The Federal Trade Commission has finalized the rule under which the three consumer credit agencies will provide consumers with a free yearly copy of their credit report upon request.

Equifax, Experian, and Trans Union will be required to establish a centralized source for accepting consumer requests for free credit reports. This centralized source must include a dedicated Internet Web site, a toll-free telephone number, and a postal address.

The rule provides for a gradual, structured roll-out of the centralized source. The centralized source will become available in cumulative stages, over a period of nine months, rolling-out from west to east beginning December 1, 2004. The entire transition will be complete by September 1, 2005.

Consumers will become eligible on the following schedule:

  • Western states (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming) will become eligible on December 1, 2004;
  • Midwestern states (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin) will become eligible on March 1, 2005;
  • Southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas ) will become eligible on June 1, 2005; and
  • Eastern states (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia), Puerto Rico, and all U.S. territories will become eligible on September 1, 2005.

The rule also requires that the centralized source:

• Must have adequate capacity to accept requests from the reasonably anticipated volume of consumers making requests;
• May collect only as much personally identifiable information as necessary to process requests;
• Must provide clear and easily understandable information and instructions on how to make requests; and
• May not include any advertising or marketing that interferes with, detracts from, or undermines the purpose of the centralized source.

In addition, the final rule provides the credit reporting agencies with relief from the capacity requirements during times of unusually heavy request volume. In those circumstances, the agencies are permitted to place consumer requests in a queue for processing, or request that consumers return to the centralized source at a reasonable later time.

The rule also limits the use and disclosure of personally identifiable information collected through the centralized source. It provides that personally identifiable information can only be used to process the consumers request.

In addition, the final rule requires nationwide specialty credit agencies - those that maintain specific types of files on consumers, such as employment history, tenant history, medical records, and insurance claims - to maintain a toll-free telephone number through which consumers may request a free copy of their credit report once every 12 months.

The new procedure was mandated by Congress when it passed the Fair and Accurate Credit Transactions Act (FACTA) and by amendments to the Fair Credit Reporting Act (FCRA).