ICBA - Publications - Effective Dates for FACT Act Established

Effective Dates for FACT Act Established

WWR Article - February 13, 2004

The Federal Reserve and the FTC have adopted rules to establish effective dates for provisions of the Fair and Accurate Credit Transactions Act (FACTA) that do not have statutory effective dates. The rules set three different effective dates: December 31, 2003, March 31, 2004 and December 1, 2004.

December 31, 2003 is the effective date for the provisions of the Fair Credit Reporting Act (FCRA) that preempt state law and that would have expired if FACTA had not passed. However, the agencies clarified that existing rights under state law will continue to apply until the agencies implement the provisions of FACTA that affect those rights.

The March 31, 2004 effective date applies to provisions of the law that "do not require significant changes to business procedures." These include the statutory definitions, a new statute of limitations for consumer lawsuits under FCRA (the sooner of two years after discovery of the violation or five years after the occurrence), and a provision excluding certain communications involving employee conduct investigations from being defined as a consumer report subject to the provisions of the FCRA.

December 1, 2004 will be the effective date for all other provisions of FACTA that do not have statutory effective dates but that likely entail significant changes to business procedures. These include provisions on fraud alerts, procedures for identifying possible instances of identity theft, truncation of Social Security numbers in consumer reports, blocking of information that may have been due to identity theft, coordination of identity theft complaints, the risk-based pricing notice, and reconciling addresses.

In comments to the agencies, the ICBA expressed concerns that December 1 may not allow sufficient time for regulatory proposals to be issued and finalized, and for providing adequate transition time for compliance. However, as FACTA requires rules to be in place no later than December 4, for many of these provisions, the agencies determined that December 1 was appropriate and should "allow industry a reasonable time to establish systems to comply with the statute." The ICBA will continue to cover and comment on additional proposals and regulations under FACTA as they are issued.