1     
USE OF CREDIT INFORMATION AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Christine F. Watkins

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill amends and enacts provisions related to the use of credit information.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     prohibits a public service provider from using credit information to determine a
14     rate;
15          ▸     prohibits an Internet service provider from using credit information to determine a
16     rate;
17          ▸     prohibits an insurer from using credit information to determine certain aspects of a
18     motor vehicle related insurance policy;
19          ▸     prohibits an insurer from using credit information in connection with the
20     underwriting of residential dwelling liability insurance;
21          ▸     prohibits a public utility from using credit information to determine a rate;
22          ▸     prohibits the Public Service Commission from adopting a method of rate regulation
23     that bases rates on credit information; and
24          ▸     makes technical and conforming changes.
25     Money Appropriated in this Bill:
26          None
27     Other Special Clauses:
28          None
29     Utah Code Sections Affected:
30     AMENDS:
31          31A-22-320, as last amended by Laws of Utah 2008, Chapter 382
32          31A-22-1307, as enacted by Laws of Utah 1997, Chapter 105
33          54-4-4.1, as last amended by Laws of Utah 2009, Chapter 319
34     ENACTS:
35          11-26a-101, Utah Code Annotated 1953
36          11-26a-102, Utah Code Annotated 1953
37          11-26a-201, Utah Code Annotated 1953
38          13-57-101, Utah Code Annotated 1953
39          13-57-102, Utah Code Annotated 1953
40          13-57-201, Utah Code Annotated 1953
41          54-3-34, Utah Code Annotated 1953
42     

43     Be it enacted by the Legislature of the state of Utah:
44          Section 1. Section 11-26a-101 is enacted to read:
45     
CHAPTER 26a. PUBLIC SERVICE PROVIDER PROHIBITION

46          11-26a-101. Title.
47          This chapter is known as "Public Service Provider Prohibition."
48          Section 2. Section 11-26a-102 is enacted to read:
49          11-26a-102. Definitions.
50          As used in this chapter:
51          (1) "Credit information" means the same as that term is defined in Section 13-57-102.
52          (2) "Public service provider" means a person engaged in the business of supplying
53     taxable energy as defined in Section 10-1-303.
54          Section 3. Section 11-26a-201 is enacted to read:
55          11-26a-201. Prohibition against determining rates from credit information.
56          A public service provider may not use an individual's credit information for purposes of
57     determining a rate for the individual.
58          Section 4. Section 13-57-101 is enacted to read:
59     
CHAPTER 57. CREDIT CHECK PROHIBITIONS

