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Attorney General Lockyer Urges Delay in Preempting State Laws Protecting Victims of ID Theft
Attorney General Warns Immediate Start of Federal Law Leaves Consumers Unprotected
(SACRAMENTO) – Attorney General Bill Lockyer, as president of the National Association of Attorneys General, urged the Board of Governors of the Federal Reserve System and the Federal Trade Commission (FTC) to delay preempting state consumer protection laws that guard against identity theft until the provisions of the federal Fair and Accurate Transactions Act of 2003 (FACT Act) are implemented.
"Although many important provisions of the federal law will not go into effect for almost a year, state consumer protection laws could be preempted immediately," Lockyer said. "We cannot leave residents of California and other states without strong protections against identify theft and other consumer fraud. With holiday sales and gift exchanges luring California shoppers into stores, the potential for identity theft is at a peak, and strong laws protecting consumers are critical."
As president of the National Association of Attorneys General, Lockyer sent a letter late Monday to the Federal Reserve System Board of Governors and the FTC, urging them to link the effective date of the new preemption provisions contained in the FACT Act to the date each of the provisions in the federal law goes into effect.
The FACT Act, signed by President Bush on December 4, revises the existing Fair Credit Reporting Act (FCRA) by, among other things, making permanent preemption provisions of the FCRA that were set to expire on January 1. Of concern are new provisions in the FACT Act that are intended to prevent identity theft and assist victims. Some of those provisions do not go into effect until June, while many others will not be effective until December 1, 2004. But a rule adopted, without public comment, on December 15 by the Board of Governors and the FTC appears to preempt state laws effective December 31, 2003, leaving consumers with no protection for six months to a year.
California law, for example, gives identity theft victims the right to obtain copies of applications and transactions for accounts that are fraudulently opened in the victim's name. The FACT Act contains a comparable provision and thus preempts all states from enforcing similar state laws. If the provision preempting state law becomes effective December 31, as proposed under the federal rules, California consumers would have no right under either state or federal law to obtain this essential information until the federal law goes into effect in June 2004.
The FACT Act also, effective December 1, 2004, requires national credit reporting agencies to include a security alert in a consumer's credit report at the consumer's request. California already has a similar law. If the state law is immediately preempted, consumers may be blocked for almost a year from asking those bureaus to place a security alert on their credit reports. However, the federal law does not address security alerts for specialty credit reporting agencies that maintain files on consumers relating to specific issues, such as medical records or payments, residential or tenant history, check writing history, employment history or insurance claims. The Attorney General believes that since the federal law does not address these specialty credit reporting agencies, the state law will not be preempted and California consumers still may ask specialty credit reporting agencies to place a security alert on their credit reports.
A copy of the letter, as well as tips on preventing consumer fraud and identify theft, may be found at the Attorney General's website, at www.ag.ca.gov.