Maryland Legal Alert for Financial Services
Maryland Commissioner of Financial Regulation Issues Advisory Concerning New Laws
On August 27, 2024, the Office of Financial Regulation (OFR) issued an advisory to provide guidance concerning two new legislative changes that protect criminal record history and limit the use of older information in consumer reports. The first new law, HB 622, restricts the types of criminal background information that consumer reporting agencies may include in consumer reports. HB 622 prohibits a consumer report from including any criminal charge where the consumer was falsely accused, acquitted or exonerated; received a nolle prosequi; was not found guilty nor pled guilty; or that was later expunged. For additional issues related to this topic, please see: FAQs for the Consumer Reporting Law.
The second, SB 41, limits the existing exceptions concerning when businesses may consider information that normally disappears from a credit report over time. SB 41 raised a dollar threshold related to specific exceptions allowing a business to consider information that otherwise disappears from a consumer credit report. Negative information typically disappears from consumer reports after either seven or ten years. Current law specifically disallows businesses to consider bankruptcy discharges after ten years, or civil suits and judgments, tax liens, charged-off accounts, and any other adverse item after seven years, unless a consumer applied for a loan or insurance policy of $50,000 or more or employment of $20,000 or more.
Under the revised law, the otherwise-expired information may only be revealed through a consumer report if the consumer applies for a loan or insurance policy over $150,000 or a job that pays more than $70,000 per year. This change limits the circumstances under which the exceptions may be considered in consumer credit decisions. Both new laws take effect on October 1, 2024.
For more information, contact Christopher R. Rahl or Tamia J. Morris.