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MAKING SENSE OF CONSUMER CREDIT REPORTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

FINANCIAL INSTITUTIONS AND CONSUMER 

PROTECTION 

OF THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

ON 

EXPLORING THE CONSUMER CREDIT REPORTING MARKET, CONSUMER 

UNDERSTANDING OF CREDIT REPORTS, AND THE EXPANDED OVERSIGHT OF KEY MARKET PARTICIPANTS IN THE CREDIT REPORTING 

INDUSTRY 

DECEMBER 19, 2012 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

KAY HAGAN, North Carolina 

RICHARD C. SHELBY, Alabama 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

ROGER F. WICKER, Mississippi 

DWIGHT FETTIG, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

DAWN RATLIFF, Chief Clerk 

RIKER VERMILYE, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER PROTECTION

SHERROD BROWN, Ohio, Chairman 

BOB CORKER, Tennessee, Ranking Republican Member 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

JEFF MERKLEY, Oregon 

KAY HAGAN, North Carolina 

JERRY MORAN, Kansas 

MIKE CRAPO, Idaho 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

GRAHAM STEELE, Subcommittee Staff Director 

MICHAEL BRIGHT, Republican Subcommittee Staff Director 

(II)
C O N T E N T S 

WEDNESDAY, DECEMBER 19, 2012 

Page 

Opening statement of Chairman Brown ................................................................ 1 

Opening statements, comments, or prepared statements of: 

Senator Corker .................................................................................................. 2 

Senator Akaka 

Prepared statement ................................................................................... 26 

WITNESSES 

Corey Stone, Assistant Director for the Office of Deposits, Cash, Collections, 

and Reporting Markets, Consumer Financial Protection Bureau .................... 3 

Prepared statement .......................................................................................... 26 

Response to written questions of: 

Chairman Brown ....................................................................................... 135 

Stuart K. Pratt, President and CEO, Consumer Data Industry Association ..... 13 

Prepared statement .......................................................................................... 27 

Response to written questions of: 

Chairman Brown ....................................................................................... 137 

Chi Chi Wu, Attorney, National Consumer Law Center ...................................... 15 

Prepared statement .......................................................................................... 38 

Response to written questions of: 

Chairman Brown ....................................................................................... 139 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Senators Merkley, Schumer, Menendez, and Brown letter to Richard Cordray, 

Director, Consumer Financial Protection Bureau ............................................. 143 

Richard Cordray, Director, Consumer Financial Protection Bureau, response 

letter to Senators Merkley, Schumer, Menendez, and Brown .......................... 145 

National Association of Credit Services Organizations letter to Senators 

Brown and Corker ................................................................................................ 147 

Letter to Senate Banking Committee and House Financial Services Committee in support of S. 2149 and H.R. 2086 from a coalition of organizations, including the National Homebuilders Association, the Mortgage 

Bankers Association, the American Medical Association, and the Consumers 

Union, among others ............................................................................................ 149 

LexisNexis articles from the Columbus Dispatch’s investigative series on credit reports ............................................................................................................... 151 

New York Times article, ‘‘Discrepancies on Medical Bills Can Leave a Credit 

Stain’’, by Tara Siegel Bernard ........................................................................... 208 

Associate Press article, ‘‘Medical Bills Can Wreck Credit, Even When Paid 

Off’’, by Carla K. Johnson .................................................................................... 212 

(III)

(1) 

MAKING SENSE OF CONSUMER CREDIT 

REPORTS 

WEDNESDAY, DECEMBER 19, 2012 

U.S. SENATE, SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER PROTECTION, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Subcommittee convened at 10:06 a.m. in room 538, Dirksen 

Senate Office Building, Hon. Sherrod Brown, Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF CHAIRMAN SHERROD BROWN 

Senator BROWN. The Subcommittee will come to order. Thank 

you for joining us. I will welcome Mr. Stone in a minute. We will 

have two panels today. 

I thank Senator Corker. This may be our last hearing together 

like this on the Subcommittee, as Senator Corker moves on to bigger and better things, and I appreciate his cooperation and his good 

sense in asking tough questions during his Subcommittee hearings 

over the last couple of years. 

Americans, as we know, depend on access to credit to fund our 

education, purchase homes, to run their businesses. That is why we 

need to address credit reports, one of the most significant and least 

understood elements of the consumer credit system. 

This hearing highlights yet another benefit of Dodd-Frank and 

the new Consumer Financial Protection Bureau. In the past, the 

Federal Trade Commission has had authority over furnishers, 

those who send financial information to the credit bureaus. Those 

furnishers are, in most cases, banks. But it did not have the authority—the FTC did not have the authority to examine the credit 

bureaus themselves. They could only bring enforcement actions. 

The CFPB has comprehensive authority now to examine the operations of credit bureaus, to shed new light on the credit reporting 

industry, about which we do not know much in many ways, and to 

write new rules of the road. That is just one reason why the CFPB 

is so important. 

Though consumers are entitled to one free copy of each of their 

credit reports each year, one from each of the three bureaus, if they 

choose to do that, the CFPB finds that only one in five consumers 

request a copy of their credit year report in any given year. Last 

year, eight million consumers disputed more than 30 million items 

in their credit report, challenging their voracity or accuracy in one 

way or another. Even though each American, every American who 
2 

is in the credit system, as most Americans are, each American has 

three credit reports, one for each one of the bureaus, an error on 

just one credit report can affect that consumer’s ability to access 

credit. 

A former colleague of mine in the House of Representatives recently contacted my office. His wife had passed away earlier this 

year. When he applied for a mortgage, he was denied because one 

of his credit reports listed him as deceased. When he called the bureau to tell them that he is still alive, he was told that the error 

would take 30 days to correct, and 30 days is a long time if you 

are in the midst of a financial transaction, obviously. He got in 

touch with us. We fixed the problem for him, something he should 

not have had to do. But he still does not know what other credit 

reports say. 

Unfortunately, that is just one story, admittedly, but these stories are all too common. An investigative series in one of my State’s 

largest newspapers, the Columbus Dispatch, found that more than 

half of consumers who filed credit report complaints with the FTC, 

back when it was done that way still, had been unable to resolve 

their issues through the normal dispute process with credit bureaus. Problems abound, even for consumers with nearly flawless 

credit. 

One of the Nation’s foremost bankruptcy experts visited my office 

last week. She has nearly perfect credit and recently received an 

auto loan with a rate of 1 percent. She then received an adverse 

action notice in the mail explaining she may have received a higher 

than expected rate because of adverse information on her credit report. It is hard to think she could have gotten a rate below 1 percent, but it was not explained, and like most hard-working Americans, she did not have the time to really pursue the follow-up with 

the organization that sent the notice. 

These examples, in my mind, show that the current system does 

not work always for consumers. It does work and is quite profitable 

for the banking industry, who are the main customers of those 

three bureaus, admittedly, but not for consumers who ultimately 

fact the impact of credit ratings, credit scores. 

Creditors make money off of loans with higher rates. Their ability to report negative information too often gives them leverage 

over consumers. Credit bureaus are largely paid by the lenders, by 

the furnishers, in many ways, by the lenders themselves when they 

go back to the bureaus and ask for information. Conducting thorough investigations costs money and cuts into profit margins. 

Under the law, credit bureaus and creditors have some general 

commands, but few concrete obligations. 

Too often, the burden is on the consumer, whose credit rating 

and credit score may not be accurate and whose interest rates on 

their financial transactions may be higher as a result. The burden 

is on consumers who do not know enough about their credit reports—too few people ask for them—or who do not have time to 

navigate the all-too-often arcane and confusing system. 

I look forward to hearing from our witnesses how we can help 

to work together to create a system that really protects consumers’ 

interests, is more transparent and more understandable to all of us 

who use our credit system in this country. 
3 

Senator Corker. 

STATEMENT OF SENATOR BOB CORKER 

Senator CORKER. Thank you, Mr. Chairman. I appreciate you 

calling the hearing and I have enjoyed working with you over the 

last couple of years, and I certainly look forward to the testimony 

of our witnesses and learning more about some of the issues 

around credit reporting. So thank you for being here and I look forward to your testimony. 

Senator BROWN. Thanks. Thank you, Senator Corker. 

Corey Stone is Assistant Director for the new Consumer Financial Protection Bureau’s Office of Deposits, Cash, Collections, and 

Reporting Markets. Immediately prior to joining CFPB, Mr. Stone 

served as a Fellow at the Center for Financial Services Innovation, 

was Chair of Start Community Bank in New Haven, Connecticut, 

visiting clinical lecturer at Yale Law School’s Community and Economic Development Clinic. From 2006 to 2008, he served as CEO 

of Pay Rent, Build Credit, an alternative credit bureau helping underserved thin file, he called them, consumers to demonstrate their 

creditworthiness using their rental and bill repayment history. He 

served as a member of the Federal Reserve Board of Governors 

Consumer Advisory Council. He is a graduate of Harvard and the 

Yale School of Management. 

Mr. Stone, welcome, and thanks for your public service. 

STATEMENT OF COREY STONE, ASSISTANT DIRECTOR FOR 

THE OFFICE OF DEPOSITS, CASH, COLLECTIONS, AND REPORTING MARKETS, CONSUMER FINANCIAL PROTECTION 

BUREAU 

Mr. STONE. Chairman Brown, Ranking Member Corker and 

Members of the Subcommittee, thank you for the opportunity to 

testify today on the consumer credit reporting industry. 

Credit reporting plays a critical role in consumers’ financial lives. 

Credit reports on consumers’ financial history and behavior can determine their eligibility for credit cards or car loans and home 

mortgage loans, and they often affect how much consumers pay for 

their loans. The industry is critical in our economy. It promotes access to credit that consumers can afford to repay. Without credit 

reporting, many consumers likely would not be able to get credit 

at all. 

Credit reports are also often used in a number of noncredit decisions about consumers. They can be used to determine whether a 

consumer is offered a job, a car, homeowners’ insurance, or rental 

housing. 

The CFPB is the first Federal Government agency that supervises both consumer reporting companies and the largest banks 

and many of the nonbanks that provide them with consumers’ credit information. This responsibility is a priority of the Bureau. Last 

year, the CFPB published one report to Congress on credit scores 

and another report on whether remittance information might help 

consumers develop positive credit scores. Earlier this year we published a Consumer Advisory about credit reports. In July, the 

CFPB adopted a rule to extend its supervision authority to cover 

larger consumer reporting agencies. In September, the CFPB re-
4 

leased its examination procedures for these companies along with 

a study examining credit scores—the three-digit numbers used to 

assess consumers’ creditworthiness. In mid-October, the CFPB 

began handling individual complaints about consumer reporting 

companies. If a consumer files a complaint with a credit reporting 

company and is dissatisfied with the resolution, the CFPB is available to assist. 

As many of us at the CFPB conduct outreach all over the country 

to learn how consumers hurt by the financial crisis are recovering, 

we have heard many express frustrations about their credit reports 

or credit scores. And we have heard a considerable amount of confusion and misunderstanding about credit reporting. 

Last week, the CFPB issued a new report based on information 

provided by the big three consumer reporting companies—Equifax, 

Experian, and TransUnion—and their industry association. The report highlights the basic systems that credit reporting companies 

use to collect, organize, and maintain consumer credit information. 

It is one of the most comprehensive looks at the consumer reporting industry to date. And it represents a significant step forward 

in understanding this industry and making it more transparent for 

consumers. 

Some of the key findings in the report are, first, more than three 

quarters of the trade lines in the credit bureaus’ databases come 

from the top 100 furnishers of information. These are largely the 

large banks and nonbank lenders—and now the largest debt collectors and debt buyers—who fall under the CFPB’s supervision. This 

means for the first time a Federal agency has the tools to examine 

and understand how well all parts of the credit reporting system 

are working—including both the sources of credit information and 

the credit bureaus themselves. 

Another finding, more than a third of consumer disputes relate 

to collections items. In fact, the information provided by the collection industry is five times more likely to be disputed than information from the mortgage industry. 

Another finding: A relatively small percentage of consumers—approximately just 20 percent—look at their credit reports each year. 

This is a shame because—while we do not know for sure how common inaccuracies are—it is likely that many additional consumers 

could identify and correct inaccuracies if they reviewed their credit 

reports. 

Another finding: Most complaints are forwarded to the furnishers 

that provided the original information when they are submitted to 

the credit bureaus. Credit reporting companies on average refer 85 

percent of complaints on to the furnishers that provided the original information. But documentation that consumers mailed in to 

support their cases may not be getting passed on to the data furnishers for them to properly investigate and report back to the 

credit reporting company. 

The CFPB’s report should help clarify the confusing world of consumer reports. It should help to inform policymakers and consumers about how this important industry works. If consumers 

know more about how these companies report on credit use, consumers should be better able to make decisions for themselves and 

use credit more wisely. 
5 

Thank you for inviting me to testify today. I will be happy to answer any questions you have about our report. 

Senator BROWN. Thank you, Mr. Stone. 

Expand on the last things you said, that if a consumer that is 

signing up, that is doing a refi of their home, of their home mortgage, wants to challenge her credit score and talks to one of the 

three companies that does that, typically—and sends documentation of something that she said is inaccurate—typically, the credit 

bureau does not go back to the original furnisher of the information 

with the—I mean, goes back to them, but not with the documentation that the consumer sent to the bureau, is that correct? 

Mr. STONE. That is correct. If the consumer sends in paper documentation, if they were filing the complaint by mail or faxed it in 

or provided it in an email, that is correct. 

Senator BROWN. There is also my understanding the CFPB’s 

study noted that only 255 characters of consumer-supplied text 

typically can be provided. Some do not even have a text field available. That makes the consumer complaint less likely to be examined in the way that the CFPB would recommend. Is my understanding right about that? 

Mr. STONE. Well, we do not know what happens when the complaint gets to the furnisher. We know that the text field can be 

filled in either by the consumer themselves when they file a complaint online, or if they call it in or mail it in, it can be translated 

onto a text field, that same text field, by a representative of the 

consumer reporting agency. 

Senator BROWN. So my understanding is the law requires the 

credit bureau supply the furnisher with all relevant information. 

So is that a violation of the law, that they have not provided? Partly, it is a technology issue that, I would think, could be fixed easily 

enough, I would think. And, second, it is just an issue that they 

make a determination not to send the furnisher all this information. So is that a violation of at least the spirit of FCRA, or it is 

a violation of the law? What is it? 

Mr. STONE. Senator, our purpose in putting together this paper, 

which is characteristic of the work of all of our markets teams, is, 

first, to be descriptive rather than prescriptive, so what we are describing is what we heard. We have many tools with which we can 

make determinations about whether the law is being violated or 

not, and in this case, that is what is going to happen. So we have 

found that this information is not being forwarded. 

Senator BROWN. Is it a fair statement to say that consumers 

must provide evidence when they challenge a credit score, but that 

creditors are taken at their word? 

[Pause.] 

Mr. STONE. It is—to describe the system that way, I think, would 

be accurate. So you are saying that the consumer can provide information, it is not going to get to the furnisher necessarily in the 

form in which they provide it. It does get converted into codes. It 

can be put into this limited text field and it can get to the furnisher—— 

Senator BROWN. Or may not entirely be passed on. 

Mr. STONE. It may not be passed on if it is a separate document. 
6 

Senator BROWN. And the consumer—the bureau, then, makes 

this determination by—I mean, there is no outside player here. 

There is the consumer going back to the bureau, the bureau going 

to the furnisher, perhaps with less complete documentation, and 

then the bureau ultimately making the decision which will affect 

the consumer’s credit score, the consumer’s interest rate, the consumer’s access to credit generally, but all done internally with no 

real disinterested party making a determination, correct? 

Mr. STONE. I would not say it is fair necessarily to characterize 

the credit bureau as not a disinterested party, but their interest is 

in making sure that the complaint gets passed on and they fulfilled 

that obligation. They have created codes and mechanisms to automate it as much as possible. And so the question is—is there more 

information that a furnisher could use to do a better investigation 

or not? So there are pieces of information that we know are not 

getting through. 

Senator BROWN. One last question and I will turn to Senator 

Corker. The three bureaus make the great preponderance of their— 

the revenues for the three bureaus overwhelmingly come from the 

financial institutions, not from the consumer, correct? 

Mr. STONE. That is correct. 

Senator BROWN. So the most important customers to the bureau 

are the furnishers and those whom they send the credit scores and 

share the credit information with the financial institutions, correct? 

Mr. STONE. That is correct, although I would point out that there 

is roughly a billion dollars of revenue earned by the three credit 

bureaus we are talking about today from consumers through credit 

monitoring services that they sell directly or wholesale through 

various partners. 

Senator BROWN. Give me a couple of examples of—I know you 

pay $11 if you want your credit score. That does not make up much 

of the billion dollars, I assume. So where does it come from—— 

Mr. STONE. There is a subscription service that consumers can 

sign up for. That is how some of the 40 million consumers who get 

their reports, that we referenced in our report, are actually getting 

them. They answer an ad online or they go to one of the three bureaus or other people who sell these subscription services and say, 

yes, I would like to get a copy of my bureau reports and an educational score once a month, or once a quarter, and they pay $8.99 

or $12.99 or some monthly subscription fee for that service. 

Senator BROWN. OK. Thank you. 

Senator Corker, thanks. 

Senator CORKER. Thank you, and I know we have some witnesses that are coming right behind you. I will just ask one question, and hopefully we can get through everybody. 

Has anyone raised any concerns about the accuracy of credit 

scores and their ability to predict? It seems to me that based on 

what our office knows, they have been very good predictors of behavior, generally speaking, and I know we are talking about a lot 

of different things today, but have there been any questions in your 

office about their ability to predict behavior, generally speaking? 

Mr. STONE. Thank you, Senator. I am glad you asked that question. Obviously, people focus in on the score because it is a single 

number and it is easier to tell where you rank—— 
7 

Senator CORKER. Right. 

Mr. STONE.——compared to all the underlying information. Credit scores that lenders use are these three-digit numbers that are 

built on the information that is in the credit report. So one concern 

one needs to have is whether the underlying information is accurate. When it is not accurate—— 

Senator CORKER. Yes, I understand—— 

Mr. STONE.——then the score will be less predictive than when 

the information is accurate. 

Senator CORKER. But, generally speaking, just out of curiosity, is 

there any sense in your office different than, generally speaking, 

they are pretty predictive, is that correct? I mean, I know there 

may be some outliers and I understand that there are some things 

that need to be rectified as it relates to consumers’ ability to ensure 

that, you know, the credit ratings they have are accurate and they 

have access, and I value all those things. But, generally speaking, 

if someone’s credit rating is correct and the information is there, 

are they fairly predictive for the future and useful in that regard? 

Mr. STONE. Yes, Senator, the lenders have found them useful, 

and that has to be one way in which we need to judge them. But 

lenders depend on these scores. The mortgage industry depends on 

a specific score, or a specific set of scores. We do find increasingly 

that in the auto industry and the credit card industry, that lenders 

use multiple scores when they do underwriting decisions. They will 

not rely on just a single score, and they are increasingly relying on 

scores derived from other kinds of information besides that found 

in credit reports. So these are different kinds of scores and information is overlaid on top of the original score and the original credit report that would have been pulled as part of an application to 

make a determination about whether to accept an application and 

how to price that account. 

Senator CORKER. So I would assume, since lenders lose a lot of 

money if they make bad loans, that having an indicator or a predictor of how people are going to handle their finances is something 

that is an asset and actually is an asset especially to people who 

keep their credit in good shape. Would that be true or false? 

Mr. STONE. It certainly helps people who keep their credit in 

good shape and where that credit is reported accurately. One of the 

concerns that we need to be aware of in the building of credit is 

the impact that the very first credit lines that consumers establish 

have on their credit history. Credit scores rely on credit history 

and, therefore, scores are really using the past to predict the future. 

And we know that different consumers start out with different 

kinds of products and the different products may have different 

likelihoods of resulting in good or bad payment behavior. One of 

the questions we are beginning to think about is whether bad loans 

and bad products make bad repayers and, therefore, can result in 

harm to consumers’ credit histories. 

Senator CORKER. Well, listen, I appreciate your efforts to ensure 

that when something happens on someone’s credit report that is inaccurate and unfounded and, candidly, makes it very difficult for 

them to navigate the society we live in, I appreciate your efforts 

to rectify those things and make it easier for people to be able to 
8 

overcome that. I think that is an important thing. At the same 

time, obviously, they have some value and have been good predictors, and hopefully, when we are through with this process, we will 

end up in a place where they are still a useful tool, but at the same 

time, people who have been maligned inappropriately have the 

ability to rectify those, and I thank you very much for your testimony. 

Mr. STONE. Thank you, Senator. 

Senator BROWN. Thank you, Senator Corker, and I think we concur with that. That is where we want to get to. And I understand 

the valuable service that they provide. 

Before turning to Senator Merkley, I ask unanimous consent to 

include the following documents in the record of this hearing: The 

National Consumer Law Center’s report, ‘‘Automated Injustice’’; 

second, a statement by the National Association of Credit Services 

Organizations; and third, articles from the Columbus Dispatch investigative series on credit reports that I mentioned in my opening 

statement. Without objection, so ordered. 

Senator BROWN. Senator Merkley. 

Senator MERKLEY. Thank you very much, Mr. Chairman, and I 

am going to jump right into an issue I have some concern about, 

which is the role of medical debt in consumer reports. 

I found it fascinating with just my family of four, how many billings I get in the mail, so many letters saying, ‘‘This is not a bill, 

but here is the information,’’ and after about four or five of those, 

‘‘Here is a bill, but you need to check with your other insurance to 

see if it is covered,’’ et cetera. And it has not been unusual for us 

to look at it and go, well, this should have been covered, and so 

we call up and say, ‘‘This should have been covered,’’ and virtually 

always, we are right and it just simply was not processed the first 

time through. Maybe the insurance company just kind of stamped 

it and hoped we would not call back and say, ‘‘Well, but wait a 

minute.’’ 

I guess the portrait I am trying to lay out is, just from my personal experience, enormous confusion about what you are paying 

when, and people simply having to go through a complex set of 

hoops in order to really determine, do I really owe this or should 

it have been covered by insurance company number one, insurance 

company number two. Was it a mis-billing? It does not even look 

like it was the right charge for what I went in for. 

So I have looked at all that and proposed that settled medical 

debt—in other words, after you have sorted through all that mess 

but you have reached an agreement on what you will—and you 

have paid it—should not be included in your credit score. And I 

thank very much the Chair of the Subcommittee, Senator Brown, 

for cosponsoring that. 

But I wanted to ask about your sense of this. Before I do, I want 

to enter several things into the record. I would like the letter that 

the Chairman and I sent to CFPB’s Director Richard Cordray on 

the need to address the impact of medical debt; his response back 

to us; a support letter by a broad coalition that includes the National Homebuilders Association, the Mortgage Bankers Association, the American Medical Association, the Consumers Union; and 

then two recent articles, one from the AP and the other from the 
9 

New York Times, highlighting the disastrous effect of medical debts 

on consumers’ credit and their financial futures many years down 

the line. If I could enter those things into the record, I would appreciate it. 

Senator BROWN. Without objection. 

Senator MERKLEY. So, Mr. Stone, I wanted to get your perspectives on this. In your recent report, you cite research showing that 

40 percent of all consumer disputes at credit reporting agencies related to collections events. But before we jump into just that piece 

of it, overall, this issue of the complexity of medical debt and resolving it, whether it is a good predictor, whether it should be part 

of the credit reporting system. 

Mr. STONE. Senator, I appreciate your bringing this issue up. It 

is definitely a source of concern. The fact that collections items are 

disputed at very high rates is not a surprise, just because negative 

information gets disputed more often than positive information. So 

we should expect high rates on collections items. 

As I think you have pointed out in some of your own correspondence, over half of collections items about 10 years ago in a Fed 

study come from medical collections items, which is way out of proportion to the role that the health care system plays in the economy compared to debt. So—— 

Senator MERKLEY. Is that the Federal Reserve study you are referring to? 

Mr. STONE. That is the Federal Reserve study, correct. 

Senator MERKLEY. Yes, 2003? OK. 

Mr. STONE. So it is clear that consumers face enormous challenges just understanding medical bills, who is liable for what, 

dealing with insurance payments. Consumers get with a single procedure bills from multiple entities, some of whom they may not 

have even been aware they were being treated by—the anesthesiologist, the ambulance driver—— 

Senator MERKLEY. The laboratory that is involved—— 

Mr. STONE.——the laboratory, all of that stuff, and it is not clear 

when a bill is a bill. 

One of the complicating factors is also that many health care providers outsource not just collections, but their whole accounts receivable function to agencies who manage the billing. And so the 

timing of when an item gets charged off or is treated as a collections item and then ultimately gets reported to a consumer reporting agency can vary considerably from provider to provider. There 

is not a single set of rules out there that happen in the medical 

billing environment that have evolved, unlike what has evolved in, 

say, the credit card industry, where a charge-off happens at a particular period of time. 

So some collections items show up earlier and before even some 

of the responsibilities on who owes what or a formal invoice may 

have been received. 

Senator MERKLEY. So, given all that, when a person has worked 

their way through all that and settled the debt, should it still be 

on their credit report? 

Mr. STONE. So there are a couple of issues raised by that and I 

think that those are questions that you will have to answer in the 
10 

process of developing your legislation. But one of those is simply—— 

Senator MERKLEY. No, no, no. I am asking you for your expertise. 

I have already developed the legislation. 

Mr. STONE. So here are the things—— 

Senator MERKLEY. I already know my answer to it. 

Mr. STONE. Here are the things that we are looking at, and I 

have to tell you, we are looking at them now and I do not have firm 

answers. But one question, obviously, is to what extent medical 

items, or certain medical items—and many of these are very small, 

as you know, $100, $75—— 

Senator MERKLEY. Seventy percent under $250. 

Mr. STONE. Yes, tiny items. Are they predictive if they are not 

paid? Many consumers find out about them only when they go to 

apply for a loan and they learn that there is a collections item. So 

the idea that the collections item for those consumers was something that was willfully not paid or that could not be paid is not 

something that you can infer. And so for those people, one could 

argue that it would not be predictive of anything regarding ability 

or willingness to pay, which is kind of the way credit history is 

used and reflected in credit scores. 

A second issue is where in the system one wants to hold accountable the filter for determining what is and what is not predictive. 

We have the credit reporting agencies who collect the data, and 

then we have score developers such as FICO and VantageScore 

who translate the underlying data into something that is predictive 

of creditworthiness. And so they have the ability to leave out information that is unimportant. They have the ability to distinguish 

between items that have been there for a long time versus not, or 

between the large items and small items, and those are things that 

a score developer could determine. We actually have purchased a 

panel of anonymized consumer data from one of the credit reporting agencies that will have this medical data and from which we 

will be able to make a determination about the predictiveness of 

this data. 

Senator MERKLEY. Terrific. I am going to have to cut you off 

there because I am way over my time. I do want to take note that 

VantageScore does throw out most medical data, and my understanding is they do not consider it to be predictive. But, still, this 

data is in the scores and it is affecting millions of Americans. And 

again, I am only arguing that when people have settled these, gone 

through the complex process of determining which insurance company should have paid what, they settle it, but by that time, it has 

already been reported and it is on their credit record for 7 years. 

Between the fact that a lot of the industry does not consider it predictive and the fact it does so much damage, it seems to me it 

ought to come out and I look forward to the results of your study. 

Thank you. Thank you, Mr. Chair. 

Senator BROWN. Thank you, Senator Merkley. 

Before calling on Senator Akaka, I believe this probably will be 

his last hearing, at least in the Banking Committee, and I appreciate your work, especially the work you have done for the underbanked and the unbanked, how that is a persistent problem in our 

society, and we have looked to your leadership, Senator Akaka, on 
11 

that issue and also on financial education. Thank you for all of 

your work in all of that. I yield to Senator Akaka from Hawaii. 

Senator AKAKA. Thank you very much, Mr. Chairman. Chairman 

Brown, it is so good to be here with you and the Committee. I have 

enjoyed working with all of you here. Of course, we are here to help 

the people of America. 

First, let me just say thank you very much for holding this hearing today and for all of your work on consumer protection issues, 

Chairman Brown. I know you agree, when Americans make wise 

economic decisions and are protected from bad actors, our economy 

and Nation are stronger for it. 

It is fitting that a hearing on the topic of consumer protection 

will be my last as a Member of the Senate. Financial literacy and 

consumer protection issues are very close to my heart. So while my 

Senate career is coming to an end, I know there are many of my 

colleagues who will continue to empower consumers to make the 

best financial decisions possible. So thank you very much to my colleagues here on the Committee, also Chairman Johnson and Chairman Brown and Senator Reed, Senator Merkley, Senator Hagan, 

and others who I know share my strong interest in consumer protection issues. 

I also appreciated the dedicated work of the Committee and the 

staff and personal office staffs, as well, because we have worked together very well to do so much to support the work that we do, so 

thank you, again, as well. 

And I want to thank our witnesses for your tireless work on consumer protection. 

Mr. Chairman, I ask that my full statement be added in the 

record—— 

Senator BROWN. Without objection. 

Senator AKAKA.——and I would like to ask just a couple of questions. 

Senator AKAKA. We are glad to have you here, Mr. Stone. I am 

so glad to see that the Consumer Financial Protection Bureau is 

working out here. I look forward to your work. 

I believe that it is important to have a complete picture of an individual’s financial record when calculating a meaningful credit report. I fought to include a report on remittance transfers in the 

Dodd-Frank provisions. Last year’s CFPB report on the remittance 

transfers mentioned research that the CFPB planned to do to address the potential for using remittance histories to enhance credit 

scores. So my question to you is, can you please discuss any 

progress being made in those research projects. 

Mr. STONE. Yes, Senator. First, let me thank you for making sure 

that that report requirement was inserted in Dodd-Frank. It is an 

important issue of what kinds of information are going to help provide a complete history that gives all consumers an opportunity to 

get access to credit. 

As you pointed out, we did provide an initial report last year and 

that dealt with some of the strengths and weaknesses that we 

would anticipate would be involved in using remittance history. For 

context, lots of people who send remittances are people who have 

thin files, so it is a great opportunity for a new kind of information 

to enrich our understanding of their ability to pay and financial 
12 

wherewithal. A downside of remittance information is that it is not 

an obligation and, therefore, does not provide indications of whether an obligation has been met. 

I am happy to say that since we completed that report, we received a sample of information from one of the largest remittance 

providers, transaction history, all anonymized on a very large sample of consumers. That information has been matched with those 

consumers’ credit histories so that we have remittance history and 

we have how those consumers performed on their credit obligations 

subsequent to that remittance history. Right now, we are doing the 

analysis to determine how useful the remittance transactions are 

in predicting the credit performance and repayment history of 

those consumers. So we expect that report to be finished in the second quarter of calendar year 2013. 

Senator AKAKA. Well, thank you very much for that. 

The CFPB report discusses the many ways that credit reports affect the lives of Americans, from finding a job to finding a home, 

two fundamental topics when we talk about moving our economy 

forward. Yet, less than one in five consumers accesses their credit 

report. Please tell me, what is the CFPB doing to encourage people 

to access their credit reports? 

Mr. STONE. Thank you, Senator, for asking that. It is important 

to us that consumers access their credit reports, and we have a 

number of mechanisms to do so. As you know, we have a whole 

Consumer Education and Engagement Division. That office posts 

blogs. We develop content that gets distributed through all kinds 

of community partners. We also make sure people are aware of research that shows what the benefits are of people seeing their credit reports and knowing their credit reports and knowing their credit scores. In fact, there was a very recent article from the Federal 

Reserve Bank of Boston that showed some of the potential benefits 

of consumers knowing their scores when they apply for credit and 

the handicap of not knowing their scores. 

I want to call attention to our particular constituent offices that 

were part of the formation of our Consumer Education and Engagement Division. We do special outreach to service members through 

our Office of Service Member Affairs headed by Holly Petraeus. We 

have an Office of Students. Our Office of Older Americans is headed by Skip Humphrey. These offices have developed specialized 

channels for communicating what in particular about credit reports 

and scores is important for these particular groups to know, and 

we are trying to make the message available to each of these 

groups at the most teachable moments. 

Senator AKAKA. Well, thank you very much. May I then ask you 

to please pass my aloha to Holly Petraeus. She did come out to Hawaii, and particularly to talk to the military about financial literacy, and she did a great job, and the staff that came with her, 

also. So I am proud of what you folks are doing to help the people 

of our country. 

Mr. STONE. Thank you, Senator. I will be happy to pass on your 

greetings to Mrs. Petraeus. 

Senator AKAKA. Thank you very much. 

Thank you, Mr. Chairman. 

Senator BROWN. Aloha. Thank you, Senator Akaka. 
13 

Thank you very much for your testimony, Mr. Stone. 

The Chair will call up Stuart Pratt and Chi Chi Wu, if the two 

of them would join us. 

[Pause.] 

Senator BROWN. I thank the two of you. Stuart Pratt is President 

and CEO of the Consumer Data Industry Association 

headquartered in Washington. He has advised U.S. Presidential 

and gubernatorial task forces on the importance of the free flow of 

information to the economy. He has testified often before Congress. 

He serves as an advisor to the Department of Commerce regarding 

E.U.-U.S. trade negotiations and has counseled private and government entities overseas on responsible uses of consumer data. He 

serves on the U.S. Chamber of Commerce’s Committee of 100 and 

on the Advisory Council for the National Foundation for Credit 

Counseling. He received his Bachelor’s degree from Furman University and conducted his graduate studies in business at the University of Maryland. Welcome, Mr. Pratt. 

Ms. Wu, Chi Chi Wu, has been a staff attorney at NCLC for over 

a decade. Her specialties include fair credit reporting, credit cards, 

refund anticipation loans, and medical debt, which Senator 

Merkley asked about. Before joining NCLC, she worked in the Consumer Protection Division at the Massachusetts Attorney General’s 

Office and the Asian Outreach Unit of Greater Boston Legal Services. She is a graduate of Harvard Law School and the Johns Hopkins University. She is coauthor of the legal manuals Fair Credit 

Reporting and Collection Actions, and a contributing author to 

Consumer Credit Regulation and Truth in Lending. Welcome, Ms. 

Wu. 

Mr. Pratt, would you begin. Thank you. 

STATEMENT OF STUART K. PRATT, PRESIDENT AND CEO, 

CONSUMER DATA INDUSTRY ASSOCIATION 

Mr. PRATT. Chairman Brown and Ranking Member Corker, 

thank you for the opportunity to be here before you today. 

Let me just touch on a few highlights of the written testimony 

that we have already submitted. To start off, I think that we talked 

a little bit about credit reports and whether or not consumers really understand them or not, but they really are the strongest advocate for me as a consumer. When I walk into the bank, the bank 

does not know me. Lenders do not know me. Forty million of us 

move every year in this country. We move to new cities. We need 

to engage in business. And the credit report is the bridge that tells 

my story. It is about my hard work. It is about how I pay my bills. 

It is about the good decisions I make. It is about personal responsibility. So credit reports at their very best are an incredible indicator to others of everything about me that you want somebody else 

to know about me. 

In fact, USAID, the International Finance Corporation, Bank of 

International Settlements, and the World Bank are all so deeply involved—they are so supportive of credit reporting that they are involved in spreading this good news around the world. And, in fact, 

I serve on an International Task Force for Credit Reporting Standards to try to advance credit reporting in other parts of the world, 

as well. 
14 

The system is big. I think the CFPB’s report laid it out very well. 

Two-hundred-million consumers plus have a credit report in this 

country. About 10,000 lenders and other data furnishers are supplying data. There are about 1.3 billion accounts in the credit reporting system and about three billion updates every month going 

into that system, as well. 

With all of that said, our members are confident of the accuracy 

of the system that we have, and they should be. They work on accuracy 7 days a week. 

We provided the FTC with data free of charge so that they could 

conduct their study of accuracy, and I think it is imminent. They 

are going to release their report soon, and we will see what they 

have to say. 

We did not wait for the FTC, however, to measure the question 

of accuracy, and, in fact, we wanted to answer the question that 

consumers most often asked of us, and that is, is there an inaccuracy on my credit report that is consequential, one that is likely to 

affect the mortgage loan for which I am making application? And 

I think there is some good news in all of that. 

We contracted with an outside group, the Political and Economic 

Research Council. It was an arms’-length grant that we gave to 

them. They controlled the data. They controlled the results. They 

controlled the press releases. That was their study, not ours. And, 

in fact, it was a very powerful study. It was peer reviewed by professors at the Wharton School of Business, University of Pennsylvania, Duke University, and UNC–Chapel Hill. 

