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INTRODUCTION
On December 4, 2003, President George W. Bush signed into law the Fair and Accurate Credit Transactions Act of 2003,1 (the "Act") which amends the federal Fair Credit Reporting Act2 (FCRA). The primary impetus for the Act was to prevent the expiration of the FCRA's preemption provisions which establish uniform national rules for a number of key credit reporting functions.3 In addition to making the preemption provisions permanent, however, the Act imposes significant new obligations on banks, retailers, insurance companies, finance companies, consumer reporting agencies, and other participants in the credit reporting systems.
BACKGROUND
The FCRA was enacted in 1970 primarily to regulate "consumer reporting agencies" that furnish "consumer reports" for use in determining consumers' eligibility for credit, insurance, employment, and certain other purposes. For example, the FCRA requires a consumer reporting agency to: (i) maintain "reasonable procedures to assure maximum possible accuracy of the information" it reports on consumers;4 (ii) exclude obsolete information from consumer reports;5 (iii) disclose consumer reports only to those that have one of the specified permissible purposes to receive them;6 and (iv) allow consumers to access and correct information the agency maintains about them.7 The FCRA also requires users of consumer reports to provide "adverse action" notices to consumers when they use a consumer report to deny credit, insurance, employment, or take certain other adverse actions based on a consumer report.8
The FCRA remained largely unchanged until 1996. Congress made several amendments to the FCRA in 1996 to improve the accuracy of consumer reports and to strengthen consumers' ability to correct that information.9 For example, Congress imposed, for the first time, FCRA obligations on those that furnish information to a consumer reporting agency-so-called "data furnishers."10 These obligations include standards for reporting accurate information,11 promptly reporting when a consumer has voluntarily closed a credit account,12 and a duty to reinvestigate information when a consumer reporting agency reports to the data furnisher that a consumer has disputed the accuracy of information provided by the furnisher.13
The amendments adopted in 1996 also addressed the issue of "affiliate sharing."14 At the time, there were concerns that affiliated companies, such as members of the same holding company family, could become consumer reporting agencies by virtue of sharing information about their customers among themselves. The...