationwide specialty consumer reporting
agency  may disclose public record information lawfully obtained
by, or for, the consumer reporting agency  or nationwide
specialty consumer reporting agency  from an open public record
to the extent otherwise permitted by law. This subdivision does not
prohibit a consumer reporting agency  or nationwide specialty
consumer reporting agency  from electing to apply a valid
security freeze to the entire contents of a credit report  or
consumer file  .
  SEC. 5.  Section 1785.11.3 of the Civil Code is amended to read:
   1785.11.3.  (a) If a security freeze is in place, a consumer
credit reporting agency  or nationwide specialty consumer
reporting agency  shall not change any of the following official
information in a consumer credit report  or consumer file 
without sending a written confirmation of the change to the consumer
within 30 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
shall be sent to both the new address and to the former address.
   (b) If a consumer has placed a security alert, a consumer credit
reporting agency  or nationwide specialty consumer reporting
agency  shall provide the consumer, upon request, with a free
copy of his or her credit report  or consumer file  at the
time the 90-day security alert period expires.