So what does it mean to me as a consumer? Well, about less than 

1 percent of the time will a dispute and a correction of data my 

credit bureau filed result in a 25-point change in my credit score, 

and less than a half-percent of the time, or about a half-percent of 

the time, I will see myself move from a higher-priced pricing tier 

to a lower-priced pricing tier. So 99.5 percent of the time, I am not 

likely to see something that my credit bureau filed that is really 

going to impair my ability to engage in the marketplace and to lose 

out on the offer that I really am seeking in the first place. 

Reinvestigations, another big issue that we have talked a little 

bit about already this morning. We also asked consumers how they 

felt about reinvestigations, and most importantly, the result of the 

reinvestigation. We did this in tandem with the work that the 

PERC had done with their accuracy study and we got a bit of good 

news there, as well. Ninety-five percent of the consumers that disputed information on their credit reports and then saw the results 

indicated that they were satisfied with those results, 95 percent. 

Automation really is not the problem. We have heard that sometimes, but it really is not. We solved fundamental problems for consumers with automation. I go all the way back to the 1990s when 

we depended on mail for processing disputes. Today, it is a highly 

automated system. It is Web-based. It wires together about 15,000 

to 18,000 financial institutions. And whereas law requires that we 

resolve a dispute in 30 days, these automated systems allow us to 

resolve disputes in 14 days. 

We had a little bit of a discussion of paperwork already this 

morning, so I thought I would add a bit to CFPB’s report. CFPB 

and our own research indicate about 44—roughly 44 percent of the 
15 

time, the consumer sends a communication about a dispute 

through the mail. They send us paper. However, 85 percent of the 

time, it is just a standardized form or a single-page letter. Ten percent of the time, it is an identity theft report, and maybe two to 

3 percent of the time is it something more than that. That is really 

important, because I think the perception has been consumers are 

sending big stacks of validating data. Some of that is not getting 

to the lenders. But we see consumers satisfied at 95 percent and 

we see a system which is working today even though it is automated, because, in fact, it turns things around faster, serves that 

consumer who is in the middle of that lending transaction. 

One of the biggest challenges for reinvestigations, however, is 

credit repair. Forty-three percent of the mail we receive comes from 

fraudulent credit repair activity, 43 percent. It clogs the system. It 

interferes with process. Consumers, when they hire a credit repair, 

often do not know what the credit repair agency is going to do. 

Credit repair agencies take money from consumers in cases where, 

in fact, they could exercise their rights free of charge. We are grateful for the Credit Repair Organizations Act having been enacted. 

We are grateful for FTC enforcement. But credit repair is one of 

our greatest challenges. 

I am happy to go forward. I see my time has expired, however, 

Mr. Chairman, so I will leave it at that and I look forward to the 

questions and answers. Thank you. 

Senator BROWN. Very helpful. Thank you, Mr. Pratt. 

Ms. Wu, welcome. 

STATEMENT OF CHI CHI WU, ATTORNEY, NATIONAL 

CONSUMER LAW CENTER 

Ms. WU. Mr. Chairman, Ranking Member Corker, Members of 

the Subcommittee, thank you for inviting me here today. My name 

is Chi Chi Wu. I am a staff attorney at National Consumer Law 

Center. 

Mr. Chairman, thank you for holding this hearing about the 

American credit reporting system. Credit reports play a critical role 

in the economic lives of Americans. They are the gatekeeper for affordable credit, insurance, sometimes, unfortunately, even a job. 

Yet despite their vital importance, the system is full of preventable 

errors, and the dispute mechanism mandated by the Fair Credit 

Reporting Act to fix these errors has been turned into an automated travesty of justice. 

Consumer advocates have been complaining about these issues 

for over a decade in numerous hearings, reports, and media articles. These issues were discussed in a 2006 report by the FTC, by 

the groundbreaking series this year in the Columbus Dispatch that 

the Chairman mentioned, and in a report released just last week 

by the CFPB. 

Preventable errors include what are called mixed files, where 

credit information relating to one consumer is placed in the file of 

another. Mixed files happen because the credit bureaus’ matching 

criteria are too lax. In particular, they match information based on 

seven out of nine digits of the Social Security number if the consumers’ names are similar. Mixed files could be prevented by requiring the credit bureaus to have an exact match of Social Secu-
16 

rity numbers, the one piece of unique identifying information that 

most every American has. 

Debt collectors and debt buyers present their own special types 

of errors created by the fact that they usually do not get any of the 

supporting documentation to establish that the consumer actually 

owes the debt, the correct amount, whether there are any disputes, 

or even if the collector is dunning the correct consumer. The report 

issued by CFPB indicates a disproportionate number of errors involve debt collectors, given that they only provide about 13 percent 

of the accounts to the credit bureaus, but generate 40 percent of 

the disputes. 

Now, the industry has attempted to rebut these issues by citing 

the studies that they funded showing less than 1 percent of reports 

contain serious errors. We have a number of concerns about this 

study and it contrasts with studies by consumer groups and polling 

surveys finding higher rates. But even if we take this 1 percent 

error rate at face value, that figure translates into two million 

Americans, given that the credit bureaus have information about 

200 million Americans in their databases. That is not acceptable. 

Would we accept it if 1 percent of airplanes fell out of the sky? 

As for the dispute process, we have documented the broken nature of the system in our 2009 report, Automated Injustice, which 

we thank the Chair for introducing into the record. Credit bureaus 

translate disputes, sometimes painstakingly written by desperate 

consumers, into two- or three-digit codes. They use the same handful of codes over 80 percent of the time. And the entire role of the 

foreign workers employed by their offshore vendors to handle these 

disputes amounts to little more than selecting these codes. They 

fail to send documents, as has been mentioned, that have been submitted by the consumers, such as canceled checks, payoff statements, even court judgments, to the furnishers involved in the dispute. 

Then the credit bureaus blithely accept or parrot whatever the 

furnishers respond with, no matter how good the consumer’s evidence is to show they are right, even when the furnisher is a debt 

buyer or debt collector with a known record of bad behavior. The 

consumer is not only always presumed guilty, but she cannot even 

get an innocent verdict if she provides proof and the furnisher just 

says, ‘‘Nah, she is guilty.’’ 

For their part, furnishers also engage in nonsubstantive investigations, mostly limited to ensuring data conformity between the 

records maintained by the credit bureaus and their own records. 

For instance, the FTC just brought a case in which it alleged that 

Asset Acceptance, a debt buyer, required its dispute handlers, 14 

or 20 of them, to handle half-a-million disputes a year—that is, to 

process one dispute every 3 minutes. 

The end result of this broken system is that no one, either at the 

credit bureau or the furnisher, conducts any sort of meaningful inquiry into the consumer’s dispute, such as examining documents, 

contacting the consumers by phone or email, or exercising any form 

of human discretion in resolving a dispute. 

Reform needs to happen now. It should have happened years ago. 

We have high hopes for the CFPB, now that it has begun formal 

supervision of the credit bureaus. But Congress can help, too, by 
17 

giving consumers the ability to seek injunctive relief under the Fair 

Credit Reporting Act. 

Turning to medical debt, this is an issue with enormous impact 

on credit reports. We support the Medical Debt Responsibility Act 

and thank Senator Merkley for introducing it. It is probably the 

simplest and quickest fix out there to improve the credit records of 

millions of Americans. As we have heard, medical debt makes up 

over half of the items on credit reports for debt collection, and it 

is often for services that are involuntary, unplanned, and unpredictable. It could result from a dispute between the insurer and 

provider or a mistake in billing. When mistakes occur, delay happens and bills can be sent to collection agencies in the meantime. 

Now, tell me, how does the fact that a consumer got caught between an insurer and a hospital in a billing dispute make him or 

her a bad credit risk? 

Thank you for the opportunity to testify and I look forward to 

your questions. 

Senator BROWN. Thank you, Ms. Wu. 

Before beginning questions, I turn to Senator Corker for a couple 

of comments. 

Senator CORKER. Mr. Chairman, again, thank you for this hearing. I am going to step into another meeting, and I know we all 

have multiple things to do today, but I think this has been very 

enlightening. 

Mr. Pratt, I thought your testimony was, from the standpoint of 

the credit folks, very, very good. And, Ms. Wu, if I am ever in a 

situation, which I hope I am not, where I need an attorney for that 

kind of thing, I am going to call you. You are very good. 

[Laughter.] 

Senator CORKER. So I hope that—you know, look, we all want 

this to work for everybody, and obviously there are some issues 

here that need to be resolved and I hope we can do that. 

And I want to thank you again for calling this hearing and for 

your leadership, and I will see you later today. 

Senator BROWN. Thank you, Senator Corker. Thank you. Thanks 

very much. 

And I thank both of you for testifying, and I endorse Senator 

Corker’s comments about the two of you and your insightful testimony. 

Mr. Pratt, let me start with you. Is it feasible for credit bureaus 

to share documentation with furnishers? I understood you said 

that, more often than not, it is a one-page document. I understand 

the technology issues. But I understand, also, that it seems pretty 

certain that the bureaus do not share that information with furnishers when furnishers, it seems to me, should be able to see it. 

Is it feasible for them to begin to share all of that information each 

time? 

Mr. PRATT. So, I think if you look at technology, the answer is 

there is probably some technologies we could look at, and, in fact, 

we are always in that dialogue. Is there a way to improve the reinvestigation process? Is there some new mechanism that we could 

put forward? 

Just to give you an idea of one of the challenges, though, when 

you do get, I guess, a thicker letter, and that is consumers will 
18 

often talk about two or three different accounts on the same front 

page of the letter. One of our challenges is we cannot send a Bank 

of America information about Citigroup or information about another lender. So how do we parse through the letter and make sure 

that we get the right information to the right lender? So one of the 

legal issues we have—it is a matter of law issue—is how to unpack 

complicated communications so that data could be sent from one 

party to another if, in fact, it is going to advance the ball beyond 

the coding systems we have today. 

Again, our measure is we think we are getting it right. In other 

words, most of the letters come in and they say, ‘‘That is not my 

account.’’ Or most of the letters come in and say, ‘‘I never missed 

a 30-day late payment. Go talk to my lender.’’ 

And, by the way, I will say one more thing, and that is more consumers, I think, with a complicated dispute, are choosing to dispute 

directly with their lender the issue that they have, and this is 

something that was done—— 

Senator BROWN. Even if the lender is not the furnisher? 

Mr. PRATT. Well, the lender in this case would be the furnisher. 

Senator BROWN. OK. 

Mr. PRATT. I mean, right. So, yes. In the case where my lender 

is the furnisher, I, actually, through the FACT Act, an Act, of 

course, that you voted on, as well—the FACT Act actually pushed 

forward the idea that sometimes I may need to go talk directly to 

my lender and I should have that right under the law, under the 

Fair Credit Reporting Act, and sometimes I may go to the credit 

bureau. We see more consumers with complicated issues going to 

the lender to resolve the issue, and that is why I think you will 

continue to see that evolution going forward. I think it was a good 

idea that was put into the law in 2003 and it is one that consumers 

are beginning to take up—— 

Senator BROWN. But it seems, more often than not, the furnisher 

and the lender are not the same institution. 

Mr. PRATT. No, they are—if a consumer says—if a consumer 

looks at his or her credit report and says, here is a credit card 

issuer. I disagree. I never missed 30 days. Then, obviously, assuming I do not think that that account is—— 

Senator BROWN. That is if they have their credit report. 

Mr. PRATT. Yes. 

Senator BROWN. But if they look at their credit score and then 

they see—when they are in the middle of a transaction with a financial institution, they look at their credit score—— 

Mr. PRATT. Right. 

Senator BROWN.——they question why it is that low—— 

Mr. PRATT. Right. 

Senator BROWN.——and they then come back to you, to the credit 

bureau, and the credit bureau—I mean, I think that consumers do 

not—I mean, this is a sort of a dense kind of a black hole for consumers dealing with the credit bureau so often, and if the credit 

bureau is not sharing the information with the furnisher, there is 

sort of no good appeals process for that—— 

Mr. PRATT. Well, you know, we want that process to work, first 

of all. You know that. I know that. It may not be—— 
19 

Senator BROWN. Why would you not share—I understood the one 

reason you would not share with furnishers, but that is not the 

story every time. 

Mr. PRATT. But the primary reason is because furnishers themselves—it is a voluntary system. Historically, we have had to be 

very careful about overburdening the system where a furnisher 

says, you know what? I have just decided to stop sharing my data. 

So that is one challenge. So we try to automate and make sure that 

we deliver the right information to the furnisher so the furnisher 

can process that information effectively. 

I would tell you today that if a consumer writes a single-page letter and says, ‘‘That is not my account,’’ furnishing the letter does 

not do anything to change how that lender is then going to investigate the data. If the consumer says, ‘‘I never missed a 30-day late 

payment,’’ whether it is a code that says, ‘‘Never missed payment,’’ 

or whether it is a letter that says, ‘‘Never missed payment,’’ it has 

the same effect and the lender is going to process the dispute in 

precisely the same way. 

So I think the wheat and the chaff here is there is very little 

communication coming over the transom to the credit bureaus that 

is large, thick, complicated sets of data. 

And, by the way, on the letter writing side, I will tell you this, 

Senator Brown. One of the challenges we have is credit repair is 

flooding the mail-based system. Forty-three percent of what we are 

getting is coming from credit repair. Credit repair is out there saying, we will dispute unverifiable data, but what they mean is I will 

dispute the same information over and over and over again until 

the lender stops reporting it, even if it is accurate. And so 44 percent of our mail—and if we keep pushing that mail or those disputes back out to that lender, all we are doing is harming the system. 

So one of the great challenges we have, it has been around for 

a long time, the Credit Repair Organization Act was enacted in 

1996. The FTC has been enforcing the law. State Attorneys General have been enforcing their State laws. But it is a challenging 

issue for us. 

Senator BROWN. Thank you. 

Let me shift for another round of questions to the Asset Acceptance that you brought up, Ms. Wu. Why did credit bureaus—and 

then certainly Mr. Pratt has a chance to respond to it, too—why 

would credit bureaus keep accepting customers that have a poor 

record of compliance? Talk through more of the Asset Acceptance, 

what happened. 

Ms. WU. Well, that is a great question, Senator Brown, and it is 

a very simple answer. It is, money talks. Asset Acceptance—just a 

little background—Asset Acceptance is a company we complained 

about in 2007 before the House. It is a debt buyer, a particularly 

notorious debt buyer. They were subsequently sued by one of the 

credit bureaus for supplying inaccurate information to that credit 

bureau, getting that credit bureau involved in a lawsuit—— 

Senator BROWN. Five million accounts, is that number correct? 

Ms. WU. Uh—— 

Senator BROWN. They were sued for providing false information 

for several million accounts, is that—— 
20 

Ms. WU. I do not remember the exact number, but it was a class 

action involving a number of accounts. And then, just this year, the 

Federal Trade Commission sued them for egregious violations of 

the Fair Credit Reporting Act. 

This is the type of furnisher that is constituting about 40 percent 

of the disputes, by the way. This is the kind of furnisher that the 

industry says it does not want to burden with the obligation of resolving the disputes. I think they are required by law to deal with 

these disputes. 

But, anyway, the reason that Asset Acceptance is still in the system—and we think they still are because their SEC filings so 

state—is because they are the customer. They pay the credit bureaus both to enter their information into the system and to pull 

reports. They are a subscriber. And it is the creditors and the debt 

collectors that are the major customers of the credit bureaus, not 

the consumer. 

This is an industry unlike every other industry in the United 

States, or almost every other industry. Usually, in an industry, you 

have competition. A consumer has a choice. If they do not like one 

cell phone carrier, they can go to another. In this system, consumers do not have a choice. If you are unhappy with how 

Experian handles your information, you cannot say, ‘‘I am not 

going to deal with Experian anymore. I am only going to deal with 

TransUnion,’’ because, you know what? If you want a mortgage, 

you have to go with Experian. So there are no traditional market 

forces to improve the services to consumers. 

On the other hand, creditors and debt buyers, like Asset Acceptance, can choose between the credit bureaus, and they are the ones 

who are paying the bulk of the revenues. 

Senator BROWN. Mr. Pratt, you can certainly answer that, but 

answer this, too. Given the history of bad behavior among some 

debt collectors, should there be a higher standard for these furnishers and for credit bureaus that work with them? 

Mr. PRATT. So, let me do two things. I will answer that question, 

and it kind of ties back, of course, to some of Ms. Wu’s comments. 

First of all, I think it is just fundamentally wrong, what Ms. Wu 

is saying about our relationships with consumers. National credit 

bureaus, and I think Mr. Stone described it, as well, are seeking 

a relationship with consumers and tens of millions of consumers 

have that relationship every year through these products and services they make available—— 

Senator BROWN. But you do acknowledge the relatively small 

part of revenues for the—— 

Mr. PRATT. To the contrary. To the contrary. One of our national 

credit reporting systems, their direct-to-consumer relationships 

generate more revenues than their credit bureau. To the contrary. 

It is an important relationship that is developing and evolving. It 

is market-based. It is free market-based. It is exactly what we 

should want in this country, and it operates conterminously with 

the rights that I have under the law, which I can certainly exercise 

free of charge. 

Senator BROWN. Your revenues—of the three major—— 

Mr. PRATT. One of our members has a revenue stream—— 
21 

Senator BROWN. One of the big three gets more money from consumers than they do from lenders, furnishers, other financial institutions? 

Mr. PRATT. That is right. That is right. 

Senator BROWN. The other two—— 

Mr. PRATT. The world is changing. 

Senator BROWN. What is the ratio on the other two? 

Mr. PRATT. I cannot tell you. 

Senator BROWN. You know a lot about the one. Do you not know 

about the other two? 

Mr. PRATT. Yes, I just do not have math in my head that I can 

tell you exactly. It is obviously less than that. 

Senator BROWN. OK. Fair enough. Proceed. 

Mr. PRATT. So I think it is just patently wrong to say that we 

are not seeking a relationship with consumers. And it is also patently wrong to say that we want to have a less than—some sort 

of substandard system for processing reinvestigations. All I can tell 

you is when we look at our metrics, we have one of our companies 

that measures every time a consumer goes through and talks to an 

operator, ‘‘Would you like to take a survey and tell us how we did? 

Please sign up before you talk to the operator.’’ You know, one out 

of five—one to five, do we do a good job. The average is 4.5 for consumers. 

We are measuring and looking for ways to serve consumers 

through what the law requires, and we are also looking for ways 

to serve consumers in the marketplace that we have. Both are important ways for us to reach consumers. 

I would also say that there has been a lot of discussion of consumers being confused about credit reporting, but I have it in the 

testimony, the Consumer Federation of America, totally independent from us, often one of our critics, has surveyed consumers 

and said progress has been made. Consumers understand credit reporting better today than ever before, and by many, many multiples over earlier surveys. So we are making progress with that. 

So I think it is probably wrong to say that we are still in the same 

place that we might have been back in 2003 or back in 1996. 

Why do credit bureaus do business with—debt collectors are certainly one community with whom we do business. That is true. And 

I think that Mr. Stone said it just right. Because debt collectors report negative information, their dispute rate will be higher. 

We, however, as credit bureaus, evaluate every new incoming 

data furnisher. They go through probationary periods. Actually, the 

CFA White Paper does a great job of outlining the process by which 

we check and bring a new furnisher on board. Examinations that 

the CFPB is conducting are looking at that very question. How do 

we bring a new customer on board? And we also have an ongoing 

audit process for every set of data that is coming into the system 

to make sure that we quality control for what is coming into the 

system before it is loaded into the system. 

So this is not the Wild West description that I think we sometimes run into. It is a very deliberate, very careful quality assurance process, which is why, by the way, I think you see dispute 

rates that are running around—bank card retail, a dispute rate of 

0.17 percent. Even with collection agencies, by the way, the dispute 
22 

rate runs around 1 percent of all data reported. So when you look 

at it in the macro level, the dispute rates are incredibly good relative to the amount of data that is reported. That is what is showing up in the accuracy study that we sponsored in the first place. 

Senator BROWN. Do you want to specifically—and thank you for 

that. Do you want to specifically respond to the Asset Acceptance 

question? 

Mr. PRATT. Yes. I cannot speak to Asset Acceptance specifically 

other than, obviously, one of our national members felt that there 

was a basis for them to sue the company for what was being furnished in the first place. 

Senator BROWN. Great. 

Senator Merkley. 

Senator MERKLEY. Thank you, Mr. Chair. 

First, I wanted to ask both of you about the use of credit scores 

in employment. Are we setting up a vicious cycle where a person’s 

credit score may affect their ability to get employment, which, in 

turn, obviously, affects their ability to pay bills? Ms. Wu. 

Ms. WU. Thank you, Senator Merkley. Yes, we have taken the 

position and strongly oppose the use of credit reports in employment, except in very limited circumstance. We think it harms 

American workers. It does create a vicious catch-22. If you lose 

your job, you cannot pay your bill. Your credit report is damaged. 

And now your credit report is being used against you when you are 

getting a job. It just sets up the worker to fail. It puts them in a 

horrible bind. 

When you are talking about our most recent economic recession, 

where we had almost 10 percent unemployment, we have millions 

of consumers affected by this practice. We know that a lot of employers use it. The statistic is 60 percent of employers use credit 

reports in some form or another in jobs. 

We also think it has a disparate impact on minorities. We have 

evidence and statistics. Every study shows that, as a group, certain 

minority groups have lower credit scores. If credit scores are supposed to be an accurate translation of the credit reports, that 

means this practice disproportionately affects those communities. 

So we have supported bills in the House before to restrict this 

practice. 

Senator MERKLEY. What is the employer’s best argument for 

using the credit score, and how much weight do you think that carries? 

Ms. WU. Well, I think some employers make the argument that 

the credit report is somehow a reflection of personal responsibility, 

that it shows hard work, you know, good values. But I submit that 

people with damage on their credit report often are the victim of 

circumstances, of bad luck. They lose their job. They cannot pay 

their bills. They get sick. I mean, we just had this discussion about 

medical debt and how a lot of the damage on credit reports is from 

medical debt. 

So I do not think credit reports are a reflection of personal responsibility. I think they are a reflection of circumstances, bad 

luck, and sometimes hard times. 

Senator MERKLEY. What about student loans? We have this recognition that student loans now involve more debt across America 
23 

than credit cards. And, of course, when you come out of college in 

a setting like this and you cannot get a job, your student loans are 

due. Is that proving to be a challenge for people trying to get work 

in that their student loans create bad credit because they do not 

yet have a job to pay their student loans, and then that makes it 

impossible to pay their student loans? 

Ms. WU. Yes, student loans certainly show up on credit reports 

and certainly have an impact on credit reports and credit scores. 

And then what we have heard, at least in the past, is that if you 

have deferments, it actually affects the credit score in another way 

having to do with the ratio of credit available to credit outstanding. 

So it definitely does have an impact on credit reports. 

Senator MERKLEY. Does this create kind of a generational bias, 

in that if you are fortunate enough to have parents who can cover 

your student loans, you then have a much enhanced ability to get 

a job as compared to someone who did not have parents who could 

pay your student loans while you are in that process of looking for 

work? 

Ms. WU. I think credit reporting and credit scoring often reinforces gaps in the economic circumstances, whether they are 

generational, because of what has been happening in our economy 

and how the younger generation is being impacted by high unemployment; whether it is racial, by sort of baking into the system 

centuries of discrimination and racism. You know, the evidence we 

have with credit scoring is that the good scorers tend to have their 

scores go up. The bad scorers, their scores go down because they 

have to pay more for credit. They have to pay more for insurance. 

Remember, credit scores are often used in insurance. Everybody 

needs insurance if you are going to drive a car, if you are going to 

own a home, and you are going to pay a lot more if your credit 

score is low for insurance. 

And so the burdens placed on a consumer economically because 

of a bad score makes it financially harder for them to dig out and 

reinforces that sort of vicious cycle. 

Senator MERKLEY. Now, in insurance, you have a situation 

where, if you do not pay your bill, you lose your insurance, so there 

is no kind of credit outstanding, if you will, and no credit issue. 

Why would a credit score be used in that setting? 

Ms. WU. From what we understand from the industry, they use 

credit scores because they have found them to correlate with loss 

ratios, in other words, when people file claims. Again, industry 

claims that the reason why credit scores are correlated with loss 

ratios is that consumers who are bad with their credit reports are 

just bad drivers and have messy lives. Again, we submit that the 

correlation has to do with economics. People with low scores may 

have lower income, have more difficult financial situations, and if 

they are in a fender bender, they are more likely to file a claim. 

It is all about the money. 

Senator MERKLEY. Mr. Pratt, what do you think about this issue 

of employment and the fact that we are baking into the process the 

biases from a previous generation in terms of parents’ ability to 

cover debts, or particularly student loans, and thereby kind of putting people on an unequal footing going forward? 
24 

Mr. PRATT. So I think the news is better than that, so let me 

share just a few thoughts with you. First of all, the Society for 

Human Resources Management, which represents a lot of the 

human resources folks in this country who do this sort of thing for 

a living, has been polling their members regularly, trying to learn 

more about, first of all, what is going on in the marketplace today, 

and today, really, only 53 percent of employers who conduct a background check are using a credit report for any job, and it is really 

important to know there is a difference between saying 53 percent 

of employers use it for one out of ten jobs versus 53 percent of employers use it monolithically for all jobs. There is no employer that 

is using it monolithically for all jobs that are out there. 

Number two, the folks they surveyed said 80 percent of them 

have hired somebody despite poor credit. This is because the 

human resources folks are saying, we are looking for something in 

particular, something that may deal with personal responsibility, 

but we are usually doing this after we have made a contingent 

offer. So at that point, I am going to talk to you about your circumstances. At that point, I may be interested in why you have 

some delinquent student loans. But at that point, I may also say, 

‘‘I get it. I absolutely understand it. If you do not have a job, you 

cannot pay your loans. I am going to give you a job and you are 

going to be able to pay your loans.’’ And in this case, I do not think 

that this delinquency that shows up on a student loan has anything to do with how you are going to perform in the particular job 

that I have available. 

So, in fact, that is what we see. Eighty percent—and, by the way, 

credit reports are used most often for positions with financial responsibilities, for senior executive positions, and employees who 

have access to highly confidential information. So there is a certain 

cabined-in population. So it is a narrow set of jobs. 

By the way, our members—we have surveyed our members— 

maybe 5 percent of the product they issue in the marketplace includes a credit report from the background screening perspective. 

That means 95 percent of the background screening product in the 

marketplace does not include a credit report. It is being used for 

a very discrete population. 

So I think that also responds to the idea that, somehow, you are 

right, some parents are able to pay student loans and other parents 

are not, and some parents are able to pay their kids’ bills when 

they can and others are not. I think that it is the way it is being 

used. It is not what is in the credit report, but it is the way that 

it is being used that really is the pivotal question. In this case, the 

answer is, it is being used responsibly. 

Finally, credit scores are not used. The credit report is used, but 

our members do not sell credit scores for employment, so you are 

not just seeing a number. You are seeing the report and you are 

taking a deeper dive into the details, which is exactly what human 

resources folks say they want to do. So I think the news is better 

than that. 

Senator MERKLEY. Thank you, Mr. Pratt. 

Senator BROWN. I do not think you meant to say no employer 

uses it for every job? 
25 

Mr. PRATT. That is probably dangerous these days, is it not? But 

I would say that, based on everything we have seen, Mr. Chairman, it is used very selectively and it is not used in some sort of 

just broad filtering process. It is used on a contingent offer basis, 

most commonly. 

Senator BROWN. OK. And you talk persuasively about—and 

using percentages—but as Ms. Wu points out, percentages of 200 

million are a lot of people. Very low percentages of 200 million, I 

think it is—you were not inaccurate. I am not accusing you of that, 

for sure. But when it is a few percent of 200 million, it is a lot of 

Americans affected by this, as, of course, you know. 

Thank you. I particularly appreciate Senator Merkley’s questions. I think this points to the fact that moderate-income Americans and low-income Americans whose lives are often a challenge 

when most of them have not had much of a raise in 10 years and 

then face these obstacles of maybe higher insurance rates in some 

cases, more difficulty getting a job, more difficulty getting an apartment, and more difficulty certainly getting a lower interest rate 

than they might otherwise get, sometimes a credit score that they 

have earned through their behavior, other times credit scores that 

may not be entirely accurate that are challengeable, but it is lowincome and moderate-income people that are probably least likely 

to know that they can challenge these scores and get them fixed. 

I hope that—I know that you, Mr. Pratt, are aware of that, and I 

hope that we can see, without legislative action, some remedies in 

some of this. 

I ask both the minority and the majority that anybody who 

wants to submit questions to the panelists, please do and get them 

back to us by January 2, if you can do that. And if either of the 

two of you or Mr. Stone wants to expand on anything you have said 

or submit anything for the record, please get that to us by January 

2. 

Thank you very much for being here, and the hearing is adjourned. 

[Whereupon, at 11:22 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 
26 

PREPARED STATEMENT OF SENATOR DANIEL K. AKAKA 

Thank you, Chairman Brown. Thank you very much for holding this hearing 

today and for all of your work on consumer protection issues. I know you agree that, 

when Americans make wise economic decisions and are protected from bad actors, 

our economy—and Nation—are stronger for it. 

It is fitting that a hearing on a topic of consumer protection will be my last as 

a Member of the Senate. Financial literacy and consumer protection issues are very 

close to my heart. This is a policy area of the utmost importance to me. I am proud 

of the work we have accomplished on this Committee through both legislation, such 

as the Dodd-Frank and the Credit CARD Acts, and oversight, including numerous 

hearings with officials from the CFPB. 

Financial literacy is important for many reasons. Strong personal finances make 

for strong families. Being financially literate makes it easier for individuals to pay 

unexpected emergency expenses, further their education, and save for retirement. 

It allows people to better fulfill their dreams and deal with difficult times. It makes 

for happier, healthier communities and truly helps people in so many areas of their 

lives. That is why I have worked hard during my time in Congress to educate, protect, and empower consumers. 

I am pleased that we will hear from our panelists about the work they have done 

examining credit reports from a consumer’s perspective. I also look forward to hearing from the witnesses about their ideas on how to further protect consumers and 

what more we in Congress can do to help people secure their financial futures. 

Working families need to access mainstream financial institutions so that they are 

not prone to make use of predatory and unscrupulous lenders. We need straightforward disclosures so that consumers can make choices that best suit their situations. Student debt should not hinder our young people from getting the training 

they need to compete globally, and financial concerns should not put additional 

strains on our military families. 

While my Senate career is coming to an end, I know that there are many of my 

colleagues who will continue to empower consumers to make good financial decisions. Mahalo nui loa to my colleagues here on the Committee including Chairman 

Johnson, Chairman Brown, Senator Reed, Senator Merkley, Senator Hagan, and 

others. 

I also appreciate the dedicated work of Committee and personal office staffs. They 

do so much to support the work that we do, so mahalo to you all as well. 

Over the years my staff has provided excellent assistance in helping consumers 

in Hawaii and across our country both by aiding individuals on a case-by-case basis 

and by advancing commonsense laws to improve the functioning of the financial 

marketplace. It is very nice to know that four of my former staffers—Erika 

Moritsugu, Matthew Pippin, Preethi Raghavan, and Elizabeth Songvilay—are continuing to advance consumer protection and financial literacy in their roles at the 

CFPB. 

Panelists, thank you for your tireless work to protect consumer interests. I look 

forward to hearing your testimony. Thank you. 

PREPARED STATEMENT OF COREY STONE 

ASSISTANT DIRECTOR FOR DEPOSITS, CASH, COLLECTIONS, AND REPORTING MARKETS

CONSUMER FINANCIAL PROTECTION BUREAU

DECEMBER 19, 2012 

Chairman Brown, Ranking Member Corker, and Members of the Subcommittee, 

thank you for the opportunity to testify today on the consumer credit reporting industry. 

Credit reporting plays a critical role in consumers’ financial lives. Credit reports 

on consumers’ financial history and behavior can determine their eligibility for credit cards, car loans, and home mortgage loans—and they often affect how much consumers pay for their loans. The industry is critical in our economy. It promotes access to credit that consumers can afford to repay. Without credit reporting, many 

consumers likely would not be able to get credit. 

Credit reports are also often used in a number of noncredit decisions about consumers. They can be used to determine whether a consumer is offered a job, a car, 

homeowner’s insurance, or rental housing. 

The CFPB is the first Federal Government agency that supervises both consumer 

reporting companies and the largest banks and many of the nonbanks that provide 

them with consumers’ credit information. This responsibility is a priority for the Bu-
27 

reau. Last year, the CFPB published one report to Congress on credit scores and 

another report on whether remittance information might help consumers develop 

positive credit scores. Earlier this year we published a Consumer Advisory about 

credit reports. In July, the CFPB adopted a rule to extend its supervision authority 

to cover larger consumer reporting agencies. In September, the CFPB released its 

examination procedures for these companies, along with a study examining credit 

scores—the three-digit numbers used to determine consumers’ credit worthiness. In 

mid-October, the CFPB began handling individual complaints about consumer reporting companies. If a consumer files a complaint with a credit reporting company 

and is dissatisfied with the resolution, the CFPB is available to assist. 

As many of us at the CFPB conduct outreach all over the country to learn how 

consumers hurt by the financial crisis are recovering, we’ve heard many express 

frustrations about their credit reports or credit scores. And we’ve heard a considerable amount of confusion and misunderstanding about credit reporting. 

Just last week, the CFPB issued a new report based on information provided by 

the big three consumer reporting companies—Equifax, Experian, and TransUnion— 

and their industry association. The report highlights the basic systems the credit 

reporting companies use to collect, organize, and maintain consumer credit information. It is one of the most comprehensive looks at the consumer reporting industry 

to date. And it represents a significant step forward in understanding this industry 

and making it more transparent for consumers. 

Some of the key findings in our report are that: 

• More than half of the trade lines in the credit bureaus’ databases are 

supplied by the credit card industry. This means that credit cards are given 

great weight in how consumers build their credit profiles. 

• More than three quarters of the trade lines in the credit bureaus’ databases come from the top 100 furnishers of information. These are largely 

the large bank and nonbank lenders—and now the largest debt collectors and 

debt buyers—who fall under the CFPB’s supervision. This means for the first 

time a Federal agency has the tools to examine and understand how well all 

parts of the credit reporting system are working—including both the sources of 

credit information and credit bureaus themselves. 

• More than one-third of consumer disputes relate to collection items. In 

fact, the information provided by the collections industry is five times more likely to be disputed than mortgage information. 

• A relatively small percentage of consumers—approximately 20 percent— 

look at their credit reports each year. This is a shame because—while we 

do not know for sure how common inaccuracies are—it is likely that many additional consumers could identify and correct inaccuracies if they reviewed their 

credit report. 

• Most complaints are forwarded to the furnishers that provided the original information. Credit reporting companies on average refer 85 percent of 

complaints on to the furnishers that provided the original information. But documentation that consumers mail in to support their cases may not be getting 

passed on to the data furnishers for them to properly investigate and report 

back to the credit reporting company. 

The CFPB’s report should help to clarify the confusing world of consumer reports. 

It should help to inform policymakers and consumers about how this important industry works. If consumers know more about how these companies consider credit 

use, consumers should be better able to make decisions for themselves and use credit more wisely. 

Thank you for inviting me to testify today. I will be happy to answer any questions you may have about our report. 

PREPARED STATEMENT OF STUART K. PRATT 

PRESIDENT AND CEO, CONSUMER DATA INDUSTRY ASSOCIATION

DECEMBER 19, 2012 

Chairman Brown, Ranking Member Corker and Members of the Subcommittee, 

thank you for this opportunity to appear before you. For the record my name is Stuart Pratt, president and CEO of the Consumer Data Industry Association (CDIA). 

CDIA is an international trade association of more than 180 corporate members. 

Its mission is to enable consumers, media, legislators and regulators to understand 

the benefits of the responsible use of consumer data which creates opportunities for 
28 

consumers and the economy. CDIA members provide businesses with the data and 

analytical tools necessary to manage risk. They help ensure fair and safe transactions for consumers, facilitate competition and expand consumers’ access to a market which is innovative and focused on their needs. Their products are used in more 

than nine billion transactions each year. 

We commend you for holding this hearing, and welcome the opportunity to share 

our views. 

My written comments will include important background on the industry and 

then focus on the following specific Committee requests listed below: 

• Current oversight of credit reporting agencies by the Consumer Financial Protection Bureau 

• The dispute resolution process for consumers 

• Communication between furnishers and credit reporting agencies 

• Specialty credit reporting agencies and their duties under the Fair Credit Reporting Act 

• Differences in credit scores available to clients versus consumers 

Background Part 1—The importance of credit reporting to consumers and 

our Nation’s economy. 

