|Received:||5/22/2006 8:30:28 AM|
|Subject:||Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies|
|Title:||Advance Notice of Proposed Rulemaking|
|CFR Citation:||16 CFR Parts 660 and 661|
Comments:Reporting Credit Limits. Have credit reports list ALL credit limits. Prohibit data furnishers and CRAs from false reporting high balance as the credit limit. When financial institutions like Capital One fail to report credit limits, FICO substitutes the "high balance" in computing consumer's utilization. Because utilization percentage is 35% of consumers' FICO scores, their creditworthiness is negatively impacted through no fault of their own. Credit is extended or denied, and APRs are established based on consumers' FICO scores. Further, on manual reviews of a consumer's credit file, tradelines so reporting appear "maxed out" or overextended, causing creditors whose terms include the universal default clause to rate jack consumers. It is generally accepted that financial institution do not report credit limits purposely artificially deflate their customers' scores allowing them to make more money at your expense in higher interest rates because of lower scores. In general, disputing the completeness or the accuracy of a tradeline that does not include a credit limit or does not accurately reflect a tradeline results in "verification" even when the data field is obviously blank or null filled. If a consumer, through time, energy, expense and persistence manages to get the tradeline corrected, it is "updated" during the following reporting period to null fill the data field again. The caveat to this is that disputing an otherwise positive tradeline often results in it being deleted completely, which negatively impacts credit scores in other ways (lack of established credit history, as an example). TransUnion has a nasty reputation for deleting the whole tradeline, while Equifax is known to refuse to update credit lines even when a consumer submits a letter from the data furnisher confirming that they have requested the tradeline correction. Please clarify that failure to report an accurate credit line for consumer accounts is false and inaccurate reporting, subject to sanctions. -------------------------------------- Third Party Data Mining and Marketing. The FTC should institute strict guidelines in reference to the inclusion of third party information marketers in consumers' credit files. Some suggestions are below: When an inaccurate public record shows up on a consumer's CR, that consumer is penalized in the financial world, yet soon discover they are unable to correct the erroneous information in their file. CRAs advise consumers the information they report is from the courts. Consumers who follow up with the court at the contact information on their credit report discover all too often that the court's do not submit this information to consumer reporting agencies. In fact, the CRAs report false, misleading and inaccurate information as to the data furnishers their contact information on consumers' reports. The CRAs further circumvent the procedures request standards of the FDCPA when they do so by pointing consumers to this inaccurate information in response to consumers' request to discover how this erroneous information ends up on their reports and subsequently is verified. CRAs typically "verify" these erroneous public records through their automated verification (E-Oscar) process with the third party information mining and marketing firms. Consumers must jump through hoops to discover the true identity of the data furnisher only to discover this info is being provided by third party information sellers who are held to no standard of accuracy, and are not held to the govt. mandated dispute process for data furnishers. This is an especially troublesome area because public records can remain on ones report for extended periods of time. It is at great expense to consumers to try to make corrections if corrections can be had at all. The optimal solution would be to ban the inclusion of information submitted by third party data miner & marketing firms. If CRAs are to be allowed to include information reported by third party data marketers, there must be some FTC guidelines in place for these data marketers. First of all, have CRAs report the name and contact information of the actual data furnisher of public records. Prohibit them from falsely telling consumers that the data furnisher for the public records included in their files are the courts, causing untold numbers to waste not only their own time and energy but that of the courts in an attempt to resolve reporting errors. Then, clarify that these companies are included in the definition of CRA and hold them to the standard of recognized CRAs like Experian, Equifax and Trans Union so that consumer files are made available free to the public annually and for purchase under the same pricing guidelines in place for the other CRAS. They are, after all, in the business of compiling personal and financial information on consumers and providing that information not only to CRAs but to businesses with whom consumers apply for credit or otherwise enter into such other financial transactions as mortgages. Because these data marketers are influencing the credit decisions that impact not only APRs, but whether consumers can attain the basic necessities of housing, utilities, at a minimum, give consumers access to the information files they compile and the right to dispute inaccurate and incomplete information these information marketers submit to the CRAs can be disputed. Further, I would like to ask how these information marketers, who have no first hand knowledge of the alleged indebtedness or records, can possibly attest to the factual truth of what they are reporting? They must be required to verify the information the same as any other CRA. They furnish information to the CRAs yet, despite FACTA guidelines, the consumer has no right to dispute inaccurate data with them. We have no recourse as they are not held to any standard, that of the CRAs or of the data furnishers. -------------------------------------- Roles of data furnishers and CRAs. Clarify the distinction and roles of data furnishers and credit reporting agencies such that third party information mining and marketing firms like Lexis-Nexis may not act as both while they are held to the FTC guidelines of neither. -------------------------------------- Medical and Health Care Provider Reporting. Please institute some guidelines that prevent health and medical care providers from reporting until a consumer's account has become at least six months past due and the billing office has made at least monthly efforts to resolve the outstanding account. Many of these accounts are