The Federal Trade Commission proposed a rule requiring consumer reporting agencies to provide free credit monitoring service to active duty military members that would electronically notify these consumers of “material” changes to their file within 24 hours. The deadline to submit comments on the proposed rule is January 7, 2019.

The proposed rule implements the credit monitoring provisions contained in Section 302 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, “Protecting Veterans’ Credit,” which amends the Fair Credit Reporting Act.

The proposed rule specifies that the electronic credit monitoring must electronically notify the consumer within 24 hours of “material additions or modifications” to the consumer’s file. Under the proposed rule, “material additions or modifications” include:

  • New accounts opened in the consumer’s name;
  • Inquiries or requests for a credit report, other than inquiries made for the purpose of making a firm offer of credit or insurance or for the purposed of reviewing an account of the consumer;
  • Changes to a consumer’s name, address, or phone number;
  • Changes to credit account limits; and
  • Negative information.

“Negative information” is defined to include delinquencies, late payments, insolvency, or any form of default.

The proposed rule further requires that notices to consumers include a hyperlink to a summary of rights under the Fair Credit Reporting Act.

Under the proposed rule, consumer reporting agencies may condition providing the free electronic monitoring service on the consumer providing proof of identity, contact information, and proof of active duty status. The proposed rule lists any of the following as adequate proof of active duty military status: a copy of the consumer’s active duty military orders, a certification of active duty status issued by the Department of Defense, a method or service approved by the Department of Defense, or a certification of active duty status approved by the consumer reporting agency.

The proposed rule also contains limitations on the use of the information collected from consumers as a result of requesting this service and limitations on the content and format of the communications sent to those requesting this service.  Further, the consumer reporting agencies cannot ask or require the consumer to agree to terms and conditions in connection with obtaining this service.

We will continue to monitor and report on the ongoing implementation of the Act and the implications for industry stakeholders.