Chapter 06-226

Chapter 226

2006 -- H 7148 SUBSTITUTE A AS AMENDED

Enacted 06/29/06

A N A C T

RELATING TO COMMERCIAL LAW - GENERAL REGULATORY PROVISIONS

Introduced By: Representatives Rice, Church, Ajello, and Lima

Date Introduced: February 08, 2006

It is enacted by the General Assembly as follows:

SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW – GENERAL

REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter:

CHAPTER 48

CONSUMER EMPOWERMENT AND IDENTITY THEFT PREVENTION ACT OF 2006

6-48-1. Short title. – This chapter may be cited as "The Consumer Empowerment and

Identity Theft Prevention Act of 2006".

6-48-2. Purpose. – This act establishes the right of consumers to protect themselves from

identity theft or fraud by conferring upon them the right to voluntarily place a security freeze on

their credit report.

6-48-3. Legislative findings. – The general assembly finds and declares that:

(a) Identity theft is a growing menace for consumers in the new economy, as vast

quantities of sensitive, personal information has become vulnerable to criminal interception and

misuse;

(b) Identity theft has become a major law enforcement challenge;

data, the fraudulent acquisition of credit cards or other financial products in another person's

name;

(d) Identity theft is an act that violates the privacy of our citizens, ruins their good names

and may subject them to restricted access to credit, diminished employment opportunities, and

months or years of effort to repair damage to credit histories;

(e) Social security numbers are frequently used as identification numbers in many

computer files, giving access to information an individual may want kept private, making it is

wise to limit access to an individual's social security number whenever possible; and

(f) It is therefore a valid public purpose for the Rhode Island general assembly to ensure

that the private financial information and social security numbers of the citizens of the state of

Rhode Island are less accessible, in order to mitigate the potential for more identity theft to occur.

6-48-4. Definitions. – As used in this chapter:

(a) "Person" means any individual, partnership, corporation, trust, estate, cooperative,

association, government or governmental subdivision or agency, or other entity.

(b) "Consumer" means an individual who is also a resident of this state.

1681(a)(f).

(d) "Consumer report" has the meaning ascribed to it in 15 U.S.C. sec. 1681(a)(d).

(e) "Credit card" has the same meaning as in section 103 of 15 U.S.C. section 1601 et.

seq. (The Truth in Lending Act.)

(f) "Debit card" means any card or device issued by a financial institution to a consumer

for use in initiating an electronic fund transfer from the account holding assets of the consumer at

such financial institution, for the purpose of transferring money between accounts or obtaining

money, property, labor, or services.

(g) "Proper identification" means proper identification as defined in 15 U.S.C. sec.

1681h(a) (1).

(i) "Security freeze" means a notice placed in a consumer's credit report at the request of

the consumer and subject to certain exceptions, that prohibits the consumer reporting agency from

releasing the consumer's credit report or score related to the extension of credit.

(j) "Reviewing the account" or "account review" includes activities related to account

maintenance, monitoring, credit line increases, and account upgrades and enhancements.

6-48-5. Security freeze – Timing, covered entities, cost. – (a) A consumer may elect to

place a "security freeze" on his or her credit report by making a request by certified mail to a

consumer reporting agency at an address designated by the consumer reporting agency to receive

such requests.

(b) A consumer reporting agency shall place a security freeze on a consumer's credit

report no later than five (5) business days after receiving from the consumer:

(1) a written request as described in subsection (a);

(2) proper identification; and

(3) payment of a fee, if applicable.

freeze to the consumer within ten (10) business days of placing the freeze and at the same time

shall provide the consumer with a unique personal identification number, password or similar

device to be used by the consumer when providing authorization for the release of his or her

credit for a specific period of time, or when permanently removing the freeze.

(d) If the consumer wishes to allow his or her credit report to be accessed for a specific

period of time while a freeze is in place, he or she shall contact the consumer reporting agency,

using a point of contact designated by the consumer reporting agency request that the freeze be

temporarily lifted, and provide the following:

(1) proper identification;

(2) the unique personal identification number or password provided by the consumer

reporting agency pursuant to subsection (c) of this section;

(3) the proper information regarding the time period for which the report shall be

available to users of the credit report; and

(4) a fee if applicable.

(e) A consumer reporting agency that receives a request from a consumer to temporarily

lift a freeze on a credit report pursuant to subsection (d) of this section shall comply with the

request no later than three (3) business days after receiving the request.

(f) A consumer reporting agency may develop procedures involving the use of telephone,

fax, or, upon the consent of the consumer in the manner required by the Electronic Signatures in

Global and National Commerce Act hereinafter referred to as ("E-Sign") for legally required

notices, by the Internet, e-mail, or other electronic media to receive and process a request from a

consumer to temporarily lift a freeze on a credit report pursuant to subsection (d) of this section in

an expedited manner.

