State Protections Versus the FCRA
The Fair Credit Reporting Act is similar to other federal privacy statutes in that they provide a standard of protections for consumers without going into the nitty-gritty of state-level legislation. Acting as a type of frame for state legislatures to build off of, the FCRA is what is called “partially preemptive,” which means that aside from a few specific situations, states may pass laws to supplement the consumer protections offered by the FCRA. For example, some states have enacted legislation within their own state-lines that require CRAs to provide reduced-cost or free credit reports.
If consumer protections was a house, the FCRA would be the frame and foundation and state laws would be the walls.
The Fair and Accurate Credit Transactions Act
The FACTA, passed in 2003, included amendments that circumvented prior provisions of the FCRA that would have allowed states to pass laws before January 1, 2004 that would have preempted the FCRA, possibly granting greater protections to consumers while clamping the credit reporting industry with greater restrictions. The financial industry collaborated with Congress to pass the FACTA. Besides the elimination of the January 1, 2004 provision, the FACTA also:
- gave the FCRA broader preemption power
- retained all “subject matter” preemption provisions (this meant that consumers could opt out of prescreening reports, or the affiliate-sharing of their information for marketing purposes)
- provides further preemptions for the disclosure of credit scores
- preemptively regulates free credit reports
- allows states to enact sterner identity-theft-protection laws
- addresses certain areas of identity theft regulation with preemption, including areas such as truncation of payment card numbers and required CRAs to block identity-theft related information
Click here to read more on how the FCRA protects consumers and credit reporting agencies alike.