NEW YORK (AP) Most American consumers have come to take the Fair Credit Reporting Act for granted.
The law, enacted in 1970 and extensively updated in 1996, was designed to protect consumers' credit information. It requires, for example, that consumers turned down for a loan get free access to their credit report. It gives the nation's credit bureaus 30 days to investigate consumer challenges of data. It limits who has access to a consumers' information and how they can use it.
Complacency over the law has given way to debate as the House and Senate urged on by consumer groups and business lobbyists face a Jan. 1 deadline to modify the bill.
The fight centers on provisions that will ''sunset,'' or expire, at year's end if Congress doesn't act. These provisions prevent states from imposing limits on the reporting and sharing of consumer credit information, reserving that responsibility for federal authorities.
The financial services industry wants Congress to reauthorize national standards, arguing that the FCRA as it stands has been beneficial for consumers by creating uniform national rules.
''If states enact different rules, consumers' credit history is going to be dependent more on where they live than on their actual payment history,'' argues Joe Rubin, director of Congressional affairs for the U.S. Chamber of Commerce in Washington, D.C. ''If these pre-emptions fail, the system we've come to take for granted could be at risk.''
Consumer advocates, meanwhile, are urging Congress to give the states a role in creating credit policies in the seven areas they're currently barred, including determining whether businesses can share a consumer's credit information with ''affiliated companies'' and how long negative information can remain on a credit bureau report.
''We believe that privacy will be better protected and the accuracy of credit reports will be dramatically improved if the Congress reinstates states' rights to enact state laws to protect consumers better,'' said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group in Washington, D.C.
He argued that states often are ahead of the federal government when it comes to consumer protection.
''States often get good ideas and pass them,'' Mierzwinski said. ''In our view, Congress doesn't tend to act unless the states act first.''
The House Committee on Financial Services, chaired by Rep. Michael G. Oxley, already has begun hearings on the FCRA renewal. The Ohio Republican termed it this year's ''job No. 1.''
The Senate Banking Committee, headed by Sen. Richard Shelby, R-Ala., opens a series of informational hearings later this week.
The consumer finance industry is so concerned about the outcome that it has created a new group the Partnership to Protect Consumer Credit dedicated to ''preserving our nationally consistent credit system.'' It has set up a Web site at www.protectconsumercredit.org and launched an advertising campaign in Washington to get its points across.
Stuart Pratt, president of the Consumer Data Industry Association, a trade group for the consumer credit reporting industry and a member of the partnership, worries that failure to renew the national standards could end up increasing the cost of credit to consumers.
He noted that under the current system, adverse data such a loan delinquencies must be removed from credit reports after seven years. At least one state has proposed that delinquencies should be expunged from a consumer's credit file as soon as they've been cleared up.
''Look at it from the lender's point of view,'' Pratt said. ''If a future lender doesn't know this consumer had financial problems, he'd have a harder time making a credit decision. The lender would have to spread risk differently, and that could likely lead to everyone paying more.''
The Consumer Federation of America, meanwhile, studied more than 500,000 credit files and found wide discrepancies in consumers' credit scores. It concluded that inaccurate scores meant that millions of Americans were forced to pay more for credit, insurance and utilities or were denied credit when they deserved it.
Mierzwinski of U.S. PIRG argues that the report underscores the need for broader reform.
''Instead of focusing on pre-emption, Congress ought to look at the flaws in the FCRA,'' he said. ''Let's consider a stronger law.''
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