How much may a consumer reporting agency charge for a security freeze on a consumer's credit report? The 2018 session of the Virginia General Assembly answered that question by halving the existing $10 maximum fee, dropping the fee cap to $5.
Measures passed the Senate (Senate Bill 16) and House (House Bill 1027) on March 5 and 9, respectively, and are expected to be signed by Governor Ralph Northam. Once the measure becomes law, the $5 fee cap will take effect on July 1, 2018.
Background on Credit Report Security Freezes in Virginia
The amendments address Title 59.1, Chapter 35.1, of the Virginia Code: "Security Freezes." The sort of "security freeze" at issue in the legislation, covered in Code Section § 59.1-444.2(A), is "a notice placed in a consumer's credit report, at the request of the consumer and subject to certain exceptions, that prohibits the consumer reporting agency from releasing the consumer's credit report or score relating to the extension of credit."
Existing Virginia law generally requires consumer reporting agencies to "place a security freeze on a consumer's credit report no later than three business days after receiving from the consumer: 1. A written request . . . ; 2. Proper identification; and 3. Payment of a fee not to exceed $10, if applicable." Id. § 59.1-444.2(C) (emphasis added). The fee may not be applied when the consumer is "a victim of identity theft who has submitted a valid police report to the consumer reporting agency." Id. § 59.1-444.2(M).
Significance to Credit Reporting Agencies
Credit reporting agencies should take measures to ensure compliance with Virginia's halved fee cap by or before the July 1 effective date. Even negligent (rather than willful) noncompliance permits a consumer to recover not only actual damages from a violation but also costs and attorneys' fees.
Another point of significance is that the General Assembly could, in a future session, revisit the issue of permissible fees for security freezes. As initially introduced, House Bill 1027 would have disallowed any fee where the consumer made their request electronically (with a $3 fee cap applying to requests made by telephone or mail). The Senate Bill, as introduced, would have done away with such fees altogether. Thus, it is possible that, in the future, the fee cap may be reduced or eliminated.
We will monitor the issue for further developments.
The Troutman Sanders' Consumer Financial Services Law Monitor blog offers timely updates regarding the financial services industry to inform you of recent changes in the law, upcoming regulatory deadlines and significant judicial opinions that may impact your business. To view the blog, click here
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