Consumer Financial Protection Bureau Director Richard Cordray stated the following about credit reporting during a July 16, 2012 field hearing: 

Credit reporting is an important element in promoting access to credit that 

a consumer can afford to repay. Without credit reporting, consumers would 

not be able to get credit except from those who have already had direct experience with them, for example from local merchants who know whether 

or not they regularly pay their bills. This was the case 50 or a 100 years 

ago with ‘‘store credit,’’ or when consumers really only had the option of 

going to their local bank. But now, consumers can instantly access credit 

because lenders everywhere can look to credit scores to provide a uniform 

benchmark for assessing risk. Conversely, credit reporting may also help reinforce consumer incentives to avoid falling behind on payments, or not 

paying back loans at all. After all, many consumers are aware that they 

should make efforts to build solid credit. 

In its 2011 publication of Credit Reporting Principles the World Bank observed: 

Credit reporting systems are very important in today’s financial system. Creditors 

consider information held by these systems a primary factor when they evaluate the 

creditworthiness of data subjects and monitor the credit circumstances of consumers. This information flow enables credit markets to function more efficiently 

and at lower cost than would otherwise be possible. 

Congressional findings reinforce the positive contribution of credit reporting to 

consumers and state that ‘‘consumer reporting agencies have assumed a vital role 

in assembling and evaluating consumer credit and other information on consumers.’’ 

Ultimately credit reports tell the story of our good choices and hard work. They 

speak for us as consumers when we apply for loans and lenders don’t know who we 

are or how we’ve paid our bills in the past. Credit reports replace human bias and 

assumptions with a foundation of facts that tell our story and ensure that we are 

treated fairly. Our members focus on consumers first, on ensuring fairness for them 

in the marketplace and on the accuracy of the data in the products they produce. 

Background Part 2—An overview of the types of data used to build a consumer’s credit history. 

Before we provide testimony on particular issues identified by the Committee, we 

thought it would be helpful to discuss what is and isn’t in a ‘‘credit report.’’ The 

term ‘‘credit report’’ is not defined by the Fair Credit Reporting Act (15 U.S.C. §1681 

et. seq.) The FCRA defines the term ‘‘consumer report’’ and the traditional credit reports produced by nationwide consumer reporting agencies meets this definition. 

Credit reports include: 

• Identifying Information—Name (first, last, middle), current and previous addresses, social security number, date of birth. 

• Credit History—History of managing various loans issued by retailers, banks, 

finance companies, mortgage companies and other types of lenders. 

• Public Records—Judgments, bankruptcies, tax liens. 
29 

• Accounts Placed with a Collection Agency—these accounts are reported by thirdparty debt collectors who attempt to collect delinquent debts owed to a service 

provider or lender. 

• Inquiries—A record of all who have a permissible purpose under law and have 

access a consumer’s report. 

Note that credit reports do not contain information on an individual’s medical condition, race, color, religion, or national origin. It is important to note that our U.S. 

credit reporting systems are full-file and thus they include both positive and negative payment history on a consumer. Full-file credit reporting is inherently fairer 

for consumers because it ensures that there is a clear record of not just missed payments but all on-time payments. 

Background Part 3—Consumers and Credit Reports 

A consumer’s credit history starts with the very first relationship a consumer has 

with a lender. It may be when a parent adds a son or daughter as an authorized 

signatory on a credit card or when a young adult makes application for his or her 

very first loan. Ensuring that consumers understand how lenders consider their 

management of credit is critical and certain fundamental principles are consistently 

true over time: 

• Pay your bills on time. 

• Don’t run up your credit cards to their limits. 

Never before in the history of our country has there been a greater degree of 

transparency when it comes to the information available to enable consumers to understand consumer credit reports and their rights under the FCRA. In particular 

CDIA applauds its members for their market solutions which make available to consumers unlimited access to credit reports, credit scores, as well as providing additional information about the credit, credit reporting industry. These market solutions, for example, push alerts to consumer’s smart phones when data has changed 

on their report and also warn consumers when there’s a risk of identity theft. 

Under the Fair Credit Reporting Act consumers also have a right to an annual 

free credit file disclosure from each of the nationwide consumer credit reporting 

agencies: Equifax, Experian and TransUnion. We estimate that more than 15 million consumers view at least one of their reports each year and an average of more 

than 30 million disclosures are issued annually. Since December of 2004 hundreds 

of millions of disclosure have been issued to consumers. 

For some years consumer advocates have been measuring the knowledge consumers have regarding their credit reports and how credit scores used by lenders 

analyze data. In particular VantageScore and the Consumer Federation of America 

have partnered on a project to reach consumers and measure their knowledge. The 

trends identified through this effort are very encouraging. Consider the following excerpts drawn from the CFA News Release issued on May 14, 2012: 

A large majority of consumers now know many of the most important facts 

about credit scores, for example: 

• Mortgage lenders and credit card issuers use credit scores (94 percent and 90 

percent correct, respectively). 

• Many other service providers also use these scores—landlords, home insurers, 

and cell phone companies (73 percent, 71 percent, and 66 percent correct, respectively). 

• Missed payments, personal bankruptcy, and high credit card balances influence scores (94 percent, 90 percent, and 89 percent correct, respectively). 

• The three main credit bureaus—Experian, Equifax, and TransUnion—collect 

the information on which credit scores are frequently based (75 percent correct). 

• Consumers have more than one generic score (78 percent correct). 

• Making all loan payments on time, keeping credit card balances under 25 percent of credit limits, and not opening several credit card accounts at the same 

time help raise a low score or maintain a high one (97 percent, 85 percent, 

and 83 percent correct, respectively). 

• It is very important for consumers to check the accuracy of their credit reports at the three main credit bureaus (82 percent correct). 

Somewhat surprising was the fact that most consumers understand new, 

and fairly complicated, consumer protections regarding credit score disclosures. When asked when lenders who use generic credit scores are required 
30 

to inform borrowers of these scores, large majorities correctly identified 

three key conditions—after a consumer applies for a mortgage (80 percent 

correct), whenever a consumer is turned down for a loan (79 percent correct), and on all consumer loans when a consumer does not receive the best 

terms including the lowest interest rate available (70 percent correct). 

‘‘Increases in consumer knowledge probably reflect in part the increased 

public attention given to credit scores because of the new protections,’’ 

noted CFA’s Brobeck. ‘‘The improvements may also be related to increased 

efforts of financial educators, including our creditscorequiz.org, to inform 

consumers about credit reports and scores,’’ he added. 

Our members are encouraged by the progress made and these data argue against 

the perception reported by some journalists and advocates that consumers are simply confused and unable to understand the credit reporting system. It’s our view 

that journalists and advocates would serve consumers better by setting aside the 

rhetoric of confusion in favor of encouraging consumers to act on their rights and 

to learn how the credit reporting system is making their lives better. 

Background Part 4—Credit Repair Scams 

It is good news that consumers’ knowledge of credit reports and how scores analyze credit report data is improving. However it is critical that consumers remain 

vigilant and do not fall prey to fraudulent credit repair schemes. Fraudulent credit 

repair agencies have a business model built around the premise of seeking to have 

accurate, predictive data deleted from a consumer’s credit report and taking consumers’ hard-earned money to do something that consumers can do for themselves. 

The quote from an October 13, 2011 FTC press release regarding a public investigation of a credit repair operator is illustrative of the problem and challenge our members face: 

The FTC alleges that the defendants made false statements to credit bureaus disputing the accuracy of negative information in consumers’ credit 

reports. In letters to credit bureaus, which XXX did not show to consumers, 

the firm typically disputed all negative information in credit reports, regardless of the information’s accuracy. XXX continued to send these deceptive dispute letters to credit bureaus, even after receiving detailed billing 

histories verifying the accuracy of the information, or signed contracts from 

creditors proving the validity of the accounts. 

The complaint alleges that XXX misrepresented to consumers that 

Federal law allows the company to dispute accurate credit report information, and that credit bureaus must remove information from credit 

reports unless they can prove it is accurate. In the company’s words, credit 

bureaus must ‘‘prove it or remove it.’’ XXX charged a retainer fee of up to 

$2,000 before providing any service, and falsely told consumers that Texas 

law allows credit repair organizations that are registered and bonded to 

charge an advance fee. 

CDIA applauds the actions of the Federal Trade Commission and State attorneys 

general to protect consumers through their enforcement of the Credit Repair Organizations Act. These enforcement efforts must continue. But the CFA survey of consumers speaks clearly to the need to also continue to educate consumers. Consider 

the following finding: 

Over half (51 percent) [of consumers] incorrectly believe that credit repair 

companies are ‘‘always’’ or ‘‘usually’’ helpful in correcting credit report errors and improving scores. Experts agree that credit repair companies often 

overpromise, charge high prices, and perform services that consumers could 

do themselves. 

Fraudulent credit repair activities remain a problem for consumers and also for 

our members who serve consumers. Our members estimate that as much as 43 percent of incoming mail is tied to credit repair schemes that distract from processing 

valid disputes and which tie up data furnisher resources leading some to give up 

and delete accurate, predictive data. 

Committee Request I—Current oversight of credit reporting agencies by 

the Consumer Financial Protection Bureau 

Our members have successfully operated in a highly regulated context for decades. Recent changes in how the Federal Government enforces various consumer 

protection laws, most notably the Fair Credit Reporting Act (15 U.S.C. § 1681 et. 

seq.), do not materially alter this fact. 
31 

The FCRA was first enacted in 1970 (PL 91–508). It has since been the subject 

of active oversight by many different Congresses. Following is a partial listing of 

major and minor amendments to the law which speaks to the fact that the FCRA 

is a contemporary law that has been updated to recognize changes in the marketplace: 

• Consumer Credit Reporting Reform Act of 1996 (Public Law 104–208, the Omnibus Consolidated Appropriation Act for Fiscal Year 1997, Title II, Subtitle D, 

Chapter 1) 

• Section 311 of the Intelligence Authorization for Fiscal Year 1998 (Public Law 

105–107) 

• The Consumer Reporting Employment Clarification Act of 1998 (Public Law 

105–347) 

• Section 506 of the Gramm-Leach-Bliley Act (Public Law 106–102) 

• Sections 358(g) and 505(c) of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 

2001 (USAPATRIOT Act) (Public Law 107–56) 

• The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) (Public Law 

108–159) 

• Section 719 of the Financial Services Regulatory Relief Act of 2006 (Public Law 

109–351) 

• Section 743 (Div. D, Title VII) of the Consolidated Appropriations Act of 2008 

(Public Law 110–161) 

• The Credit and Debit Card Receipt Clarification Act of 2007 (Public Law 110– 

241) 

• Sections 205 and 302 of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 (Public Law 111–24) 

• The Consumer Financial Protection Act of 2010 (CFPA) (Title X of the DoddFrank Wall Street Reform and Consumer Protection Act, Public Law 111–203) 

• The Red Flag Program Clarification Act of 2010 (Public Law 111–203). 

Most important to understanding this statute is that it carefully and clearly divides responsibilities for ensuring the accuracy of information in credit reports and 

also how consumer disputes and questions about their credit reports are resolved. 

As CFPB Director Cordray stated during a July 26, 2012 field hearing: 

Our credit reporting system involves several key participants. First are the 

creditors and others that supply the information about your financial behavior, which can include your credit card issuers, your mortgage company, 

or companies that are collecting debts they claim you owe, among others. 

Second are those that collect and sell the information, which are the credit 

reporting companies. Third are those that use the information, which largely consist of financial institutions, but can also include insurance companies, auto dealers, retail stores, and even prospective employers. Fourth are 

consumers themselves, who are the object of all this scrutiny and who are 

immediately affected by it. All of these participants play important roles in 

ensuring that the credit reporting system operates effectively to help consumer credit markets work better for us all. 

At this same hearing Director Cordray also pointed out: 

First, our oversight of the credit reporting companies will help us make 

sure that the information provided to them is itself reliable. Lenders and 

others who furnish information to the credit reporting companies are legally 

required to have policies in place about the accuracy and integrity of the 

information they report—which includes identifying consumers accurately, 

correctly recounting their actual payment history, and keeping their information and recordkeeping in order. Otherwise, their sloppy work becomes 

the true source of harm to the consumer’s overall creditworthiness. We 

want to deepen our understanding of the recordkeeping and reporting practices by lenders and we want to see what the credit reporting companies 

can be doing to test and screen for the quality of information they receive. 

The FCRA has always been enforced by both State attorneys general and also 

through private litigation. Until the enactment of the Dodd Frank Act (PL 111–203) 

the Federal Trade Commission had the primary Federal responsibility for enforcement of the provisions of the FCRA which apply to our members. As a result of 

Dodd Frank, the Consumer Financial Protection Bureau was created (See Title X) 
32 

and this enforcement responsibility was transferred to the CFPB. While the CFPB 

now has primary oversight for our members’ FCRA duties, the FTC and State attorneys general may still bring enforcement actions. A Memorandum of Understanding 

between the CFPB and FTC has been completed and it outlines how the two agencies will cooperate on enforcement actions. 

Our members have sought a positive and collaborative relationship with the 

CFPB. Free of charge, our nationwide credit reporting agencies provided the CFPB 

with 600,000 depersonalized credit reports and another 3,000,000 credit scores so 

that the Bureau could conduct a study of the similarities of various credit scores 

in the marketplace. One of our members voluntarily provided the CFPB with free, 

depersonalized credit reports for a study of the usefulness of remittance data in predicting creditworthiness of consumers who may have ‘‘thin’’ credit reports or no 

credit report. Further, our members conducted extensive, free research for the CFPB 

in support of their effort to draft a white paper on the credit reporting eco-system. 

Ultimately it is our hope that these efforts are in support of a CFPB that continues 

to follow the important guiding comments of the Bureau’s Deputy Director, Raj Date 

when he stated: 

First, we are committed to basing our judgments on research and data 

analysis. We won’t shoot from the hip. We won’t reason from ideology. We 

won’t press a political agenda. Instead, we’re going to be fact-based, pragmatic, and deliberative. 

It is essential that the CFPB remain an organization focused on the facts and not 

driven by the headlines. The CFPB cannot be successful if it seeks out inflammatory 

headlines that are a distraction for consumers, or reacts to headlines that simply 

are not based in good social science and scientific methods. 

Committee Request II—The dispute resolution process for consumers. 

Before we delve into the systems our members have designed to assist consumers 

with disputes regarding information in their credit reports, some context for the accuracy of credit reports is helpful. 

In May of 2011 the PERC completed and released a CDIA-commissioned study of 

the quality of data found in the databases of nationwide consumer credit reporting 

agencies. This work was groundbreaking. The research was truly an arms-length, 

let-the-chips-fall-where-they-may project which was the only condition under which 

Dr. Turner would agree to conduct the study. Our members had no reservations 

about this requirement. Consumers wanted answers from a trusted source regarding 

the accuracy of credit reports and we wanted to make sure we gave them an answer, particularly since the General Accountability Office has rejected all consumer 

advocate efforts to measure accuracy due to serious flaws in their methodologies and 

lack of sound statistical practices. The CFPB’s recent white paper on the credit reporting eco-system added to these GAO criticisms in its discussion of the failure of 

a consumer group to develop a statistically representative, unbiased study population. 

PERC designed its study using a peer review process that included reviews of 

methodology conducted by leading academics from the Wharton School of Business 

at the University of Pennsylvania, the University of North Carolina and Chapel Hill 

and Duke University. As an indication of the openness of Dr. Turner to engage in 

the dialogue about accuracy, when PERC published its results, it also made the raw 

data and research findings available to the CFPB and the FTC so that these agencies could replicate the findings and not merely depend on PERC’s interpretation 

of the data. 

Dr. Turner and his team used two measures of what might be a material error 

in a consumer’s credit report. First they used VantageScore to measure the point 

change between credit reports before and after a dispute and reinvestigation process. In this instance they found that only 0.93 percent of all credit reports examined 

had one or more disputes which resulted in a credit score increase of 25 points. 

However, Dr. Turner recognized that in a risk-based-pricing context even a single 

point change could make a difference for a consumer who is on the edge of qualifying for a better rate. Thus the PERC team also measured material errors by considering how often a consumer moved from a higher priced pricing tier to a lower 

one (an approach the CFPB has used in a study of credit scores). Only one half of 

1 percent (0.51 percent) of all credit reports examined by consumers had a credit 

score change that resulted in the consumer likely receiving a lower-priced product. 

This study puts to rest the debate about the accuracy of our members’ data. 

As a further statement of our members’ confidence in their systems and the quality of their data, they not only provided a grant to fund the PERC research, they 

also provided, free of charge, the data the Federal Trade Commission needed to ful-
33 

1See page 5 of the FTC Report to Congress Submitted on December 29, 2003: http:// 

www.ftc.gov/os/2008/12/P044807fcracmpt.pdf. 

fill its mandate under the FACT Act to study the accuracy of nationwide credit reporting systems. Release of the FTC’s full research findings is imminent. 

CDIA applauds its members for facing the hard questions about data quality and 

engaging in responsible, sound research. The results of our members’ decisions are 

impressive and expected. 

As for the question of dispute resolution procedures, consumers’ rights are very 

clear under the FCRA. Below is an explanation of those rights prepared by the Federal Trade Commission: 

You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your ‘‘file disclosure’’). You will be required to provide proper identification, which may include your Social Security number. In many cases, the 

disclosure will be free. You are entitled to a free file disclosure if: 

• a person has taken adverse action against you because of information in your 

credit report; 

• you are the victim of identity theft and place a fraud alert in your file; 

• your file contains inaccurate information as a result of fraud; 

• you are on public assistance; 

• you are unemployed but expect to apply for employment within 60 days. 

In addition, [since] September 2005 all consumers [have been] entitled to 

one free disclosure every 12 months upon request from each nationwide 

credit bureau and from nationwide specialty consumer reporting agencies. 

See www.ftc.gov/credit for additional information. 

You have the right to dispute incomplete or inaccurate information. If you 

identify information in your file that is incomplete or inaccurate, and report 

it to the consumer reporting agency, the agency must investigate unless 

your dispute is frivolous. See www.ftc.gov/credit for an explanation of dispute procedures. 

Consumer reporting agencies must correct or delete inaccurate, incomplete, 

or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified 

as accurate. 

The staff and systems used by our members to handle consumer requests for reinvestigations of data reported to them are first-class and this is not merely an opinion. The PERC data quality study discussed above measured consumer satisfaction 

with the reinvestigation process and fully 95 percent of consumers were satisfied 

with the results. These data are facts and not merely anecdotes and set aside unfounded accusations by consumer advocates that our members’ systems fail to meet 

consumer expectations. 

Further indication of our members’ success in meeting consumers’ needs can be 

found in a 2008 report to Congress regarding complaints submitted to the Federal 

Trade Commission. Note in the excerpt below that consumers appeared to be complaining to the FTC concurrent with the submission of a dispute directly to a consumer credit reporting agency. More than 90 percent of the disputes were resolved 

when submitted directly to the CRA, a percentage that is very consistent with the 

findings of PERC: 

The data indicate that a significant number of disputes were resolved in the 

consumer’s favor (i.e., the disputed information was either removed from 

the file or modified as requested). The data further indicate, however, that 

in most cases, the favorable resolutions took place as part of the normal dispute process, and not as a result of the referral program. Specifically, the 

CRAs’ reports show that over 90 percent of disputes that were resolved ‘‘as requested by the consumer’’ were resolved before the CRA 

processed the referral from the Commission.1

It is also important to note that in 2003 consumers were given the right to dispute information furnished to a consumer reporting agency directly with the furnisher of the data (e.g., lender, etc.). A March 2012 FTC report on a survey of consumers indicated that 46 percent chose to dispute an item of information directly 

with the data furnisher rather than with a consumer credit reporting agency. It is 
34 

2 Comments of the National Consumer Law Center, ANPR: Furnisher Accuracy Guidelines 

and Procedures Pursuant to Section 312 of the Fair and Accurate Credit Transactions Act, Pp. 

16. 

our view that consumers will continue to grow in their understanding of this right 

and will more often dispute with the data furnisher. 

The 95 percent satisfaction rate and the FTC’s analysis of complaints received are 

strong, empirical evidence of our members’ commitment to getting it right for all 

consumers. 

Committee Request III—Communication between Furnishers and Credit 

Reporting Agencies 

New data furnisher—All of our members have specialized staff, policies and procedural systems in place to evaluate each new data furnisher. Common practices include reviews of licensing, references, and site visits. All apply robust tests to sample data sets and all work with the furnisher to conform data reporting to the Metro 

2 data standard. Once a furnisher is approved, there may be ongoing monitoring of 

this data reporting stream during a probationary period of time. 

The CFPB’s newly released report, ‘‘Key Dimensions and Processes in the U.S. 

Credit Reporting System: A review of how the Nation’s largest credit bureaus manage consumer data’’, provides additional details on our members’ efforts at Section 

4.1 on pages 18–19. 

Ongoing furnishing—Our members employ a variety of practices; some of these 

are listed below: 

• Producing reports for data furnishers which outline data reporting problems, including errors in loading data and data which is not loaded. This reporting process ensures data furnishers are receiving feedback regarding the quality of their 

data furnishing practices. 

• Cross-referencing data in certain fields to look for logical inconsistencies are 

often used as a data quality check. 

• Historical data reporting trends, at the database level or data furnisher level, 

are used as baseline metrics upon which to evaluate incoming data. 

• Manual reviews of data can occur when anomalous data reporting trends are 

identified. 

• Reviewing incoming data for consistency with the Metro 2 data standard. 

Beyond the extensive, individual corporate strategies for ensuring data quality, 

our members have undertaken industry-level strategies as well. Central to these efforts has been the development of a data reporting standard for all 10,000 data 

sources which contribute to their databases. The latest iteration of this standard is 

titled Metro2. Standardizing how data is reported to the consumer is a key strategy 

for improving data quality. Consumer advocates appear to agree. The National Consumer Law Center, writing on behalf of a range of consumer groups, appears to 

agree with this point when it stated in its letter to the Federal Reserve Board:2

However, the failure to report electronically or to use Metro2 creates even 

more inaccuracies. 

CDIA provides free access to a ‘‘Credit Reporting Resource Guide’’ which is the 

comprehensive overview of the Metro2 Format. This guide is designed for all types 

of data furnishers, but it also provides specific guidance for certain types of furnishers to encourage proper use of the format. Target audiences include collection 

agencies, agencies which purchase distressed debt, all parties which report data on 

student loans, child support enforcement agencies and utility companies. CDIA and 

its Metro2 Task Force have administered telephonic and in-person workshops for 

thousands of data furnishers representing the majority of all data furnished to their 

systems. These programs include a range of specialized topics including, for example: 

• Reporting Requirements for Third Party Collection Agencies and Debt Purchasers. 

• Reporting Requirements Specific to Legislation & Accounts Included in Bankruptcy. 

The CFPB report also discusses oversight of ongoing data furnishing at Section 

4.2, page 19 and an outline of the Metro 2 Data Format (Section 3.1.2, page 15 and 

following). Our members’ efforts to audit incoming data and to work with both new 

and current data furnishers are well-documented. However, the Congress recognized 

that data furnishers have to have duties to ensure that accuracy of what they report 
35 

which is why, in 1996, the FCRA was amended to create an accuracy duty for data 

furnishers and again in 2003, the Congress enacted new FCRA requirements on 

data furnishers via the issuance of regulations regarding the ‘‘accuracy and integrity’’ of information furnished to consumer reporting agencies. 

Committee Issue IV—Nationwide Specialty Consumer Reporting Agencies 

Some consumer reporting agencies regulated under the FCRA are further defined 

a ‘‘nationwide specialty consumer reporting agency.’’ This term is defined as follows: 

§ 603. Definitions; rules of construction [15 U.S.C. § 1681a] 

(x) The term ‘‘nationwide specialty consumer reporting agency’’ means a consumer reporting agency that compiles and maintains files on consumers on 

a nationwide basis relating to—— 

(1) medical records or payments; 

(2) residential or tenant history; 

(3) check writing history; 

(4) employment history; or 

(5) insurance claims. 

NSCRAs have to provide a free annual disclosure. Below is the section of law 

which establishes this duty: 

§ 612. Charges for certain disclosures [15 U.S.C. § 1681j] 

(C) Nationwide Specialty Consumer Reporting Agency 

(i) In general. The Bureau shall prescribe regulations applicable to each consumer reporting agency described in section 603(w) to require the establishment of a streamlined process for consumers to request consumer reports 

under subparagraph (A), which shall include, at a minimum, the establishment by each such agency of a toll-free telephone number for such requests. 

(ii) Considerations. In prescribing regulations under clause (i), the Bureau shall 

consider—— 

(I) the significant demands that may be placed on consumer reporting agencies 

in providing such consumer reports; 

(II) appropriate means to ensure that consumer reporting agencies can satisfactorily meet those demands, including the efficacy of a system of staggering 

the availability to consumers of such consumer reports; and 

(III) the ease by which consumers should be able to contact consumer reporting 

agencies with respect to access to such consumer reports. 

(iii) Date of issuance. The Bureau shall issue the regulations required by this 

subparagraph in final form not later than 6 months after the date of enactment of the Fair and Accurate Credit Transactions Act of 2003. 

(iv) Consideration of ability to comply. The regulations of the Bureau under this 

subparagraph shall establish an effective date by which each nationwide 

specialty consumer reporting agency (as defined in section 603(w)) shall be 

required to comply with subsection (a), which effective date—— 

(I) shall be established after consideration of the ability of each nationwide specialty consumer reporting agency to comply with subsection (a); and 

(II) shall be not later than 6 months after the date on which such regulations 

are issued in final form (or such additional period not to exceed 3 months, 

as the Bureau determines appropriate). 

Committee Issue V—Differences in Credit Scores Available to Clients 

versus Consumers 

In September of 2012 the CFPB issues a reported entitled ‘‘Analysis of Differences 

between Consumer- and Creditor-purchased Credit Scores.’’ The findings of this report were very favorable to consumers and set aside any concerns regarding which 

score a consumer chooses to purchase. Four out of five consumers get exactly the 

same result regardless of the score they choose and where this isn’t the case it is 

a result of how lenders set their prices in the market place. No one credit score will 

every match up with all lender pricing strategies or with their internal underwriting 

systems which include customized credit scores designed uniquely for them. From 

a statistical/scientific perspective the CFPB reports that all scores they studied were 

highly correlated (.9 out of 1). In a competitive credit scoring marketplace correlations could not likely be better, and this is good news for consumers, as well. 

Because, as the CFPB itself reports, there is no one score in the marketplace 

(some commonly used score brands have as many as 49 different versions operating 
36 

in the current marketplace) and lenders make different offers to the same consumer, 

we agree with the CFPB that the lesson learned from this study is that it is essential that consumers shop around for a deal. Consumers should never take the first 

offer on the table. Consumers should take advantage of the availability of credit 

scores and set aside unfounded concerns about the variety of high-quality credit 

scores available in today’s competitive marketplace. 

CDIA issued a release in support of the CFPB’s report and we have included it 

below. It captures our industry’s reaction to the study. 

WASHINGTON, Sept. 25, 2012 /PRNewswire-USNewswire/—‘‘We applaud 

the Consumer Financial Protection Bureau’s credit score report that was released today. We think it puts an end to the debate over the value of educational scores versus those scores lenders use,’’ said Stuart K. Pratt , president and CEO of the Consumer Data Industry Association. 

The CFPB study concluded that ‘‘correlations across the results of the scoring models were high.’’ As a result, it determined ‘‘that for a majority of 

consumers the scores produced by different scoring models provided similar 

information about the relative creditworthiness of the consumers. The study 

found that different scoring models would place consumers in the same 

credit-quality category 73–80 percent of the time.’’ 

‘‘The study sheds new light on why consumers can trust the credit score 

disclosures they receive and the products in the commercial marketplace 

that help consumers build a deeper understanding of their credit scores and 

how they affect their financial decisions. Consumers want to be proactive 

in learning about their scores. Unfortunately, too many mixed messages 

have made them hesitant to access the data currently available that will 

help them better understand the scoring process. This study is good news 

for consumers who can now be confident that the disclosures and services 

they are getting today are helping to empower them to receive better prices 

tomorrow in the credit market,’’ stated Pratt. 

The study was built on the foundation of two key facts made clear in the 

Bureau’s 2011 report and reiterated again in this study: 

• ‘‘Given this complexity it is unlikely that a consumer will often be able to 

know the exact score that a particular lender will use to evaluate them.’’[1] 

• ‘‘Lenders use credit scores produced by many different scoring models.’’[2] 

‘‘The CFPB is right,’’ said Pratt, ‘‘no one score is used by all lenders. However, the credit score is a valuable educational tool and can enable consumers to better understand their creditworthiness relative to other consumers.’’ As the CFPB’s report notes, the many credit score options in the 

marketplace today will help consumers answer these questions. CDIA recommends that when consumers obtain their credit scores they should ask 

these important questions: 

1. What credit scoring model was used? 

2. What’s the scale? 

3. What does the score I received mean in terms of lending risk? 

4. What are the key factors affecting my credit score? 

5. How might my future financial decisions affect my credit score? 

CDIA’s members are global leaders in the development of credit score technology. While the CFPB was not charged by Congress with studying every 

effective and reliable credit score in the marketplace, this report shows that 

all such scores designed using the same common principles will help educate consumers with equal effectiveness. 

In support of the CFPB’s study, the CDIA will fund a new series of public 

service announcements focused on encouraging consumers to read the 

CFPB’s report, obtain their credit scores and also, in support of the Consumer Federation of America’s latest credit score poll, avail themselves of 

resources that are available to better understand what does and doesn’t affect a credit score. 

———————————— 

[1] July 19, 2011 CFPB Report, ‘‘The impact of differences between 

consumer- and creditor-purchased credit scores,’’ Pg. 18. 
37 

[2] July 19, 2011 CFPB Report, ‘‘The impact of differences between 

consumer- and creditor-purchased credit scores,’’ Pg. 1. 

SOURCE: Consumer Data Industry Association 

Conclusion 

I am grateful of this opportunity to testify and for your interest in our members. 

They are a vital and successful part of our U.S. economy. I am happy to answer 

any questions. 
38 

NCLC 

NATIONAL 

CONSUMER 

LAW 

C EN T E R' 

Advancing Fairness 

in the Mal1<etPlace for All 

Testimony before the 

U.S. SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER 

PROTECTION 

regarding 

"Making Sense of Consumer Credit Reports" 

December 19,2012 

ChiChiWu 

Staff Attorney 

National Consumer Law Center 

7 Winthrop Square, 4th F1. 

Boston, MA 02110 

617-542-8010 

cwu@nclc.org 
39 

Table of Contents 

INTRODUCTION .......................................................................................................................... I 

I. EASILY PREVENTABLE INACCURACIES PLAGUE THE CREDIT REPORTING 

SySTEM ......................................................................................................................................... 3 

A. Categories of Avoidable Inaccuracies ................................................................................... 4 

1. Mixed Files ........................................................................................................................ 4 

2. Identity Theft ..................................................................................................................... 6 

3. Furnisher errors .................................................................................................................. 6 

B. Accuracy Statistics ................................................................................................................ 8 

C. Fixing the System: The Role of the CFPB, the Nationwide CRAs and Empowered 

Consumers ................................................................................................................................. 12 

1. The role of the CFPB ....................................................................................................... 12 

2. The culpability of the nationwide CRAs ......................................................................... 13 

3. The vital importance of private rights and empowered consumers; the need for consumer 

rights ..................................................................................................................................... 17 

II. THE FCRA-MANDA TED CREDIT REPORTING DISPUTE SYSTEM IS A TRAVESTY 

OF JUSTICE ................................................................................................................................. 19 

A. A Long-Documented History of Blatant Violation ............................................................. 19 

B. The Nationwide CRAs' Bias against Consumers Violates the FCRA ................................ 22 

C Furnishers Also Engage in Perfunctory "Investigations," with Encouragement from the 

Nationwide CRAs ..................................................................................................................... 24 

D. What Needs to be Done .................................................................................................. 29 

III. SPECIALTY CONSUMER REPORTING AGENCIES ................................................... 32 

IV. CONSUMERS SHOULD HAVE THE BASIC RIGHT TO ANY CREDIT SCORE THAT 

IS ABOUT THEM AND THE RIGHT TO A FREE ANNUAL SCORE ................................... 36 

V. CONGRESS SHOULD REQUIRE THAT PAID OFF MEDICAL DEBT BE DELETED 

FROM A CONSUMER'S CREDIT REPORT.. ........................................................................... 39 

VI. CONGRESS SHOULD BAN THE USE OF CREDIT HISTORIES IN EMPLOYMENT 

WITH LIMITED EXCEPTIONS ................................................................................................. 45 

VII. CONGRESS MUST ACT TO CORRECT AN INJUSTICE RESULTING FROM A 

SCRIVENER'S ERROR IN THE FCRA ..................................................................................... 47 

ii 
40 

Testimony of Chi Chi Wu, National Consumer Law Center 

Before the Subcommittee on Financial Institutions and Consumer Protection 

of the U.S. Senate Committee on Banking, Housing and Urban Affairs 

regarding 

"Making Sense of Consumer Credit Reports" 

September 19,2012 

INTRODUCTION 

Mr. Chairman, Ranking Member Corker, and Members of the Subcommittee, the 

National Consumer Law Center thanks you for inviting us to testify today regarding consumer 

credit reporting and the need for reform. We offer our testimony here on behalf of our low 

income clients. 1 

Mr. Chairman, for over a decade, consumer advocates have complained of a credit 

reporting system plagued with preventable errors, and a broken dispute system that utterly fails 

to conform to requirements of the Fair Credit Reporting Act (FCRA). These complaints have 

been confirmed by numerous courts, journalists, and now a report from the Consumer Financial 

Protection Bureau (CFPB). 

• Credit reports are plagued by inaccuracies, such as files mixing the identities of 

consumers; errors caused by debt collectors, creditors and other furnishers of 

information; and the fallout caused by identity theft. Whether the percentage of errors is 

I The National Consumer Law Center is a nonprofit organization specializing in consumer issues on behalf of lowincome people. We work with thousands of legal services, government and private attorneys, as well as community 

groups and organizations, from all states who represent low-income and elderly individuals on consumer issues. As 

a result of our daily contact with these advocates, we have seen many examples of the damage wrought by 

inaccurate credit reporting from every part of the nation. It is from this vantage point - many years of observing the 

problems created by incorrect credit reporting in our communities - that we supply these comments. Fair Credit 

Reporting (7th ed. 2010) is one of the eighteen practice treatises that NCLC publishes and annually supplements. 

This testimony was written by Chi Chi Wu and Persis Yu ofNCLC, with assistance from Carolyn Carter. 
41 

33% or 1 %, it is too high, especially when the errors are easily preventable with 

straightforward measures. 

• The nationwide consumer reporting agencies (CRAs) - Equifax, Experian, and 

TransUnion -- are in gross violation of the FCRA's requirements to conduct "reasonable" 

investigations when consumers dispute errors in their credit reports. Instead of hiring 

trained personnel to conduct real investigations, the nationwide CRAs have developed a 

perfunctory automated system that consists of nothing more than translating a consumer's 

dispute into a two- or three-digit code, forwarding that code and a one-page electronic 

form to the furnisher, and parroting whatever the furnisher states in response. 

• The CFPB has the authority and ability to reform this system, and in the short time that it 

has existed, we have seen it take significant steps. However, there are measures that 

Congress can take to help consumers. A consumer should have the right to ask a court to 

order the nationwide CRAs and furnishers to correct an error when it appears in his or her 

own credit report. 

The problems described above don't end with the credit reports issued by the nationwide 

CRAs. Reports issue by specialty consumer reporting agencies, such as background check 

CRAs and tenant screening CRAs, are even more rife with errors and present even worse 

problems. 

Finally, there are a number of other issues and problems with the credit reporting system 

that Congress should address: 

• Consumers lack critical information regarding credit scores. They do not have the right 

to obtain a copy of the credit score most commonly used by lenders (FICO), or other 

types of scores based on their credit or consumer reports, such as insurance credit scores, 

2 
42 

tenant screening scores, or healthcare scores. They do not have the right to a free annual 

credit score. 

• Millions of Americans have their credit reports damaged by medical debt, even when the 

debt is the result of insurance disputes or billing errors by providers, or is ultimately 

settled or paid off. We strongly support S. 2149, the Medical Debt Responsibility Act, 

which would remove paid or settled medical debts from credit reports. This approach 

will tremendously benefit consumers, and indeed is probably the simplest and easiest 

"quick fix" out there to improve the credit records of an enormous number of consumers. 

