Credit Bureau Association Disputes 60 Minutes Contentions of 40 Million Errors

by devteam February 13th, 2013 | Share

Therncredit reporting industry’s trade group, the Consumer Data Industry Associationrn(CDIA) is vigorously disputing much of a CBS 60 Minutes (watch below) report thatrnaired last Sunday, February 10.  CDIA hasrnissued a barrage of press releases documenting its correspondence with thernshow’s producers and presenting its responses to the show’s assertions.</p

The 60rnMinute segment which can be viewed below focusedrnon the dispute resolution process used by major credit reporting agenciesrn(CRAs).  It presented some findings fromrna Federal Trade Commission eight year study due to be released the following dayrnand interviewed FTC Chairman  JonrnLeibowitz who said that one out of five of the 200 million credit bureau filesrnhas an error and one out of ten has an error that might lower the creditrnscore.  CBS reporter Steve Croft also interviewedrnOhio Attorney General Mike DeWine who said that “there was no doubt” CRAs werernbreaking the Fair Credit Reporting law. </p

The centerpiecernof the show was an interview with a woman who, after repeatedly being deniedrncredit starting in 1999 finally found that, while the free credit reportrnprovided to her was clean, potential lenders were uniformly provided arndifferent version with highly negative information on an unrelated party. Itrntook better than a decade and a lawsuit against two of the CRAs to get herrncredit cleared.</p

CBSrnsaid it approached the major credit reporting companies in December requestingrninterviews about their dispute resolution procedures.  The companies referred CBS to CDIA whichrndeclined to appear.  CDIA said of therninvitation, “Knowing 60 Minutes reputation for the sensational at the expensernof the factual, we decided the better alternative was to respond in writing tornany questions they had rather than on camera where most of our responses wouldrnbe edited out of context, if at all.”</p

The Association provided a formalrnstatement to CBS which said in part:  “Repeated studiesrnhave shown thatrndespite the fact thatrnbillions of individual pieces ofrndata are receivedrnand processed each year, therncredit reportsrnassembled provide highly accurate assessments ofrnconsumer history that both businesses and consumersrncan use to make informed financial decisions.” rnCDIA quoted a Consumer Financial Protection Bureau (CFPB) study whichrnfound that betweenrn1.3% and 3.9% of consumers disputed informationrnin their credit reportrnthat they believed wasrnin error and another from the Policy and Economic Research Council that concludedrnthere was only a one-half of one percentrnerrorrnrate that would result in a consumer paying a higher price for creditrn</p

Thernstatement continued; when errors are found, “creditrnreporting agenciesrnhave institutedrnrobust consumer service proceduresrnto ensure any errors canrnbe quickly corrected.  Offeringrnconsumers the opportunity to dispute information either by phone or online speedsrnup the process and over half of all disputes are received in this manner.” rnConsumers who use the dispute process, CDIA said, are generallyrnsatisfied with the results; the Policy and Economic Research Councilrnstudy found 95% consumerrnsatisfaction.  </p

On February 1 CBS provided a listrnof questions to Stuart Pratt, President and CEO of CDIA which asked forrncomments on the DeWine statement and on assertions by former Experian disputernresolution employees to the effect that they processed up to 90 disputes a dayrnwithout having access to phone, email, or documentation supporting thernconsumer’s complaint.  Pratt respondedrnwith statistics from a Federal Trade Commission study of the dispute processrndone in 2003, results of a more recent internal study and with a statement fromrnExperian which directly contradicted the information provided by its formerrnemployees.   The questions and responsesrncan be read in their entirety here. </p

On Friday February 9 CDIA saw arnpromotion for the Sunday broadcast and issued a preemptive press release thatrnsaid the promo “demonstrates that ’60 Minutes’ has selectively interpreted anrnupcoming FTC study to ignore the most significant results.  The FTC study shows that 98% of creditrnreports are materially accurate, a fact it appears ’60 Minutes’ is set tornignore.”  Further, CDIA said, FTC foundrnthat “The measure of accuracy is tied to the question of when an error has arnconsequence for consumers, not just when a report contains an error that willrnhave little or no impact on creditworthiness.”  </p

“It is irresponsible for ’60rnMinutes’ to be reporting the findings of the study in this manner, Prattrncontinued.  “The FTC’s study concludesrnthat only 2.2 percent of credit reports have an error that would lead tornhigher-priced credit for the consumer. It is simply wrong to suggest that 21rnpercent have errors that would lead to this consequence.” </p

The show also states that arndisputed error is “nearly impossible to expunge,” Pratt said.  “It is irresponsible to suggest to consumersrnthat they might as well not take action when they have a question about theirrncredit report.” </p

He also disputed allegations thatrnactions of CDIA members are in violation of federal law saying that federalrncourts have found just the opposite on multiple occasions.  “There seems to be some misunderstandingrnabout what the law requires of a credit bureau when a consumer submits arndispute. This is a good time to get the facts straight,” he said. </p<ul

  • ThernFair Credit Reporting Act requires a credit bureau to send the consumer’srndispute to the lender or other data source within five days of receivingrnit.  Congress recognized that only thernlender has the relevant data to determine if their reporting is in error.rn </li
  • Thern60 minute statement that “They’re not doing an investigation at all”rnignores the timeframes dictated by federal law under which a dispute must bernresolved. In almost every instance resolution is well within the deadline.  Second, it ignores recent findings by CFPBrnthat credit bureaus are working proactively to resolve disputes even when therndata resides with the consumer’s lender. Lastly, it completely ignores thernadvances the CRA’s have made and are implementing – and which the CFPB and FTCrnhave reviewed – to significantly streamline the reinvestigationrnprocess.” </li</ul

    “Let’s have a responsiblerndiscussion and step back from the hyperbole,” urged Pratt. “Creditrnreports are materially accurate 98% of the time, and when they do containrnmistakes, our members work to resolve them quickly and to the consumers’rnsatisfaction 95% of the time.”</p

    On Monday the long-term FTC studyrncited by 60 Minutes was released. rnCDIA said the report “Reconfirmed the findings of several recent studies thatrnconclude that credit reportsrnarernhighly accurate and play a critical role in facilitating access to fair and affordable consumer credit. The FTC’s research determined that 2.2 percent of all creditrnreports have an error thatrnwouldrnincrease the price a consumer would pay in the marketplace and that fully 88% of errors were the result of inaccurate information reported by lenders and other data sources tornnationwide creditrnbureaus. The study also showed that 95 percent of consumersrnare unaffected by errorsrninrntheir credit report.”</prn<p

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  • About the Author


    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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