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New law affects multifamily operations: governs use of consumer reports and related data: the FACT Act is part of a broader bipartisan trend in Congress and the states to strengthen consumer privacy regulations, highlights of which are noted here.

President Bush signed into law Dec. 4 the most significant changes since 1996 to the federal Fair Credit Reporting Act (FCRA), the law governing how apartment firms and related entities use consumer reports and related data.

At the urging of NAA/NMHC and others, the measure, known as the Fair and Accurate Credit Transactions Act (FACT Act). renews and expands the soon-to-expire FCRA's pre-emption of certain state laws and makes those extensions permanent. It also addresses consumer concerns about identity theft and inaccuracies in consumer reports and gives consumers the right to limit how businesses can use their non-public personal information.

Multifamily housing providers can expect to see the FACT Act affect their operations in these key areas.

Identity Theft and Related Fraud

With implications for resident screening standards, the law requires consumer reports to include fraud alerts and file blocks when consumers claim identity theft or fraud. Apartment firms that furnish data (furnishers) to consumer reporting agencies (CRAs) have new duties to respond to notices of alleged identity theft from consumers, CRAs and debt collectors and to provide certain business records when requested by law enforcement and identity theft victims.

Data Accuracy and Dispute Reinvestigation

Furnishers can also expect to see new Federal Trade Commission (FTC) guidelines specifying appropriate procedures for ensuring the accuracy of data furnished to CRAs and for reinvestigating and correcting data in response to a consumer request. Furnishers are further subject to new statutory standards describing when they must not furnish inaccurate information to CRAs and when they must modify, delete or block inaccurate, incomplete or unverifiable data.

Expanded Consumer Access to Files

Consumers will have greater access to, and awareness of, their consumer files, including the right to a free copy of their credit report each year, as well as information about their credit scores, how such scores were calculated and how they can be improved.

Affilate Marketing

Future FTC guidelines will define the limits on a corporate entity's ability to share (and a consumer's ability to "opt out" of such sharing of) data among common affiliated companies within a corporate structure for marketing purposes.

Liability and Miscellaneous Provisions

Most categories of state consumer reporting laws are now pre-empted and the pre-emption is made permanent. Future FTC regulations will govern the security mid disposal of consumer file data. Employee investigation procedures will no longer require advance notice to the investigation target.

Creditor Provisions

The FACT Act's revised definition of creditor does not appear to alter the FTC's established view that the owner-resident transaction is not a "credit" transaction. However, provisions applying to creditors are described here, as they may serve as useful models for apartment firms' own policies and procedures.

This bill is part of a broader bipartisan trend in Congress and the states to strengthen consumer privacy regulations. Specifically, the FACT Act joins new federal regulations restricting the way firms can use the phone or fax to market themselves, key consumer privacy laws in California and other states, and federal legislation limiting certain unsolicited commercial e-mail (spam).

In addition to the 2003 consumer privacy regulation, the Gramm-Leach-Bliley (GLB) Act already places consumer privacy restrictions on certain apartment industry activities. Thus, firms contemplating updates to their apartment operating procedures as a result of the FACT Act may want to undertake a broader review of compliance with all applicable state and federal consumer privacy laws in company marketing, screening and human resources activities.

NAA/NMHC developed a white paper that reviews the provisions of the FACT Act that apply to apartment firms and offers specific operational guidance. The paper is available on the NAA Web site at NAA/NMHC developed
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Date:Mar 1, 2004
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