• The use of traditional credit reports by employers is a growing practice that is harmful 

and unfair to American workers. Despite many good reasons to avoid engaging in this 

practice, sixty percent of employers do so today. We urge Congress to restrict the use of 

credit reports in employment to only those positions for which it is truly warranted, such 

as those requiring a national security clearance. 

• The Fair and Accurate Credit Transactions Act of 2003 (FACTA) inadvertently deprived 

consumers of a 30 year-old pre-existing right they had to enforce the FCRA requirement 

that users of credit reports disclose to consumers when an "adverse action" is taken, i.e., 

credit or insurance is denied or provided on less favorable terms, on the basis of an 

unfavorable credit report. Congress can easily fix this scrivener's error and should do so, 

as it was never part of the legislative bargain struck by F ACTA. 

I. EASILY PREVENTABLE INACCURACIES PLAGUE THE CREDIT REPORTING 

SYSTEM 

Credit reports playa critical role in the economic health and well-being of consumers and 

their families. A good credit history (and its corollary, a good credit score) enables consumers to 

3 
43 

obtain credit, and to have that credit be fairly priced. Credit reports are also used by other 

important decisionmakers, such as insurers, landlords, utility providers, and unfortunately, as we 

discuss below, even employers. 

Thus, a consumer's credit report can have a huge impact on a consumer's life. A good 

credit report allows a consumer to own a home, buy a car, obtain insurance for both, get a fairly 

priced credit card, or perhaps secure an apartment. Conversely, a bad credit report will deny 

consumers those same things, or force them to pay thousands more for credit and insurance. It 

may even cost a consumer a vitally needed job. It is no exaggeration to say that a credit history 

can make or break a consumer's finances. 

Despite the importance of accurate credit reports and the purpose of the FCRA to 

promote accuracy, systematic errors are unfortunately common in the credit reporting system. 

There are many types of errors in credit reports; we focus on a few of the most egregious. Most 

importantly, these errors are entirely preventable with some common-sense measures. 

A. Categories of Avoidable Inaccuracies 

1. Mixed Files 

One of the most intractable and damaging types of credit reporting errors are mixed or 

mismerged files. Mixed files occur when credit infonnation relating to one consumer is placed 

in the file of another. Mismerging occurs most often when two or more consumers have similar 

names, Social Security numbers (SSNs), or other identifiers (for example, when information 

relating to John J. Jones is put in John G. Jones' file). 

Mixed files are unfortunately not an uncommon problem. When the Columbus Dispatch 

conducted a year-long investigation of credit reporting errors that included a review of credit 

reporting complaints to the Federal Trade Commission (FTC) and state Attorneys General during 

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44 

a 30 month period, the reporters found that about 6% of the 21,600 complaint to the FTC and 8% 

of 1842 complaints to state Attorneys General involved mixed files.2 An older study found that 

44% of credit reporting complaints to the FTC involved mixed files. 3 

Mixed files occur largely because the nationwide CRAs do not use sufficiently rigorous 

criteria to match consumer data precisely, even when such unique identifiers as SSNs are 

present. Mostly importantly, they do not match information based on all nine (9) digits of the 

consumer's SSN. Instead, they will match information based on seven of nine (7 of 9) digits of 

an SSN if the consumers' names are also similar.4 

Mixed files could be prevented by requiring the nationwide CRAs to use stricter 

matching criteria when placing information into a consumer's credit report, most critically an 

exact match of SSNs. However, the nationwide CRAs have chosen to be excessively and 

unreasonably over-inclusive because, as the FTC once noted: "lenders may prefer to see all 

potentially derogatory information about a potential borrower, even if it cannot all be matched to 

the borrower with certainty. This preference could give the credit bureaus an incentive to design 

algorithms that are tolerant of mixed files."s 

The nationwide CRAs have been aware of mixed file errors for decades.6 In the early to 

mid-1990s, the FTC reached consent orders with the nationwide CRAs requiring them to 

2 Michael Wagner and Jill Reipenhoff, Credit Scars: Mixed and Marred, Columbus Dispatch, May 7, 2012. 

3 U.S. Public Interest Research Group, Credit Bureaus: Public Enemy #1 at the FTC, October 1993. In this sample, 

U.S. PlRG analyzed 140 complaints to the FTC. 

'See. e.g., Reeves v. Equifax Info. Serv., 2010 WL 2036661 (S.D. Miss. May 20, 2010) (mixed file case involving 

similar names, different addresses but same state, and match of seven of nine SSN digits); Apodaca v. Discover Fin. 

Servs., 417 F. Supp. 2d 1220 (D.N.M. 2006)(describing how Equifax uses partial matching logic, including only 

seven of nine SNN digits, to build files). 

, Federal Trade Commission, Report to Congress Under Sections J18 and 319 a/the Fair and Accurate Credit 

Transactions Act 0/2003, at47 (Dec. 2004). 

6 For an example of a mixed file case dating from the late I 970s, see Thompson v. San Antonio Retail Merchants 

Ass'n, 682 F.2d 509 (5th Cir. 1982). 

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45 

improve their procedures to prevent mixed files. 7 However, nearly two decades later, mixed files 

remain a significant problem. 

2. Identity Theft 

Identity theft is often called the "fastest growing crime" in this country, with an estimated 

eleven million consumers victimized by some form of the crime every year.8 Identity theft itself 

presents a serious source of inaccuracies in the credit reporting system. The identity thief, 

however, is not the only culprit. The nationwide eRAs and furnishers bear a share of the blame 

as well. 

The nationwide eRAs' loose matching procedures, discussed above, contribute to 

identity theft problems. For example, if a thief has only adopted the victim's first name and SSN 

but not his or her last name or address, the algorithm used by nationwide eRAs to "merge" 

information often will incorporate the thiefs information into the victim's file at the time the 

bureau compiles the report. Once the fraudulent debt is reported, often after default and nonpayment, and especially when collectors begin attempting skip trace searches, the account ends 

up merged into the victim's file even though many of the identifiers do not match. Accordingly, 

the "identity theft" can be characterized as a special type of mixed file problem. 

3. Furnisher errors 

Furnishers can often be the source of errors in credit reports. A furnisher might report the 

consumer's account with an incorrect payment history, current payment status, or balance. The 

error might be due to a misapplied payment or data entry error. Sometimes these errors occur 

7 FTC v. TRW, Inc., 784 F. Supp. 361 (N.D. Tex. 1991), amended by (N.D. Tex. Jan. 14,1993); In the Matter of 

Equifax Credit Infonnation Services, Inc., 61 Fed. Reg. J 5484 (Apr. 8, 1996) (consent order). 

8 Iavelin Strategy & Research, 2010 Identity Fraud Survey Report: Consumer Version 5 (2010). 

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46 

because the creditor has not complied with industry reporting standards, such as the Metro 2 

reporting format. 

A particularly difficult type of error involves furnishers who have attributed a credit 

account to a consumer who does not owe the debt, often called an "ownership dispute." This 

type of dispute often involves a spouse or other authorized user who is not contractually liable 

for a debt. Other times, the consumer may have been the victim of identity theft. These 

"ownership" disputes are among the most common, constituting 33% of the disputes to 

nationwide CRAs.9 

Another type of common error is the failure to mark accounts as disputed when the 

consumer has a legitimate bona fide dispute with the furnisher. Marking an account as disputed 

is required both under the FCRA as well as numerous federal consumer protection laws, such as 

the Fair Credit Billing Act, the Fair Debt Collection Practices Act and the Real Estate Settlement 

Procedures Act. 

One ofthe CFPB's first enforcement actions (conducted jointly with the FDIC) involved 

allegations that American Express failed to report disputes about credit accounts to the 

nationwide CRAs, in violation of Section 623(a) of the FCRA, 15 U.S.C. § 168Is-2(a).10 In 

addition, the CFPB's report on its supervision activities for the Fall of2012 noted significant 

9 Consumer Financial Protection Bureau, Key Dimensions and Processes in the u.s. Credit Reporting System: A 

review o/how the nation's largest credit bureaus manage consumer data, December 2012, at 31, available at 

http://www.consumerfinance.gov/reportslkey-dimensions-and-processes-in-the-u-s-credit-reporting-system. 

10 CFPBIFDIC Consent Order with American Express subsidiaries (In Re: American Express Centurion Bank, File 

No. 2012-CFPB-0002; In Re: American Express Bank, FSB, File No. 20 I 2-CFPB-0003; and In Re: American 

Express Travel Related Services Co. Inc., File No. 2012-CFPB-0004, all issued Oct. 1,2012) available at 

http://www.consumerfinance.gov/pressreleases/cfpb-orders-american-express-to-pay-85-million-refund-toconsumers-harmed-by-illegal-credit-card-practices/. 

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47 

FCRA violations, including the failure of financial institutions to report disputes to the 

nationwide CRAs, and the inability to determine whether disputes had been fully investigated. I I 

Debt collectors and debt buyers present their own special types of credit reporting errors. 

These include errors created by the fact that debt buyers and collectors often obtain nothing more 

than a list of names and SSNs of alleged debtors. Typically, the debt buyer or debt collector 

does not get any of the critical supporting documentation to establish that the consumer actually 

owes the debt, it is the correct amount, whether there are any disputes, or even if the collector is 

dunning the correct consumer. Another problem is the "re-aging" of old accounts so that they 

stay on the credit report past the FCRA's seven year Iimit. 12 

A report issued by the CFPB just last week indicates that a disproportionate number of 

credit reporting errors involve debt collectors. This December 2012 CFPB Report finds that debt 

collectors generate 40% of disputes to the nationwide CRAs, despite providing only 13% of the 

account tradeline information in credit reports. 1J 

B. Accuracy Statistics 

Given the types of problems described above, one would rightfully conclude that errors 

are unfortunately all-too-common in the credit reporting system. Indeed, study after study has 

documented significant error rates in credit reports. 

II Consumer Financial Protection Bureau, Supervisory Highlights: Fall 2012, at 12, available at 

http://files.consumerfinance.gov 1f/20 121 0_ cfpb _ supervisory-high lights-fall-20 12. pdf 

12 Chi Chi Wu, National Consumer Law Center, Automated Injustice: Haw a Mechanized Dispute System Frustrates 

Consumers Seeking to Fix Errors in Their Credit Reports (Jan. 2009), at 11-12, available at 

www.nclc.orgiissues/credit_reportingicontentlautomated_injustice.pdf. 

IJ Consumer Financial Protection Bureau, Key Dimensions and Processes in the u.s. Credit Reporting System: A 

review o/how the nation's largest credit bureaus manage consumer data, December 2012, at 14, 29, available at 

http://www.consumerfinance.gov/reports/key-dimensions-and-processes-in-the-u-s-credit-reporting-system. 

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48 

For instance, a 2010 on-line survey by the Columbus Dispatch reported that one-third of 

respondents said they had found errors on their credit reports. 14 A similar on-line survey by 

Zogby Interactive found that 37% of consumers who ordered their credit reports discovered an 

error, and 50% of those were not easily able to correct the error. 15 A study by the Consumer 

Federation of America and National Credit Reporting Association documented numerous serious 

errors in credit reports. 16 Studies from U.S PIRG and Consumers Union have found errors in 

25% of credit reports serious enough to cause a denial of credit. 17 

The FTC is currently undertaking a comprehensive study of errors in credit reports, using 

expert consultants to help study participants order and review their credit reports. The results of 

this study should be available soon. In the second pilot phase of the study, 15 of the 128 

participants (or 12%) found material errors in their credit reports. IS Only 12 of the 15 filed 

disputes with the assistance of the researchers; of these, 7 resulted in changes to the credit report, 

3 resulted in partial changes, and 2 cases resulted in no changes. Thus, at least 7 out of 128 

participants (or 5.5%) had material errors that were confirmed due to a change upon dispute. 

The credit reporting industry has attempted to rebut charges of systemic inaccuracies, 

commissioning a study by the Policy and Economic Research Council (PERC) claiming that 

fewer than I % of credit reports are inaccurate. 19 However, further analysis of the PERC study 

" Jill ReipenhotTand Michael Wagner, Credit Scars, Columbus Dispatch, May 6, 2012. 

" Zogby Interactive, Most Americans Fear identity Theft, Zogby's American Consumer, April 2007, at 3. 

"Consumer Federation of America and National Credit Reporting Association, Credit Score Accuracy and 

Implications for Consumers, December 17,2002, available at 

www.consumerfed.org/pdfs/121702CFA_NCRA_Credit_Score_ Report Jinal.pdf ["(CFA-NCRA study"). 

17 Nat'l Ass'n of State PIROs, Mistakes Do Happen; A Look at Errors in Consumer Credit Reports, at 11 (2004); 

Consumers Union. What Are They Saying About Me? The Results of a Review of 161 Credit Reportsfrom the Three 

Major Credit Bureaus (Apr. 29,1991), 

18 Federal Trade Comm'n, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act 

of 2003, at 2 (Dec, 2008). 

!9 Michael Turner et aI., Policy and Economic Research Council, U,S. Consumer Credit Reports: Measuring 

Accuracy and Dispute Impacts, May 2011. This study was funded by the Consumer Data Industry Association, 

which provided both monetary support as well as assistance with the study implementation, along with the 

nationwide CRAs. 

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shows that an initial rate of alleged errors was actually closer to 20%, but this percentage was 

whittled down by excluding categories of established errors, discounting errors if the participant 

did not make a dispute, and excluding errors that did not change the participant's credit score by 

more than 25 points. In particular: 

• One-third of the alleged errors were excluded from consideration as immaterial because 

the consumer did not file a dispute. Yet previous FTC research has noted how difficult 

some consumers find it to file a dispute?O This is the reason why the FTC provided 

consumers with the assistance of consultants in its study. 

• Another one-third of errors involving consumers' identifying information - such as name, 

address, employer, or date of birth - were excluded as immaterial. While some errors of 

this type may be minor, other errors in identifying information can be an indication of 

mixed files, as discussed above in Section l.A. I. In 2004, the FTC estimated that about 

4% of inquiries match to more than one file, thus indicating potential mixed files. 21 

Errors in identifying information are especially critical because the copy of the credit 

report that a consumer receives may be different from the version that creditors and other 

users receive. As the National Credit Reporting Association noted regarding the PERC 

study,22 consumers typically receive a sanitized version oftheir reports, in which all data 

20 Federal Trade Comm'n, Report to Congress Under Section J 19 of the Fair and Accurate Credit Transactions 

Act of 2003, Appendix at 17 (Dec. 2006). As the researchers in the first FTC pilot study noted, "[w]e expected that 

participants would be motivated to have any errors in their credit reports corrected promptly. This did not generally 

occur." An example of this from the FTC pilot was a consumer with a material error who explained that she did not 

file a dispute because "she was a single mother with twins and could not muster the time to file a dispute." 

21 Federal Trade Commission, Report to Congress Under Sections 318 and 319 of the Fair and Accurate Credit 

Transactions Act of 2003, at 58 (Dec. 2004). 

22 The NCRA stated: "Consumer disclosures require strict data inputs and have tighter matching criteria that are 

known to filter out some afthe most common errors, credit files that have data mixed between more than one 

individual." Terry Clemans, Executive Direcotr, National Credit Reporting Association, Position on the DoddFrank Wall Street Reform Proposed Qualified Residential Mortgage Requirements, Aug. 1,2011, at 15. The NCRA 

also noted that: 

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have been properly matched using their full name, all nine digits of the SSN, and full 

addresses. In contrast, a user may receive a version based on the partial match criteria 

discussed above in Section l.A.1. The reports employed by PERC therefore potentially 

exclude an entire category of mixed files. 

• Any error that did not result in a correction with a score increase of 25 points was 

excluded as immaterial, even if the item was negative, and thus was not counted in the 

I % error rate. Yet 87% of the tradelines in which there were alleged errors were 

modified or deleted, and 40% resulted in some increase in the participant's credit score. 

Thus, the error rate could just as well be characterized as 16.7% (87% of 19.2%) or 7.7% 

(40% of 19.2%). Second, some particularly negative items by themselves (e.g., an 

erroneous collection account) could cause a denial regardless of the score. 

Most importantly, a 1% error rate is still too high because it means 2 million consumers 

harmed by inaccurate reporting. If we take PERC's 1 % error rate at face value, that figure 

translates into 2 million consumers, given the 200 million credit histories in the databases of ead 

of the nationwide CRAs. Thus, even by PERC's analysis, 2 million consumers are harmed by 

inaccurate reporting. This is simply unacceptable. Would we accept it if 1% of all airplanes 

fell out ofthe sky? Would we accept it if 1 % of all automobiles had defects that caused horrible 

accidents? This is especially egregious when errors could be prevented with straightforward 

measures. 

Finally, note that a 1 % figure was a snapshot in time. The chances of a consumer being 

impacted by a credit reporting error are much greater over the consumer's lifetime. For 

While the study is impressive for its professional design and depth of research, the findings just do not 

match the real world experiences of the average American consumer. Based on the aforesaid issues and 

considering the methodology of the previous study funded by the national credit bureaus, (the 1992 

ACBIAA study) it looks very likely that the methodology behind this study has been carefully crafted to 

obtain the unrealistically low error rate it claims. 

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instance, consider that about 121.7 per 100,000 women (or 1.2%) in the United States have 

breast cancer at any time.2J But as many women know, the "lifetime risk" of getting breast 

cancer is much higher at 12.4%.24 

C. Fixing the System: The Role of the CFPB, the Nationwide CRAs and Empowered 

Consumers 

1. The role oJfhe CFPB 

The CFPB has the authority and ability to reform the credit reporting system, and we 

have high hopes that it will do so. The Dodd-Frank Act gave the CFPB significant authority to 

regulate the nationwide CRAs, in a way that the FTC never had. The CFPB can write 

regulations to implement almost all of the provisions of the FCRA, including the provisions 

regarding accuracy and the dispute process, while the FTC only had rulewriting authority over 

specific provisions. 15 U.S.C. § 168Is(e). The CFPB can take enforcement action against the 

major players in credit reporting. 

Most importantly, the CFPB has supervision authority over the "larger participants" of 

the credit reporting industry, including the nationwide CRAs. 12 U.S.C. § 55l4(a)(I)(B). The 

CFPB began supervising the nationwide CRAs in September 2012, and we hope that it will be 

able to move them toward reforming these problems. 

The CFPB also has supervision authority over the largest furnishers of information, such 

as banks with over $10 billion in assets. CFPB began supervision over some of these institutions 

earlier, and we have already seen results, as discussed above in Section l.A.3. 

23 Centers for Disease Control and Prevention, Cancer Among Women, May 2, 2012, at 

www.cdc.gov/cancer/dcpc/datalwomen.htm. 

24 National Cancer Institute, Breast Cancer Risk Among American Women, Sept. 24, 2012, at 

www.cancer.gov/cancertopics/factsheetldetection/probability-breast-cancer. 

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We commend the CFPB for taking these enforcement actions. We also appreciate that 

the FTC has been more active in taking enforcement actions against furnishers such as debt 

collectors, as well as specialty CRAs, discussed below in Section III. 

However, these enforcement actions raise the troubling issue that these flagrant violations 

of the FCRA have been prevalent for years, with no sanction by prior regulators and no recourse 

for consumers. Why were major lenders such as American Express, which should be well versed 

in the law and have ample resources to ensure compliance, in such blatant violation of the FCRA 

and other federal consumer protection laws? The CRAs are culpable in this as well. Why did 

the nationwide CRAs not detect these problems and prompt these furnishers to improve their 

systems? 

2. The culpability of the nationwide eRAs 

Obviously, the nationwide CRAs have the critical role in fixing errors caused by their 

own procedures, such as mixed files. However, they also bear some responsibility for furnisher 

errors, which are aided and abetted by the failures of the nationwide CRAS to exercise adequate 

oversight. 

The nationwide CRAs unquestioningly rely on furnishers and provide little oversight of 

the quality of the information being reported. Any error sent by the furnisher in its computer file 

automatically appears in the consumer's credit report, sometimes even when the information 

patently contradicts information appearing in other parts of the credit report. The classic 

example is reporting a consumer as "deceased" when active tradelines are being reported by 

other furnishers, clearly indicating that the consumer is still alive?5 And as the CFPB's 

"See. e.g.. Perez v. Trans Union, L.L.C., 526 F. Supp. 2d 504, 509, 510 (E.D. Pa. 2007) (question of fact for jury as 

to whether eRA should have detected inaccuracy in reporting consumer as deceased even though payments were 

reported as being made to his current accounts). 

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December 2012 Report noted, the nationwide CRAs "do not conduct independent checks or 

audits to determine if the data is accurate, ... "Z6 This unquestioning acceptance and republication of furnisher information invites abuse. 

Must of the problem lies in the mindset of the nationwide CRAs, which claim they are 

only the database, or the "library" for the information ofthe furnishers, and thus have no 

responsibility for its accuracy.27 But that is not what the FCRA requires. The FCRA imposes 

"grave responsibilities" on consumer reporting agencies to promote accuracy, and to act with 

"fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. § 1681. 

The FCRA requires them to have and follow "reasonable procedures to ensure maximum 

possible accuracy." 15 U.S.C. § 1681e(b). 

In other words, the CRAs are not supposed to be bystanders. They are supposed to 

actively take steps to promote accuracy. They are supposed to be engaged, aggressive, and 

proactive in rooting out errors. Reasonable procedures for ensuring maximum possible accuracy 

surely does not include standing by and doing nothing while creditors and debt collectors 

blatantly violate the law. 

The culpability of the nationwide CRAs is especially true when it comes to debt 

collectors and debt buyers. Despite being aware of these errors, the nationwide CRAs refuse to 

take meaningful action to exclude bad actors who provide bad data. For example, in our 2007 

26 Consumer Financial Protection Bureau, Key Dimensions and Processes in the u.s. Credit Reporting System: A 

review of how the nation's largest credit bureaus manage consumer data, December 2012, at 19, available at 

http :ffwww .consumerfinance.gov!reportsfkey-dimensions-and-processes-in-the-u-s-credit-reporting-system. 

27 See. e.g., Credit Reports: Consumers' Ability to Dispute and Change Inaccurate Information: Hearing before the 

House Committee on Financial Services, I lOth Congr. 46 (2007)(oral testimony of Stuart Pratt, President and CEO, 

Consumer Data Industry Association)("But to put the CRAs in a position of being a small claims court, 

to try to adjudicate and be the oracle of truth is the wrong place for it to be. The lender will know the decision."). 

14 
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testimony,28 we cited the example of the debt buyer Asset Acceptance, which had been allegedly 

excluded for re-aging obsolete account information, but then reinstated as a furnisher by the 

nationwide CRAs. 

Despite the information provided in the 2007 hearing, the nationwide CRAs continued to 

accept Asset Acceptance's data - even though in July 2011, one of the nationwide CRAs 

(TransUnion) sued it for providing inaccurate information that led to TransUnion being named as 

a defendant in an FCRA lawsuit.29 And just this year, the Federal Trade Commission took 

enforcement action against Asset Acceptance in part over its failure to properly investigate 

consumer disputes and reporting of information it had reason to suspect was inaccurate.3D 

Yet there is no indication that any of the nationwide eRAs have excluded Asset 

Acceptance as afurnisher. In fact, the company's Annual Report filed March 2012 states "We 

furnish information concerning our accounts to the three major credit reporting agencies, ... ".31 

Asset Acceptance is only one out of many debt buyers and collectors that continually provide 

inaccurate information to the nationwide CRAs. For another example, see the Brim v. Midland 

case discussed below in Section II(D). 

Unfortunately, there are very logical reasons, and tremendous incentives for the 

nationwide CRAs NOT to exclude bad actors or require stricter measures to reduce furnisher 

errors. The credit reporting industry is unlike most other American industries in a fundamental 

respect. The paying clients of the credit reporting industry are not consumers, but the very 

28 See. e.g.. Credit Reports: Consumers' Ability to Dispute and Change Inaccurate Information: Hearing before the 

House Committee on Financial Services, I 10th Congr. 46 (2007)(statement of Chi Chi Wu, Staff Attorney, National 

Consumer Law Center). 

29 Complaint, Trans Union LLC v. Asset Acceptance, LLC, (III. Cir. ct. Cook Cty July 12,2011). 

30 Complaint, United States v. Asset Acceptance, LLC, Case No. 8:12-cv-182-T-27 (M.D. Fla. Jan 30, 2012). 

3' Asset Acceptance Capital Corp., 2011 Form IO-K: Annual Report Pursuant to Section 13 or 15(d) of the 

Securities Exchange Act of 1934, March 29, 2012, at II. 

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creditors and debt collectors that the CRAs should be but are not screening the data of, 

auditing, and overseeing. 

Moreover, consumers have no say in whether their information is included in the 

nationwide CRAs' databases. Most Americans cannot avoid having a credit history. Unless they 

are very wealthy, consumers will need to borrow money if they want to buy a house or attend 

college. Thus, unlike almost all other business relationships, consumers who are unhappy with 

the actions of a CRA cannot vote with their feet - they cannot remove the information or take 

their business elsewhere. 

On the other hand, debt collectors and creditors do have the ability to switch between 

CRAs if they wish. And vigorous oversight by the nationwide CRAs, or tougher requirements 

for accuracy, are likely to drive furnishers away. The biggest impact of excluding a furnisher 

like Asset Acceptance is to cost the nationwide CRAs a paying customer; the nationwide CRAs 

don't profit and indeed lose money from making sure consumers are treated fairly. Furthermore, 

furnishers want all negative information that might possibly relate to the consumer, even if the 

information is of uncertain accuracy - it costs creditors more if negative information is 

unreported than if it is falsely reported. Thus, the nationwide CRAs have incentives to develop 

systems that are overly inclusive of negative information. 

In short, traditional competitive market forces provide little incentive for CRAs to incur 

the costs to institute new procedures that ensure information is accurate or to undertake 

investigations to correct errors, since these activities primarily benefit consumers. Up until the 

creation of the CFPB, the major force doing so were consumers themselves who were willing to 

go to court to enforce their rights under the FCRA. 

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3. The vital importance of private rights and empowered consumers; the need for 

consumer remedies 

In 1970, Congress recognized that no one has a bigger stake in the accuracy of a credit 

report than the consumer whose name is on it. By establishing the right of consumers to seek 

private redress under sections 1681n and 16810, Congress assigned the primary enforcement role 

to those with the greatest interest in accomplishing such a task - the individuals whose peace of 

mind and material wellbeing are directly impaired by inaccurate credit reports. In the 1970 

legislation, there were no exceptions to this private enforcement scheme. 

And for over 40 years, private litigants have provided the most significant enforcement 

of the FCRA. A Westlaw search for reported Fair Credit Reporting Act cases citing either 

section 168ln or 16810 yields over 1,500 cases. In contrast, there was been much less 

enforcement by federal regulators. At best, the FTC was only able to bring several dozen FCRA 

cases, and most of them did not involve the accuracy of the nationwide CRAs. Prior to the 

CFPB, not one single banking regulator had publicly disclosed an FCRA enforcement action 

against a bank furnisher. 

New rights were added to the FCRA in 1996 and 2003 to protect consumers, but in 

compromises with the credit industry, consumers were prohibited from seeking relief in court to 

enforce some ofthese rights. Most notably, many of the responsibilities placed on furnishers are 

only enforceable by government agencies. This includes a prohibition on reporting information 

that the furnisher knows or has reason to believe is inaccurate, and the requirement that 

furnishers handle credit reporting disputes sent directly to them. See 15 U.S.c. § 1681s-2(d). 

Thus, a consumer who has been the victim of inaccurate information in his or her credit 

report simply has no resource against the furnisher, even if the furnisher deliberately and 

maliciously provided the wrong information. She has no resource if she files a dispute directly 

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57 

with the furnisher, and the furnisher ignores her. Furthermore, a part of the compromise to 

impose obligations on furnishers, the FCRA preempts state laws governing them, even in some 

cases venerable common law doctrines such as defamation and slander. See 15 U.S.C. §§ 

16Slh(e),16SJt(b)(F). 

At least one court has expressed extreme frustration with this statutory scheme: 

But the FCRA's substance is even more troubling than its complex form. The statute 

includes numerous provisions that limit consumers' ability to enforce its mandates either 

by explicitly barring private actions or by imposing such burdensome procedural 

requirements that no layperson could possibly be expected to comply. 

The court in this case, Burrell v. DFS Services, LLC,JZ went on to note: 

In a particularly frustrating twist, another provision ofthe FCRA requires several federal 

entities to promulgate regulations governing when and how a consumer may submit a 

dispute directly to a creditor, 15 U.S.C. § 16Sls-2(a)(S)(A), but that provision falls under 

the section ofthe FCRA that prohibits private enforcement. See 15 U.S.C. § 16SI(d). As 

ifthat were not enough, the FCRA actually takes away any alternative means that 

consumers could previously have used to enforce their rights by expressly preempting 

virtually all state law causes of action related to credit reporting. 15 U .S.C. § 16S1 

t(b)(l)(F); 15 U.S.C. §§ 16S1 h(e). 

* * * * 

Those requirements have the practical effect of insulating creditors, such as Defendants, 

from liability even in cases where they fail to take basic measures to protect their 

customers. Instead, the FCRA places the burden of ensuring the efficient functioning of 

the credit reporting system on the consumers themselves-lay people who are, in most 

32 753 F. Supp.2d 428, 444 (D.N.J. 2010). 

IS 
58 

cases, in no position to carry out that task by jumping over the technical hurdles created 

by the statute. Such a scheme is troubling, to say the least. 

We submit that Congress should, and must act, to rectify this troubling situation. We 

urge Congress to provide consumers with the right, currently sorely lacking under the FCRA, to 

ask a judge to tell a furnisher or a CRA: "fix that report." 

With one minor exception, the FCRA does not provide for declaratory or injunctive relief 

in actions by private parties. The vast majority of courts have held that courts do not have the 

power to issue an injunction under the FCRA. The FCRA is an anomaly in this respect, as the 

Supreme Court decision in Califano v. YamasakiJ3 provides the basis for injunctive relieffor 

most other laws. 

Providing courts with explicit authority to issue injunctive relief would further the 

purpose of the FCRA to "assure maximum possible accuracy." 

II. THE FCRA-MANDATED CREDIT REPORTING DISPUTE SYSTEM IS A 

TRAVESTY OF JUSTICE 

A. A Long-Documented History of Blatant Violation 

As we have documented repeatedly, the FCRA dispute system developed by the credit 

reporting industry is a travesty of justice. The FCRA requires both CRAs and furnishers to 

conduct "reasonable" investigations when a consumer disputes an item in his or her credit report 

as inaccurate or incomplete. However, the system created by the nationwide CRAs to handle 

disputes is anything but reasonable. Instead, it is a perfunctory, automated process that consists 

of nothing more than translating consumer disputes into a two- or three-digit code, forwarding 

33 442 U.S. 682, 99 S. Ct. 2545,61 L. Ed. 2d 176 (1979). 

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that code and a one-page electronic fonn to the furnisher, and parroting whatever the furnisher 

states in response.34 

In this highly automated, computer-driven process, a consumer's dispute is 

communicated using a Consumer Dispute Verification fonn (CDV). An automated version of 

the fonn, communicated entirely electronically, is known as Automated Consumer Dispute 

Verification (ACDV). Furthennore, all three nationwide CRAs collaborated through the 

Consumer Data Industry Association to create an automated on-line reinvestigation processing 

system called "e-OSCAR." 

This automated system is heavily dependent upon standardized dispute codes used to 

communicate the nature of the dispute. Approximately 44% of consumer disputes are written.J5 

These written disputes often consist of a detailed letter with supporting documentation, 

painstakingly written by concerned and even desperate consumers. All of these documents, 

including a consumer's careful description of a specific dispute, are reduced to a two or three 

digit code that the employee of the CRA's offshore vendorJ6 who glances at the material believes 

best describes the dispute. The code is sent to the furnisher and is often communicated alone, 

without supporting documentation provided by the consumer - documents such as account 

applications, billing statements, letters, payoff statements and even court judgments that can 

show overwhelming and even conclusive proof. 

The overly automated and perfunctory nature of the process, and the obstacles it creates 

for consumers, has been noted repeatedly by consumer groups, as well as courts, regulators, and 

J4 Chi Chi Wu, National Consumer Law Center, Automated Injustice: How a Mechanized Dispute System Frustrates 

Consumers Seeking to Fix Errors in Their Credit Reports (Jan. 2009), available at 

www.nclc.org/issues/credit_reportinglcontentiautomated_injustice.pdf. 

J5 Consumer Financial Protection Bureau, Key Dimensions and Processes in the U.S Credit Reporting System: A 

review of how the nation's largest credit bureaus manage consumer data, December 2012, at 27, available at 

http://www .consumerfinance.gov/reports/key -dimensions-and-processes-in-the-u-s-credit-reporting-system. 

36 Usually located in India, the Philippines, Chile, or Costa Rica. 

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journalists. Consumer advocates raised criticism of this system during the debates leading up to 

the FACTA amendments of 2003. A 2006 study mandated by FACT A and conducted by the 

FTC and Federal Reserve Board confinned the automated and perfunctory nature of the dispute 

system.37 In a 2007 hearing before the House Financial Services Committee, several consumer 

advocates provided more evidence, such as materials obtained in discovery and deposition 

testimony, and greater details about the Kafka-esque nature of the system.38 

In 2009, the National Consumer Law Center issued an in-depth report about the details, 

nature, and abuses of the credit reporting dispute system in a report called Automated Injustice: 

How a Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors in Their Credit 

Report. This report included many real-life cases, deposition testimony and other extensive cites 

documenting the extent of how the system prevents consumers from fixing errors and deprived 

them of their rights under the FCRA. We wish to submit this report (also found at 

www.nclc.orglissues/credit reporting/content/automated injustice.pdO for the record. 

Unfortunately, the abuses in the credit reporting dispute system have persisted despite 

this extensive history of criticism and calls for reform. Just this year, the Columbus Dispatch 

issued a series of articles with a similarly in-depth expose of the dysfunctional credit reporting 

dispute system, proving that the abuses continue despite decades of complaints.39 

The latest report to document the problems with the credit reporting dispute system was 

issued just last week by the CFPB. The CFPB's report confinned the automated nature and 

hands-off approach of the nationwide CRAs, and documented that in 85 percent of cases, the 

17 Federal Trade Commission and Federal Reserve Board, Report to Congress on the Fair Credit Reporting Act 

Dispute Process (Aug. 2006), at 12, available at 

www.fic.gov/os/comments/fcradisputeIP044808fcradisputeprocessreporttocongress.pdf 

38 Credit Reports: Consumers' Ability to Dispute and Change Inaccurate Information: Hearing before the House 

Committee on Financial Services, 11 Oth Congr. (2007). 

39 Jill Reipenhotfand Michael Wagner, Credit Scars Series, Columbus Dispatch, May 7-14, 2012, available at 

http://www.dispatch.com!contentltopic/special-reports/2012/credit-scores.html. 

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CRA does no more than pass along the dispute to the furnisher. Most notably, CFPB Director 

Cordray noted that, as consumer advocates have long alleged, "the documentation consumers 

mail in to support their cases may not be getting passed on to the data furnishers for them to 

properly investigate and report back to the credit reporting company.,,40 

We believe this failure to pass along documentation submitted by the consumer 

deliberately violates the FCRA's requirement that a CRA include "all relevant information" 

about the dispute that the CRA received from the consumer. 15 U .S.C. § 1681 i(2). And if all 

relevant communication is not forwarded, the furnisher cannot comply with the FCRA' s 

requirement to "review all relevant information" provided by the CRA. 15 U.S.c. § 1681s2(b)(I )(B). 

B. The Nationwide CRAs' Bias against Consumers Violates the FCRA 

Another fundamental problem with the credit reporting dispute process is the utter and 

complete bias against consumers by the nationwide CRAs. After a furnisher responds to an 

FCRA dispute, the nationwide CRAs' main response is to parrot whatever the furnisher says. 

The CRAs will accept the results of the furnisher's "investigation" even when a simple check 

would reveal inconsistent information. In other words, the nationwide CRAs' policies are that 

what the furnisher says is gospel, and even when that furnisher is a bad actor with a history of 

violations, such as a debt buyer. We believe this absolute bias in favor of the furnisher in 

dispute investigation violates the FCRA. 

In fact, a number of courts have chastised the nationwide CRAs for this parroting, and 

their general failure to do no more than send an ACDV to the furnisher and accept its response. 

40 Prepared Remarks by Richard Cordray, Director of the Consumer Financial Protection Bureau, Credit Reporting 

White Paper Press Call, December 13, 2012 . 

