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February 16, 2005


To: Chief Executive Officer
All Farm Credit System Institutions

From: Thomas G. McKenzie, Director
Office of Examination

Subject: Fair and Accurate Credit Transactions Act of 2003 – Effective Dates


The Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which amended the Fair Credit Reporting Act (FCRA), became law on December 4, 2003. By Informational Memorandum dated September 2, 2004, the Farm Credit Administration (FCA) explained that Farm Credit System (FCS) institutions are subject to certain provisions of the FACT Act and that the Federal Trade Commission (FTC) regulates and enforces the FACT Act with respect to FCS institutions. We also suggested that you consult legal counsel to determine the responsibilities of your institution.

The purpose of this Informational Memorandum is to provide you with new information regarding FTC regulations that may apply to the FCS.

Disposal of Consumer Information
The FTC published final regulations regarding disposal of consumer information on November 24, 2004, at 69 FR 68690. These regulations implement section 216 of the FACT Act, which added section 628 (15 U.S.C. § 1681w) to the FCRA. The rule requires that any persons who maintain or otherwise possess consumer information derived from consumer reports for a business purpose properly dispose of such information by taking "reasonable measures" to protect against unauthorized access to or use of the information in connection with its disposal. The rule includes several examples of what the FTC believes constitute "reasonable measures." The rule will become effective on June 1, 2005.

Prescreen Notices
The FTC published final regulations to improve required notices in prescreened offers for credit or insurance on January 31, 2005, at 70 FR 5021. These regulations implement section 213 of the FACT Act, which amended section 615(d) (15 U.S.C. § 1681m(d)) of the FCRA. Under the FCRA, as amended, "prescreened" solicitations sent to consumers are required to contain a simple and easy-to-understand notice providing information about the offer and instructions on how consumers can opt out of receiving future offers by calling a toll-free telephone number or writing to a specified address. The rule requires a "layered" notice (a short statement on the first page of the solicitation and a longer statement providing additional information about prescreening), establishes baseline requirements for the format, type size, and manner of the notice, and provides "model" notices in English and Spanish. The rule will become effective on August 1, 2005.

Effective Date of Certain FACT Act Provisions
Attached is a letter from the FTC (as well as other federal agencies responsible for regulation and enforcement with respect to non-FCS entities) providing guidance on the how the FTC and other agencies expect to apply certain provisions of the FACT Act in light of their effective dates. You may also wish to review the FTC's joint Federal Register notice dated February 11, 2004, at 69 FR 6526, for further information regarding FACT Act effective dates.