(g) A consumer reporting agency shall remove or temporarily lift a freeze placed on a

consumer's credit report only in the following cases:

(1) upon consumer request, pursuant to subsection (d) or (j) of this section; and

(2) if the consumer's credit report was frozen due to a material misrepresentation of fact

by the consumer. If a consumer reporting agency intends to remove a freeze upon a consumer's

credit report pursuant to this paragraph, the consumer reporting agency shall notify the consumer

in writing prior to 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 any other use, and

the consumer does not allow his or her credit report to be accessed, then the third-party may treat

the application as incomplete.

(i) A security freeze shall remain in place until the consumer requests using a point of

contact designated by the consumer reporting agency, that the security freeze be removed. A

consumer reporting agency shall remove a security freeze within three (3) business days of

receiving a request for removal from the consumer, who provides all of the following:

(1) proper identification;

(2) the unique personal identification number or password provided by the consumer

reporting agency pursuant to subsection (c) of this section; and

(3) a fee, if applicable.

(j) A consumer reporting agency shall require proper identification of the person making

a request to place or remove a security freeze.

(k) A consumer reporting agency may not suggest or otherwise state or imply to a third-

party that the consumer's security freeze reflects a negative credit score, history, report or rating.

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

any of the following:

(1) A person, or the person's subsidiary, affiliate, agent, or assignee with which the

consumer has or, prior to 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) A subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom

access has been granted under subsection (d) of this section for purposes of facilitating the

extension of credit or other permissible use;

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

(4) A state or local agency which administers a program for establishing and enforcing

child support obligations;

(5) The department of health or its agents or assigns acting to investigate fraud;

(6) The attorney general or its agents or assigns acting to investigate fraud;

(7) The division of taxation 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;

(8) The use of a credit report by a person for purposes of prescreening as defined by the

federal Fair Credit Reporting Act (15 U.S.C.A. section 1681 et. seq.);

(9) Any person or entity administering a credit file monitoring subscription service to

which the consumer has subscribed;

(10) Any person or entity for the purpose of providing a consumer with a copy of his or

her credit report upon the consumer's request; and

(11) Any person or entity for use in setting or adjusting a rate, adjusting a claim, or

underwriting ~~fre~~ for insurance purposes.

(m) A consumer may be charged a fee of no more than ten dollars ($10.00) for any

security freeze services, including, but not limited to, the placement, temporary lifting and

permanent removal of a security freeze:.The consumer may not be charged for a one-time reissue

of a new personal identification number; provided, however, the consumer may be charged not

more than five dollars ($5.00) for subsequent instances of loss of the personal identification

number. However, a consumer reporting agency may not charge any fee to a victim of identity

theft who has submitted a copy of an incident report from or a complaint to a law enforcement

agency, or to a consumer who is of sixty-five (65) years of age or older.

Entities not required to place a security freeze.

(a) The following entities are not required to place a security freeze on a credit report:

(1) a consumer reporting agency that acts only as a reseller of credit information by

assembling and merging information contained in the database of another consumer reporting

agency or multiple consumer credit reporting agencies, and does not maintain a permanent data

base of credit information from which new consumer credit report are produced. However, a

consumer reporting agency acting as a reseller shall honor any security freeze placed on a

consumer credit report by another consumer reporting agency.

(2) A check services or fraud prevention services company, which issues reports on

incidents of fraud or authorizations for the purpose of approving or processing negotiable

instruments, electronic funds transfers, or similar methods of payments.

(3) A deposit account information service company, which issues reports regarding

account closures due to fraud, substantial overdrafts, ATM abuse, or 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.

(4) Any database or file which consists of any information adverse to the interests of the

consumer, including, but not limited to, criminal record information, personal loss history

information, information used for fraud prevention or detection, tenant screening, and

employment screening.

6-48-6. Notice of rights. – At any time that a consumer is required to receive a summary

of rights required under section 609 of the federal Fair Credit Reporting Act, (15 U. S.C.A.

section 1681 et. seq.) the following notice shall be included:

Consumers have the right to obtain a security freeze

You may obtain a security freeze on your credit report to protect your privacy and ensure

that credit is not granted in your name without your knowledge. You have a right to place a

"security freeze" on your credit report pursuant to the R.I.G.L. chapter 6-48 to the Identity Theft

Prevention Act of 2006.

The security freeze will prohibit a consumer reporting agency from releasing any

information in your credit report without your express authorization or approval.

The security freeze is designed to prevent credit, loans, and services from being approved

in your name without your consent. When you place a security freeze on your credit report,

within five (5) business days you will be provided a personal identification number or password

to use if you choose to remove the freeze on your credit report or to temporarily authorize the

release of your credit report for a specific period of time after the freeze is in place. To provide

that authorization, you must contact the consumer reporting agency and provide all of the

following:

(1) The unique personal identification number or password provided by the consumer

reporting agency.

(2) Proper identification to verify your identity.

(3) The proper information regarding the period of time for which the report shall be

available to users of the credit report.

A consumer reporting agency that receives a request from a consumer to temporarily lift

a freeze on a credit report shall comply with the request no later than three (3) business days after

receiving the request.