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Recent cases include Dixon-Rollins v, Experian Info, Solutions,41 in which the Federal District 

Court for the Eastern District of Pennsylvania noted: 

Significantly, the Third Circuit had already warned Trans Union that its reinvestigation 

procedures were deficient. The Cushman decision clearly instructs consumer reporting 

agencies that they must go beyond the original source in certain circumstances. Trans 

Union's attempt to avoid that instruction by citing another circuit's decision that is not on 

point is unavailing. Indeed, its argument suggests that it had no intention of correcting its 

reinvestigation procedures. It cannot avoid its obligations by creating an illusory 

exception. Thus, there is ample evidence to support a legal and factual determination that 

Trans Union's procedures are objectively unreasonable. 

The District Court characterized Trans Union's behavior as reprehensible, stating 

"because Trans Union has been warned of its inadequate reinvestigation practices in prior cases, 

it may be considered a repeat FCRA offender,,,42 

In Saindon v, Equifax Information Services,43 the Northern District of California noted in 

2009 that: 

... the monitoring and reinvestigation procedures could be seen as quite limited. The 

procedures could be seen by ajury as merely basic automated checks that catch missing 

data fields on submitted forms, which do not go to the heart of whether a source of 

information is trustworthy. For example, when a consumer files a complaint contesting 

the accuracy of an item on his or her credit report, the sole action taken by Equifax is to 

contact the source of the information to verify if it is accurate. If the source says that it is, 

the inquiry ends (Rittelmeyer DecI.1I8.). This does virtually nothing to determine the 

41 753 F, Supp,2d 452, 464 (E.D. Pa. Sept. 23, 2010) 

4Z Id, a1465, 

43 608 F. Supp. 2d 1212, 1217 (N.D. Cal. 2009). 

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actual credibility of the source--which is what plaintiff asserts is lacking--or so a jury 

could reasonabl[y] conclude. 

Another judge in this same district noted in 2010 that Equifax's history of deferring to 

furnishers rather than performing independent investigations, along with consent agreements 

with FTC and state Attorneys General, provided sufficient evidence for jury to find that the CRA 

ran unjustifiably high risk of violating the FCRA.44 

The nationwide CRAs' bias in favor of furnishers - their unquestioning acceptance of the 

furnisher's response despite being presented with evidence and documentation by the consumer 

- violates the FCRA's protection for consumers. The FCRA places the burden of proof in a 

dispute investigation on the furnisher, not the consumer, as the Act provides that if disputed 

information is inaccurate or cannot be verified, it should be deleted. See 15 U.S.C. § 

1681i(a)(5)(A). Thus, if a consumer provides evidence and documentation that she is correct, 

and the furnisher responds without such evidence, the disputed information is "unverifiable" by 

nature, and should be.deleted. Yet the nationwide CRAs not only illegally place the burden of 

proof on the consumer, they go further by always siding with the furnisher and automatically 

accepting the furnisher's position - even when, in 40% of the cases, the furnisher is a debt 

collector or debt buyer. This is not only wrong, it is illegal under the FCRA. 

C Furnishers Also Engage in Perfunctory "Investigations," with Encouragement from the 

Nationwide CRAs 

For their part, furnishers often also conduct non-substantive and perfunctory 

"investigations." These procedures consist of nothing more than verifYing the challenged data 

44 Drew v. Equifax Info. SelV., 2010 WL 5022466 (N.D. Cal. Dec. 3, 2010). See also Gonnan v. Experian Info. 

Solutions, Inc., 2008 WL 4934047, at '6 (S.D.N.Y. Nov. 19, 2008)("Given the standard articulated in Cushman and 

Experian's claimed sale reliance on the infonnation it received from HSBC, ajury could conclude that Experian did 

not reinvestigate Plaintiffs dispute in accordance with the requirements of the 15 U.S.c. § 1681" and acted in 

reckless disregard of the law). 

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by comparing the notice of dispute with the recorded information that is itself the very subject of 

the dispute. In such cases, combined with the CRAs' failure to conduct any independent review, 

the ultimate effect that no one ever investigates the substance or merits of the consumer's 

complaint. 

Unfortunately, the trend by furnishers is to increase the automation of their dispute 

processes, encouraged by the nationwide CRAs. The nationwide CRAs promote the "Automated 

Batch Interface" which "allows Data Furnishers to receive Consumer Dispute Verification 

(ACDV) requests in XML batch file fonnat" so that they can handle disputes using a mass 

production method.45 And some furnishers have fully embraced this automation. For example, 

as we noted previously: 

• MBNA (now FIA Card ServiceslBank of America) - During the course of the Johnson 

v. MBNA litigation,46 MBNA's employees testified that the company's FCRA 

investigation process consisted of merely confinning the name and address of consumers 

in the MBNA computers and noting from the applicable codes that the account belonged 

to the consumer. The employees revealed that they never consulted underlying 

documents such as account applications to detennine accuracy of disputed infonnation. 

• Capital One - Capital One employee Pamela Tuskey described how all three of the 

national credit bureaus instructed Capital One personnel to simply verilY infonnation and 

to "make our system look like your system." The credit bureaus even discouraged the 

Capital One personnel from actively researching by pulling statements or similar 

activities.47 

., e-OSCAR, Automated Batch Interface, at http://www.e-oscar.org/automated-batch-interface.aspx. 

" 357 F.3d 426 (4th Cir. 2004). 

47 Deposition of Pamela Tuskey, Carol Fleischer v. TransUnion, Case No. CV 02-71301 (E.D. Mich.). 

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• Mortgage Bankers - Trade groups for certain furnishers/creditors have asserted that if a 

credit report reflects what is in the furnisher's records, it should be considered "accurate," 

no matter whether the furnisher's records are objectively accurate as a matter of reality. 

For example, the Mortgage Bankers Association has urged regulators to define accuracy 

as "accurate reporting of the status of the account as reflected in the furnisher's 

records.',48 

More recent examples of automated non-substantive processing of dispute by furnishers 

are: 

• USAA Federal Savings Bank - USAA not only engages in perfunctory investigations, 

but a recent Sixth Circuit decision noted that: "Boggio offers deposition testimony by a 

USAA employee stating that USAA reviewers were prohibitedfrom consulting 

documents in his file-including the allegedly forged check in question-and instead 

would have verified only his identity before responding to a CRA notice.',49 

• Credit Bureau Collection Services - In its 20 I 0 complaint against this debt collector, 

the FTC alleged: "For certain types of disputes, such as those where the consumer claims 

the account is not his or hers or belongs to someone with a similar name, it is CBCS's 

policy and practice only to compare the name, social security number, date of birth, and 

address in CBCS's computer database with the information provided on ACDV forms. 

Where three of the four items match, CBCS will report to the CRA that it has verified the 

information it furnished as accurate. It is CBCS's policy that only after the consumer has 

48 Comments of Mortgage Bankers Association re: Interagency Advanced Notice of Proposed Rulemaking: 

Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies 

Under Section 312 of the Fair and Accurate Credit Transactions Act, May 22, 2006, at 4. 

49 Boggio v. USAA Federal Say. Bank, 696 F.3d 6]] (6"' Cir. 20]2) (emphasis added). 

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alleged the same type of account inaccuracy more than four times will the matter become 

assigned to a supervisor to do further 'investigation. ",50 

• Asset Acceptance - The FTC's 2012 complaint against this debt buyer describes Asset 

Accepance's equally meaningless treatment of disputes: "Asset processed many ACDVs 

through 'batch processing,' an automated system in which certain 'identifiers' in Asset's 

electronic account records are automatically compared with the infonnation provided on 

the ACDV fonns. When the Social Security number and consumer name on the ACDV 

match the infonnation in Asset's database, Asset reports to the consumer reporting 

agency that it has verified the infonnation .... The batch processing of comparing a 

consumer's name and Social Security number often does not adequately respond to the 

consumer's dispute and is not a reasonable investigation .. ,. Asset does not investigate 

the particular merits of the consumer's claim by, for example, reviewing individual 

account documents, contacting the portfolio seller to verify the accuracy of the 

infonnation, asking the consumer reporting agency for more infonnation, or reviewing its 

own internal notes.,,51 

The FTC also noted that Asset only employs 14 to 20 "ACDV specialists" despite 

receiving half a million credit reporting disputes each year, and expects each each 

specialist to process at least 18-20 ACDVs per hour - or one dispute every 3.3Jminutes. 

• Midland Credit Management.52 Midland is another major debt buyer that engages in 

non-substantive, unreasonable investigations. In one case, the consumer had 

unimpeachable evidence that he had already paid off a debt to Dell Computers, and did 

'" Complaint, United States v. Credit Bureau Collection Services, Case No. 2:10-cv-169 (S.D. Ohio Feb. 24, 2010). 

" Complaint, United States v. Asset Acceptance, LLC, Case No.8: 12-cv-182· T-27 (M.D. Fla. Jan 30, 2012), at 

m]44 and 45. 

" Brim v. Midland Credit Management, 795 F. Supp.2d 1255 (N.D. Ala. 2011) 

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not owe Dell anything. But Dell sent Mr. Brim's account to Midland, which reported it 

to the nationwide CRAs. Mr. Brim sent numerous disputes to the nationwide CRAs and 

Midland between 2008 and 2009. Midland responded to the notices by merely checking 

the dispute against its own records. Its review did not go any further than simply 

verifying that the debt existed on its books. Midland also responded to Brim's evidence 

(specifically, a bank account payment history) as "inadequate" and requested 

supplemental bank documents that were not available. Brim devoted nearly five years of 

his life to fighting a debt that he had timely paid, resulting in loss of income, loss of 

credit, and emotional distress. 

Unsurprisingly, the last three examples involve debt collectors. As the CFPB's 

December 2012 report noted, and as mentioned above, debt collectors represent 40% of all credit 

reporting dispute, a disproportionate share given that they only provide 13% of the account 

tradelines on credit reports.53 Furthennore, debt collectors have little incentive to correct errors 

in response to a dispute, especially since removing negative information may mean losing the 

opportunity to collect the debt, which is their main objective. Unlike with a creditor, the 

consumer is not the debt collector's customer, and has no reason to maintain a good relationship 

with the consumer. To a debt collector or buyer, it does not matter if the amount is wrong, there 

is a dispute as to liability, or they have the wrong consumer - so long as they can use the credit 

report to pressure the consumer to pay up. 

" Consumer Financial Protection Bureau, Key Dimensions and Processes in the US. Credit Reporting System: A 

review of how the nation's largest credit bureaus manage consumer data, December 2012, at J 4,29, available at 

hltp:llwww.consumerfinance.gov/reports/key-dimensions-and-processes-in-the-u-s-credit-reporting-system. 

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D. What Needs to be Done 

It is well past time for the credit reporting dispute system to be reformed. For too long, 

consumers with the misfortune of being plagued by errors have suffered under an illegal, 

illogical, and unjust system. Reforming the system will take the efforts of both the CFPB and 

Congress. 

First, the nationwide CRAs must be required to have sufficient trained personnel to 

actually review and conduct real investigations of consumer disputes. They must be required -

as the FCRA and court decisions mandate - to undertake "reasonable" investigations that consist 

of a "detailed inquiry or systematic examination"S4 of the evidence. This means talking to 

consumers and furnishers, examining documents in a meaningful manner, using human judgment 

to analyze a dispute, and making independent decisions. Thus, the nationwide CRAs must 

provide skilled trained personnel with the discretion to make decisions. Nationwide CRAs must 

also be required to forward to furnishers actual copies of the documents submitted by consumers. 

This will require a significant investment of resources by the nationwide CRAs, 

especially in terms of personnel. But as the court in the Eastern District of Virginia noted: 

While this obligation to conduct a reasonable investigation may increase the cost and 

expense to a CRA, it is the necessary cost associated with discharging the congressionally 

mandated duties placed upon a company choosing to engage in a business that can have 

such a profound and lasting impact on consumers, ... 55 

54 Johnson v. MBNA, 357 F.3d 426, 430-431 (4th Cir. 2004). 

"Burke v. Experian Info. Solutions, 2011 WL 1085874 (E.D. Va. Mar. 18,2011). 

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The credit reporting industry will complain, as it often does, that it is not a tribunal or a 

small claims court. But a CRA need not act as a small claims court to simply determine that 

information that a consumer owes a debt is inaccurate when the consumer has a bank statement, 

an executed loan modification, or even a judgment showing that he or she does not owe the debt. 

Furthermore, in those circumstances where the CRA personnel truly cannot determine whether 

the consumer or the furnisher is correct, the information should be deleted. After all, the FCRA 

requires information to be deleted ifit "cannot be verified." See 15 U.S.C. § 168Ii(a)(5)(A). 

Thus, the burden should be on the furnisher, not the consumer, when there is a credit reporting 

dispute. 

At a minimum all good faith disputes should be marked as such and excluded from the 

credit score. Currently, only some types of disputed debt are excluded from a credit score, and 

the dividing line is unclear and shifting. Furthermore, exclusion of some disputes from the credit 

score is entire voluntary and the industry could change its mind any time and start scoring all 

disputes. For example, consider this complaint: 

I applied for a home equity line of credit with Fifth Third Bank. Specifically I was 

interested in the line of credit that came with an initial rate of 2.99% with a credit score 

of 750 or above. A few days after the application, I was informed in writing by the loan 

officer that my application had been "Preliminarily Approved." However, I was told that I 

did not qualifY for the 2.99% rate because my credit score was only 725, as reported by 

TransUnion. 

As this did not make sense to me, I researched both my credit reports and my credit 

scores. My Equifax credit score was 802. I was unable to obtain my Experian credit 

score. The TransUnion credit score report provided to me by Fifth Third includes a 

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section stating -- "Key factors that adversely affected your credit score: 040-Dereg 

public recd or collection filed." 

The TransUnion credit report includes mention of a $70 unpaid debt to [a local medical 

center] from 2009. r had refused to pay this bill because it was for an emergency room 

visit for my son. He had a broken hand. We registered at the emergency room and then 

waited for services for 4 hours, finally, at close to midnight, we left. As we never 

received any services, I refused to pay for the bill. I disputed the bill with the hospital and 

then with the collection agency. 

There are no other derogatory factors listed on my credit report other than this old, 

disputed bill. It is apparent to me that TransUnion is using this disputed debt in its 

calculation o/my credit score. To remedy this, I have tried to go on to the TransUnion 

website for the past five days to formally dispute the debt with TransUnion. The website 

does not allow one into the disputed section -- it always says there are too many users. r 

have tried multiple times, even in the middle of the night. 

As a result, this line of credit will cost me hundreds of dollars more, and it will be 

thousands more iff intended to keep the line of credit open for over a year.56 

In this case, the consumer had submitted a bona fide dispute to the debt collector, yet the 

collection item plunged her score by 75 points. Note that this consumer is a colleague at 

National Consumer Law Center. Ifshe could not successfully nullify the impact of this negative 

information by disputing it, what chance does the average consumer have? Thus, Congress 

and/or the CFPB should require that all debts that are the subject of a dispute on a credit report 

" Email from Margot Saunders, Of Counsel, National Consumer Law Center, Dec. 14, 2012 (emphasis added). 

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must be excluded from the score, unless the furnisher or CRA can prove that the dispute is not 

bona fide. 

Furthermore, debt collectors must be subject to even stricter screening and oversight. 

When a debt collector is involved, it is even more critical to have independent review, given the 

incentives discussed above for the debt collector to ignore disputes and leave errors uncorrected. 

And there should be a flat-out prohibition against the nationwide CRAs to engage in parroting 

when a debt collector is involved. It is simply outrageous and unacceptable for the nationwide 

CRAs to take the unsupported, unsubstantiated word of a debt collector over a consumer, given 

the incentives that exist and the well-documented abuses of debt buyers.57 

Finally, as discussed above, consumers should have the right to ask a court to order the 

nationwide CRAs and furnisher to fix their credit reports when there is an error. Congress 

cannot sit idly by while innocent consumers are victimized by credit report errors because the 

law does not provide them with the ability to ask a court to prevent violations of the law. 

III. SPECIALTY CONSUMER REPORTING AGENCIES 

"Specialty consumer reporting agencies" are the wild west of consumer reporting 

agencies. These consumer reporting agencies compile and maintain files relating to criminal 

records, residential or tenant histories, check-writing histories, employment histories, or 

insurance claims. 

57 See; Federal Trade Commission, Repairing a Broken System: Protecting Consumers in Debt Collection and 

Arbitration (July 2010), available at http://www.ftc.gov!os/2010107/dehtcoliectionreport.pdf; Robert Hobbs and 

Rick Jurgens, National Consumer Law Center, The Debt Machine (July 2010), available at 

http://www.nc!c.orglimages/pdJidebt collection/debt-machine.pdf; Claudia Wilner and Nasoan Sheftel-Gornes, 

Neighborhood Econ. Dev. Advocacy Project and Urban Justice Center, Debt Deception: How Debt Buyers Abuse 

The System To Prey On Lower-Income New Yorkers I (May 2010), available at 

http://www.nedap.org/pressroom/documentsIDEBT_DECEPTlON]INAL_ WEB.pdf. 

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Specialty consumer reporting agencies are not required to be licensed or even registered, 

nor is there anyone source identifying all of these companies. Therefore, as of2012, there is no 

centralized location to obtain the kind of data required to generate accuracy data. Furthermore, 

too many users fail to comply with the FCRA's requirement to provide "adverse action" notices 

(explained in Section VlIl below) to the employee or applicant that a consumer report has been 

used against them. This hinders the ability to conduct a reliable survey of consumers to 

determine whether they have been denied employment, housing, or any other service because of 

a specialty consumer report. 

In Spring 2012, NCLC released a report that describes a number of ways in which 

criminal background screening companies make mistakes that greatly affect a consumer's ability 

to find employment,58 The use of criminal background checks is controversial for a number of 

reasons. Whether these checks should be used for employment screening is a matter of public 

debate. 

However, there is little debate that if these records are to be used, they must be accurate. 

As stated above, despite the importance of the accuracy, actual accuracy rates are not possible to 

obtain. 59 However, what evidence that is available indicates that professional background 

screening companies routinely make mistakes with grave consequences for job seekers. 

Our research found that the following common errors: 

• Reports that mismatched the subject of the report with another person (usually with a 

similar name); 

• Reports that revealed sealed or expunged information; 

58 Persis S. Yu & Sharon M. Dietrich, Nat'l Consumer Law Cent., Broken Records: How Errors by Criminal 

Background Checking Companies Harm Workers and Businesses, April 2012. 

59 See generally SEARCH, the Nat'! Consortium for lustice Info. and Statistics, Report of the National Task Force 

on the Commercial Sale of Criminal lustice Record Information (2005) at 7, available at, 

www.search.orglaboutlnews/2005/reports.asp. 

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• Reports that failed to include infonnation about how the case was disposed or resolved; 

• Reports that contained misleading infonnation, such as reporting single cases or charges 

multiple times; and 

• Reports that mischaracterized the seriousness of the offense reported. 

Many of these errors can be attributed to common practices by background screening 

companies, such as: 

• Obtaining information through purchase of bulk records, but then failing to routinely 

update the database; 

• Failing to verifY infonnation obtained through subcontractors and other faulty sources; 

• Utilizing unsophisticated matching criteria; 

• Failing to utilize all available information to prevent a false positive match; and 

• Lack of understanding about state-specific criminal justice procedures. 

The National Association of Professional Background Screeners claims that its members 

have a 99% accuracy rate. However, this error rate appears to actually be the rate of the disputes 

received by its members. Basing an accuracy statistic on the rate of disputes is flawed for 

several reasons. First, this rate did not include inaccuracies in the reports of consumers for 

whom background check reports have not yet been issued to an employer, but may have errors 

that exist in their files which could cost them a job when a report is ultimately issued. 

Second, this rate did not include errors in the background checks of consumers who did 

not file a dispute over the error. Consumers may not file a dispute over an erroneous background 

check report because they have no knowledge of the error. Unfortunately, too many employers 

fail to comply with notice requirements under the FCRA. Therefore, many people are denied 

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employment and never know that it is due to their background check nor that they have the right 

to see the report and file a dispute. 

We also know from the context of credit-based reports that many consumers with errors 

in their consumer reports do not send disputes because of lack of time or resources, educational 

barriers, and lack of understanding of their rights. 

Although the FCRA does provide consumers with the right to preemptively review the 

information in their consumer file, this right is virtually meaningless for specialty consumer 

reports. There are hundreds, if not thousands of specialty consumer reporting agencies operating 

in the United States. Unlike the big three credit bureaus, there is no centralized location where a 

consumer can go to order his or her background check. 

Fortunately, the CFPB has recently released a list of contacts for some of the largest 

specialty credit reporting agencies. However, it only scratches the surface of the number of 

background checking agencies. With thousands of specialty consumer reporting agencies 

operating, a consumer cannot predict which company his or her employer, insurance company, 

or landlord will use. 

Furthermore, dispute rights are similarly meaningless with specialty consumer reports. 

Even if a consumer is successful in disputing information on his or her report, the opportunity 

may be gone, and the chances of that report being used again are small. The only way to 

provide meaningful protections to consumers is to take greater steps to ensure the accuracy of the 

reports from the outset. 

There are numerous ways in which the FCRA can be improved to better fit with the 

realities in which specialty consumer reports are used. Consumers need, at the least, the 

following protections: 

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1. Restore the private right of action for the failure to provide adverse action notices, 

discussed in Section VII below. Without these notices, consumers have no idea 

that they have been denied employment or services based upon a consumer report 

and cannot take steps to correct any misinformation. 

2. Require all consumer reporting agencies to be licensed and registered. Before 

accuracy can even be addressed, it must be known how many consumer reporting 

agencies even exist. 

3. Require all consumer reporting agencies to undergo independent auditing oftheir 

data and records for accuracy. Current reviews of accuracy are insufficient 

because consumers lack the knowledge and incentive to dispute inaccurate 

information on a consumer report. 

4. Provide the CFPB with supervisory authority over all larger participant consumer 

reporting agencies. 

5. The CFPB should draft regulations detailing matching criteria and ensuring that 

information on consumer reports is up to date. 

IV. CONSUMERS SHOULD HAVE THE BASIC RIGHT TO ANY CREDIT SCORE 

THAT IS ABOUT THEM AND THE RIGHT TO A FREE ANNUAL SCORE 

One of the troubling aspects of our credit reporting system is the difficulty faced by 

consumers in obtaining a critical piece of information about themselves - their credit scores. 

Consumers do not have the right to a free credit score unless they are denied credit or charged a 

higher price for it. Furthermore, they have no right to obtain the score used by the vast majority 

oflenders - their FICO scores. They also do not have a right to see their scores that are used for 

non-credit purposes, such as insurance, tenant screening, or health care. 

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Consumers do have the right to obtain their credit reports. Though that is an important 

right, credit reports do not give consumers an easy-to-understand snapshot of their credit 

standing. 

Until the 2003 amendments added by the Fair and Accurate Credit Transaction Act, 

consumers had no right to access their credit scores, not even for a price. After the FACT Act 

amendments, consumers have the right to purchase a credit score, but the credit reporting 

agencies need only sell them an "educational score,,,60 even though no actual creditor might ever 

use that score. Consumers have no right to purchase their FICO scores, even though FICO 

scores represent over 90 percent of the market for scores sold for credit-related decisions, 

according to the CFPB.61 

The CFPB study released a study just this past September finding that, for about one out 

of five consumers, there are meaningful and significant differences between the educational 

score and FICO scores - an entire risk category of difference.62 Yet to this day, consumers 

cannot purchase their FICO score based on their Experian credit report. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of2010 improved the 

situation by giving consumers the right to receive their actual credit scores, the ones used by a 

lender, when they are denied credit or charged a higher price for it.63 However, consumers 

should not have to apply for credit first and then get turned down in order to learn their FICO 

scores. The time for consumers to obtain their credit scores is BEFORE they need to apply for 

'0 The FCRA penni!s credit reponing agencies to provide "a credit score that assists the consumer in understanding 

the credit scoring assessment ofrhe credit behavior ofthe consumer and predictions about the future credit behavior 

ofthe consumer." 15 U.S.C. § 168Ig(f)(7)(A). 

61 Consumer Financial Protection Bureau, The Impact of Differences Between Consumer- and Creditor-Purchased 

Credit Scores: Report to Congress, July 19,2011, at 6, available at www.consumerfinance.gov/wpcontentiuploads/20 1I/07IRepon _20 II 0719_ CreditScores.pdf 

62 Consumer Financial Protection Bureau, Analysis of Differences Between Consumer- and Creditor-Purchased 

Credit Scores, Sept. 2012, available at 

http://files.consumerfinance.govIfl201209_Analysis_ Differences_Cons umer _ Credit.pdf. 

63 Pub. L. No. 111-203,124 Stat. 1376, § IIOOF (2010), codified at 15 U.S.C. §§ 168Im(a) (2) and 168Im(h)(5)(E). 

37 
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credit, so that they can be infonned shoppers, know what kind of credit they are qualified for and 

to dispute any errors that are affecting their scores. Indeed, the anecdote provided in Section 

11.0 is a good example of this issue; if the consumer had been able to obtain her TransUnion 

FICO score, she would have known that a collection tradeline - which she had disputed months 

ago -- was still affecting her score, despite it being marked as disputed. 

Thus, we urge Congress to give consumers the right to obtain their credit scores - the 

ones used most frequently by lenders - without charge on an annual basis, just as they can obtain 

their credit reports. 

Moreover, providing a general right to the credit score would help to enforce the existing 

right to a score after credit has been denied or offered at a higher price. Consumers could seek 

out their credit scores directly from the credit reporting agencies to compare them with the score 

provided by the lender. 

Furthennore, we urge Congress to give consumers the right to obtain any score based on 

a consumer report that is about them. Currently, the FCRA only gives consumers the right to 

obtain scores used for granting credit.64 Yet there are a multitude of scores based on a credit or 

consumer report that grade consumers for other purposes - insurance underwriting, healthcare, 

and tenant screening. Consumers should have the right to obtain these scores for free on an 

annual basis, just as they are entitled to free annual reports from specialty consumer reporting 

agencies. 

This is a matter of basic fairness. These scores are about the consumer - they are about 

us. They are based on information about our behavior and our lives. They may be based on 

inaccurate infonnation that we have a right to correct. To have this important infonnation about 

64 The FCRA defines credit scores as "a numerical value or a categorization derived from a statistical tool or 

modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, 

including default..." 15 U.S.c. § 168Ig(t)(2)(A). 

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ourselves squirreled away in secret databases that we have no right to access seems inconsistent 

with the American way. 

V. CONGRESS SHOULD REQUIRE THAT PAID OFF MEDICAL DEBT BE 

DELETED FROM A CONSUMER'S CREDIT REPORT 

The National Consumer Law Center, on behalf of its low-income clients, is pleased to 

support the Medical Debt Responsibility Act, S. 2149. Millions of Americans struggle with 

overwhelming medical debts that they cannot afford to pay because they do not have health 

insurance. Even consumers with health insurance coverage can find that their credit histories are 

damaged due to medical bills, because of problems with unaffordable co-pays and deductibles, 

out-of-network charges, and disputes with insurance companies. 

The collective scope and impact on medical debt on the credit histories of American 

consumers is enormous and cannot be overstated. According to the Commonwealth Fund, 

nearly 73 million working age adults (or about 40%) experienced problems with medical bills in 

20 I 0.65 Of those consumers, 30 million were contacted by a collection agency for unpaid 

medical bills,66 and thus were likely to have their credit reports damaged by the negative 

existence of a collection account on their reports. 

Medical debt represents an enormous portion of debt that is collected by debt collectors. 

A number of studies indicate that the amount of medical debt that ends up in the hands of 

65 Sara R. Collins, el aI., The Commonwealth Fund, Help on the Horizon: How the Recession Has Left Millions of 

Workers Without Health Insurance. and How Health Reform Will Bring Refief-Findingsjrom The CommoffWealth 

Fund Biennial Health Insurance Survey of 2010, March 2011, at 6, available at 

ht!p:llwww.commonwcalthfund.org/-imediaiFiles/Publicalions/Fund%20Report!201IlMarfl486 Collins help on I 

he horizon 2010 biennial survey r"pOIt FINAL v2.pdf. 

'" Id.al 10. 

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79 

collection agencies - and thus is likely to be reported to credit reporting agencies - is simply 

stunning: 

• A 2003 Federal Reserve study found that over halJof entries (52%) on credit 

reports for collection items are for medical debts. More than one-third (36%) of 

medical collections had balances due, when reported, of $1 00 or less and the 

majority (nearly 70%) were for less than $250.67 

• A later Ernst & Young study confirmed the Federal Reserve's study, finding that 

medical debts constituted more than halJ(52.2%) of the debt collected by debt 

collection agencies in 20 I 0 - more than twice as much as credit card and other 

financial debt.68 

• A study by Federal Reserve researchers found that that "health-care providers 

represented the most important group of customers [for debt collectors], 

accounting for more than a quarter of all revenues.,,69 

The vast scope of medical debt on credit reports is troubling, because unlike collections 

for credit accounts, medical bills result from services that are frequently involuntary, unplanned, 

and unpredictable, and for which prices quotes are rarely provided. The unique nature of 

medical debt raise questions on whether it is appropriate data to even include on a credit report. 

Most critically, consumers may find that their medical debt has been characterized as a 

debt in collection for credit reporting purposes even though the medical debt has been fully paid 

or settled. Even after the bill has a balance of zero, its mere presence as a collection matter 

67 Robert Avery, Paul Calem, Glenn Canner, & Raphael Bostic, An Overview of Consumer Data and Credit 

Reporting, Fed. Reserve Bulletin, at 69 (Feb. 2003). 

68 Ernst & Young, The Impact of Third-Party Debt Collection on the National and Stale Economies, Feb. 2012, at 8, 

availab Ie at www.acainternational.orgifiles.aspx?p=/images/21594/20 II acaeconomici mpactreport.pdf. 

69 Robert M. Hunt, Fed. Reserve Bank of Philadelphia, Collecting Consumer Debt in America, Bus. Rev., at 13 (2d 

Quarter 2007), available at www.philadelphiafed.orglfileslbr/2007/q2Ihunt_collecting-consumer-debt.pdf. 

40 
80 

remains on the consumer's credit records for seven years and will likely adversely impact a 

consumer's credit score. According to a spokesperson for FICO, collection items that are "paid 

or unpaid, large or small amounts all can affect a credit score" and "a person with a FICO score 

of 680 will see their score drop between 45 and 65 points. Someone with a FICO score of780 

will see their score drop between 105-125 points, ... ,,7o 

Furthermore, the presence of a medical collection item may result from no fault of the 

consumer, but from the complex and convoluted nature of our health care payment system. The 

collection item may have resulted from a dispute between the insurance company and provider. 

It may result from a provider's failure to properly bill the insurer, or the insurer's failure to 

properly reimburse the provider. After all, the American Medical Association itself estimated 

that one in five claims is processed inaccurately.71 Even when errors are eventually fixed, they 

result in long delays in payments to providers. During these delays, bills can often be sent to a 

collection agency, completely out of the consumer's control. 

The complexities of health insurance and medical billing also contribute to this problem. 

Many people are simply confused about who has responsibility for paying the bill. They are 

often uncertain about the explanation of benefits form, unclear of the descriptions of the 

procedures they have received, and unsure of whether they should pay the healthcare provider or 

insurer; one study found that nearly 40 percent of Americans do not understand their medical 

bills.72 Some of these consumers will let a medical bill go to a collection agency because of this 

confusion, or they believe that their insurer will pay it. According to media reports, an 

70 Carla K. Johnson, Late Medical Bills Can Lower Credit Scores For Consumers: How to Check and Fix Your 

Report, Associated Press, Mar 4, 2012. 

7\ American Medical Association, 2010 National Health Insurer Report Card, available at www.arnaassn .orglamalpu b/news/news/20 1 O-report-card.page. 

72 Press Release, Intuit Financial Healthcare Check-Up Shows Americans Confused about Medical Slalements, Apr. 

27,2010, at 

http://about.intuit.com/about_ intuit/press _ room/press _ release/articles/20 1 01 A mericansConfusedAboutMedical State 

ments.htm!. 

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81 

estimated 9.2 million Americans had a medical bill sent to a collection agency because of a 

billing mistake. 73 

Indeed, many of the stories from consumers about how their credit reports and credit 

scores were damaged by paid medical debt involve such instances of confusion, mistakes, or 

problems with insurers. For example: 

• The New York Times documented the case of Ray White from Lewisville, TX. Mr. 

White received a $200 ambulance bill, which his insurer did not pay despite assurances 

that it would do so. Finally, after many months and many phone calls, Mr. White paid 

off the $200 bill, but by then the damage was done. Unbeknownst to Mr. White, the debt 

had been reported to the credit reporting agencies. Mr. White had no knowledge of this 

black mark lurking on his credit report until he and his wife went to refinance the 

$240,000 mortgage on their home, nearly six years later. It was only then that he learned 

this paid $200 bill-the result of his insurance company dropping the ball on paymenthad shaved about 100 points from his credit score. With no other debts, a healthy income 

and otherwise pristine credit, Mr. White and his wife had to pay an extra $4,000 to secure 

a lower interest rate.74 

(This story is also an example of "parking," a practice in which debt collectors merely 

report a debt to a credit reporting agency without doing more, then simply wait until the 

consumer applies for a mortgage or other credit. At that point, the consumer will 

discover the collection item and then pay the debt in an attempt - in vain - to improve his 

or her credit score. "Parking" creates even more problems with medical debt on credit 

73 rara Siegel Bernard, Discrepancies on Medical Bills Can Leave a Credit Slain, New York Times, May 4, 2012. 

74 ld. 

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82 

reports, because consumers do not know about the problem until they are in the midst of 

a time-sensitive process of applying for a loan). 

• The Associated Press reported the case of Iraq veteran Steve Barnes and his wife, Tara, 

who were refinancing their home through a Veteran's Administration program when they 

found out that nearly $600 in unpaid medical bills had brought down their credit scores. 

The bills were for treatment related to the wife's cancer, which had been turned over to a 

collection agency while Mr. Barnes was still talking with his insurance company about 

what would be covered. The $600 in unpaid bills - caused by insurance snafus - cost 

them an extra $1,700 in fees on their refinanced mortgage. Plus, even though Mr. Barnes 

and his wife paid the bill, the black mark will remain on their credit reports for seven 

years.75 

• A New York City consumer who lost consciousness on a street in Atlantic City, NJ, 

received a bill for $800 because a passer-by called an ambulance. The consumer had 

revived before the ambulance showed up, and had declined to go to the hospital. It is 

unclear whether the $800 was a charge for first aid at the scene (having his blood 

pressure and vital signs checked) or because the hospital mistakenly believed that he was 

brought to the emergency room. In either case, the consumer disputed the $800 bill, but 

it remains on his credit report as a collection item. The consumer has been declined 

credit at least once as a result of this reporting, despite the fact that he never summoned 

the ambulance or went to the hospital.76 

"Carla Johnson, Medical Bills Can Cause lingering Credit Pain, Associated Press, Mar. 4, 2012. This article 

documents several more cases in which medical collection items harmed the credit reports of consumers and cost 

them thousands in fees when refinancing. 

76 Email from Brian Bromberg, Bromberg Law Offices, May 30, 2012. 

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• A West Virginia consumer applied for Medicaid, but the state agency made a series of 

mistakes resulting in a long delay in enrolling the consumer. Finally, the state agency 

fixed the mistakes, and enrolled the consumer retroactive to February 20 II. Meanwhile, 

four of the consumer's medical bilts had been sent to debt collection agencies, and these 

collection agencies reported the debts to the credit reporting agencies. Medicaid paid the 

consumer's bills, but the collection items will remain on the credit report and harm the 

consumer's credit score for seven years despite the fact that the failure to pay the bills 

was the fault of the state Medicaid agency, not the consumer.77 

• An Arkansas consumer was hurt in an automobile accident and taken to the hospital. The 

consumer filed a lawsuit against the other driver. While the consumer was waiting for a 

settlement with the other driver's auto insurer, one ofthe medical providers turned over a 

medical bill for $118 to a debt collection agency, which reported the debt to a credit 

reporting agency. Meanwhile, the $118 bill was paid in full to the medical provideractually it was paid the day before the debt collector made the report to the credit 

reporting agencies. The debt has shown up the consumer's credit report as a paid 

collection account, dropped her credit score from 800 to 700, and prevented her from 

obtaining credit at the best interest rates. The debt collector refuses to delete the black 

mark even though the consumer paid the bill before it was reported.78 

• A Florida consumer went to an emergency room to receive medical treatment. He gave 

the hospital his proper identification showing his correct address. The hospital data entry 

personnel made a mistake by inputting a wrong address into the hospital's system. The 

consumer never received a bill, and thus never paid it. In the meantime, the debt was sent 

77 Email from Deborah Weston, Staff Attorney, Mountain State Justice, Inc., June 26, 2012. 

78 Email from Kathy Cruz, Attorney, June 27, 2012. 

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84 

to a collection agency. Later, the consumer applied for credit, and it was only then that he 

learned ofthe outstanding collection item from the hospital on his credit reports. The 

consumer called the hospital, and confirmed they had the wrong address. Despite the fact 

that the hospital's personnel caused the situation with the data entry error, the collection 

item remained on the consumer's credit report.79 

All of these consumers, and millions more like them, have had their credit reports and 

credit scores severely damaged through no fault of their own by medical collection items. 

