May 20 2003

OVERVIEW OF THE FAIR CREDIT REPORTING ACT AND ISSUES PRESENTED BY THE RE-AUTHORIZATION OF THE EXPIRING PROVISIONS

STATEMENT OF SEN. RICHARD SHELBY

“At the end of this year, the state law preemption provisions of the Fair Credit Reporting Act “FCRA” expire.”

“This Committee has the responsibility of reviewing these provisions and making a determination as to whether they should be extended, altered, or be allowed to lapse.”

“The task before us is no small endeavor.”

“The preemption provisions are but a part of a much larger, highly complex law, a law that governs crucial aspects of the consumer credit system. This national system is huge - involving trillions of dollars and millions of people, and is at the heart of the economic well being of this country.”

“This system is also fundamentally dependent on the collection and dissemination of data that involves some of our most sensitive personal information.”

“I do want to point out, however, that balancing these various interests is not a new challenge for Congress. At enactment, when it was significantly amended in 1996, and now, the calculus behind the FCRA has always required consideration of the broad issues relating to the operation of the credit markets and consumer privacy.”

“The statement of purpose of the Act bears this point out. It highlights the banking system’s dependance upon fair and accurate credit reporting, the vital function consumer reporting agencies perform in supplying this information, and the need to insure that reporting agencies exercise their grave responsibilities with fairness, impartiality, and respect for the consumer’s right to privacy.”

“As we review the expiring preemption provisions of the law, it is my hope that they are considered in the context of the law’s purpose.”

“To this end, we have already held numerous staff briefings covering many of the key topics associated with the FCRA. Additionally, and much more importantly, while working within the limited time frame we have available, it is my intention to develop a comprehensive hearing record to inform the Committee’s debate.”

“We are now moving to the hearing phase and are beginning it at what I feel is the best point of departure - consideration of the fundamental issue implicated in the debate - operation of the consumer credit system and the FCRA’s role in that system.”

“We do this by first hearing from the Federal Trade Commission, the agency with the most responsibility for enforcement of the FCRA. Our first witness is Mr. Howard Beales, Director of the FTC’s division of Consumer Affairs. From Mr. Beales, we should obtain more information about the history, purpose and function of this important law. I look forward to Mr. Beales’ testimony.”

“As we move forward, I plan to use these hearings to provide content that will enable the Committee to focus its consideration on the discrete issues and particular applications of the law.”

“It is my hope and intent that, at the end of this process, we will have obtained a full sense of the value of our national system and will be able to balance the various issues presented by contemporary information use practices.”

“Our overarching goal should then be to ensure that the law produces the most effective, efficient, balanced and fair system achievable.”