Fair and Accurate Credit Transactions Act

The law will help reduce identity theft and help victims recover

The Fair and Accurate Credit Transactions Act (FACT Act) was enacted in 2003 and amends the Fair Credit Reporting Act (FCRA), a federal law that regulates, in part, who is permitted to access your consumer report information and how it can be used. The FACT Act makes some improvements for consumers to increase the accuracy of credit reports, prevent identity theft, and restrict the marketing of financial products using sensitive information that is shared with affiliates. In addition, the FACT Act entitles consumers to obtain one free copy of his/her consumer file from each of the three national credit reporting companies (Equifax, Experian and Trans Union) once every 12 months from a centralized source. This centralized source includes a Web site, a toll-free telephone number and a postal address.

To make the free-report program function efficiently, the FTC rule requires the bureaus to create what it calls a "centralized source," which consumers can contact via the Web, by toll-free telephone numbers or by regular mail to request their credit reports.

FTC issued guidelines that allows the bureaus to roll out the new feature in stages, to avoid overwhelming the new system. The centralized source will become available in cumulative stages, over a period of nine months beginning December 1, 2004.

The centralized source will be rolling out as follows:

Identity theft fraud alters

The FACT Act also helps consumers fight the growing crime of identity theft by requiring credit reporting agencies, at the request of a consumer, to include a fraud alert notice in the consumer file and to provide this alert status to anyone that obtains the consumer's credit report. The types of alerts are:

• Initial Alert - to be maintained for at least 90 days unless the consumer requests that it be removed.
  
  
• Extended Alert - Upon the request of a consumer who has been the victim of identity fraud, the fraud alert can be extended for 7 years beginning on the date of such request.
  
  
• Active Duty Alert - an active duty military consumer may request that this type of alert be included in their credit file and it is effective for 12 months.
  

If a fraud alert or active duty alert is placed on your credit report, any business that is asked to extend credit to you must contact you at a telephone number you provide or take other “reasonable steps” to see that the credit application was not made by an identity thief. The FACT Act provisions also allow you to “block” certain items on your credit report that resulted from identity theft. Like the fraud alert, “blocking” was already an option for consumers in some states. With FACT Act, Congress has made “blocking” the national standard.

FACTA gives you the right to a free copy of your credit report when you place a fraud alert. With the extended alert (seven years), you are entitled to two free copies of your report during the 12-month period after you place the alert.

Summary of major changes to your rights

• You are entitled to one free consumer credit report annually from each of the three nationwide consumer credit reporting agencies: Equifax, Experian, and TransUnion.
  
  
• Your rights under the FACT Act are in addition to any rights you may already have to a free consumer credit report under existing law if you live in a "free state" or you have been denied credit, employment, insurance, housing or public benefits based upon a consumer credit report.
  
  
• Uniform standards on what goes into a credit report have been made permanent.
  
  
• Credit-card and debit-card numbers must be hidden on store sales receipts, listing only the last five digits. Merchants have until Dec. 4, 2006, to phase out any existing registers or terminals that print full account numbers on receipts.
  
  
• A bank must tell you if it reports any negative information about you to the credit bureaus. A bank will also have to tell you if it grants you credit at less favorable terms than those received by most other consumers.
  
  
• Any debt collector who learns that information on a consumer's report is fraudulent must inform the creditor.
  
  
• Identity-theft victims who file police reports will be able to block fraudulent information from appearing on their credit reports.
  
  
• Once a credit bureau receives a fraud alert from a consumer, it must take steps to ensure that the consumer and not the thief will be granted credit in the future. This extra step could be something as simple as calling the phone number listed in a consumer fraud alert whenever a new application for credit pops up.
  
  
• Americans in the armed forces will be able to place special alerts in their credit files while they are serving overseas to help minimize their chances of becoming victims of identity theft