FTC Announces Final Rule Implementing Law Providing Free Credit Monitoring for Active Duty Military Consumers

The Federal Trade Commission has finalized the rule implementing a 2018 law that requires the nationwide consumer reporting agencies (CRAs) to provide free electronic credit monitoring services for active duty military consumers.

The Free Electronic Credit Monitoring for Active Duty Military Rule, which will be published in the Federal Register shortly, implements legislation included in the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended the Fair Credit Reporting Act (FCRA) by requiring CRAs to notify active duty military consumers about any “material” additions or modifications to their credit files.

The FTC received 19 comments on its proposed Rule, released in November, which defined key terms such as “electronic credit monitoring service” and “material additions or modifications” to the file of a consumer. It also included proposed requirements for how CRAs can verify that an individual is an active duty military consumer, as well as restrictions on the use of personal information and on communications surrounding enrollment in the free service.

The final Rule defines “active duty military consumer” as a consumer in military service who meets the FCRA’s definition of “active duty military consumer,” which requires that the consumer be assigned to service away from their usual duty station, or be a member of the National Guard. While commenters recommended eliminating the requirement that a military consumer be assigned to service away from their usual duty station, the statute limits the Commission’s discretion on this topic. To the extent that Congress intended to provide free credit monitoring more broadly, the Commission calls on Congress to address this issue through additional legislation.

The final Rule also clarifies that National Guard members do not need to be deployed away from their usual duty stations to be eligible for the free credit monitoring. Because the statute does not expressly apply the duty station requirement to National Guard members, the Commission has interpreted the Act as providing the benefit of free credit monitoring to members of the National Guard regardless of whether they are assigned away from their usual duty station.

The final Rule also addresses concerns that active duty military consumers might have to pay to access their credit files after being alerted to an addition or change. The final Rule requires that when a CRA notifies an active duty military consumer about a material change to their credit file, the CRA must also provide that consumer with free access to that file.

The final Rule extends the amount of time the CRAs have to notify an active duty military consumer of a material change from 24 hours to 48 hours. In addition, the final Rule makes certain changes to the definition of “material additions or modifications.”

The final Rule retains restrictions on secondary uses and disclosures of information collected from an active duty military consumer requesting the credit monitoring service. It also bans marketing during the enrollment process until after an active duty military consumer has been enrolled in the free credit monitoring service. The final Rule also prohibits the CRAs from requiring active duty military consumers to agree to terms or conditions, unless such terms or conditions are necessary to comply with applicable legal requirements.

The Rule will go into effect three months after publication in the Federal Register. The Commission, however, will allow the CRAs to comply with certain portions of the Rule by offering their existing commercial credit monitoring services for free to active duty military consumers, for a period of up to one year from the effective date.

The Commission vote to publish the final Rule in the Federal Register was 5-0.

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