Furthermore, they currently have no recourse under the Fair Credit Reporting Act to fix this 

damage. The Ninth Circuit has held that a consumer has no remedy under the FCRA to remove 

a medical collection item from her credit report, because technically the patient owes the medical 

bill even though the default was caused by an insurance dispute.so 

The Medical Debt Responsibility Act, S. 2149, will help ameliorate this huge problem by 

amending the FCRA to exclude fully paid and settled medical debt from a consumer's credit 

report. It is a sensible and straightforward approach that will prevent the credit records of 

millions of consumers from being unfairly tarnished. Rather, credit records will show that these 

hard-working consumers, who successfully paid off or settled their medical bills, are more 

creditworthy than the current system would otherwise lead a prospective lender to believe. 

VI. CONGRESS SHOULD BAN THE USE OF CREDIT HISTORIES IN 

EMPLOYMENT WITH LIMITED EXCEPTIONS 

The use of credit reports in employment is a growing practice that is harmful and unfair 

to American workers. Despite many good reasons to avoid engaging in this practice, more than 

79 Email from Leo Bueno, Attorney, May 14,2010. 

'0 Carvalho v. Equifax Info SelV., LLC, 629 F.3d 876 (9th Cir. 2010). 

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85 

half of employers (60%) do so today,sl a dramatic increase from only 19% in 1996.82 We are 

concerned about this trend for the following reasons: 

• Credit checks create a fundamental "Catch-22" for job applicants. A simple reason 

to oppose the use of credit history for job applications is the sheer, profound absurdity of 

the practice. Using credit history creates a grotesque conundrum. Simply put, a worker 

who loses her job is likely fall behind on paying her bills due to lack of income. With the 

increasing use of credit reports, this worker now finds herself shut out of the job market 

because she's behind on her bills. This leads to financial spiraling effect: the worse the 

impact of unemployment on their debts, the harder it is to get a job to pay them off. 

• Use of credit checks in hiring could prevent economic recovery for millions of 

Americans. The use of credit history for job applicants is especially absurd in the midst 

of still-too-high unemployment. With the massive job losses of the past 5 years, resulting 

in unemployment rates of sometimes nearly 10%, this is exactly the wrong time to be 

permitting this unfair practice. For the many workers who have suffered damage from 

their credit reports because of unemployment or underemployment, the use of credit 

histories presents yet another barrier for their economic recovery - representing the 

proverbial practice of "kicking someone when they are down" for millions of job seekers. 

• The use of credit in hiring discriminates against African American and Latino job 

applicants. There is no question that African American and Latino applicants fare worse 

than white applicants when credit histories are considered for job applications. For .one 

thing, these groups are already disproportionately affected by predatory credit practices, 

81 Society for Human Resource Management, Background Checking: Conducting Credit Background Checks, Jan. 

22,2010, at http://www.shrm.orglResearch/SurveyFindings/ArticleslPageslBackgroundChecking.aspx. 

82 Matt Fellowes, Credit Scores, Reports. and Getting Ahead in America, Brookings Institution, May 2006 at n.3 

(citing 1996 data from the Society for Human Resource Management). 

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86 

such as the marketing of subprime mortgages and overpriced auto loans targeted at these 

populations. As a result, these groups have suffered higher foreclosure rates. Study after 

study has documented how, as a group, African Americans and Latinos have lower credit 

scores than whites. If credit scores are supposed to be an accurate translation of a 

consumer's credit report and creditworthiness, that means these groups will fare worse 

when credit history is considered in employment. 

• Credit history does not predict job performance. Credit reports were designed to 

predict the likelihood that a consumer will make payments on a loan, not whether he 

would steal or behave irresponsibly in the workplace. There is no evidence showing that 

people with weak credit are more likely to be bad employees or to steal from their bosses. 

• As discussed in Section lB., credit reports suffer from unacceptable rates of 

inaccuracy, especially for a purpose as important as use in employment. 

Fundamentally, the issue at stake is whether workers are fairly judged based on their 

ability to perform ajob or whether they're discriminated against because of their credit history. 

VII. CONGRESS MUST ACT TO CORRECT AN INJUSTICE RESULTING FROM A 

SCRIVENER'S ERROR IN THE FCRA. 

The F ACTA amendments of 2003 inadvertently deprived consumers of a 30 year-old preexisting right they had to enforce the FCRA requirement that users of credit reports disclose to 

consumers when an "adverse action" is taken, i.e., credit or insurance is denied or provided on 

less favorable terms, on the basis of an unfavorable credit report. 15 U .S.C. § 1681 m. Congress 

can easily fix this scrivener's error and should do so, as it was never part of the legislative 

bargain struck by FACTA. 

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87 

The adverse action disclosure is fundamental to ensuring the effectiveness of the FCRA's 

accuracy protections. The ability of consumers to seek redress for an adverse action disclosure 

violation has been key to its enforcement for over 30 years. FACTA itself clearly indicates that 

Congress had absolutely no intention of abolishing the consumer's right to seek redress of this 

important right. Current provisions of the FCRA, which exempt another subsection of section 

1681 m from private enforcement, make no sense and indicate that Congress did not intend to 

abolish consumer remedies for all of section 1681 m. 

The legislative history can be no clearer that Congress did not intend to abolish private 

enforcement of the FCRA' s adverse action disclosure requirements when it enacted F ACTA in 

2003. The uncodified version of F ACTA stated: 

Rule of Construction.--Nothing in this section, the amendments made by this section, or 

any other provision of this Act shall be construed to affect any liability under section 616 

or 617 of the Fair Credit Reporting Act (15 U.S.C. 1681n, 16810) that existed on the day 

before the date of enactment of this Act. 

This provision expressly preserved all private enforcement rights that existed under the 

FCRA as of the date of the new law. While not codified in the United States Code, this 

provision is still effective law as part of the Statutes at Large. Pub. L. 108-159, 117 Stat. 1960, § 

312(f) (2003). 

After FACTA's enactment, the credit industry did not claim to have eliminated the 

consumer remedy for the adverse action disclosure, with the American Banker only noting that 

F ACTA "perhaps inadvertently eliminates the existing right of consumers and state officials to 

sue for any violations of the adverse-action provisions of the FCRA."S} Had Congress intended 

FACTA to carve private damages suits wholesale out of the user liability section of the FCRA, 

83 M. Heller, Regulators Scurry to Close FACT Act Loophole, American Banker (Dec. 12,2003), at 3. 

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88 

the banking and credit industry would have trumpeted that change in the days following the 

President's signature. 

Even four years after FACTA's passage, industry representatives declined to claim that 

FACTA had intentionally abolished this private enforcement remedy. In a 2007 hearing before 

the full committee, Chairman Barney Frank engaged in the following colloquy with Stuart Pratt, 

President and CEO of the Consumer Data Industry Association, and Anne Fortney of Hudson 

Cook, another industry represe~tative. 84 

The CHAIRMAN. We will look into that. Let me just ask, the other question is to Ms. 

Fortney and Mr. Pratt, because both Ms. Wu and Mr. Bennett talked about the 

interpretation that we had sub silentio repeal of the private right of action. Do you agree 

that was something that was not done intentionally? And what would your view be to our 

restoring it? Mr. Pratt? 

Mr. PRA IT. We didn't work on that section of the FACT Act. It relates to the date of 

furnishers and the date ofThe CHAIRMAN. Okay. Ms. Fortney? 

Ms. FORTNEY. I think the statute is clear, and that is why the vast majorityThe CHAIRMAN. That wasn't the question. 

Ms. FORTNEY. Okay. I know. 

The CHAIRMAN. Then why don't you answer it? 

Ms. FORTNEY. The answer is, I don't know that whoever drafted thatThe CHAIRMAN. Fair point. But would you like to leave it the way it is? 

Ms. FORTNEY. I am sorry? 

8' Credit Reports: Consumers' Ability 10 Dispute and Change Inaccurate Information: Hearing Before the H Comm. 

on Fin. Serv., J 10 Congr. 50 (2007). 

49 
89 

The CHAIRMAN. Would you object if we restored the right of action that is in the bill? 

Ms. FORTNEY. I don't have an opinion on that, sir. 

The CHAIRMAN. Oh, okay. Then it is two to nothing, two abstentions. 

Unfortunately, the mistaken use of the phrase "this section" in Section 168Im(h)(8) has 

been interpreted by almost all of the courts to address the issue to apply to the pre-existing 

adverse action requirements.85 The scrivener's error that has deprived hundreds of consumers of 

their rights already, and has the potential to harm thousands more in the future, can be corrected 

with a very simple fix. The fix consists of the addition of three letters to two places in the 

FCRA: 

Proposal: Revise 15 U.S.C. § 168J m(h)(8) to read: 

(A) No civil actions.---Sections 1681n and 16810 shall not apply to any failure by any 

person to comply with this subsection. 

(8) Administrative enforcement ---- This subsection shall be enforced exclusively under 

section 1681s of this title by the Federal agencies and officials identified in that section 

This change reinstates a right that had existed for over 30 years from to F ACTA, and has 

no impact on any other provision 

Thank you for the opportunity to testify, and I look forward to your questions 

85 National Consumer Law Center, Fair Credit Reporting § 8.5.5 (7th ed. 2010 and Supp.) .. 

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90 

NATIONAL CO NSU MER LAW CENTE R'S RE PORT 

AUTOMATED INJUSTICE: 

HOW A MECHANIZED DISPUTE 

SYSTEM FRUSTRATES 

CONSUMERS SEEKING TO FIX 

ERRORS IN THEIR CREDIT 

REPORTS 

NATIONAL 

CONSUMER LAW 

CENTER· 

,\ 
91 

Automated Injustice: 

Howa Mechanized Dispute 

System Frustrates Consumers 

Seeking to Fix Errors in Tbeir 

Credit Reports 

Written by: 

ChiChi Wu 

Staff Anomey 

National Consumer Law Center 

Contributors: 

Leonard A. Bennen 

Evan Hendricks 

ACKNOWLEDGMENTS 

Portion:s this report are based on the Congressional tffiimony of LeoNrd It Bennett, I 

conswner anomey specializing in credit reporting cases, to the House Finam:ial SelVices 

Commin~ during • June 2007 ~aring. It also 1"0110\\; the won: of EI'Bn Hendricks, 

editor of Pril'acy T lIlIeS, and the author of CmJil Scom and C"dit Reporu: Huw lilt 

System Really Worts, Whot You Can Do, which contains additional inf\lrmation about 

this topic and many other important issues ronceming cmlit rtpOIting. 

Thanks to lauren Saunders and Willard Ogburn of NCLC and Richard Rubin for 

valuable guidance, feedback, and editorial assistance in the pltparation of this report, 

S\'ctlana Ladan fOfIlWled the report and iu; gnphies. Tamar Malloy provided editorial 

~""". 

Thanks to the following consumer anomeys who provided valuable information and/or 

represtnled the tollSUlllttS in this report: Justin Baxter, Blair Orazie, Swoe FahlgrtD, 

Joanne Faulkner, Richard Feferman, James Francis., ChriSlOpher Gmn, ianlyngklip, 

Robert Sola, David SZWllk, and Lisa Wright 

Copies of this report are ll .. ilable by doII"k/ading from NCLC's web site at 

www.COI\.umc:rlaw.org. 
92 

TABLE OF CONTENTS 

L I~TROI)UCTION ______________ . l 

II. BACKGROUND: CREDIT REPORTS ANDTHE FAIR CREDIT REPORTING ACT ~ 

A. WHAT's A ClEDrT REJOIT1 ._. _______ . ______ ._. ____ .. ___ . __ 4 

B, DISPIm RIGHn UNDER. THE FCRA ........•. _ ................... _ .. _ ..... _ ..... _. __ ._ .............. _ .. _ .. _. 4 

C. CREorr REPORTS ARE F\IU. OF ERRORS .................... . ................................. 5 

D. FRIQUIm TYPEs DFClEDIT RuOJ.IDIG F'.lRDRS ...... __ ._._._ .• ____ ..• _._._._ ....... _ .•. 7 

ilL YOU CALL THIS AN LWESTIGATlON!._ ... __ ... __ . __ ._. __ . ______ 13 

A. How AN iNVESTIGA T1I»I SIIXIW WORk ...... __ ............ _ ....................... _._ ....................... 14 

B. How ITREAU. y WORKS; THE E-Osc.u SYm.\I ' ___ '_' ___ ' __ " ___ ' __ ""_""'_'" I( 

C. OF CLERKS AND A1J1'OMA Tl):<,'S._ •.•.•..•. _ ............ _._ ..•..•...•...... _ ..•.. __ .. _ ... _ .. _._._._ .. _._ .. 17 

D, FURN1SHf.RS' INADEQUAn INVeiTIOATIOS ................................... 21 

E. PAAAOIDIG: THE CWlrToR AS Goo ... __ ._._. __ ._._._._._._ ..... __ . __ ._ ....... _._ .. _._ 23 

F. ~ALL RElEVA.'fl" lII'FORMAllOS'" _. __ . ____ ..... _._ .... _ .... ___ ......... _._._ ..... _ ....... _._._ 25 

G. BURDL'IOFI'ROOF ... ............................. ....................... . ....... 2! 

IV. THE ECOXO)IICS OF CRF.Drr R£PORTh'iG . ___ . ____ 30 

A. WHO IS TKE ctlSTOME1 ....................................................... ......................................... _ JO 

B. FAIlAl'iOAWAV ....... , ... , ......... , .. , ... , .. , .. , .. , ... ,' ................ , ....... , ........... , .....•...•.... )1 

C. QuoTAS._ ...................... _ ......... _ .... _ .•.. _._. ___ ._. __ .. __ ._. __ ._._._._._ ....... _ ..... 31 

O. ClEDrr REPAIR. ORGA.\UAtIO!>S .. _. __ .. __ ._. ___ ... _._ .... _ .................... ,_ .. ___ ..... JJ 

V. TIPS & RESOURCES .. , .. , ................................... _ .. .................... _ ...................... _ .............. JS 

A. IIOW TO D1SPU'TE EnQIS IN A CR:Eorr Rf1ORT ........... _ .... _ ....... _._._ ................. _ .. __ JS 

B. itESoURct:S .. _ ............... _ .... _ ......... _ ....... _._ ......................................................... _ ....... 38 

C. REFOR.1.t Rf.coM.\!ENDATIQIo,"S ........... "'" ..... " ..... ,,.. .. ... "." ................ 40 
93 

EXECUTIVE SUMMARY 

Inaccuracies and errors plague the credit reporting systems. Estimates of serious 

errors range from 3% to 2S%. Even using a low~nd estimate, which is from thc credit 

reporting industry and included only a n8JTOW subset of problems, 6 mi[{jon Amtrkans 

face serious errors in their reporu that could result in II denial of credit. Typical errors 

include: 

• Credit bureaus mixing the files and identities of consumers. 

• Creditors causing mistakes by attributing a debt to the wrong ~onsumer or 

incorrectly re~onIing payment histories. 

• The fallout caused by identity then. 

Nearly 40 years ago, Congress enacted the Fair Credit Reporting Act 10 protect 

consumers from errors in credit reporting. One of tnc most important safeguards in the 

FCRA is thc requirement that credit bureaus conduct I reasonable investigation when a 

eonsumer disputes an item in his or her credit report. 

Despite its importance, the FCRA dispute process has become a travesty of 

justice. The major credit bureaus (Equifax, Experian, and TransUnion) conduct 

invC:$l;g~lion~ in an automated and perfunctOl'}' manner. llH: bureDUS: 

• Translate the detailed minen disputes submiUed by desperate consumers into 

two or three digit eodes. 

• Fail to send supporting documentation to creditors Rnd other infoonation 

providers (furnishers) as required by the FCRA. 

• Limit the role of their employees who handle disputes, Of of the foreign 

workers employed by their offshore vendors, to linle more than selecting these 

tWO or three digit codes. Workers do not examine documents, conuet consumers 
94 

by phone or email, or exercise any form of human discretion in resolving a 

dispute. 

The conduct of some furnishers is no bener. The FCRA also requires information 

fumishel'$ to participate in dispute resolution by themselves conducting an investigation. 

Like the credit bureaus, some rumishe~ also conduct meaningless, non-substantivc 

investigations. Their "invcstigativeH activily consists of nothing I11OR: comparing the 

notice of dispute with the recorded infonnDtion that is ilSClf the very subject of the 

dispute, 

The credit bureaus then Iccept whatever the furnishers decide in K'SOlving the 

disputc. 11le bureaus merely "parTOtH the furnishers' results, without conducting any 

independent J'<:view, with the ultimate effect that no one ever investigates the substance or 

merits of the consumer's complaint. 

Why does this happen? Credit bureaus have linle economic incentive 10 conduct 

proper disputes or improve their investigations. Consumers are not the paying customers 

for credit bureaus - furnishers are the ones who pay the bureaus' bills, Thus, consumer 

disputes represent an expense to the bureaus, which minimize the resources devoted to 

them by using automation thai produces formalistic results. In fact, one credit bureau has 

reduced the amount it pays to its vendor that handles disputes to a mere 50.57 per dispute 

lener. 

, 
95 

I. INTRODUCTION 

Credit reports play a critical role in the eOloomie llealth and well-being of 

eOllsumers and their families. A good credil history (and 11$ corollary, a good eredit 

score) enables OOI\$Umer1 to obtain c~it, and to lIave Illat credit be fairly priced. Credit 

reporu ~ also used by ocher imporWlt dedsionrnakers, suc:h as employers, landlords., 

utility proYiden, and insurers. 

ThUs. II consumer's c",di\ ",pon nn have a huge impact 011 • consumer's life. A 

good credit report allows a consumer to OWl! a home, buy a tlr, obtain insurance for bolh, 

get a fairly priced credit eard, and perhaps e,·en secure a job. Conversely, a bad credit 

report will deny consumers those wne Ihings, or foree them to pay thousands more for 

credit and insurance. It may evrn cost the consumer an employment opportunity or result 

in termination. II is no exagge ... tion 10 say thaI a credit history can make or break • 

con~urner' linanccs. 

KeMeth Saker had a s'oIlgie finllrll;ial otJtoctive from tie early part 01 2005 until Mardi 2006 - r.e 

wanled 10 ITIOI'e his faTJiy i'lto ~""" Mme. The f(fllly borne i'l LOUCbJn Coooty, V~ia was»O 

9"nped b his Yoife. daigltef, WId *!e's children. WI order 10 1I"IOYe, KIII'II\!r. needed ~rova b I 

~. m~'!\aYe beoo IooIIartf - 8 111, Kenne!h IIad ~ PIlI his bas 00 tirJa. 

~ b" Keooetl, his ad hi5lory had bea;me -mll .. r .... flat 0I1rIOIher 'KannefI BaM( 

_, KervIeII Bater WIo was not $0 ~ CleM paying IllS till. This or.. man IIad Ia:tecI up 

n.tm!fM deIinqueocies, d\arvHIIS. toIdons and jW>}TIetIl5 ~ IWn. n- bIact IT9'U 

s/"ioWed up 00 Kenr,e~ s mdt f&IDI, makilg ~ imposstIIe for I\in 10 IjItt a~. 

Kenneth milCfe eoormotIS efltm 10 fix these errors ~d get a m~iIgt. He senl multiple dispu~ to 

II\!I aedil bunlws. He JIirecf law,-ert 10 'll-Tile dlspule IeImfs to lI1e bureaus His letter! eJjllaiood /\ow 

toe otler man·, negative ao::cunts IIad goIieo mixed ink! ~ ~ report. how r.e needed Ihe proNem 

bed k19'14 a 1TIIIrIGage. and eveo1 how tie l:ureaus proce!bes IIad caused ~ problems II oller 

cases flat reSlJ'1ed i'l sut:CIWU IawsIats I!fIinsIIhe MM 

Kennefl appied unsua;esslJAy &'1""'1 monfllOgei lIlm\jage, tome*ries ~ lI";(Ife ~ once II 

11"tIOO'tI. EYerY tI!Ie he Pld. Keme\ll1Iad kI ellPai'llc a ~ broker J\I'1If r.ome ok own .. 

~ IXOI.tIts fIad gotten mixed mo ~ ml~!ay. EI'e'"/Ime he 1\ad kI explain C"iIs. KoonetT 

&1\81 becaTIe embarrassed n .. /'ious. The CQfI$l<I\t rejedIon! I"kImiaIed Kenrlelh, ilIld ~e 5000"1 

becam& depressed. 

ell Mardl 24, 2006. Kemeth Sater COJIVl'oII!eO sudo:Io. n lis IiIsI dIsfI'JIt _ to ExpeIi~, he ""Ole 

01 hoW lis bailie kI fiJ; Ius ad repon tIao -destroyed ~.lsCla.' 10 his UtidI rIDIII. ~ referred kI 

lli$II1lfaI'Iri!I tr.t oedil. tl.rears. 10 tls ease. ftaa;wa!!! credj repol1iJ; Ii!larat)' COSI. a man IllS ife. 

'Comptallll. ""'lCofll ........ F.xpcrioo taro. ~ O'.A<.l:07.......0G470 ( ....... to. 10(1). 

; 
96 

II. BACKGROUND: CRED IT REPORTS AN D THE FA IR CRED IT 

REPORTING ACT 

A. WHAT'S A CREDIT REPORT? 

A cn:dit n:port (also called a credit history) is a record of how a consumer has 

borrowed and n:paid deblS. Almost every adult American has a credit history with the 

three major national credit burt:au5: Expcrian, Equifax, and TransUnion. 

A credit report contains the history and Slatus of many of a consumer's credit 

accounts. [t has basic personal information about a consumer··Social Security number, 

birth date, current and former addresses, and employers. The report also iiIi.'! basic 

information IIboutli consumer's credit accounts, including the date the consomer opened 

the aCl;ounl, the type of aCl;ount (sueh as real estate, revolving (credit card), or 

installment); whclhl'r the account is eurrentl), open or has been closed; the monthly 

payment; the lTIlL1limum credit limit; the Iltest activit)' on the account; the current 

balance; and any amounts past due. 

Each account includes a code that explains whether the account is current, thirty 

days past due. sixty days past due, or ninet), days past due, or if the account involves a 

repossession, charge ofT, or other collection activity. The report .lso includes the 

addresscs and telephone numbers of the creditors. 

The report will list any accounts that have been turned over to a collection 

agenc),. [n addition. a credit report will include certain public records informAtion, such 

as court judKments (and sometimes mere lawsuits), garnishments. tax liens. foreclosures, 

and bankruptcies. 

B. DISPUTE RIG lrrs UNDER TIiE FeRA 

In 1910. Congress created the hir Cr.=dit Reporting Act (rCRA) to protect 

consumers when dealing with credit bureaus. Thc FCRA limits who C:l/l see a 

consumer's cr.=dit r.=port. mandates how long negative infonnalion can remain on a 

report, and contains a number of identity then protections. The credit bureaus, which are 

called "consumer reporting agencies" under the ,",eRA, are required to tOllow 

~reaSOflable procedures" to ensure too "maximum possible accuracy" of credit reportS. 

One of the most critical FCRA protections is the consumer's right to dispute 

errors ill his or her credit report. Unde r the FCRA, both the credit bureaus Mnd the 

inrorm~lioL1 provider have responsibilities to investigate disputes and correct inaccurate 

or incompletc infonnatiun. The provider of information is onen reft:rred to as the 

;;fumisher." Furnishers include banks. credit card companies, 3utO lendeT$, collection 

.3gcncies or other businesses. 

If the CONumer sends.3 dispute to II credit bureau, the bureau must investigate the 

items in question, usually within 30 days. The bureau can n:jcet the dispute if it 
97 

determines the dispute to be frivolous or irrelevant. The credit bureau must conduct a 

"reasonable" investigation (sometimes called a " reinvestigation," which is the! term used 

in the FCRA) that includes reviewing and considering all relevant information submitted 

by the consumer. Within five days ofreeeiving the dispute, the bureau must also notify 

the furnisher of the dispute, and the notice must include "all relevant informationn 

provided by the consumer about the dispute. 

After the furnisher receives notice of B dispute from the credit bureau, the 

furnisher has its own duties under the FCRA. The furnisher must conduct an 

investigation, review all relevl!nt information provided by the Cll:dit bureau, and Il:port 

the results to the bureau. If the furnisher finds the disputed information to be inaccunte, 

it must notify all thll:e of the n~tional bureaus so that they can correct this information in 

the consumer's credit Il:port file. 

When the investigation is complete, the cll:dit bureau must give the consumer the 

written results and a fll:e copy of the credit report if the dispute results in a change. If 

information is corrected or deleted, the credit bureau cannot put back the disputed 

information in the consumer's credit report unless the fumisher verifies that it is accurate 

and complete. The credit bureau Illsa must send the consumer a \\Titten notice that 

includes the name, address, and phone number of the furnisher. 

For lips on sending a cll:dit reponing dispute, sec Part V.A of this Rcpon. 

C. CREDIT REPORTS ARE FULL Of ERRO RS 

Despite the importance of accurate credit reports and the purpose of the FCRA to 

promote accuracy, errors are unfortunately quite common in the credit reponing system. 

Study after study has documented significant error ntes in en:dit Il:pons. An on-line 

survey by Zogby Interactive found that 37% of COnsumers who ordercd their credit report 

discovered an error. and SO-;' of those were not easily able to correct the elTor? A study 

by the Consumer Federation of America and National Credit Reporting Association 

documented numo:rous serious errors in credit n:ports.l One indication of the magnitude 

of such errors is the fact that 29% of credit liles had a difference of SO points or mOil: 

bc:tw~cn the highest and lowest scores from the three national credit bureaus.4 

Studies from U.S PIRG and Consumers Union have found errors in 25% of credit 

reports serious enough to cause a denial of credil.J Even the trade association for the 

credit bUll:aus - tho Consumer Data Industry Association (COlA) • has admined that, out 

, lop,. lDI"nttlVe. MM, .. ........",.. F..". /deft1ilJ 11ttJl. Zosb)', "'''''''"-' C_r. "',,"12007, .. l. , Coouumc. fOllenrioa of Aonorin. _ NaIivnal Cred~ hpon;. ",..,...n.,.,. CnJ., JCon- .. """"""_II,,pt_iDta 

IN C_ ... Do<:embn 17. 2OD2. <MJiJabh.., www.""",,,",crf~d.OfIIpdr"'11l7020·A..JICRA_C .. <Ii,_s.:.,.e_Rt:porI.Final.pdI'rICfA·NCRA lIIody1 

'Id .. 20. 

'NO/'l A .. ·n "fSIOI. PtRO .. Mislaltl D<>I/"PP'~' A Loot", F,nw, In e""' ..... , emii, Rrpom ... 11 (1001); 

Coo.Jumc .. lJ~ion. 11''''''' ..... n.,.~ .. b.> .. Ak~ n.. R41J~()f"R • .ww""61 CndI, /Upcrlifrwtr,ho 1'/tIu 

N,yo; CIWdtl S-(",,,,. 29. 1991). 

, 
98 

of 57A million consumer.! who orde~d their own credit reports., 12.5 fllillion (or 2 1.8,.,.) 

filed a dispute.' 

The FTC is c=lIy undertaking a comprehensive study of errors in credit 

reporu using 1\ eonsultant to help study participants order and review their eredit reports. 

In the pilot phase of the study, 53% (16 out of 30) of consumers found an error in their 

credit repons. Sixteen percent of th~ ~o sumcT1 found errors that either would have 

likely had a material effeet on theiT credit score (3 out of 30), or the effect was uncertain 

(2 oul of 30).' The study may hftve underenunle<! the error nlte bec.use it was skewed 

toward ~sumers with high credit ~s, who the study indicated "not surprisingly·' 

were less likely to have major significant errors in their credit reports.' 

The credit reporting industry tms anempted to rebut charges of systemic 

inaecul1lcics in credit reportS with the ir Ol'l'fl studies, claiming that fewcr than 3% of 

credit repons are inaccurate.' However, the industry reached this statistic: by counting a5 

"inaccurate" only those credit reports in which the conswners fulfilled .11 four of the 

following criteria: (I) were denied credit; (2) requested a copy of the ir credit rcpon; 0) 

filed a dispute; lind (4) the dispute resulted in a reversal of the originlll decision to deny 

credit. This study did not include inaccuracies in the credit reports of consumers who did 

not Ilpply for or were denicd credit, had not filed a dispute, or who did out seek a reversal 

of the original denial of credit. This could be a significant number of consumers for 

many reasons, such RS the faci that some lendet$ do not deny credit but instead simply 

charge man: if the consumer has an impaired !'redit report., and the barriers faced by 

many consumers who do nOI file disputes even when they know of blatant errors. 

Indeed, many consumers with errors in their repolU do not send disputes becau5\:-

of banien such os lack of time or resources, educatiOllul barriers, and lIot knowing their 

rights. In the PTC study discussed above, only one of the consumet$ who definitc!y had 

a major elTQr in his/her credit report was successfully sble to dispute it, despite the 

aSiistanee of the FTC's consultanl. AnnUter consumer disputed on-Hne and the ucdit 

bureau did not respond. The third consumer explained that she did not file a dispute 

be<.;ause "shc " 'lIS P 3;ngle mother with twins and could not muster the time 10 file II 

dispute." TIlc ConSullant mused that "[w]e exp«too that partieipants would be mot;vlltcu 

to have any elTors in their credit repons corrected promptly. This did not generally 

O('cur."IO 

, F«Io<sl T..!o O>mm_ -' FedcnI Rn • ...., BoanI., hpon ... c ___ ....... 1It< Fw O«J/I h-""" .-let ~ 

hvc. ... (A,.,. lQ(6)," 11, trWIilDbJ~'" 

""ffl Dc rgyIQ!OIcpmmcnl.tllndj .... us/l'Q.l4I91f.rwdlI"""'""fflKSwr!I!!MHf'l ... wr. [h«cu..n.."FTCII'ItB FCRA 

DiopuI< PI"<1<XSlI R<pOIt~1 

' F • .Jrflll T~ C<lmmi .. 1on, R.poN'" C""IIr1U U'Wk,SH,iIHI Jl99jl/lo F<>IrMd.-l""""" v.o/j, T",,,,,,,,,;""'.-Ic, 

Pj1()(JJ (Do ... mbc. 2006), "ppondix .. 15. "",,{whl. ,,' 

bllD:t!1!\:WW (k; .'lvl",pyrWl:'!lCTACl"tfA~ ... ", 2!!06 C;"hibll.! 1·I2,pjlr [bo",i"..t\,;, ,·PtC Pile! ~t""y"" 

.0."""",,-"]. 

'ttl .. U-\6 . • "edonI T~ Com",I ... hp<Nt ... (.~ u.wJ..-$«,_ JII _ JI~ of"" F<'ir -' ... ...,...- ~, 

T.-A<1 if lOOJ {Ike. NI»)," U, _,/aMI at btW''Nfw ]\< IDl'htrgrWfKtlIIlI:1 IWIlt","" ..... r ~he"u..&."fTC ~ "ACTA RC"poot- , (dtll. on Anh.ot A""",-"""", _issio<>od b!' tho ","if. ~ .. ~ 

fTC Pilot $,1><11 on A"""""Y. AP!>"l'dix" 1 ,. 

, 
99 

Even using the industry's low estimate of a 3% serious error rate, there are over 

200 million consumers in this country with a credit repon on re<:ord at the credit 

bureaus.1\ Thus, 3% 0[200 million files would mean that inaccurate credit reports are 

affecting the economic well~being of 6 millfon Aml'ricilnS. One of the primary purposes 

of the FCRA is to give these consumers the ri&hl to have the errors investigated and 

fixed. 

D. FREQUENT TYPES m' CREDIT REPORTING ERRORS 

There are many types of ermn in credit reports; we focus on a few of the mOSt 

egregious. 

Mixed or mismcrged files occur when credit information relating 10 one consumer is 

placed in the file of another, thus creating a false description of both consumers' credit 

histories. Mismerging occurs most oRen when two or more consumers have similar 

names, Social Security Numbers (SSNs), or other identifiers (for example, when 

infonnation relating to John J. Jones is put in John G. Jones' file). 

Mixed Of mismerged files are a frequent problem. One study found that 44% of 

credit reponing complaints to the FTC involved mismerged files. Of these complaints, 

640/. had total strangers' files mixed in, while 360/. involved information belonging to 

relatives or former spouses.

t1 Another study found that one in ten files contoillC:d at least 

one, and as many as three, additional credit reports. [t was very common for the 

additional reports to contain a mixture of credit information, some of which belonged to 

the subject of the report requested and some which did nol. 1) 

Mixed files also result in debt colle<:tion tllulissmenl and lawsuits against innocent 

consumers. One ofthc first steps a collection 9110mey will take when he or she rc:ceives 

an assigned file is to request a skip trace from one of Lhe national credit burc:aus. These 

reportS are often the broadest matched files provided by the bureaus. It is common for 

collection attomeys to receive an incolTtc!l), m3tched repon and to suc lhe wrong 

consumer. I' 

Mixed riles ()(;Cur largel)' because the credit bureaus' computers do not usc. 

sufficiently rigorous criteria to match consumer dat3 precisely, even when such unique 

identifiers as SSNs are present. For example. the credit bureaus will include information 

" I'"t'CI1'RIl rCM Qi'PI'le Process Report .. 3. "U S.l'ub li ~l",e~ R...,on:h G"'''p,~, BIIuuIt.· Publ."£,,o"O' 1/ '" ,100 FTC, !)tip"'" t993. t~ thi,,..,,ple. 

U.S. I'IRO .... Iyu~ 1. 0 oO!llpl.aioU lathe FTC. 

n C"A.NCRJI:'"TIIdy" 10 • 

.. CrtJ,., R._: c-r-n-Ability 10 [)isp>.u twI ~ I~ ~I_' fHtJriIrr Nf<;rr ,100 Ho_ 

C-S,'""" "~iD1MnoiceI, 1100. Conp {l(I01)(SIlIICmeM or r...o-d A. Ilecmtll)." 10, ."",1abIe at 1l!!p;JJw",,: "_.rlIPP¥[isibCJringlf"'nmlwg II,:mImbsqnl:U06 I907,pdf. [ ..... U,at1e1 ~ IIftInoII 

TeJI~ 

7 
100 

in a consumer's file even when the SSNs do nOI malch, but other infonnation appears 10 

match, IS Thus, they have been known to mismerge files when the consumers' names are 

similar and they share seven of nine digits in their SSN. 1f 

Angela V'l'illiams, a medical tra~st ~ Orlando. Florida. liar:! a bacI ctId"~ report Her Equilax report 

Induded at leasl25 ilCalUnts showing negative inlcrmaLOO. The problem _ ~al none oIlhese ao:ounlS 

beIoIlged Angel;! WJian$. Inslea:l, lhey btQIg 10 Aogeina WilIams, • \¥01'11111 \WIose ad! oonnecton wifI 

!ha medicailran$Crlplionist was a ~ ~ aod 11 Social Security number IhJI was almost the ~.!he 

last lWOdIgIlS .... ' rewrsed. 

Angela V'l'iIllMlS $pent a total 0113 yearslr)'lllg 10 get her cred~ rapor1l1xed. She ~I disptJte alief to 

dispute to EqulflllC. Oo:x:aslona:ly. Equifax VIOUId delate one 01 false IICCOlInl!l from An~la $ credit raport, 

ooly 10 have me lICOO\.Iot show up again later. Even afle! bellg notified 01 !hill problem !hrougll Angela', 

disputes, new iIIXO\InlS fromlhe o!hef \YOma'! would appe<l( 1-1 Angela's report. 

WOI$8 ye~ cred;1ors and ooot coIec1<n \<b) .... , pursiJng l'1e 011'1« wootan 'MIIAd «der rep:!l1S from 

Equ~ax and gel Angela', infQanawn, $oQ'\ they stiWted wrongful)' puf$l/\g Atlgela lor 1he 0Ihet waman's -

. 

