Third Substitute H.B. 12

Representative Paul Ray proposes the following substitute bill:


             1     
CONSUMER CREDIT PROTECTION AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Paul Ray

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies Title 13, Chapter 45, Consumer Credit Protection Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    under certain circumstances, requires a consumer reporting agency to give a
             14      consumer, prior to purchase, a written disclosure that states that the credit score the
             15      consumer reporting agency provides may be different from the credit score used by
             16      a lender;
             17          .    requires an entity that requests a consumer's credit score or credit report, for a
             18      purpose other than the extension of credit, to provide the consumer with a written
             19      disclosure that includes:
             20              .    the name of the consumer reporting agency that calculated the credit score;
             21              .    the industry that is associated with the algorithm used to generate the credit
             22      score;
             23              .    the consumer's credit score; and
             24              .    if the requesting entity is a consumer credit counseling agency, the consumer's
             25      credit report;


             26          .    prohibits a consumer reporting agency from refusing to sell a consumer's credit
             27      score to a requesting entity solely because the requesting entity is required to make
             28      the disclosures described in this bill;
             29          .    requires a credit bureau to give a requesting entity written notice if the credit bureau
             30      suspends or terminates an ongoing service to the requesting entity of providing the
             31      requesting entity a consumer's credit score or credit report upon request; and
             32          .    provides enforcement procedures for the provisions in this bill.
             33      Money Appropriated in this Bill:
             34          None
             35      Other Special Clauses:
             36          None
             37      Utah Code Sections Affected:
             38      AMENDS:
             39           13-45-102 , as enacted by Laws of Utah 2006, Chapter 344
             40      ENACTS:
             41           13-45-501 , Utah Code Annotated 1953
             42           13-45-502 , Utah Code Annotated 1953
             43           13-45-503 , Utah Code Annotated 1953
             44           13-45-504 , Utah Code Annotated 1953
             45      RENUMBERS AND AMENDS:
             46           13-45-601 , (Renumbered from 13-45-401, as enacted by Laws of Utah 2006, Chapter
             47      344)
             48     
             49      Be it enacted by the Legislature of the state of Utah:
             50          Section 1. Section 13-45-102 is amended to read:
             51           13-45-102. Definitions.
             52          As used in this chapter:
             53          (1) "Consumer" means [a natural person] an individual.
             54          (2) "Consumer credit counseling agency" means:
             55          (a) a person that is registered with the Division of Consumer Protection to provide debt
             56      management services under Title 13, Chapter 42, Uniform Debt-Management Services Act; or


             57          (b) a HUD-approved housing counseling agency.
             58          [(2)] (3) "Consumer reporting agency" means [a person who, for fees, dues, or on a
             59      cooperative basis, regularly engages in whole or in part in the practice of assembling or
             60      evaluating information concerning a consumer's credit or other information for the purpose of
             61      furnishing a credit report to another person.]:
             62          (a) a credit bureau; or
             63          (b) a person that obtains and resells any information, including a credit score or credit
             64      report, produced, in whole or in part, by a credit bureau.
             65          (4) "Credit bureau" means a person that, for fees, dues, or on a cooperative basis,
             66      regularly engages in the practice of assembling or evaluating information concerning a
             67      consumer's credit or other information for the purpose of furnishing a credit report or credit
             68      score to another person.
             69          [(3)] (5) "Credit report" means a consumer report, as defined in 15 U.S.C. Sec. 1681a[,
             70      that is used or collected in whole or part for the purpose of serving as a factor in establishing a
             71      consumer's eligibility for credit for personal, family, or household purposes].
             72          (6) (a) "Credit score" means a numerical value or a categorization that is:
             73          (i) derived from information in a consumer report;
             74          (ii) derived from a statistical tool or modeling system; and
             75          (iii) developed to predict, at least in part, the likelihood of:
             76          (A) future insurance claims behavior; or
             77          (B) credit behavior.
             78          (b) "Credit score" includes:
             79          (i) a risk predictor; or
             80          (ii) a risk score.
             81          (7) "Depository institution" is as defined in Section 7-1-103 .
             82          (8) "Electronically signed" means executed by electronic sound, symbol, or process
             83      attached to or logically associated with a record, demonstrating the intent to sign the record.
             84          (9) "Extension of credit" means the right to defer payment of debt or to incur debt and
             85      defer its payment.
             86          (10) "Lender" means a person that regularly offers or makes an extension of credit to a
             87      consumer.


