Help Protect Consumers from Credit Reporting Industry Abuses

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Monday, May 6th, 2013

It’s likely that many of our readers have tried to obtain a “free” credit score from one of the ubiquitous websites that market them, but discovered later that they inadvertently signed up for a credit monitoring service that automatically bills their credit or debit card each month.

One soldier currently serving in Afghanistan recently fell victim to one of these schemes. His mother, Deborah, from Rensselaer, NY, explains how a credit monitoring website refused to cancel the service for which he accidentally registered:

“I am administering my son’s finances while he is deployed to Afghanistan. He applied online for a “free” credit score to determine his credit standing and ended up with monthly debits to his checking account from www.scoresense.com. He requested to stop the “service” but has not succeeded. He should have been able to receive the credit score for free, since it is personal information used by institutions to determine what he must pay to live. Military members are most affected by scams because they can do nothing about these problems while they are deployed.” 

Not only do many websites use the promise of a free credit score to trick consumers into signing up for a monthly credit monitoring service, but most likely the score that consumers receive will not actually be the score used by lenders. Lenders often use scores that are not available for purchase by consumers.

Deborah’s son is not the only military member who has experienced problems with the credit reporting industry. The Consumer Financial Protection Bureau’s Office of Servicemember Affairs mentioned in a recent report that 16% of the consumer complaints they received in the last quarter of 2012 had to do with credit reporting.

Consumers Union is fighting for passage of the Fair Access to Credit Scores Act, which is currently under consideration in Congress, to ensure that consumers are able to obtain a free credit score that lenders use with their free annual credit reports. This bill will provide consumers with a reliable score that is used in the marketplace.

But consumers are also relying on the leadership of the Consumer Financial Protection Bureau to police the credit reporting market. Unfortunately, the Bureau’s ability to properly regulate these organizations may be hampered if the Senate fails to confirm its director, Richard Cordray, whose term expires at the end of the year. Cordray’s nomination is currently being stalled by a group of Senators who have demanded changes to the Bureau that will compromise its ability to defend consumers. While it was reported that Cordray’s confirmation would be brought before the Senate this week, it now appears that the vote has been pushed back until summer.

Consumers – and particularly servicemen and women – need the CFPB working hard to rein in illegal and improper financial practices. Tell your Senators to confirm Richard Cordray as head of the CFPB. If you’ve had a problem with the credit reporting agencies, please share your story!

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