These r~a led errors 0Yef a (3)'11M period tool! an enonnous toll on Angela Wil'InlS. Her credit SCOI' 

dropped into tile 500$ - well be!<)W the subprlme culolf. She was denied aedit repeaWy 8I1d evoo told to 

leave ooe store after an employee l'iewad her credit report. The Ofdeal caused Angola tremendous stress 

and frustration. Ftnally, slle sought the 8S$I!lanoe of a ~\Y)'er and f,Mld a tawtllil against Equifalt 

Equilao: tought thtll1lW$1III1ong and hafd, de$pI1e glaIlng evidenoe that ~ had rrUed up Angela Wilam's 

credit reportwirllhilloffle other wman. In NoI'lll1'ber 2007, ajurylound "liMrof~ WiIiamt. and 

en1ered a 'o'6R:1id agaO'lst Equifax 101 $219,000 .. actual d;vnages and $2.7 niIIon ... pJlitlve ctamages. 

Milled files could be prevented by requiring the cr.:dit bureaus 10 use Sirict 

matching criteria when placing infomlation into a consumer's credit report, TIle most 

critical refonn would be to require an CKaet match of Social Security numbers. The credit 

bureaus could reduce milled file problems by merely requiring an eight of nine SSN 

match and a nag if Ihat match isn't perfect. Ilowever, the credit bureaus have chosen to 

be ellcessivdy and unreasonably over·inclusive because:. as the FTC nOloo in a 2004 

report mandated by Ihe Fair and Aecurnte Credit Transactions Act of2oo3: "lenders may 

prefer 10 see all pOlentially derogatory infDmlation about a potential borro'M'r, even if it 

cannot all be matched to the borrower with certainty. This preference could give the 

credit bureaus an incentive to design algorithms that are tolerant of milled files."I. 

Indeed, an erroneously low credit score may even provide the furnishcr wilh more profit, 

"FTC lOO4 "ACTi\ Kq>.w1 .. 40. 

I. s.~ ...... i\podoooo y. !>iKov<. F;". $cn':L 417 F.$"PP.1d 1120 (D.S.M, 2006). 

" eo..-. Ilk""')', &'~If<u Mom Ptty S1.9 ",III"",? Mum. Up 0uIi1 Fills, Tho eon- Ad_, Vot. 14, 

No. I. NaDonot A __ of<:O.....- i\dvoc_(J .... M .... 2OOI)fll4. C_, .......... F1".. F.o.Jir R.".,.. 

A...""..,.,., myflC)' T",,", Dec. 6. 2007. 

" FTC lOO4 i\CT A RopM ... 47 

• 
101 

becallse the consumer will be charged a higher rate, a practice known as "risk-based 

pricing," 

The credit bureaus have been aware of mUted file errors for decades.

19 In the 

early to mid-l990s, the FTC reached consent orde rs with the credit bureaus requiring 

them to improve their procedures 10 prevent mixcd files. lG However. over a decade later, 

mixed files remain a significant problem. Despite the recognition of the continuing 

nature of mixed file issues in its 2004 report. the FTC has not required the credit bureaus 

to improve their matching criteria. 

Identity Thcfl 

Identity theft is often called Ihe "fastcst growing crime" in this country, with an 

estimated eight million consumers victimized by some form of identify theft every year.ll 

Identity theft itself presents a serious source of inaccumcies in Ihe credit reporting 

system. The identity thief. however, is not the only culprit, Credit bureaus and 

furnishers bear a share of tile blame as well. 

The credit bureaus' loose matching procedures. discussed above, contribute to 

identity theft problems. For example, if a thief has only adopted the victim's first name 

and Social Security number but not his or her last name or address, the algorithm used by 

credit bureaus to "merge" information often will incorporate the thiefs infonnation into 

the victim's file at the time the bureau compiles Ihe report. Once the fraudulent debt is 

reported, often after default and non-payment, and especially when collectors begin 

attempting skip trace searches, the accoulII euds up merged into the victim'S file even 

though many of the identifiers do nOI match. Accordingly, the "identity theft" is really 

ChAracterized as a hybrid of a mixed file problem. 

Susa! and D~Wd M liIdlfieJd rI. ~. MassktlllSetts. babied 11':1 aedit ooreaus lor six yean 10 erase numerQt.t51;!eb1S on llleir flIWfd \hat were il'lCUlI'ed by ill Dil'1id J. leighlon rI. T.:mpa The Utdlllelds I\'$'l 

obtained a copy of one tndil card agreement toey had aIItged1y signed. \'I.11ch upon re>Aew $IN)Wed 

l~hlOn's signature. aIoog -Mill David M. Llkhflekl's SodiII SIClm\y ntlmber neatly penned in. 

Even wilh Ihls tMdence. the credit bure~us did not fix thl er~. The litd1ftekls sent dlspu~ 10 alllhree 

bureaus teJlllI9 thl)l1l of the apparent fraud. to nc avail. They dispIJted more than a dozen lll!m$ en Ihl 

report. lnc!>Jding a Tampa child support order fl)l $19,060 en their Experian reperl 

The bureaus' nonresponsive was costly 10 1111 Utcnfitlds • ....no were rejected for a student loan lor \t1sif 

had Iheir aedil card interest IlItes r.UecllO lI\lflall1leva!s and w&re I'cfced to pay mole !of I 

,t For on u .... p .. ora m".od til<- case "'r;1\& fiom ,he 1.0 .. 1970s. _ Thomp_ v. Son AnIOftlo I\tu,t 101.",_ 

........ 612 f2d m{SIh Cit. 1982), l'Te~. TRW. I""., 'I( f . Sow. )61 (N D. 'fu . 1991), _nd<,I/1J,(tI.D. Te>.. J .... 14. 1993): In doo ),Io"". or EqulfuCro;I;r Informal"'" S>noi<n. 1""-0 6 1 fool. Re .. 1~ &4 (Ap. 1, t996) (ocn._onl<r). 

" S)IIO_. Feclual T....s. Commm;on _ IdnItiI)' 'Tholl S.......,. Rop;n, N.,..,. 2007, .. J. """'1:JbI. a/ 

hrqr.Hwww 1k . ...,toollOO7/ 11JSy""""'ICfillalIt<-porrIDl'he1U006.pdr 

• 
102 

home equity loan fi1lm Ihe bank where Susan Utchfield had dooe business her entire lila. "I jusl sat here ilIId 

cried.' she saki. 

Finally II took Ihe In~ntion olt/1e Booton GIoI.>e for TransUnion to agree to work with the UIct1IieIds. 

What happens 10 identity Iheft victims I'iIIo don't have lila assistance of a major metropolitan newspaper? 

Furnisher errQr.f 

Furnishers can often be the source of errors in credit reports. Furnisher 

inaccuracies primarily fall into two categories types. FIrst, the furnisher might report the 

consumer's account with an incorrect payment history, current payment status, or 

balance. The error might be due to a misapplied payment or data entry error. Sometimes 

these errors occur because the creditor has not complied with industry reporting 

standards, such as the Metro 2 format. 

George Saenz~ 

George Saenz's credit report became aooiher 'lictim ollhe broken American healt/1 care s~slem. In 2001, he 

tncmred a S512 medical bililhat he couldn'l pa~. II went Into coI:eClIO<1s and was sold 10 NCO. a llifge o1ebl 

collector. NCO reported tile debt to the credit bureaus. 

NCOcoolal;ted saenz. and in AlI{just 2003. accepted acompromise payment oIS333 In iuD sa~sfaction otthe 

outstanding debt. Justifiably thinking t/1at he had dea,ed t/1e debt. Saenz sent a dispute \0 TransUnion 

infooning Ihe bureau that he had paid off the NCO account. 

TransUnion tumed arou!ld and referred the di&pute 10 NCO. Despite the foci lIlat saenz had just paid off the 

debt, NCO'& automated systems respoodad to TransUnion thatlhe debt was unpaid. 

Saenz sent a secood dispute on September 30, 2003. This lima Me included documentary ovidencc that the 

d;s~te had been paid. including a letter from NCOoffeTing to se~ lIle deblfor $0333. a rece:pl for a $333 

money order payable to NCO, and a certilied ma~ receipt. 

TransUni(m sent a second automated dispute form to NCO. However. TraI1sUnion did nOI prol'ide NCO With 

copies of the documents senl by saenz. nOf did it ask NCO aboot the auth8l1ticity of the documents. tn fad, 

TransUnion didn'! even ask NCO whelllerNCO had received lIle S3J3 >'<Iymenl. 

NCO'S automated system again erroneously verified thai Sa9I1Z had not paid off lIle debL Frustrated. Saenz 

filed a lawsuit aga~,sl NCO and TransUnKm. tn January 2007. three and a ha~ years after Saenl pakl oN lIle 

debt find onlv.itter a fooeral lawsuit was f~ed did TranSUnion remove the debl from his crecftrepOrt. 

The second type of dispute involves furnishers who have attributed a credit 

Hccount to a consumer who docs not owc the debt, often called an "ownership dispute." 

Thi~ type of dispute often involves H spouse or other authoriv;:d uscr who is not 

contractually liable fot a debt. Oth<:r times, the consumer may have been the victim of 

identity theft. According t0 credit reporting industry statistics, these '·ownership" 

,.. B<th H •• ley. Credit Age",,"', Lago" F"",,,. Fh>wd. (100.100 Globe. Dec. 28, 2006. 

"S""n, •. Tra""Uoion, I.I£, 2007 WL 240174~ (I). Or. Aua· IS. 2(07) 

" 
103 

disputes are among the most common, as the bureaus use the dispute code "consumer 

states account is not hislhers" over 30% of the time. 

Any error sent by the furnisher in its computer file automatically appears in the 

consumer's credit report, even if the information patently coniradiCIll information 

appearing in other pans of the credit report. The national credit bureaus I,mfonunately 

fail to exen:ise vir1ually any quality control over the information initially provided to 

them by furnishers. The credit bureaus blindly rely on furnishers and provide no 

oversight of the quality of the information being reported. This unquestioning acceptance 

and re-publication of furnisher infonnatioll invites abuse. This is especially true when it 

comes 10 debt collectors and debt buyers, who present their own special types of errors. 

Ch,,1tr.i KirI!l 1-' 

Ctla!1e5 Kio9's el-girllriend did a number on twn. SI\fI opened up at least one, H nol more, credit ca-d 

IICI?JUnts in/lia name, charged them up, and s~ him willl till bill. Atterd1~ of! lI1e account a! 

cIeinquen~ Fir1t Cor.SUmefS Nri'Jnal8M~ ~ all aocounlin Krog's name III Asset AI:x:epilwloe, illarge 

cIebI ru,er. As lISUai fOf debt buyer!I. Asset Acceptance did no! haY\! any of the Qliginal arx:ouot dooJmenls 

from First Consumers. 

The debt sIlowed up on K"a-Ig's ~t repaI UIIder A»et Acoeptance's name. Kr.g ~stifiabIV disptlted Glis 

I!1formatlon to Ihe cred~ bureaus. AlIef ai, he w;J$lIle Yiclim of identity IhefL He had not opened the 

ilCCWnl or used Iile credit c.:rd. 

The Cffi!Oit burlllU5 fBferrfi!O the dispule to Asset Acceptance. In tum. 811 that Assel Acceptaoce (jjd was 10 

merely compare the <!ala in its files - the same files thaI had produced Ihe disputed information - wflll the 

ldelilicallnfoImation that IIle ooreaus were naturaR1 t!1en reporting. Asset Acceptanca did not request the 

otJgll1a1 document! !rom Flr$t COMumers _ GOCOmenlS lIlat might have st\OWlI tile siyll~lula 011 U\l:I ulOJit 

card 8CD)Un! did not match Kng's signature. 

lnslead. Asset Acc:epIanc;e's usual procedure in an identify theft inwstigation was \0 ask \he consumer \0 

send n a .. aud ~ - and Asset did not even mab fib reqLleSt ., King's c:ase ill ill. How did Asset 

AccepIanaI conduct proper ~s for ldenbly !hell 'MfIouI1ooking at Ihe $igril\Ure on the origirlal 

credit card appficaIion III see ilit was b"ged ex not? 

Be-llging vfobsolere debTS 

A type of abuse by debt colleetors Ihal results in inaccurate repor1ing is Ihe ;'rcaging" of obsolete debts. The FCRA requires most consumer debts to be deleted from a 

credit n::pon after seven years from the date of chargc-off or I KO days aft,...r th,... 

delinquency .~ "Rc-aging" occurs when debt buyers purposefully misrepresent the 

critical date of delinquency, which is the trigger dllle from which the seven years is 

counted. Debt buyers repon a dale of delinqucncy that falls within the seven-year period, 

.. Kina y. A_I AcuplMC<. ~S2 F .supp.ld 1212 (N D. Oa. 2006). 

» U U.s.C. I I6Ilc(II). 

" 
104 

thus I1)sum:cting long donnant and nearly worthless debts with the simple act of false 

credit reponing. 

This problem has grown particularly prevalent and profitable in recent years with 

the emergence of a multi-billion dollar distressed debt industry that buys, sells, and 11)-

buys large ponfolios of defaulted and time-ba!"T"ed debt for pennies on the dollar and then 

duns vulnerable consumers for inflated sums. In ZOOO, the !-IC imposed a $2 million 

civil penal!)' again.st one debt buyer, Perfonnance Capital Management, for i"CIX'ated 

instances of re-asing debts as we lla.s conducting inadequate perfunctory investigatioos.16 

The credit bureaus playa role in rc-aging abuse as well, failing to control properly 

for debt buyers who are efTectively gaming their systems. The Seventh Circuit expressed 

its concern over Equifax's procedures concerning the "Date of Last Activity" field , which 

is the date lUed by EqUlfax to calculate the seven year expiration period. The Seventh 

Circuit noted tha I Equifax's procedures for this date fi eld could "effectively allow 

Equifax the opportunity to keep delin,\ucnl accounts in the credit file past the seven and 

one-half year limitation or' the FCRA. 7 

Sl6",nRrDOOberg3 

Sometime in lha earty to mid 199Os, 5161'80 Rosenbelg had received a phone caR from a debt oolectof about a 

debt he owed kl Fleet Bank. Rosenberg couIdrIl recall any debt he owed FWlel and tokl the debt collector $0. 

The (lel)1 ooIIedor respondl!<j that the debt INCISe from an account Rosenberg had with Natwesl Bank in the 

1910!l (whldl Fleel acquirad). Rosenberg had dosed his aa:oont with NaIWMt In the 19aOs, and danIad he 

owed a'ly motIIl'J' ....ten he stopped banmg Ilete. 

Aoout ten years latII!Ir, In Apr~ 2003. Row!,~ receiWId ~ letter from ~.., In-.eslmenllr. II ou)'l!' (ll bed 

debts. attempting to coIect ;i debt ~ had bought !rom Fleel Bank. AQain, Rosenbefg (IenlecI he owed a debt kl 

FIet!t. Moru Jmp<lflanb"y. he disco\lered IMI Cavalry had reported !he debt to the ttedit ~reaus with ill! 

"opeoll1g date" of December 2001. 

AI aboullhe same ~11111, Ros.enberg had been all~mptlng 10 refinance his mortgaga. The le!1der approved h.ls 

loan. on the condition that he pay 011 the debt 10 ~Ya!ry Rosenberg ~sed 10 pay - he believed he dicl ~O! 

owe lIle debt He~:ained a lawyer, wtlo !MIl dispute to Ca'r.ltry indicating that !he aileged deb!, IMln W 

Rosenberg 0WIId It. was at least a dcnen years old. Rosenberg also sent a dispute to Equifax. Equifax In tI.rn 

senlll'.e dlspule to Cavalry, reques~ ilia! tal'lll/f confirm the "date 01 last actMt( -.d "openiIg date" 0/ !hi 

"""'" 

cavalry ""WIille(r tile report. Fortunately lor RownQeJg, Cavary failed to provide the requested dates, and 

tIIus 1M accounl was deleted HowEver. the harm from lIle iUegaUy reporjad debt- a debtlhal. even W 

Rosenbe'll owed II, was from the 19805 atld 1I\(j, 8rout 20 years old-- was done. Intefest rates had riJen b~ 

ttllm. 

"u.s.~. "".~ c.,,1al M_o"""" (Boob. C.O. Cal 2000)("""",,,, oko_).~'" 

bltp :llv<ww fte.~lIpa-f"""""""8~b"", 

" Gilksp;t ~. £'fIJI'" Inr"""Mioto s.: .... i<n., 4$4 F.l<r 93. (1th Cir. 2001). 

.. R<>Knbeft y. Catyory In ... """' u.I ~C.. 1OO~ WL z..I9IllSl (D- Co ..... Sop!. 3O.lOOj~ 

" 
105 

UJ. YOU CALL THIS AN INVESTIGATION! 

The FCRA. does IlOl impose Mct liability for inaccurnc:ies. Instead,;1 requires 

the: crtdil bureaus to "follow reason.1ble prot;edures 10 assure ma~imwn possible 

act:urn~ " Thai is lite fll1l Je,-d of prote.:lion for accuracy in cred it rtpOIting. 

Unfortullll~Jy. Part n of this report mo .... ~ lIIat the credit ~us do IlOl ahn~ mct1 their 

obligations fO! this klel of protection. 

For those c-eruumers for woom mis first hel of protection fails- "hclhcr it be 3% 

or 2S% of the- U.S. adu~ population· Congress mal'ted a sm>nd level of proIection: !he 

disptltC process. The dispute Pl= is Ihc i3fety net whc1 >omething goes wrong in the: 

procrning of billions of pit>:cs of dati [01 hundreds of millions offiles. 

The dispute process is criti~1 to c!\S\IIing the tCCUl1lC)' of cmlit reporting, &lid 10 

prWeIing the rights of the millioo! of' OOI1Sumers whose livelihoods, boIIsing. i!lS\lm1~, 

&nd IIC(¢SS 10 credit dqlend on lo;cunte ttpOmng. Congres.'l'S intent in enacting the 

FCRA's di.lpute process and ;IS soci«aJ importance wm plainly $!lite>:! by Senator 

WiUiam PromUre when the FCRA ,,"IS flJ"Sl introduced in Ihc U.S. Senate: 

It would be unrtalisti( to e:<pect credit .-.porting agencies to be absoMtly 

=1011 ,'IUi lingle case. But il seems to me thai coosumtr$ lffected by an 

Idvme rating do have 1 righl 10 present their side of the story and to have 

inactu!ate infOllllation tlf'.lnged from ihcir file. Coru;idmng the growing 

imporu~ of cmjit in 0 ... ctooomy, 1M right to fair qedil reponing is 

btooming more II!Id lII(I!t essenlial. We ctTlainly would !lO1 tolerate 1 

Gov~ agtllc)' depril'mg a cilizen of bis livelihood or frtclool 00 the 

b.1sis of\lrlSllb$tan1.ialed gossip "iiboul an opportunity 10 present his case . Ar.d 

yel this is mtirely po~iblt oolhc part of a credil reporting "gc"CJ". 

liS Congo Re.:.2412 (1969). 

Thus, the disp'Jte proem is wpposed to be the safety net for oonswnm plagued 

by illlCC\ll1lI1.: credit rtpOrtinE- Unfortun:ttely, the industry has created gaping iIoles in 

thai oct. The crroit reporting dispute system in ilS currenl fO!lll is fundamentally flawed. 

The- credit OOIUUS h;.·c created an automated and perfunctory pt'OC(SS that is 1 mockery 

of 00 ..... real dispu'.e process sh<ruld funclion. This atJtomated dispute:;ystem in""lrCI 

cn:dit bureaus eOlwerting detailed consumer disputci irrto cl)'plic two Of Lhrte digil 

tocb. The bureaus forward tbese c!)'pric codes to the furnishers but do not f<)l'l\'3Id th~ 

lUIderi)'ing documentation smtlO Lhcm by consumers. 

Fumi>hen hale a role in this automated injU51ice. Their inl'es!isatioru gf disputes 

5OIIK'Iimes in"oire mm)y I'erif}'ing that tilt: information matches their own compu!tr 

rcoords, withoul undertaking a meaningful eM/l\inariQo of the ur.derlying facts. The 

bu= IC«pl ,,·Il.11cver the fumishtrs lell them without cOl)(/uctiog an indqlcndcrJ 

" 
106 

re.-icw. The COIItirJutd resu~ rJ 1tIi5 ~ jn'itStipliorll)"$tcnl is that_ 

fllld itutmntlydifficull, ~and~lO~tfl(II$. 

A. HOW AN INVESTIGATION SHOULD WORK 

Most people Mve I genm.i r~p«UIion of ... "hIt l1li "investigation" of I emli! .ani 

01" loin lpu~ sho>uld look. lik!. An invt$liption Ibouid invoh·e rniewing doeumenu, 

resurclJing facts, mlervirning w~ 01" comparing Iurodv.riting. For (ample, 

,onsider !/It deposition 1eStimon~ of I bIIIl: emplo)'tt ... 1\0 on« "';orted 1$ I thud 

inffltigalor for bits k\I-etel$. Thil employee 6e~n"bed bow he! fraud inl·esrigations 

for lIks me!ur:led: l'J 

ptherin( original docume!IIs, intludinc Ihf credit appIialion. the s:ales tickeu., 

and my \t3!UIItIII$ &om Ihf 510ft ~ ilia! wm in _TittaI form; 

pIIImlIg copies of IIImtifictiIoIIIIId poilU rtp:JrtS; 

euminiog the signmur of the pllldWCf on the sales ticket and ICOOUIlI 

application; 

illlm'ievo~ 510ft pmoonc~ ird.dinj: 1IIc!loR NmKCf, .... hf~ possible, u! the 

sales ~iatc: _1>0 hod hafl,jled IIIc aetull transaction; 

prtparin~ stJIetnents to be ligned by store pet10IIDfl Of taking notes Qf inteo'iewJ; 

intmiewing tIH: fraud victim btuuse "olkn lhcy would hal-e $WilioMI 

information thlt WOIIki h<:lp \II in Ioc:atin& I Il.I5peCf or deterntining 11011' the fraud 

or forgery bid oo:urrcd." 

TIlis descripIion probably malebes _ith rnosI COIISI!!I"IeI"S' IIIC!mlEding of _iIaE 

sbould bappcn in an irl,"tIIiplion. UafllltUnllely. b IIqIS, Of .:I)"Ihi.'I& rtSCIlIblinj: I 

raj inqWy, mdy OC>:III" in I atdit ~ dispu. 

B. HOW IT REALLY WORKS; THE E'()SCAR SYSTEM 

In ((IQII$ to tilt mtIIIingfui and ~~ mlt3liplion ~ribc:d above, em!it 

bo.mus tim ~;:Ioped I highly automIIed, «Jm/lI1Icr-drivCI'I 1;o·l\tm thai prtcludes lII)' 

real irm:!ligation. This sy~em W1fetts the o!krl«l.likd 1I!d painstilingly IInlltl1 

diipUle Icttm into IKKhmg!llon: than ItWU Of tlIM digit oode, sometimes with I [(II' 

lines of namuil·c. 

The !ltdit ITponing ind~~ \ISe11 SLand.udlad fonn 10 cmummitate dilflllte! to 

fumishels, called I CO!IIUI!Ief Dispute Verifntion form (CDY). An.utomaIed version 

of tbc form, a.nrnunUted. etltittly elcctrcnially, is kncr.on IS AW"IIIlIted Cormo:m 

Dispne VaiflC3lioa (ACDY) rona The modi! bIna&s inmlle • ~ fOf .. 

in¥tstiption _itb \he (umiWr by 5l:llllinl1ll ACDV ugh III 1IId\!mII~ on.\inc 

proccssiIIf: ~ uIItd Me-<!SCAR" (0111" Solution for ~ IIId Aocurw 

RqJortiIllJ.. IQ 1006. thr irxIustty rrp::md ItIIt 13% of dis:p*$ 110m fIOC%SsaI..w. c-

·~ ... ~~Saooto. ~ ..... Stn ..... No.J.~(ll"D.CIl.Io\OrdIIl 

.." 

" 
107 

OSCAR. r~ .... oflbe tIRe Ulima! tmI~ luewI had IIIIIOWUd pbns 10 

~1bM dI ~be~ 1lSiDJM>SCAR. lD 

All ACUY simply CUI!oim ofl fA' items: idertifyiDJ: iIlfllnDllion abouIlht 

eoII$IIII'ItI' in the crtdi! bu!nlJ's lile; one or two ro:Ic:s IUInIIlU'izina the toIISIIlIn', 

dispJte; and, in $OOle ases, I one-<lr-t'll'O-line fite..form namti~e fleld!lw suwkmerlls 

the dispute codes. ~ emJil btnnu mlplo~ seledS I lpCtilic dispute rode from 

amon& t"'tllly-six offtml by the e-OSCAR l)'Aem, Mn IS "No! hillhm" and "Claims 

Kcowt closed." These codes art often eootaUd in I dfopdoo.'11 "pid;: list .,JI 

This IIAOmaIed sysrmI is bmUy ~ upoa b 1UIIdardiud disp# «des. 

Yet dIese codes lD't entirely ~ .. many ~ ID JWOIIt!fr COIn)' mbrnalion 

abouI • disp.de. As mad)' ., 10% of_ ~ lD't wrian.];I 'J'bex 1"titIm 

dbpo,rtes ofterl consist of I deuikd kttn ~itII supp:rninx dorurnrnWioll, painstakingly 

writtrn by o:)ncnncd and n'tn ddpm!e coruumm. AD of b doeumcnts, including, 

tQIIlW1ItI", cartful dmription of. spco;if~ disput~ fllhioned to nuke dc:tettion aml 

tOn'KIion my, are ~ 10 I IWO or tht« digit COIk that the bure.tu rntployet who 

sJantcs It the maim.! believes best de1<:t1"bes the dispute. 

The rode ill1MI 10 tht I'Itmi$ber 'IIilhotlllJ!lPDltinc doo;lnltnIaion puvidt.l by 

!he _ - docwnmIs suck • ItQ)(III app/ic3tioas, bi!!in&; SI.It:mrnts, Irnm, artd 

payoll" ~ !Iw t.III !bow ovttwbt!mins wi ro~ tODI;lusiwt JIOOI'. These c:ritio:a! 

documents :w leli 001 of the in~rstip:ion procns, ... 'hicb ilStlr I!IaY I'iobk the FCRA u 

discum<! be!!) ... m Pan lI!.F. 

EI"tI'l worse, the ettdit MIllS !educed the number of dispuk oodcs from 100 

dIaic:e$ uncIer thtir prior S)slt!Jl, ID 26 under M)sc:ar.lJ MO$I shodina!y, of these 26 

wde:s, the mdit but-ems use !be _ fOIl' or fJ\-': oodcs for the VIS! majority of all 

di~ A~ ID !be ttstimoIty provided ill congn:ssiotul brmap, ~illMnus 

\I$Cd the foIIoftI& cedes .. the roao..inI ~ 0( dispN$:)I 

Me hiso'bm 305" 

Disputes pr=rt/pm'ious Mcounl SWuslHistory 21.2% 

Claims Inaccurate Information. Did !lOt p!O"idc spctifie dispute 16.8% 

Di~1C5 amounts U% 

em K«IWII (19m I!y consumn 1 0% 

To9I H·m 

Once tht ~ iI ~ in1"Cstiptd, the mdit bIIrat:Ilhen smd ~ 

and ICnf(l!l'lll!Rte Iettm ~ 1M II!I iavcstip!ion bas bcUllIIIIIt. 1riIIIouI indudiq 

• nona fQ,\ o.,.c. _..,... Ii. 

"~_T.......,..ll. 

~ St. Dq.oo .... oI'tiIe<o UIDt, E_., o.f. CopaI ~ 0. A ..... IIo, n.c.··1 111 (til. h. I .. Zl. 

,." 

ul-.I_T,,"-,I:I ", 

" 
108 

my ddailus to whom they hI.e COOIItICd IIId whIl ilIformation "'IS oblIinrd 01' relied 

upon For I final drImnination. As Ihc Sr.-erG! Circuit Coull of Appeab his roaI, !be 

ACDV proass is oIIr:tJ ~ WId "mrIIIinzkss": 

II ~ !hat Experian his I l)'ltemk probkm ill its limiled a~ 

of the inquiries il rt«i.es and i1S aypIic: notic« and ~ FOI' 

eumple, thm is !he meaningitU «IIIlmunic,alion [plaintillJ re ~i 'ed from 

Experian in rtSpCIIIle 10 her DOIice of dispute: "Usin, the information 

JWlided the follo"ilI& ittm __ nor foond: GrossiIlF" City To)'Oll: 

Anorher txaD1pk is 1hc opaqut noIio;c of dispAc: sen! by Experian 10 U.s, 

Bri:; "Claims ~ "ill 0Iqe 01' [)e\ele..~ Mcmmr, in "fill 

~ 10 be .. ~we fomIletIer rIIher than 1hc rtporI of .. 

lllequale investigation imo her claim, [pwluillJ '/I'IS notif:ed Ihat the 

"PaidlWas I . notIIiorI woWd rtIlIlin in her rtpOI1 WId !be 

only clJan,e would be the .&:Inion of: • Aocounl ,Ioscd It wruwm's 

rtqlll:Sl."1 

.',~Nd.~71 

IUsuy Kr.,.slilldq _Ni.., __ WIdIl:Mm-ft.IiI' ~ 

lid Ilk db1f dlblII gel, '* il2OO' br ~ ... \:Ia111d n III! rd ...... 8-

~iII""aiJlKlI"_"''*. 9:lIttw"'(3"~onee.lldloa*'1dat.g. 

1ilisblr41im1e. 

~i¥i <W6, .lJsq:/1was _ IIId .,Itit,*wltitpdi:e IJwe'.l i:Ia .. ~ As , red, 

... _00 I'll 13kl-.-.o.r.m fIiIDIII fnn:ll- " 13 *-Ion blfitill'lliXtl 

.... ~1bdI"FO'IId",,-IaI\ead.bursu~IIRdIa,..m~'" 

~nsbaRd lJl jdotlllil'.aIldIlllQlliber ra""'~IIId~1II 

.... ."dl'lt~o1e_ .. 1:Il 

~.~hIIrI1rt~ .... I'bjIrl 6l .. rrJt.tqll!'~I"Mil 

bY;e ~ III PIt d11f:11rr31 ~ 8tcut 01 ... tii<t -' on /Iw CI'IOc ~ bMM:, 

..... QltitlrlgeCtIe~ 

~hlOlatell~$idI!oIfltl'ayIl!'~Idlsix.ilkl ~~()r;tIbej2(lJi$~~Jl 

kWI:& Hmda~ ~d I ~ (1\ b1f ~ rtp;)\ .. fIc:I:(qr,:t betauw!hl tal! ~ 

..-ed1~oofle13",,,,,,* .. ~~,iIId"'''lIIIdildrAlhi 

bal Bat T rnUIi:in lid n:t lirIIL 

_1_~ __ ·""''' ____ '~1 

~ 'My"~~' "'N:1JIlfdra_ A.~!'«I:ItIrl""''''''"'''t:mJ 

I ,_" ~~s ~ t.at""1IIrl rd~" mill! im.VIl Tr:I N:1JIod ~l1I!IWo 

t.a mtewsij dai'l!I'ld ~ IIpOMIIkII ~ lIS i'Ialltd bet:IoM ~ .., real)' , pob iI!IBItt c;ue,:: 

Itf'*l«1 

Mw:x:arIimh, 01 ~ _ CCII\»1'1 L'Ie ~ (WI hi)(;J1l III * 0'0II mp,1er ~ 

" 
109 

":.ad"~ 111-*. ,.....ild ~~~Jluym, wfltIISQ! 

... 

SOdll;ia lie fad i!riI: W!:ftlll!lllled I iJ'!IIl!II!cnlbr 1bI:I.l-. ~_n.t" CiJ, dotJ! _ gQ}I tie CiJ. wt.oa:., 1'\11 til ~'_Ibrlftld he Il.II III IIIil msId ~ 

IbI t3',ItnjmIj_ bted II. ,"""'1I ~ k!CtlleOOl ~cn.Cld rfP"'1 flit 

tbewuh$tlijecldaf~mMno!~, ~!ijooti:!g",;n~r.-Is 

aMbind!R AInai::M 1bIi;Ia) br~ II Will rr.-e lln _ ... pa:I. 'IIi:II' tm-1Id1xl' 

-a _'I\IIled~ reo:rd NlsbtcoJd no!(IIII imj ~alMi 

C. OF CLERKS AND AUTOMATONS 

The: 10k oflht emlil btmII cmpIoym: &I1tged1y mipd 10 "invdigae" m! 

ItpO!\Ing aispv!es is mmnc:Il' lim1ltd. BollI ~ intaniI hillllbook5 OCtile crall! buraus 

.II\d evidence in FCRII aWSililS indUic !hiIlIK' primary job of these employca, or in 

lOme cues 0III$0l.IIted l'eMors, is no mort than selel:ling !he 'pproprilte dispute (Q(Ies 

.ItIl1 10 !he furnisher. 

For ~ TransUDion'1 dispuIt ~ng IIlIIIIlII inswru iu tmpio)=or vtndort" rtk>'/IIlI partll 

I. ldel!lify!he Lisle item. ("f1)dn1tify \be bdeline.'") 

2, Opm the Displl~ Scrten. 

l Add Claim Codq$~ ("Bastd on \he inform.uion the t:QIU\Imtr PfOvides, selctla 

Claim Code from !he Claims drop-Oown iiI! and chose A~I.") 

4. Add Cooumer Conwell\. iAdd I Consumer Comment if the «.IIISUII)er provides 

additional details about die dlsp.rte dW i$ IlOI addrtucd by the ~ Cairn """,' Sdca an Adoh:ss. ("If the 5Ubsaiba".'data funWhcr hzI 111ft !han Ott 

1IIimt .... The: rov ... in be _10 !be ~)td Iddrtss.I 

6. FinDh opming IIlc Dispuk. iCboose '~:i 

WIlli il of WJl'SC missing from this ~ i$1Ilc exercise of any di$4;mion by tl:e 

bllrew employee Qr outsoun:c vcrW. TIUllUn!or1'S procedurel wert funher elailorated 

upon ;., th is OtpositioJll of an employee who perfOllllCd diipJ!e processing before ber job 

_ OUI5OU1CoJ 10 a vrncIof in India: " 

Q. Ilfdlt] COIlSUIIlCf !a)"'l, 'I di$puIe dUs =Iii ard ICtOlD, 11m', \he 

1CtOIII11U1lbtt, it belmcs lei my IniDnd, 00110 IIIC, "fIII_ld)w 

.~. __ r_c..,.,m l.$w.l1l"",!l ltO,h lOCI). 

"-c-~·r~"'ClS-'''~1IIM,''! ''''' '' io ~_r.......". . II·)!. 

_. · T\ltC-C-'O:IIoW. r .... WloI .. 'I'CJ..\.~~·lIoN.iI .... ~." .. !Ii.f. 

~ ~of_ -. M ... wWe 0., "" No. J:Omat, ~ 11._" '*<Iio I-.J 

_ I_.1h't.. 

" 
110 

ha,"C done if you .. 'elf mmplyiDJ willi TrmsUnion's protMm in AIIg\I5t 

'OS? 

A. ! .... -ould dilpll!e the ,"0III1I with the appropriatedlUn codc:. 

Q. fIO'II' wouId)'O\l de t!JdI 

A. IlIIbcCOlJlflWf. [ ... 11 'MlII!delic1ollll., ~and xkathe 

appropriate dlim Q)de. Onct you hit okay, it ~)l open, .. "hid! means 1M 

di$pUIe 011 thalleeount has been opened. 

Q. After)'Oll putlbe dilfllle code and click on the dispo.l!e, do)'Oll hart 

3/lyoibcr role in !he ~ 01 di$pute p-ow:$ for th..I aa:ourt1 

~ .... Q, It j\lll gtIS !em OllIe 1M crtditor. and your job IS to ilia! dispute is 

done, right? 

A. Corre<:L 

Q. II lI;auId be fair 10 R)' IbaI if)'OU "m~'iIJ ,,~TIJIISlIaion'1 

poIicie$, )'OIl're IIOC., an in\"t5IiplQr 01',1$1 dispute proee$IOI" makirlg 

Illy judgment cal" or uerei$ing illy diiCretion about whether I eonsumer 

really O\\llS the 1c:(:QUIlI? [ ... j You're IIOC o:erc:isin& thII discretiCla? 

