Utility companies should be aware of the July 21, 2011 compliance deadline arising from Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act”), which amended the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”). Section 1100F requires new disclosures about a consumer’s credit score and other factors which are part of a consumer’s credit report to be included in adverse action notices and risk-based pricing notices. Utilities most often send out such notices to applicants for service who are required to make a deposit to receive service (when other applicants may not be) or potentially charge different rates or terms based upon a consumer creditor report obtained by the utility on the applicant. These amendments to the FCRA will become effective on July 21, 2011. In light of this effective date, and the recent publication of regulations to implement Section 1100F, utility companies that provide applicants and customers with adverse action notices and risk-based pricing notices under the FCRA must ensure that the required changes have been made to their notices in light of Section 1100F.
Section 1100F of the Act amended Section 615 of the FCRA to add credit score and other disclosure obligations in connection with adverse action and risk-based pricing notices provided to consumers. These notices must be amended so that they contain the following additional information:
- A numerical credit score used in taking any adverse action;
- The range of possible credit scores under the model used;
- The factors that adversely affected the credit score of the consumer, which should be ranked in the order of their importance and should not exceed four factors — unless the number of credit inquiries is a factor and is not already reflected in the top four, in which case, five factors must be disclosed (i.e., the top four, plus the “inquiries” factor);
- The date on which the credit score was created; and
- The name of the consumer reporting agency or other person providing the score; and
- A prescribed statement explaining credit scores.
In addition to making these required changes, utilities that send out adverse action notices and risk-based pricing notices should amend their internal policies to take into account the new requirements imposed by Section 1100F. Utility companies that fail to make these changes to their adverse action or risk-based pricing notices may face penalties.