             88          (11) "Lender credit score" means a credit score that a mortgage lender uses to
             89      underwrite or evaluate an individual's request for a mortgage loan, and that is calculated using
             90      the same algorithm used by Fannie Mae, Freddie Mac, or a comparable entity.
             91          (12) "Lessor" is as defined in Section 15-8-3 .
             92          [(4)] (13) "Normal business hours" means Sunday through Saturday, between the hours
             93      of 6:00 a.m. and 9:30 p.m., Mountain Standard or Mountain Daylight Time.
             94          [(5)] (14) (a) "Personal information" means personally identifiable financial
             95      information:
             96          (i) provided by a consumer to another person;
             97          (ii) resulting from any transaction with the consumer or any service performed for the
             98      consumer; or
             99          (iii) otherwise obtained by another person.
             100          (b) "Personal information" does not include:
             101          (i) publicly available information, as that term is defined by the regulations prescribed
             102      under 15 U.S.C. Sec. 6804; or
             103          (ii) any list, description, or other grouping of consumers, and publicly available
             104      information pertaining to the consumers, that is derived without using any nonpublic personal
             105      information.
             106          (c) Notwithstanding Subsection [(5)] (14)(b), "personal information" includes any list,
             107      description, or other grouping of consumers, and publicly available information pertaining to
             108      the consumers, that is derived using any nonpublic personal information other than publicly
             109      available information.
             110          [(6)] (15) "Proper identification" has the same meaning as in 15 U.S.C. Sec.
             111      1681h(a)(1), and includes:
             112          (a) the consumer's full name, including first, last, and middle names and any suffix;
             113          (b) any name the consumer previously used;
             114          (c) the consumer's current and recent full addresses, including street address, any
             115      apartment number, city, state, and ZIP code;
             116          (d) the consumer's Social Security number; and
             117          (e) the consumer's date of birth.
             118          (16) (a) "Requesting entity" means a person that requests or obtains an individual's


             119      credit report or credit score for a purpose other than the extension of credit, including a
             120      consumer credit counseling agency, credit counselor, housing counselor, lessor, or employer.
             121          (b) "Requesting entity" does not include a depository institution.
             122          [(7)] (17) "Security freeze" means a prohibition, consistent with Section 13-45-201 , on
             123      a consumer reporting agency's furnishing of a consumer's credit report to a third party intending
             124      to use the credit report to determine the consumer's eligibility for credit.
             125          Section 2. Section 13-45-501 is enacted to read:
             126     
Part 5. Credit Score Disclosure Requirements

             127          13-45-501. Title.
             128          This part is known as "Credit Score Disclosure Requirements."
             129          Section 3. Section 13-45-502 is enacted to read:
             130          13-45-502. Educational credit score -- Required disclosure.
             131          (1) Except as provided in Subsection (2), when, for a purpose other than an extension
             132      of credit, a consumer requests the consumer's credit score from a consumer reporting agency
             133      and the consumer reporting agency provides a credit score that is not a lender credit score, the
             134      consumer reporting agency shall give the consumer a written disclosure in substantially the
             135      following form:
             136          "This credit score will differ from the credit score used by a lender for the approval of a
             137      residential mortgage or other loan. This credit score is generated from a formula that is
             138      different from the formula used by lenders. Based on the credit score actually used by a lender,
             139      rather than this credit score, the lender may offer you loan terms that are more or less costly to
             140      you."
             141          (2) If a consumer reporting agency described in Subsection (1) is also a lender, and the
             142      consumer reporting agency provides the consumer a credit score that is not a lender credit score
             143      that the consumer reporting agency uses when deciding whether to grant an extension of credit,
             144      the consumer reporting agency shall give the consumer a written disclosure in substantially the
             145      following form:
             146          "This credit score is different from the credit score we use to evaluate whether to grant
             147      an extension of credit. This credit score is generated from a formula that is different from the
             148      formula we use to generate the credit score to evaluate whether to grant an extension of credit.
             149      Based on the credit score we actually use, rather than this credit score, you may be offered loan