60          13-57-101. Title.
61          This chapter is known as "Credit Check Prohibitions."
62          Section 5. Section 13-57-102 is enacted to read:
63          13-57-102. Definitions.
64          As used in this chapter:
65          (1) "Consumer report" means the same as that term is defined in 15 U.S.C. Sec. 1681a.
66          (2) "Credit information" means:
67          (a) a consumer report;
68          (b) a credit score;
69          (c) any part of a consumer report; or
70          (d) any part of a credit score.
71          (3) "Credit score" means a numerical value or a categorization that is:
72          (a) derived from information in a consumer report;
73          (b) derived from a statistical tool or modeling system; and
74          (c) developed to predict credit behavior.
75          (4) "Internet service provider" means a person engaged in the business of providing
76     Internet access service, with the intent of making a profit, to consumers in the state.
77          Section 6. Section 13-57-201 is enacted to read:
78          13-57-201. Prohibition against use of credit information.
79          An Internet service provider that contracts with an individual to provide Internet access
80     for the individual may not use the individual's credit information for the purpose of
81     determining a rate for the individual.
82          Section 7. Section 31A-22-320 is amended to read:
83          31A-22-320. Use of credit information.
84          (1) For purposes of this section:
85          (a) "Credit information" means:
86          (i) a consumer report;
87          (ii) a credit score;
88          (iii) any information obtained by the insurer from a consumer report;
89          (iv) any part of a consumer report; or
90          (v) any part of a credit score.
91          (b) (i) Except as provided in Subsection (1)(b)(ii), "consumer report" is as defined in
92     15 U.S.C. Sec. 1681a.
93          (ii) "Consumer report" does not include:
94          (A) a motor vehicle record obtained from a state or an agency of a state; or
95          (B) any information regarding an applicant's or insured's insurance claim history.
96          (c) (i) "Credit score" means a numerical value or a categorization that is:
97          (A) derived from information in a consumer report;
98          (B) derived from a statistical tool or modeling system; and
99          (C) developed to predict the likelihood of:
100          (I) future insurance claims behavior; or
101          (II) credit behavior.
102          (ii) "Credit score" includes:
103          (A) a risk predictor; or
104          (B) a risk score.
105          (iii) A numerical value or a categorization described in Subsection (1)(c)(i) is a credit
106     score if it is developed to predict the behavior described in Subsection (1)(c)(i)(C) regardless of
107     whether it is developed to predict other factors in addition to predicting the behavior described
108     in Subsection (1)(c)(i)(C).
109          (d) "Motor vehicle related insurance policy" means:
110          (i) a motor vehicle liability policy;
111          (ii) a policy that contains uninsured motorist coverage;
112          (iii) a policy that contains underinsured motorist coverage;
113          (iv) a policy that contains property damage coverage under this part; or
114          (v) a policy that contains personal injury coverage under this part.
115          (2) An insurer that issues a motor vehicle related insurance policy[: (a) except as
116     provided in Subsection (2)(b),] may not use credit information for the purpose of determining
117     for the motor vehicle related insurance policy:
118          [(i)] (a) renewal;
119          [(ii)] (b) nonrenewal;
120          [(iii)] (c) termination;
121          [(iv)] (d) eligibility;
122          [(v)] (e) underwriting; or
123          [(vi)] (f) rating[; and].
124          [(b) notwithstanding Subsection (2)(a), may use credit information for the purpose of:]
125          [(i) if risk related factors other than credit information are considered, determining
126     initial underwriting; or]
127          [(ii) providing to an insured:]
128          [(A) a reduction in rates paid by the insured for the motor vehicle related insurance
129     policy; or]
130          [(B) any other discount similar to the reduction in rates described in Subsection
131     (2)(b)(ii)(A).]
132          (3) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
133     commissioner may make rules necessary to enforce this section.
134          Section 8. Section 31A-22-1307 is amended to read:
135          31A-22-1307. Use of consumer reports by residential dwelling liability insurers.
136          (1) As used in this section:
137          (a) "Consumer report" means the same as that term is defined in 15 U.S.C. Sec. 1681a.
138          (b) "Credit information" means:
139          (i) a consumer report;
140          (ii) a credit score;
141          (iii) any information obtained by the insurer from a consumer report;
142          (iv) any part of a consumer report; or
143          (v) any part of a credit score.
144          (c) (i) "Credit score" means a numerical value or a categorization that is:
145          (A) derived from information in a consumer report;
146          (B) derived from a statistical tool or modeling system; and
147          (C) developed to predict the likelihood of future insurance claims behavior or credit
148     behavior.
149          (ii) "Credit score" includes:
150          (A) a risk predictor;
151          (B) a risk score; or
152          (C) a numerical value or a categorization described in Subsection (1)(c)(i), if the
153     numerical value or categorization is developed to predict the behavior described in
154     Subsection(1)(c)(i)(C) regardless of whether it is developed to predict other factors in addition
155     to the behavior described in Subsection (1)(c)(i)(C).
156          [(1)] (2) An insurer [who uses consumer reports] may not use credit information in
157     connection with the underwriting of residential dwelling liability insurance [shall establish and
158     adhere to written procedures that:].
159          [(a) identify the circumstances under which the insurer may request and the manner in
160     which it will use consumer reports in its underwriting decisions;]
161          [(b) provide prior notice of the possible or intended use of a consumer report to an
162     applicant for a residential liability insurance policy; and]
163          [(c) ensure compliance with the Consumer Credit Reporting Act, 15 U.S.C. Sec. 1681
164     et seq., including the duties that arise from taking adverse action based on information
165     contained in a consumer report.]
166          [(2) An insurer that requests or uses a consumer report in connection with an
167     application for a residential dwelling liability insurance policy shall maintain evidence of its
168     compliance with the written procedures established by the insurer under Subsection (1).]
169          [(3) An insurer shall submit to the commissioner, upon request, evidence of
170     compliance maintained in accordance with Subsection (2).]
171          [(4) As used in this section, the terms "consumer report" and "adverse action" are
172     defined in 15 U.S.C. Sec. 1681a.]
173          Section 9. Section 54-3-34 is enacted to read:
174          54-3-34. Use of credit information in determining rates.
175          (1) As used in this section, "credit information" means the same as that term is defined
176     in Section 13-57-102.
177          (2) A public utility may not use an individual's credit information for the purpose of
178     determining a rate.
179          Section 10. Section 54-4-4.1 is amended to read:
180          54-4-4.1. Rules to govern rates.
181          (1) [The] Subject to Subsection (3), the commission may, by rule or order, adopt any
182     method of rate regulation that is:
183          (a) consistent with this title;
184          (b) in the public interest; and
185          (c) just and reasonable.
186          (2) In accordance with Subsection (1), a method of rate regulation may include:
187          (a) rate designs utilizing:
188          (i) volumetric rate components;
189          (ii) demand rate components;
190          (iii) fixed rate components; and
191          (iv) variable rate components;
192          (b) rate stabilization methods;
193          (c) decoupling methods;
194          (d) incentive-based mechanisms; and
195          (e) other components, methods, or mechanisms approved by the commission.
196          (3) (a) As used in this Subsection (3), "credit information" means the same as that term
197     is defined in Section 13-57-102.
198          (b) The commission may not adopt a method of rate regulation that bases rates on
199     consumers' or users' credit information.