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Rep. Frank Promises Hearings On Credit Bureas

Consumers Complain of Delays in Correcting, Updating Credit Reports

By Martin H. Bosworth
ConsumerAffairs.com

January 1, 2007

Your Credit • Free Credit Reports • Equifax • Experian • Trans Union • Consumerinfo • Freecreditreports.com --- News • Class Actions Challenge LifeLock • FreeCreditReport.com Can Get Expensive • Children Becoming Prime Identity Theft Targets • Study: Seniors Not Familiar With Credit Freezes • Feds Propose New Rules for Credit Bureaus • Experian To Offer Credit Freezes To Consumers • Two Credit Bureaus Offer Consumers Credit Freeze in 50 States • No 'Free' Lunch on Credit Report Sites • Insurer Unlawfully Poached Consumers' Credit Reports • ConsumerInfo.Com Settles FTC Charges • Rep. Frank Promises Hearings On Credit Bureaus • PayPal, Equifax Team Up To Offer "Free" Credit Monitoring • Free Credit Reports Available Nationwide Starting Sept. 1 • Marketer of "Free Credit Reports" Settles FTC Charges • Credit Bureaus: Biggest Threat to Your Identity • Escape From Plastic Prison • Experian, ConsumerInfo.Com Named in Class Action Suit • Free Annual Credit Reports Required by Next Year • Big 3 Charged • Trans Union Ordered to Stop Selling Consumer Data • Equifax in Trouble Again

Observers had predicted that reforming the credit industry would be a prime objective of the new Democratic Congress, and Rep. Barney Frank (D-Mass.) is taking up the challenge.

Frank, the incoming chairman of the House Financial Services Committee, says he will hold hearings in 2007 on how the credit bureaus can improve their reporting and error-correcting procedures.

ConsumerAffairs.com receives a constant stream of complaints from irate customers regarding credit bureaus' inability -- or unwillingness -- to protect the personal information of the very people they claim to assist.

"It took me over three months of letters, emails and calls to no avail," said Georgia of Lodi NJ in a recent complaint to ConsumerAffairs.com. "The workers at Experian read from script and do NOTHING to help one out.

"They've listed accounts that have been closed since 1998 and have inaccurate addresses on my credit report. My credit is as pristine as possible and would like to keep it that way, but cannot trust Experian," she said.

Rep. Frank's pledge followed a Boston Globe article spotlighting the difficulties consumers have in trying to correct mistakes in their credit reports.

"We will have some hearings about how to fix this," Frank told the Globe. He said that laws mandating free credit reports for all Americans were not enough, especially if the procedures to correct errors were difficult and time-consuming.

Frank and his Senate counterpart, Christopher Dodd (D-Conn.), incoming chairman of the Senate Banking Committee, have already promised to target the mortgage industry and pass new protections against predatory lending.

Profiting From Fear

Errors in credit reporting can cost consumers jobs and loans, as well as leading to identity theft and fraud. Each of the three credit bureaus -- Experian, Equifax, and Trans Union -- has a laborious process for correcting errors that requires sending extensive documentation to prove the information is inaccurate or out of date.

The credit agencies generally blame the lenders for reporting inaccurate data, and for only reporting negative information, such as delinquencies, bankruptcies, or liens.

But the sale of credit reports continues to be a billion-dollar business for the credit bureaus, which collect buy information from lenders and sell it cheaply to lenders and other business clients while charging consumers three or four times as much to view their own information.

Consumers can spend years and thousands of dollars trying to clean up innaccurate credit reports, even those that are mixed up with others' information, being denied jobs, loans, and places to live all the while.

Worse yet, the "fraud monitoring" services credit agencies offer to protect against identity theft often don't work. They don't detect Social Security number theft, for example, which leads only to a new file being opened under the new account holder's name.

Yet many Americans find themselves threatened with collection or unable to obtain credit due to a credit bureau's mistakes. The major CRA's consistently fail to report accurate information, change credit ratings based on erroneous data, and often "mix up" customers' information, resulting in innocent consumers being harrassed or penalized for actions they did not commit.

Moreover, as Consumers Union pointed out in 2005, "When a company improperly breaches a consumer's sensitive information, the onus is on that consumer -- the victim -- to fix the problem." Customers have to contact the credit bureau and attempt to prove that they were not responsible for the actions committed using their identity, a process made more difficult by the lack of direct contact options most credit bureaus provide.

A recent New York Times article detailed the failings of credit monitoring services, including the admission by credit agency spokespersons that they fail to detect SSN-based fraud, even as credit monitoring rakes in $900 million a year for the agencies that offer it.

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