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HSFPP Weekly Update #78—Fair and Accurate Credit Transaction Act of 2003

Message from Flashman: Welcome back! I hope all of you have had time to rejuvenate and that you’re ready for the spring semester. Let’s get back in the swing of things with an update focusing on the Fair and Accurate Credit Transaction Act of 2003. This act was designed to strengthen Federal protections against identity theft, a major crime that cost Americans over $55 million last year. The changes to the Fair Credit Reporting Act that were approved in this recent Federal legislation provide consumers the right to obtain free copies of their credit reports each year.

This bill also would prevent sharing of some sensitive medical information and other customer information among affiliated companies. Consumers will also be able to opt out of receiving marketing calls or mail from companies they do business with. However, the bill infringes on states' rights by not allowing states to impose stronger protections than those provided at the Federal level.

This week’s update is also part of Kentucky Cooperative Extension’s promotion of National Consumer Protection Week, a national effort to increase financial literacy that takes place the week of February 1-7, 2004. (Because financial literacy is so critical to the economic well-being of families, I believe this should at least be a month-long promotional effort.) As you are well aware, financial literacy is very low among today’s teenagers. See our earlier Updates # 20 and 21 for more detailed information on teenagers’ lack of financial knowledge.

This update is related to Unit 5, which deals with credit.

Website Pick of the Week:

http://www.ftc.gov
The Federal Trade Commission’s website provides great resources on a variety of consumer issues, including our topic this week.

Suggested Activity for Teachers:

Have students go to one of the major credit bureaus’ websites (see Student Activity) and get a copy of their credit report. Give them a copy of the publication at the following website

http://www.ftc.gov/bcp/conline/pubs/credit/fcra.htm

as well as this week’s story In the New$... to share with their parents. This will help your students if they need to change any inaccurate or incomplete information in their credit reports. Answers to the student questions are in the publication at that FTC Web page. Ask your students about their understanding of credit reports and discuss with them why their credit reports are important. The student guide (pages 67-68) might be helpful, also. As parents want to know what their teenagers are learning at school (and possibly in their 4-H club), this also can be a great way to educate parents on changes in laws concerning identity theft.

In the New$... Fact Sheet: President Bush Signs the Fair and Accurate Credit Transactions Act of 2003

“On December 4, 2003, President Bush signed into law the Fair and Accurate Credit Transactions Act of 2003, ensuring that all citizens are treated fairly when they apply for a mortgage or other form of credit.

“The legislation will provide consumers, companies, consumer reporting agencies, and regulators with important new tools that expand access to credit and other financial services for all Americans, enhance the accuracy of consumers' financial information, and help fight identity theft. These reforms make permanent the uniform national standards of our credit markets, and institute new, strong consumer protections.

Background

“The Fair and Accurate Credit Transactions Act of 2003 will accomplish the following key Administration priorities to help ensure that all Americans, of every income level and background, are able to build good credit and confront the problem of identify theft:

• Ensuring that lenders make decisions on loans based on full and fair credit histories, and not on discriminatory stereotypes. In 1996, uniform national standards were established to set clear rules on what credit agencies were entitled to include in individual credit reports, and now more than a million Americans have credit as a result. This legislation makes those national standards permanent.
  
• Improving the quality of credit information, and protecting consumers against identity theft.
  
  • Giving every consumer the right to their credit report free of charge every year. Consumers will be able to review a free report every year for unauthorized activity, including activity that might be the result of identity theft.
    
  • Helping prevent identity theft before it occurs by requiring merchants to leave all but the last five digits of a credit card number off store receipts. This law will make sure that slips of paper that most people throw away do not contain their credit card number, a key to their financial identities.
    
  • Creating a national system of fraud detection to make identity thieves more likely to be caught. Previously, victims would have to make phone calls to all of their credit card companies and three major credit rating agencies to alert them to the crime. Now consumers will only need to make one call to receive advice, set off a nationwide fraud alert, and protect their credit standing.
    
  • Establishing a nationwide system of fraud alerts for consumers to place on their credit files. Credit reporting agencies that receive such alerts from customers will now be obliged to follow procedures to ensure that any future requests are by the true consumer, not an identity thief posing as the consumer. The law also will enable active duty military personnel to place special alerts on their files when they are deployed overseas.
    
  • Requiring regulators to devise a list of red flag indicators of identity theft, drawn from the patterns and practices of identity thieves. Regulators will be required to evaluate the use of these red flag indicators in their compliance examinations of financial institutions, and impose fines where disregard of red flags has resulted in losses to customers.
    
  • Requiring lenders and credit agencies to take action before a victim even knows a crime has occurred. With oversight by bank regulators, the credit agencies will draw up a set of guidelines to identify patterns common to identity theft, and develop methods to stop identity theft before it can cause major damage.

“This legislation gives consumers unprecedented tools to fight identity theft and continued access to the most dynamic credit markets in the world. With a free credit report and powerful new tools to fight fraud, consumers have the ability to better protect themselves and their families.”

http://www.whitehouse.gov/news/releases/2003/12/20031204-3.html

Student Activity:

Go to one of the three credit bureaus’ websites

http://www.equifax.com
http://www.experian.com
http://www.transunion.com

and get your credit report. Then answer the questions below.

1. Do you have a credit report? Yes___ No___

o If yes, do you understand the report? Explain what the information on the report means. (Example: what does an R1 or an I3 mean?) What steps can you take to correct incorrect information?

o If no, and you have a credit card or a loan, why is it not on your credit report? What steps can you take to get that information on your report?

2. How can you improve your credit rating or maintain your good credit?

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.