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From Banking and Finance Law Daily, November 2, 2018

Free credit monitoring for active duty military detailed in FTC proposal

By Jacob Bielanski

Credit reporting agencies would be required to offer, at no charge, electronic monitoring services to active duty military members under a proposed rule from the Federal Trade Commission. The FTC said it developed the proposed rule as part of a mandate within the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), passed by Congress earlier this year. In a press release on the proposal, the FTC said it was looking for comments from stakeholders regarding the rule’s marketing, notification and secondary disclosure requirements, as well as proposed standards for verifying active duty military status and reporting requirements.

Under the proposed rule, CRAs would have up to 24 hours to report to the participating member any "material additions and modifications" to the consumer’s credit file. In a press release, the FTC asked whether that definition "adequately cover the changes to a consumer’s file that should require notification." Under the proposal, such additions or modifications included "new accounts opened in the consumer’s name;... changes to a consumer’s name, address, or phone number; changes to credit account limits; and negative information." These items, the FTC said, were key indicators of potential credit fraud. Requests or inquiries for a report could also trigger notification requirements, but with exceptions.

The FTC also asked whether the rule’s limits on marketing to active duty military who expressed interest in the credit monitoring service was "necessary" or "impose[d] undue burdens," on CRAs. The current proposal largely prohibits marketing any specific service to the member until after they are signed up for the monitoring.

In addition to defining two distinct methods for confirming a consumer’s active duty military service, the proposal also allowed for "a method or service approved by the Department of Defense" (DoD) or "a certification of active duty status approved by" the CRA. The proposal said it allowed the CRAs to define their own verification process over concerns that it might be "burdensome" to limit verification to a system in which consumers would have to upload documents, such as active duty orders, to the reporting agency. The DoD does not currently have a system for consumer agencies to verify active duty status, the proposal noted, but the included wording would accommodate future development of such a system by the department.

Other items in the proposal include a prohibition on a CRA, before it provides the free electronic monitoring, from requiring agreement to specific terms and conditions or from implying that other services must be purchased in conjunction.

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