outstanding awaiting insurance claims to process. Consumers are frustrated in trying to get their insurance companies to make timely payments for medical and health treatments. Meanwhile, medical health care billing offices are submitting these accounts to the CRAs as late pays or non-pays. They do not submit at all for timely payments. Consumers who pay exorbitantly for health and medical care insurance do not expect to their credit rating to suffer while trying to navigate the claims process. Most consumers don't have the funds to cover, out of pocket, the cost of their medical care, which is why they purchased insurance to start with. Consumers who need medical and health treatment are under enough stress without coming out on the other side to find their credit has taken a severe hit due to the reporting practices of their health care provider. Many don't even realize it until they apply for a mortgage or any other extension of credit that requires their file to be pulled. It is a timely and often expensive process getting their credit reports corrected, if it can be corrected at all. CRAs tend to "verify" inaccurate information through some unexplained process, never releasing the name and contact information of the individual who verified this information to the consumer so that the problem can be corrected - notwithstanding the FTC's position on procedures request. A procedures request by a consumer, to date, yields nothing more than a form letter, if that, saying it's all electronic, contact your creditor. -------------------------------------- Full disclosure of FCRA Compliance/Date of First Delinquency (DOFD). CRAs should be required to DISCLOSE this information on consumer reports to consumers and to creditors and potential creditors and all else who have legitimate access to that report. The FCRA §623 stipulates that this information must be reported within 90 days of reporting a delinquent account. This information is hidden from consumers and, because we have no access to the reports provided businesses and employers, we have no ready means of ascertaining if this information is reported at all, and if it is, whether or not it is correct. Full disclosure of the Date of First Delinquency (DOFD) should be required on every consumer report so the age of a tradeline can be ascertained by consumers, lenders, and Fair Isaac. Regarding the DOFD, Equifax stated to me just this week that this date was NOT required from any data furnisher other than a collection agency. I have read through the relevant statutes again and again and the plain meaning of the statute does not bear that out. If that were true, a bank that charged off a credit card account would not be obligated to provide a date of first delinquency and charged off credit cards would remain on consumers reports perpetually. In fairness to consumers, the FTC should make it clear that all data furnishers must provide this date under the timeframe stipulated in §623, whether they are reporting a 30 day delinquency, 60 day, 90, 120, 150 or 180 day delinquency, a charge-off, collection or default by any other name. -------------------------------------- Misleading dates on credit reports. Dates that are misleading are routinely substituted for DOFD. These dates include Experian's infamous Date of Status, which updates every time a consumer makes an inquiry or a dispute on a tradeline. A tradeline that charged off six years ago will show an updated status date and date last reported, severely damaging a consumer's current credit rating. This is particularly troubling when the tradeline has been placed on one's report in error or when there are inaccuracies in the tradeline that consumers should be able to legitimately dispute under the guidelines the FTC has set in place. As a related matter, make it clear that no alternate date, such as Date of Last Activity (DOLA) may be substituted for the FCRA Compliance/Date of First Delinquency. The FTC went to great extents to establish a date certain by which CRAs would compute the obsolescence date. CRAs and data furnishers are allowed to circumvent their obligation to accurately compute the reporting period when they are allowed to use alternate dates. Data furnishers diverge widely on what they define as DOLA. In general, DOLA means any activity, as is the plain meaning of the term. This could be some activity the creditor engaged in, such as sending the account to collections, or charging it off, or selling it to a junk debt buyer post SOL. DOLA can also mean when an inquiry or dispute caused the account to be accessed via electronic means and a clerical notation made to that effect. The CRAs and the Data Furnishers need to be CLEARLY told the DOFD is required of all data furnishers on any account that reports ANY delinquency, not just collection agencies, and not just charge-offs. They also need to be CLEARLY told no other date can be substituted for DOFD. Further, and not of least importance, they need to be required to DISCLOSE the DOFD on all consumer reports, regardless of to whom that report is provided. As it is, consumers have to go to greater expense and energy to acquire that information, if it is available at all. -------------------------------------- Inaccurate reporting of Account/Payment History. Require or clarify that data furnishers and CRAs may not report an account as 120 days late for month after month after month, particularly when the account is closed, paid zero balance. Equifax is notorious for recording: "Current Status: Over 120 Days Past Due" on negative accounts that have been closed and paid to zero balance, not just months, but years after the account has been settled. It doesn't matter if the account was paid after or before charge-off, it reports the same. This manner of reporting causes a stale account to appear and to score as a fresh delinquency, unjustly penalizing consumers who have gone to great lengths to get back on their feet and rebuild their creditworthiness. It doesn't matter if the tradeline has been closed, zero balance for two years old or six years, it reports are currently over 120 days late. If a consumer send a check for the balance of ZERO, can the over 120 days late notation be deleted? -------------------------------------- Full disclosures and masked information. Related to the above suggestion that DOFD be disclosed, I submit that CRAs do not feel compelled to provide a full report to consumers when they request their credit files. I refer you to the FTC August 2000 opinion letter to Ben Cohan (http://www.ftc.gov/os/statutes/fcra/cohan2.htm) what states Section 612 of the FCRA requires disclosure of all information in a consumers file upon request. It presents an undue burden upon consumers to have to go back again