Facts for Consumers from the Federal Trade Commission

Utility Credit -- November 1992

My husband and I always paid our phone, gas, and electric bills 
promptly. Then...suddenly...he was gone. When I tried to get 
utility service in my own name, each company wanted me to make 
deposits ranging from $25 to $100. Can they do this?

Women sometimes write the Federal Trade Commission with this type 
of question. 

Getting Utility Credit

A utility account is generally a credit account. You get service 
now and pay for it later. Like any other creditor, a utility 
company keeps a record of your payment patterns. This record is 
your utility credit history.

Utility credit discrimination is illegal under the Equal Credit 
Opportunity Act (ECOA). The ECOA forbids discrimination based on 
your sex, marital status, race, national origin, religion, age, 
or because you receive public assistance income. The ECOA also 
contains specific rules that utility companies and other 
creditors must follow when evaluating their customers' credit 
histories.

Utility companies frequently require customers to make a deposit 
or to get a letter of guarantee from someone who will agree to 
pay the bill if the customer does not. Under the law, requiring a 
deposit or letter of guarantee can be the same thing as denying 
credit or offering credit on less favorable terms.

Paying a Deposit 

The utility company generally can require a deposit if you have a 
bad utility credit history, if you are a new customer and all new 
customers are required to pay deposits, or for other 
non-discriminatory reasons. For example, the utility company 
might ask you to pay a deposit if there is no record of your name 
on your husband's account. But if you had previous service in 
your husband's name, the company must consider that credit 
history as yours. If you shared a credit history, it might be 
unlawful to require you to pay a deposit if your husband got 
credit without paying a deposit.

Challenging a Bad Credit History

But there is another side of the coin. If your husband's credit 
history on a shared account was bad, the company will consider 
that credit history yours as well and might ask you to pay a 
deposit or get a letter of guarantee. The ECOA gives you the 
opportunity to prove that your husband's bad credit history did 
not reflect your unwillingness or inability to pay. For example, 
if you can prove that you did not live with your husband when the 
account was overdue, the company must take that into 
consideration. If you never saw the bills, or paid them as soon 
as you discovered they were overdue _ that also must be 
considered.

Usually your spouse's utility credit history can only be 
considered if your spouse lived with you or benefited from using 
your account. However, if you live in a community property state 
(Arizona, California, Idaho, Louisiana, Nevada, New Mexico, 
Texas, and Washington), the utility company can consider 
information about your spouse even if you were not living 
together and did not share the account. 

If you cannot convince the company, you may have to pay a deposit 
or get a letter of guarantee. Or, you may be asked to pay your 
husband's old debts before your service is connected. In the 
latter case, the company's right to take such action is governed 
by state law, not the ECOA. If this happens, contact your local 
consumer office for more information.

Getting the Reason in Writing

Whenever you are denied credit or offered less than favorable 
credit terms that you do not want to accept _ including utility 
credit _ you have the right to know the specific reason. If this 
happens, request the reason in writing.  

Getting  More Information

You may want to get more detailed information about the ECOA and 
other credit rights. For a free copy of the FTC's brochures: 
Equal Credit Opportunity, Fair Credit Reporting, Credit and Older 
Americans, and Women and Credit Histories, write to: Public 
Reference, Federal Trade Commission, Washington, D.C. 20580.
You also may wish to contact the FTC about your complaint. 
Although the FTC cannot represent you directly in a dispute with 
a company, it can act when it sees a pattern of possible law 
violation. Write to: Correspondence Branch, Federal Trade 
Commission, Washington, D.C. 20580.


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