A security freeze does not apply to circumstances where you have an existing account

relationship and a copy of your report is requested by your existing creditor or its agents or

affiliates for certain types of an account review, collection, fraud control or similar activities.

If you are actively seeking a new credit, loan, utility, telephone, or insurance account,

you should understand that the procedures involved in lifting a security freeze may slow your

own applications for credit. You should plan ahead and lift a freeze – either completely if you are

shopping around, or specifically for a certain creditor – with enough advance notice before you

apply for new credit for the lifting to take effect.

You have a right to bring a civil action against someone who violates your rights under

the credit reporting laws. The action can be brought against a consumer reporting agency or a

user of your credit report.

Unless you are sixty-five (65) years of age or older, or you are a victim of identity theft

with an incident report or a complaint from a law enforcement agency, a consumer reporting

agency has the right to charge you up to ten dollars ($10.00) to place a freeze on your credit

report, up to ten dollars ($10.00) to temporarily lift a freeze on your credit report, depending on

the circumstances, and up to ten dollars ($10.00) to remove a freeze from your credit report. If

you are sixty-five (65) years of age or older or are a victim or identity theft with a valid incident

report or complaint, you may not be charged a fee by a consumer reporting agency for placing,

temporarily lifting, or removing a freeze.

6-48-7. Violations; Penalties. – (a) Any person who willfully fails to comply with any

requirement imposed under this subchapter with respect to any consumer is liable to that

consumer in an amount equal to the sum of:

(1) any actual damages sustained by the consumer as a result of the failure or damages of

not less than one hundred dollars ($100) and not more than one thousand dollars ($1,000); or

(2) such amount of punitive damages as the court allows; and

(3) in the case of any successful action to enforce any liability under this section, the

costs of the action together with reasonable attorneys' fees as determined by the court.

(b) Any person who obtains a consumer report, requests a security freeze, requests the

temporary lift of a freeze, or the removal of a security freeze from a consumer reporting agency

under false pretenses or in an attempt to violate federal or state law shall be liable to the consumer

reporting agency for actual damages sustained by the consumer reporting agency or one thousand

dollars ($1,000), whichever is greater.

this subchapter with respect to any consumer is liable to that consumer in an amount equal to the

sum of:

(1) any actual damages sustained by the consumer as a result of the failure and;

(2) in the case of any successful action to enforce any liability under this section, the

costs of the action together with reasonable attorneys' fees as determined by the court.

(d) Upon a finding by the court that an unsuccessful pleading, motion, or other paper

filed in connection with an action under this subchapter was filed in bad faith or for the purposes

of harassment, the court shall award to the prevailing party attorneys' fees reasonable in relation

to the work expended in responding to the pleading, motion, or other paper.

6-48-8. Social security number protection - Effective January 1, 2008. – (a) Except

as provided in subsection (c) of this section a person or entity, including a state or local agency,

may not do any of the following:

(1) Intentionally communicate or otherwise make available to the general public an

individual's social security number;

(2) Print an individual's social security number on any card required for the individual to

access products or services provided by the person or entity;

(3) Require an individual to transmit his or her social security number over the Internet,

unless the connection is secure or the social security number is encrypted;

(4) Require an individual to use his or her social security number to access an Internet

Website, unless a password or unique personal identification number or other authentication

device is also required to access the Internet Website; and

(5) Print an individual's social security number on any materials that are mailed to the

individual, unless state or federal law requires the social security number to be on the document

to be mailed.

Notwithstanding this paragraph, social security numbers may be included in applications

and forms sent by mail, including documents sent as part of an application or enrollment process,

or to establish, amend or terminate an account, contract or policy, or to confirm the accuracy of

the social security number. A social security number that is permitted to be mailed under this

section may not be printed, in whole or in part, on a postcard or other mailer not requiring an

envelope, or visible on the envelope or without the envelope having been opened.

(b) The provisions of this section do not apply to documents that are recorded or required

to be open to the public pursuant to the Rhode Island general laws chapter 42-46. This section

does not apply to records that are by statute or case law required to be made available to the

public by entities provided for in the Rhode Island Constitution.

number as required by state or federal law or the use of a social security number for internal

verification or administrative purposes.

(d) The penalties for violating this section shall be:

(1) Any person who violates this section is responsible for the payment of a civil fine of

not more than three thousand dollars ($3,000).

(2) A person who knowingly violates this section is guilty of a misdemeanor punishable

by imprisonment for not more than thirty (30) days, or a fine of not more than five thousand

dollars ($5,000), or both.

6-48-9. Severability. – If any provision of this chapter or the application thereof to any

person or circumstances is held invalid, such invalidity shall not affect other provisions or

applications of the chapter, which can be given effect without the invalid provision or application,

and to this end the provision of this chapter are declared to be severable.

SECTION 2. This act shall take effect upon passage except for sections 6-48-5 and 6-48-7

which shall take effect on January 1, 2007.

=======

LC01484/SUB A/3

=======