and again asking for data one field at a time because CRAs refuse to include that information on the standard consumer reports provided consumers. The FTC's opinion, stated cogently in the Cohan letter, is that: "The term "file", when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored. The use of words such as "retained" and "stored" suggests that a CRA cannot escape its obligation to make disclosure of information on a consumer simply by placing the information in a category that it considers archival." As far as I know, no consumer has yet been able to get all the information in their file despite making explicit requests. I personally have a long paper trail documenting my requests for the contents of my file. I submit that if the report I receive includes all information in my file, then why is the FCRA Compliance/Date of First Delinquency not disclosed on a single tradeline? What must consumers do to get the contents of their files? I believe it imposes an unjust burden on consumers to require them to initiate suit against the CRAs in order to get the information the FTC has already stated is to be made available at their request. CRAs are going to say it's too expensive to comply with their obligation to provide consumers with all the information in their file. I believe the contents of one's file has too great of an impact on consumers' lives to allow this flimsy excuse to carry any weight. Hit CRAs with a big fine for failing to do what is required and perhaps they will understand the decision to provide this data has already been mandated by the FTC and they are in noncompliance. -------------------------------------- Procedures requests. A procedures request by a consumer, to date, yields nothing more than a form letter, if that, saying basically, "It's all electronic, contact your creditor whose information you can find on your last report." I submit that whatever the FTC intended to accomplish in § 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i] (6)(B)(iii) is routinely circumvented by the CRAs when they respond with the above mentioned form letter. They could print that sentence or two on their reinvestigation results and save themselves and the consumer the time, trouble, and expense of even requesting "a description of the procedure used to determine the accuracy and completeness of the information shall be provided to the consumer by the agency, including the business name and address of any furnisher of information contacted in connection with such information and the telephone number of such furnisher, if reasonably available." Please make it clear to the CRAs that a reasonable and responsive reply to a procedures request, where a reasonable reinvestigation has occurred, is more than the above mentioned form letter. -------------------------------------- Previously verified and frivolous disputes Some minimal standard should be established regarding at what point the CRAs can label a consumers' dispute frivolous. CRAs routinely evade their responsibility to conduct even a semblance of a reasonable reinvestigation. Standard CRA investigations rely on the data furnishers, that is, the source of disputed information, to confirm or correct disputed tradelines. If the information is not corrected upon an initial (& occasionally a second) dispute, CRAs routinely refuse to further investigate unfairly disadvantaging consumers who are trying to correct reporting errors. Experian is notorious for refusing to reinvestigate and no amount of supporting documents can convince them a consumer's dispute warrants investigation. I refer you to Apodaca v. Discover Financial Services, 417 F.Supp.2d 1220 (DNM Mar. 2, 2006) available online at: http://www.ltclg.com/Pages/Law%20Library/Cases/Apodaca%20v.%20Equifax.pdf to discover how minimal a so-called reinvestigation is. Because this is standard operating procedure for CRAs, it is not surprising when erroneous information is verified. When such an investigation fails to resolve bona fide errors in a consumer's file, they have no recourse other than a courtroom. Was this the Congress' intent in establishing consumer protection laws regarding accuracy in credit reporting? -------------------------------------- Erroneous personal data on reports. It is not uncommon for consumers to order their report and discover a dozen or more addresses, many of which are not even remotely recognized by the consumer who is supposed to have lived there. Correcting this information is next to impossible, particularly with Experian, who claims this is "historical information" and not subject to the accuracy and reinvestigation requirements of the FCRA, thereby evading responsibility under the act to include only accurate information, to reinvestigate and to correct erroneous information. CRAs add addresses due to mistaken identities. An address that John B Doe lived at may appear on the credit file of John D Doe. CRAs add addresses submitted by marketing firms who frequently have had no prior business relationship with you, even if the address is not correct and consumers, which may or may not have been a previous or current residence of the consumer. They have no mandate for accuracy, yet the CRAs refuse to correct the erroneous information they submit insisting that consumers must personally contact these marketers to update their address with them. I know of few consumers who want to contact these firms so they may be further bombarded with advertising. Further, this imposes an additional burden on consumers that is unwarranted and often time consuming and fruitless. Once an inaccurate address is attached to a consumer's file, the likelihood of erroneous tradelines belonging to someone who lives at or has lived at that address at any time in the past exponentially increases. Additionally, CRAs sell this erroneous data to skip tracers who then contact the wrong consumer based upon inaccurate information that the consumer is prohibited from disputing. It is particularly troubling when CRAs include rental housing/apt addresses where residents come and go. Any mail forwarded to the consumer at that address exposes that consumer to increases risk of identity theft and fraudulent credit activity. Not even the guidelines established for removing obsolete tradelines is applicable to personal data, according to the CRAs. Absolutely invalid addresses are all but impossible to have corrected and even an affidavit from the USPS that the address is not legitimate is insufficient to get an erroneous address deleted from an Experian report. Clarify with CRAs that all information, including personal data, that they include in consumers' files is subject to the accuracy and completeness guidelines established by the FTC and to reinvestigation mandates.