             150      terms that are more or less costly to you."
             151          (3) A person who gives a disclosure described in Subsection (1) or (2) shall ensure that
             152      the disclosure is:
             153          (a) independently displayed on a separate page;
             154          (b) typed in at least 14-point font; and
             155          (c) signed by the consumer, or if the credit score is obtained online, electronically
             156      signed by the consumer, before the consumer purchases the credit score.
             157          (4) This section does not apply to a depository institution.
             158          Section 4. Section 13-45-503 is enacted to read:
             159          13-45-503. Disclosure of credit score and other information to consumer.
             160          (1) Except as provided in Subsection (2), within 10 days after the day on which a
             161      requesting entity receives a consumer's credit score or credit report, the requesting entity shall
             162      give the consumer a written disclosure that states:
             163          (a) the name of the consumer reporting agency that calculated the credit score;
             164          (b) the name of the industry that is associated with the algorithm used to generate the
             165      credit score;
             166          (c) the consumer's credit score; and
             167          (d) if the requesting entity is a consumer credit counseling agency, the consumer's
             168      credit report.
             169          (2) A lessor shall disclose a consumer's credit score in accordance with Subsection (1)
             170      within three days after the day on which:
             171          (a) the lessor denies the consumer's application for a lease; or
             172          (b) the consumer and the lessor enter into a lease agreement.
             173          (3) A consumer reporting agency may not refuse to sell a consumer's credit score or
             174      credit report to a requesting entity because the requesting entity is required to disclose the
             175      credit score or the credit report to the consumer under this section.
             176          Section 5. Section 13-45-504 is enacted to read:
             177          13-45-504. Notification to requesting entity of suspension or termination.
             178          If a credit bureau and a requesting entity have an ongoing arrangement by which the
             179      credit bureau provides the requesting entity with a consumer's credit score or credit report upon
             180      request, and the credit bureau suspends or terminates the service of providing the requesting


             181      entity with a consumer's credit score or credit report upon request, the credit bureau shall,
             182      within two business days after the day on which the credit bureau suspends or terminates the
             183      service, give the requesting entity a written notice of suspension or termination that:
             184          (1) states the date on which the credit bureau suspended or terminated the service;
             185          (2) states the reason that the credit bureau suspended or terminated the service; and
             186          (3) provides an address and a phone number that the requesting entity may use to
             187      contact the credit bureau with any questions regarding the suspension or termination.
             188          Section 6. Section 13-45-601 , which is renumbered from Section 13-45-401 is
             189      renumbered and amended to read:
             190     
Part 6. Enforcement

             191           [13-45-401].     13-45-601. Enforcement.
             192          (1) The attorney general may enforce this chapter's provisions.
             193          (2) A person [who] that violates [this chapter's provisions] a provision from Section
             194      13-45-201 , 13-45-202 , 13-45-203 , 13-45-204 , 13-45-205 , or 13-45-301 is subject to a civil fine
             195      of:
             196          (a) no greater than $2,500 for a violation or series of violations concerning a specific
             197      consumer; and
             198          (b) no greater than $100,000 in the aggregate for related violations concerning more
             199      than one consumer.
             200          (3) A person that violates Section 13-45-502 , 13-45-503 , or 13-45-504 is subject to a
             201      civil fine of:
             202          (a) no less than $1,000 per violation; and
             203          (b) no greater than $1,000,000 in the aggregate for related violations.
             204          [(3)] (4) In addition to the penalties provided in [Subsection] Subsections (2) and (3),
             205      the attorney general may seek injunctive relief to prevent future violations of this chapter in:
             206          (a) the district court located in Salt Lake City; or
             207          (b) the district court for the district in which resides a consumer who is the subject of a
             208      credit report on which a violation occurs.


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