Proposed Changes to Fair Credit Reporting Act Do Not Go Far Enough to Protect Consumers
July 16, 2003
Janell Mayo Duncan or Liz Rose
Washington, DC — “Today, the Financial Institutions and Consumer Credit Subcommittee of the House Committee on Financial Services marked up H.R. 2622, the ‘Fair and Accurate Credit Transactions Act of 2003.’ Even as currently amended, the bill does not go far enough to protect consumers from identity theft, and it may not substantially improve the accuracy of consumers’ vital personal financial information.
Inaccuracies regarding important consumer credit information, such as an individual’s payment history, account balance, and credit limit, can cost borrowers thousands, if not hundreds of thousands of dollars over the life of a loan in the form of higher interest rates. H.R. 2622 does not ensure that creditors submit accurate consumer credit information to credit bureaus in the first place. In addition, it fails to ensure that if there are mistakes on a consumer’s credit report, creditors have to act quickly to correct them.
Some of the steps that should be taken to improve consumer credit reporting include:
— giving consumers one free credit report and credit score annually;
— giving consumers who have been denied a loan, or who have been granted a loan at a higher rate than they applied for, a copy of the credit score and credit report used in the decision to deny the loan or the lower rate;
— matching at least 4 identification points before granting credit (instead of granting credit to an individual based only on a name and a Social Security number); and
— extending the liability for inaccuracy currently placed on credit bureaus in the Fair Credit Reporting Act to lenders and businesses that furnish information about consumers.
The above changes would not slow down the credit granting system that we have today. Instead, they would help to protect consumers from the growing epidemic of identity theft and would ensure that they get the credit that they deserve based on their true financial history.
As Congress continues to consider this matter, we also believe that they should not take away states’ ability to pass laws that are stronger than federal law. This will ensure that state governments will be able to act expeditiously to protect their citizens as problems and threats to credit report accuracy arise, instead of requiring Congress to act every time new problems arise.”
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. www.consumersunion.org