A. No.1 ... ] 

Q. How docs T rwUnUr imwet it1 ~ to proem Iht dispw? 

A. III 1M syllCln, 

Q. By !!king the eortSumu's displlle, rumrnarilitll it into I claim 01' 

dispute «Ide, inprIlil'll! dUl ilI'.(l1be sy5leln and tending \hat codc: to the 

cmlilor? 

A.Co= 

Q, II there Illy ocher part of III investignioo besides thll that T MlUniorl 

nu in.uructed ia employtts is requi~? 

A. No. 

Equifu'l protedtm In: suhsuntilily simil1r. In. MWl 2007 ~. 

Equifax's Vice rrtSldenl of Global ConsurIvr Services described thlt burt.1u·s 

"rrinlutiption" proem IOOXdingly:" 

Q: I\'MI knowkdgt do)'ou hale 1110 Iht nwhallits ofllowa DOC 

Filipino employee WOIIld p!\X'CSI' III Equifax displJte? [. , .] 

A: The elwronic image ..... ould be diipll)1XI on thtir SCIffil, They 

would bave III ACIS ]Au!(lm3led Constmer llllm'iew S)'SImIJ !(fmI thII 

they would lIIe. 1ky \IQIIIcI tbm loot lillie elC'CIrlIIIic .... They 

WOIIld rea.:! offlhe identifying infonnation, mter [ ... J thlllD infomration 

into the s)'stem, KCeSI that credit report. At that point, they'd be liMe to 

dettrmine ifthcy .... m kdingat tht 00ITtCI file. Ifthcy .. =, lhc/dlO 

further. lky'd IQd Ibc icna', tlo:y pi! lin ~ of the is$IK'$lI 

IIIn;I, and they'd look ill the utdit ItpOfIIO see if the credit rtpo!! &I dw 

time reflecu tMl Ir~ docs, thqo WOIIld send t!IOIt partic:ular i:rrru III the 

-o.p.-tlo.r-.r ... r..,.r...c;. IV../It 1_',_lllOf'J,. __ ~_ 

r......,.n.n 

" 
111 

wlla furnis.'>er ()l fumishm. They woold rtqllCSlthll iID in>'estigllion be 

""'" { ... ) 

Q: Right Bill !hey're no! -lhey'rt 001 going to Iwldle 'II~! t'. et 

rtSpQIISt the crtdoor may pnI>idc:? 

A: Tha(s corrtd. 

Q: Do DOC emplQYees hm IClepho!ltS on theil desk? 

A: Ido!\Q!belim!9. 

Q: As part of theil compliam:e ",i!h Equifu's proce~lIITS. ~ 

emplovteS IClrnhone wnSUl11C13 as p.yt of £9nduetin& a [tin,:gtigalion? 

A: Thev do DOt 

Q: Do thev te lephone cmft!)l}, the furnisher; as part ofw¢actjng • 

rein"esligation? 

A: IM:Ldonot. 

Q; Do Ihey telephQne iID}'body from oLd$ide DOC or Equifu as pan of 

condI.rcting a reinl'e$!igation of a OOIlSUlTlCT dispute? 

A: Theydooot 

Q: What about e-mailing lilY of those non-&!ujfa;<, non-DOC people. 

creditor £9nruroer. or thiN party? 

A: They should not be - they 00 not .. rwjl !hem. 

Q: And .. hat lbout fax I/llIchirJes? 

A: [, .. ] They 60 !lOI h.we fp maGhines either. 

Q: Under whilt cirtumstances willa DOC employee fOO>'3rrl !he 

COllSlJl11e-rs actual ~ispu e Ituer or documents the OORSI!meI provided to 

the fwni!het, the cmlitor, as pan of a rtinvtSligation? 

II: A mechanism docs noI e~ist to fOl\l'aJd !be: actual documents. 

As !his deposition mo..1, the only human ioter.-enlLon by the credit bIlrtaus' 

empio)'teS is to determine the appropriale two-or·thrte-digit code to coter in a oompIItef 

message to lhe creditor, No independent discretion is exrn:iscd, No information is 

"oonsidmd" in !he invcltigllion. The cred it burtau's employees or >'endors oilly action 

is to lIa!1Sfet !he OOI'lSIIrOO's wriam dispute, of .. -hate>'et deLIil, into a dispute code. In 

filct, oWer thao the unusual and me "Vii>" dispultS handle:! by the credit burtatl 

altomc:)1 or legal support, thcrt is not (>'tII hum.m oont1ct between the furnisher and the 

cred itor IOUrtC. 

Elperian'S procedures lIT no IIlQIT rigorous than those ofTr.III.IUnioo or Equifax. 

[1$ employoe testified:" 

Q. Afie!)'OO rtteive 3 displlte sudl as Exhibit I [3 multipage di>put~ 

lo:ucr with nearl)' 60 pages of supporting documentation], if ~ou wtre 

follo .. ing Experian's m1ndate or requirt!l1rnl, you WOIIld plug the 

"~"'lIr<o<ioHolko.jkd;. E>p<nac;."A<.1'o. ~1(LD. L~,..2t,l:IlC5 , .. ciIol . 

l_8<oo<IIf_"16. 

" 
112 

infmnatim inco!he «t'IIjlWf, lilt name, iICkIress wid too;iIl and pWI ~ 

!be file 011 the Itlml, ~ 

A. Yes. 

Q. You YoIIUld thcnm'icwlOm what items "om beizls dispIlUl4, is 

"" A. Yes. """" 

Q. IVhaI is !he neXI SItp thaI yOII would follow if )'011 were obeyinJ 

Expemn? 

A. I IIIO;tId proc:ess lIIc ilmlL [ ... 11 hiJlllidJI 011 the [rr.cScIineJ _ and 

I CIlIef!he option. J ••• J 

Q. What opIioru de)"O\l have I~ choose from~ 

A. I WOIIld choose !he one 'the COIUUIIItI $la1esllle item il no! thein due: ...... 

Q Sn t!rre n. list of multiple dID" opIicm dIII)'IIII would c/id: (II? 

A. Yts. ( ... J 

Q. And can you li~ fOII)e 01 the othtr m~kiple ehoi<:e code$ )OO could 

click (III? 

A. [Alicr atimatiQc llII1lbett 'Io"etr 1$ DIIIIY It!I IS dbp.I1t Cl.ldesJ Tbete·s OIIC for ' 1\IIt _, for IIIixed filr.' 

What thrse dtpolilions iIIKI inlffUl credi1 bumlu oo.:UIlItI\lS show is tNI lilc:ir 

emplo)u:s lie no mon: than dati CllIIy clrrU ill !be diSJIU1t and im"~ip1lOll p:oeess. 

Nmr of!he cmIi1 bureIus permil !bese dab 10 m:Wda IDd run:jje diJctetioII (II"e" J 

tonSUIIICI"'S lfi.spu1c. Wbm III Expman Q"tdil burtau "ilIIcss ""Gmt<! IbiDc an«hcr 

deposilion, '"Whal does Expnian intend fOt its emplo)"ffllO de in onItt b !hem 10 

obtain lind TtVie .... QlSlies of the lIndertyizls dotumrnu on the dlsjrutt" - from the creditor 

(III the dispuled acQ)Un(l," the cmpIayct lestiflCd, -rfs!lOt Expmm', policy 10 I"tCIWre 

Ot sugges1lM1 its agenI at lOr aay ~fiaJ doaaoents. Expnian dooII" !rJin its 

employffl 10 de baIId"II"riIina: IIIlIIy$is or varW otheJ inv~\ e-type lhiap thai. 

I'owld ~ l"tCIuircd of TtVitl'oing J c:Mil Jpplic.llioo.~ 

J_ di5pute:t involVli mil _ 1II<"IIIIIion, IS Ibm: is _It no 

ulI"olnmcm oftht cmIi1 bun:au's pmomd ill the dispute pv«SS. The irIItmcI dispxe 

fomu provide J list of on·line cbcck.ocXts to itl(C! 15 the basis for the dispute. The 

clJeek·tm. oeleett<! by the consumer is II\Itched In one of the pick-lilI ACDV d<sputc 

(Odes and ~Ur JefllIO!be rumiWt l\i1hoIJ.lIIY IIuman inItrmItian.. 

"" DrpootiIiooolKiIobotly III&k Bcd. EugioL a.. '" No. 7 (ED. \'4'" JI, 

:!OM,. CIIaI io Loaur4s.-.T~. 26-v' 

" 
113 

D. FURNISHERS' INADEQUATE INVESTIGATION 

N iflhe 1IdI)cIIIt£d and ~ narure of die t-OSCAR 1)l1tm .m noc b16 

_gil. ~ 00IIribu1e 10 the probienIby conduaizIl ~ ilrrestiprir:lls. 

0IIm. fumiWn wi!! mmly I"Crify tht ai!lcntt of dispatd infOllllllion, irntead of 

ktull!y invnligaling tht dilpute. Thry "'i!! nO\Jcrually rncmh tht WIderlying diSfKlle, 

m-icw OOo;umems, or ~a);: to tonl\llnel"l .boot !he dispute. Instead, these furniwr! 

limply (OTlfirm!hat the information in the ACDV malches their e«JIp.tter rMros, and 

then \'erify the disputed inforrnaliol! to the nedit bureau!. 

tile ~fCRAdI!asiJI ~!IIe 119f1t.6e:l ~1Ucsb!r .... FQI.A. iII'IIMs head: 

ardmilrlllM tNllS ~b!' 8atd kIIIPca. ~ _<r.edhlq)lIIIO'dardllmers 

II lie C011ry. 1I.kt:r;SCI\ v.1IIINA. ~a:IIlI*'Y~~ IlJiO:l ~ JoIIImID b" b 

(fICP.ard deltdher~ byJ&POMl he~(Il hercredlrep;rL ~ 1Itj_ ~I:p 

1l!Jr respor:lilIe 11$;1 pn3CWJtlh:id!l' on her ~1DllIIt ns.d,her ~hI:I 

I11II'I/)' daimdll!r kl Uil!!ill3d ... ,.,_..ned. ___ 1iIpR il'lf6sp..w kl" NlIIIIIu I"Jhl b i'elbtt .~_18iA 

lCI:Maf .. ad:1tIpCIl Fr~.""IUIdYlMDhadt..a OIIrIiihconed 

"--'~I~~"'''~FCWo~proce$Ia.l!dd 

...,~t.e~M:!"'d_n"~OllICXMftldlgm" 

Wi6am!riilhl~dIII!'~kl"_. lbe~~~'" 

_a;ast/IId~ltnrnenIm._~I'J~aomtyrJ~ 

....... 

Mort ~ was h!1z:I t~ leNA _ h!se pert.D::ttydlocb br ¢UOXfIblrity .... fIIlfle 

f(R.I.ttq.Qdd~n .. ~ ~daJDldlh3tlwasoo"'ll_ttIIu· 

IIIsbdJ crp imUl! ..... lIIittIw:d:ItlMstw.'VI~ JliDcflIIId .,.sqIldoo h! 

do:Ied tlrrl mnybee:la1\ld 15.~"" b fKl.lB\.I.~ i:lldrllMl MIll ~ 

.1XlUIl~.Z,.,. QleIyInI8lA..;:d:IIla".e~"_"'(3II1 

Irtl.-!b_tJer.njllspd"'Qflllll_~1I1 

Trotteylllmlllw Iln, ~. iJdif.ned 151a1det.f~Qf 1)'1*1"1* 

............. TM.flerQol!\WIIIQd~·fimy~!CtI"II!. dcnU 

iIIPY DY Q"editfs... i w:U:I!3.e __ kl ClI'd.de M n Q"eaIrg I Sj1WII ~WIOOd kl 

~~al;"U\$b~.".~~(IItlllJg1f61 

II(I(fIs.Cqm.sedfllltn~kltod;ide~~ftJlIBl:>! '**' Vlemotlw:il ..... fClWreq:escmm,.-""'!1MDdl ~~b:lI'CldNPXDil9&'l.G=.dI~~dlleif 

IKl"Itlbdeiel:..e .... fIt*P*r:l ...... t31!Jrwiiea. 

~~, WB.'~A.ll7f.J,j llt (l·c..NOI\. 

MI4.I)"",ll r_~ 

" 
114 

OIIItr 1,,,,slIits rnuI thai MBNA if IlOl .io:IrIt ill ~ supmrcial 

inmuptiDns. 0Cba ~ .. -iIh simibrly perflonCCOry FCRA iftvatipri~ 

~inI;lIIIIo: 

C.pilal 0,", - CapitII One if one ohllt lOp 10 credit tInIlmcIeI1 .. die counuy. 

(~employ~ I'ame:Ia TlISkey clncribtd how all \hm; oflhe lUtioMl tralillrJreaus 

ill$l!\lCteil c.pital One pmonnc:l to simply miry ",formation ~ to "mah crur 

system loot; lik.)'<IUI' syll'm." The ,redit maus eyen dilCO\lJ1itd the Capiul 

One p:rsonnt! from ICtively lHWthing by pulling stI!Cments or sir'niJ. 

Ktivims." 

DrbI ColkdonlB.r~ - ~ KiItg v_ ,Usrt tllXl'~ CII( ill Port [1.0, 

Ibcribc:s bow !his ddIt I!uye-~ FCRA diJpIIa by nrcrdy ~ 

the IC«IUlII infonnaiDn in ACOV -MIb !be infonMioo if, AsscI's files. 

,,~ 10 Ilw: infO!lllllioll I't\'cakd ill 1M K~ <:1$(, Anet docs IlOl ~ 

ob!aln KtOtI1I dotwn<nu from tbe Qriginal crtdillll. 

ASStt AcctpI3/K'I' il IlOl lio:IrIt IIlIOII& dtbI buyers. The FTC I0OI: enfort,men! 

action agairuI ....,...... ~bI bo.Iyu, I'trformantr C.piul ~1Inagemtnt (PCM). 

aIlegu.a that it railed to cordrct "inr~ wimi~ !he -inc oflht FCRA ~:'1 

""'11m I"CM rm:;nl _ dispute nnfx:ation IOOtim, it is tbe 

prKtice of POl to ~ the _, address, ~ information in I'CM'I 

00IIlfIWt da!Jbl$e "'ith Iht in(ormaIiaoI provided 011 nth _ 

dispu!C \'erifK:ation form. Wht'!~ lhe tYoll OWth, PCM rq>.">IU Ihll it hi> 

mif>e<J II! KCurat. the mfomlltion in its flits. The Ktull ttrord! of the 

Qrig"'l c .. dilOl' lie IlOl reyic .. cd, nor is the rnan,r referred 10 the on,inaI 

utdilGr for 1M original craliW to \'erify the ac:.:uncy of !he inf~ 

Mortzac. lhakm · Trade: croups fOf «Tom. filnithmkmliton itaWi' ISStrtcd 

the _ arxummt II:! MRNA - dw: if 1 credit rq:o;wt reflects ",hoi is in Lh:: 

furnisbor'l rm'II'ds. it JIIouId be considmd "amIrItt." 110 matttr .. 'he1!Ia- Ihe 

fbmi!il<f'l!<COfIh arc obJco;Ilvdy otnI/1Ite:os, IIIIlln' Of reality. ~Of europle, 

the Mong.agoe Bm" AS$Dt"1IIiDn bas urxcd regulwn to defme ICCUZJCY II:! 

"1CC\II11' repMing of LlIe stalUS of the ICCOIJI1l IS reflected in lilt furnisher's ~ .• u 

.. Do,ooioootl_~. 0001"....,. T--."'" lIo. C'lIIH1Je1 (to _~ 

·l.ofI ...... ~mf~lmIll.PGo."*\. ·~I,I.l-._o,,;o.I"'-_CII_c.t. __ • 

... . c-,,~ """"......-.,..'" __ , ... .. ~ __ ,, ~~~ 

.~.""""'IW ....... ".-FortIhJW.c.-,,,-~..-t.Io*t_jJJ II ... F .... _u..tor_A ... MIJu.I\I06, .. ~ 

" 
115 

Some Iilrnisbtrs ft e\"UI 'IIOISe. .... pparentI~.1bey do not even boIhcr 10 make 

sure !hey have ~ dJ their rCCOI!k , .. ben they Ilk !he ~!IqI of cbedin!: 

tIw the infonnatioa i111hcir ~ lIII_the ~ ill tilt .... COV. 

o..n,n GlrR.oterllm~ I J.c. F'WIefCldel'll i!O.X:tIJ1ti! 1m ItbnJ ,mID", f1tRotierlsa".l' 

aeo:UIllOOe:lllPilGE 1IcnIySD, "'I~ dsm.22. ~ 0:I:itlIr2004 il Qlldlle ~ b 

o:III:tlllb*l:t. ~RobIrtt!GlIPIi:lo/l .. tINa_III~IIl1il .. dll:tcR, GEMlgM 

III Rdmnlll o:t:haximm., _ DOCIDwrWlflCJ:MlftIIIe:l ... ", P'Jll*llWI m. 

HowMr. il *bp;EI "'/t:tIn(JI~ ~ b"~ il~ bo:llclile bllla;eQII 

flllIXCUtliMtilllm 11M$. Ed ...... 'tI:CnoosdJllul GE III..., IIId pill (ft.IOXllIl!~ 

...... 

GE ~~ lie llDIltoill ~ lIIttulasipl Ill! ato:IIInI b I iIIIM a:Id;r. Thedetc 

o:kI:lr lep;.1e(I IIe!l:U)lfll.b fltadMail as II C\lIeI:6:n$.' v.t.n f1tRober1n"lsINlnd'-

.xw.!"AI ~ up~ 00 tlerati IlIPD. fie) sooIdelaiedrilplJlliIIn b r~ 

Eqa:I. uI GE. 

TbtRobn:n·I~"b ... 'tnt~~_t.atIlefIla:l~oI"'lIXCUt 

r ___ iII'IJaNbGEIIISCiImIs29,2OCIi GEII!!lII~bd\"lllIlt-r_"" 

.".. .... 1lI! IIImIillllbeln~<f. 1-',. _iIbIIIb iII.~/laildiN I 

,.-:1IIIl_1IIiIde. 

~ IMnlGE iII'Ilroiootwlll (, 2005 _ il 'OIrieol '" ~ asdlaged<t "1fI'Ie'O\WlJl~ 

III! bOO SO. GE<jj rd~ IJI7 ~ illJlt5ll\111rwm1s txUI\lI b~ldItIIJ'd:irrrlIIon 

The \1St of 1\It0lllltioll by !be trmi! ~ tOI'IIrib\ltes 10 the p-oblnn of 

furnis/ltn ~ ~oci:aI ..... cstipIion$. "Tbr; ACDY cocIes fail 10 pro~;.x • 

~t'uI destriptioa of the disp.ne IrIII IlIdtrlying doanc:nwioII • fumishcn ba,'f 

e\"UI oompIained dill !be disp.ct axXs an: "ngoc: IIlII O\"tIb!oId . ..lO The ~R 

$)'"llmlllllkes illlI 100 W)' for • lilmisher 10 simply o;b:d • bo.I: indicllifls tIw !be 

disputtd infomWon IllS bctn ,·trifled, iii exercise \hal Iid$ IOd abru pmWlCtOr)' in.esti~!ion. 

E. P .... RROTING: THE CREDITOR AS GOD 

Aller !he f"urnMcr re:spond.s 10 an FOtA di$pJtf, the atdit buruus main 

~ is Io"'parro(~ ,,"bat !he ~ rtparI III !hem. Thty wiD ICCcpt !he mulls of 

!he f\ni:she:'J "im~ption. e\"UI • I simplt died: "MIIIId rrnaI iaconsi=t 

infllflNlion. In 0Iber "Mltd5, the crtdil blRaus' policies ft \hal "hal the fwnilhn" ~"S 

is ppellIId fl'tII t(Ut rteOI'Ib cannoI toIuradin!hat 

• _., J.e. '-Yc..," lI'LWlt1(51l. w;..loI>r.l.lOOIl- • FrofU faA c,.. _..,... 11 

" 
116 

For mmple,!he ClUe of Alifn v. £.xperi(lfl/njorlMJion SYJIiMJ involved I Srus 

!CtOWlt !hat was being rep)ned on !he CO!IS\IrrIeI"'1 credit repon as being "included in 

bankruptcy" past the limiwions period for !hal information, The oonsumer's bankruptcy 

had occurred in 199), which..vas reflected in !he S«!ion of the COOSUl1lef'S report WI 

listed public rtrords infonnation. Yet !he Still!OC(M1\ was ~rted as being pan ofa 

bankruptcy !hat occumd in 1997. During a depositioo, the o:onswner's '!!Orney asked 

EXfM'rian employee Kathy Cen!alllli why Experian did not addrrn!he oonswnrr's dispute 

by cross che<:~ing E~an's own r=rds 01" checking !he r=rds of the United SUItes 

Banluup!Cy Ccwt 01! 10 the COIT\lCIII.l!c: of tht bWroptcy. Ms. Centanni ans",md:11 

.. ,the tooS\III\eI il 001 disp.ning the bankrupl.;y. If they y,1:ft disp.,rting 

the b.mkrup!cy as 5UCn. we wOlJId dispute the public rewro. 

The rollSUmer is di$pllting !he inf(lfTll1tion being reported by • 

tmlilor, and it's our respoI'ISibility 10 £0 back 10 thai tmfuor for them 10 

reswch it 

In other words, Experian'l polity "''IS 10 dtfer 10 whal!he fwnisl!er responded. 

e,'m when (0\11\ rtrords and its own flies contradicted thai response. 

Indeed, in ease after case,!he Cttdit bureaus h,,'e refused to ronduc! !heir OYoll 

investigation and ins!tlld simp ly "puro!td" the furnisher. R«tIlI ewnples include: 

Cairns v. GMAC Mong. CoIp., :!007 WL 7355601 (D. Ariz. M;l!th 5, 2007). 

&jllifax argued thai «by oontming GMAC regilding Mr Caim~ dispute, it had 

complied with !he S!alUlO!}' obligations regarding reinvtStigatioo." 

Murphy v, Midland Credil ~lgmt, 456 F.Suppld 1082 (ED. Mo. 2(06). The 

roon rejected Experian's IIgtlmrnl that an invel'tigltioo solely consisting of 

ACDVs without seddng additional docllIllmUltioo y,-.s reasonabk as a mlUer of 

Ilw. 

Satnl v. TraruUniOl1, I.lC. 2007 IVl 240!745, '7 (D, Or, Aug, 15, 2001). In 

thii we, the eourt DOled: "T raruUnion argues that use of ACDV procedures is 

necessarily I'ffi()nablc lin 1I1 inl'estigationl TransUDKm oonn:= ;15 

argwnenlf 'lith !he wcrtion Wt crtditors are better situated !hat reponinB 

agendes to detmn il\t tM accuracy of disputed infCKIJU~oo. Tl'llnsUnion's 

argwntnt rests upon , signifK:Mt misthmcteriution of its dul~ Wlder !he 

FCRA,' 

Another mCTpl of !he deposition of T ransUnioo's employee who performed 

dilpllte proc~ing before sucll 1IIsks were O\I!Sourted 10 a verulor using wOlters in India 

rcrpled hQw!be credit burt3US entil'tly defer 10 !he furnisher in disp..'\cS: 

Q. What if the cmlilOl and the OOIlSumtI mongly disagree about whether! deb! 

is Oll'ed, C<lnsumer ~ys!hat the debt·s no! owed, the creditor sa}'S)"tS, it is, what 

doe$ TransUniort do 10 deh'rmiru: woo's corrtcl? 
117 

A. It's up to the cm:litor to make ~ decision.» 

Thus, if the cm:litOf instrucu the credit bureau to rttain the infomLltion 1$ 

reponed, there is almost nothing tile consumer can iIo to o.midc: thaI tnswc:tioo. 

While the cm:lit bureaus claim that the~ will review the documents the COIlS\JIJle! 

provides to determine if the~ lit "ilC\:eplable" to allow , corrtttioo outside tile ACDV 

process, this is IC tWlI~' a Yery" narrow category of documents. Ss$entiaJly, for t 

=;umtf'1 disptJte of, cm:lit acroun~ the only "~ptable" documents for T!1IlSUnion 

are wrinen Icnerhead communications from tIN: cm:litor ttself instructing TransUnioo to 

dc:ltte or oolTttt the reported a.ccountY Funher, the creditor letter would have to be 

mort recent than the last date tile creditor had othm<ise ",·trified" the tcOOIUIt 

CSC Cm:lit Services, '/,hith i$ an Equifa;t tflili.lte, has explidtly stated its policy of IlOl 

oonsiderinll any p;I)'Offlener from a creditor over 90 days old. I< 

...... 

h t99l:l, ilCDlac1ll3l ~1It 1'I!s»e ((fle ro/U. lawerJm:emeotolkiil!s tI3d 1'I!..w:Ie 

_ .!IIId tlfll$ S(Oij aI~. The atdb1 FfIIC'lOOs itllOO'1erltlebNj ~,Iee, 50 II! 

~W<IIi assiJII!d () TQFOl. adebl o;ktr. 

Top::<ll:t;p;j a-.elide seIer"~~oo ~lIi!Ilbe ~ Sta:e Depmer~dl..i;;ansf>,jw'" hi 

I\af.I) oI.1J1esater asl"le !l'JIef .m 8akerwas .me Be:Il;'SI"ID1 n.na, oj Ile tI3d her 

ad:tes$(l!l,bJt BellS dainedsbene\\!l fle~ ~~~ .. ~ 

:001. IqlOOud Bett; .. KiIg Couity Disrd Ca.It 1Qn!\at iaII1Ul mtlecoon ~ I 

~mi1g her I)j iabIe tfltle fre. 

qlOOlIso~N ..,.....):!b!(I1 il'ltts t~fqXIt Ol r!ltulry 13. 2001, Se3S >«1t<l!lOb tl 

E¢.~-&g 1"Il0e0t. ~ serna aNti Top:o. W:fI_1¢aled Betts's 00dr~ I"!d 

ax(rmea fJedebl ~'$ ~ a~~Ie, aid TC9X'ret8wd nt.erCOV 00 UofdI2ll. 

2001. lopco <IJai> 'Iriid fle<W. Jijs n,lgp;c MIl irIcrei!:sed 11U 0IJ"t~cIaiI!8d IGS_, 

rom$lS8b$m £~~tsledHsnew~~ QFOl·liIeaIion. Thinas 

dei¢ellefao.tIlatBebh3dlOllTOp:IJ s~;IJ"fIIlher,mftM:lilcoot!~t~ 

flat sna_lIlrespcn!tle tf!ledett 

F. "ALL RELEVANT INFORMATION" 

A$ part oft credit rtporting inl'eSligatiOl'l, the FCRA contains an explicit and iq 

requirement thai the ~m:lit burta\I mclude in the n01iCt' of dispute to the furnisher "all 

~ Il<poIotioorl S<lw.&a-, MliI]i;!. TI!pII."" Ch At. . JikrW.Sq<.II.lOO6, .. cilod .. l-.I 

1>" •• " IT ........ )'I. I' 

~._ A=pbNt lot ~" -v.;,. CRS ~ Sq<. lt 1001. ~ 1-1, .. <>101 io l.ooor;I 

___ f"",-, .ll. 

~ ioIoJ' CSCOoiit Set>", ~ II"\. llm (D. M;'" Mq 10, 1007). »_ .. ~Doo5t....,...,. SM;.:." I~ H. S'W ld 1I,o('ll'.D. "'.lOO3) 

" 
118 

Itk.'lnI infomwioII" pI'OI'iIW by IbtConsanet'.1I Howeo.-er," <.Iis=u:d in P.t ruB, 

IIfIm I o:on\lIIOO smds I dispule 10 !be cttdil bureau, !he l>uttalr ",in ~ !he dispuk, 

I"(III\3IItf how detailed, subsllnti .. ~ or ~ 10 0lIl: ofllle baMfol of ll\\l or !Me 

digit dispute eOOes used by !he &-OSCAR system. The burt:au .. ;11Il0l send !he furnishn" 

any of Ihe .\lip", <IoomcntItioa provided by !he romumer, such as ICIXlUIlt 

appliatiQns. billing m.!emrnts, lcum, lind p.lyoff IIIlrnItnIS - docllllltlll5 that could 

$how OI"t ...... llelming and C'o'm eonclllSivc proof of !he eonrumcr's dispute." The 

buttaus' re~ 10 fQl'\\olrd III relevam documenlSlI!d dmils Qf!he dispute appean 10 be 

in dar oon/Iict ",ilb lite dictateS oCtile FCRA. 

No! oaly ba."t CODSIIIlItrS wllbtir 1!IOnIe)'1 «JDI9b:ifIed of !his fililun- III fOfWlnl 

donnnnIts. this bas also bmI. milia' in I:UIICNian betwmI lilt fTC and Ibt mdil 

b\a:taIs. Yet 1Inf0ltullllcly, Ihe fTC and FaImI Rncrvc Board bm decickd IlOIlO 

1IIi"mally awIemn !br tuau.' &il," 10 """'ide fumi ......... ilk .... ~ 

doc~ subtcilltd by _. IMItId, tIIi: FTC II1II Fa! have SIlled Ihai "1b1r 

ilStlf, C'o'er, dIis does not mm IhII [mdi! bureaus! flillO o;an-cy 'all rtk~1III 

inf\X1l\llioa' 10 furnishers,· btl !lw "in ~ siwaliortI, !br failure ID convey the .::tuaI 

documenu 1liiy \c:ad III incorna 0IIIC(ImeS."S$ And cIespi\e tl"tllihis ~ Nt !be 

&ilure !o forward dmunenlS may kad 10 inI;oma outoornes in tOme mes, !he FTC and 

Frd appai"mlly hal"C no! !JI;en any K!ion to Rquirt!he credit ooruus 10 irnpro~e !heir 

pro<.~ 

The c!'!d~ burcrus claim 1M fOlllltding documenu through &-OSCAR is 

"quest_Ie," a diffltllh claim 10 believe lil'm boll' easily doctnaents cat oow be 

lran:!miaed dectronially. FinI, III three national burtau.s ~ II1II NChi,'e the 

tonSUJner's dispw- IIIofdowmmls. ~ is 00 JIUItI' IIOr1ge ~ RqUimI. Thm is 

also 1"(1 ~ obsIatk 10 ro......-.ding!be ~ .-.I ~ ~II!y. 

Equi&x wi TransUniorI Qudy do JQ 10 India and !be l'!tiIippines. Scndq Ibem 

~·IO Ibnes!it fumbhe,s would DOl require 1II)'!IIOft: resoon:es. 

lk credit MM' raponse 10 ailicism O\'ef !heir &ilutt 10 fOC"llo"1ld 

doc-unlen\llionls to rely on I rltld in !he ACl}V fooD tIw F1Dil5 I "frte lUI" eomnxm 

\0 be mtcrcd by the eredit buruu tlerk. IInich is calla! the 'FCRA Relm/ll Information 

neld." This box is lim~ed !o one line lIId I fi~ed number of thanckn. The =lit 

1:Puruus' )II1lttduI"tS manUolls oIftr llmost 00 illllMlions for tOOl tlerb lIS \0 whll 

infOl!lM!ion shoold be piamI in this one-line!tX! fltld." As. ~u1~ only a mioorily of 

ACDVs 5ent by the oornus Ktually eonain SlOth I fltld. The credit burelllS haft 

admined IN! !his fltld ii used in only JO% of di!plkS pnxtssed i!vQugjI e.{)sear." 

TranslIllian's empIo) .... 1= testified tbat it il u:sed 1m !han 10% of !be 1m: and tva! 

~ U U$.C.IlAI(@ 

ftntltUR1.\~_~al' 

• rroru l'lV.1:liII* _ ~ollJ.J4. 

·~_T......,.alt. 

"tlO'flB~.tl 

" 
119 

t/In! only iftbe ~J disputt is noc in. ~.kttcd ~.I' 1n0lhtt 

"*"Ofds, if die mtpIo)-u is Ibk 10 ~ lbe disput¢ into 011( of die IWO or 11= dip 

C(lCb, !he 1m field is IpplICiuly noc used to 00II\"t)' additional informalion IhIIIllligII. 

hdp resolve the dispne. 

1IIecal! tlIIdIaeIKnci'.st'dIdmst*lIo'I"ilDq.;lIt .. 'fCAA1iIIM"o! ~ ~13\ 

lII;,iDI:rmi"I\l "'~tllliIpAt,.~ ~r.CIIIUI8"5I11111"_R 

--

m_lX:1.lm-li)U oIIIl'.n:j'IIti~lgd!3""d aawtIdlAluilmClldlcn, iI 

"-faII!qndb,-Oibft. Hetlll.p,nfelb!llo:lmJlilri'gI'I,iXl:IdItt ~ 

~dlt.ocl;tt"'''llllf*I'.~S1\8IIIf-RSJ,I''<dII:a,ilDer.:eI'IItw 

mi. Km;btj_~~pa)'df"'d9bt.IIIitI.hlpI!IIIalItI~ilMled2tVJ2. 

~ pliddfl'ledetl, buI CiIbri~ ~ lie t:dtInM fIaIKm::Ihii!lil owed ipast 

\iltil*leeOl'll'lea:::w.&'ll. AsI_~w;lS\lltleilpWlt,*"''I<a"m"Wi1S 

de:ildchrcd Ht~ ERS. --!li"~ Ile!IPdiI!d 1.IIy2OOlJlllJisl"Nibepiiddl 

III AI3x:iII!s 1CCXlIII.1I ..... 3Xl2. 

AIIr_IIrINfl~iI.;.I2Qi!n",N!CIbri"_""lpiIII_bMa, 

KndmI!"'~ II TIJIIIUiII'II.;.I2004 -.I ~ 2004 WIll .... __ be 

RUled Ia."Cllt.. ttm ~ aI"lmIIt ....... I!IlRI~lIIidad b 1.Iif2003 

_mas NeifIeI~"6IWCilcart 

mSi, I~ w ~ /aNI ~ Olibri.~ i tll!l'iyvm..1\Pu1a!ICo MIl 31 iltOOJI:l 

~lI"Jdt:t9lllbll~ T~_~NI~~aand" 

«toI>1 .. pildal~lIoO~naw:rtCllbis~ il1a:!.lrnlJftrlllil 

Kn!ohai IllllcUll"d.::::ep""'" 2m ElIS_. b!ca:ae 1."...1 ,..-0IIIi111111111_ c:iit-*.. t.. ImINtERSIIId _IIlItr901'1be/Ji1C11AD:oaatla't. ...... ,. 

.... 3XJ4N:!NnMyMld ....... bnlIIcl1cllim~ .. ~ vq. UIMI~-I'I!IY .... ~_tr.Idylld ..... i"II:IINb·lt«t,. 

"'II~ tlill nIIIIP'ftII_froII EllS. 

01 cane, CI:iIri \riel" II! pall M *'<:e 01'1 the IaXItfII ~ ~ tl boll /o!IJB. Km:IkIsI;i 

fiIIO" IawU:when rol rtCIMd ooIICedibe!ml:l ~ on Octt« 6, !104. A 1Iw~ 1m, 

"'~ iIlXUIIWl deI!I!d ttmlilaodl!lpCfl. 

The cmlit!Mews' flilurt 10 r,,",-...I tbe CIl!I5\IIIIn"J ~ bas I n:aI 

and signifltllli impItt 011 c:onsumen. 0IWn. II SIripJ them of chr;ir ripts III bu 

flllllilhm \0 eoodua!he .'cry inl"esti&Jtion 011 >ItIidllhe bin..., defer. $nmi federal 

CO\II'U hJve dismissed roIIsumtf clililll$lgaiMl furnishers ~IUlC of the gmmlil)' oflbo 

~ 

_ 

Dopooioooof£iJeaoLilllt,MiIIjor,. T .. ! .... C"~A~So.l:OSooW,S<I'-'I._.riIoI.l _ r......,..ll 

II ~, I40iln w.-.. s...,.lIWIlot l-ImIl (D. 0<. ~J:I,!CI1). 

" 
120 

bureaus' ACDVl and f,;lul\' II) forward !he Itwal dispUte and docwnenlJ. For enmplt, 

the s.:vt"lllh Circuil beld in one: (;I!e: 

Cmlit Control's investigation in this ease ""3$ rnsonablt liVUJ the KIIIt 

information it _eivcd rtill1linl the natun: of Watn's dispute. Credit Control 

~ivcd. CDV from TransUnion indicati", thai Westra ..... dispuliq!he charge 

011 !he basi. thai !he _aunl did not belong 10 him.lk CDV did not provide ~y 

information aboul possible frlUd or idc-ntily thd\ Of include ."y of the 

documClll3tiOll provided to TransUnion by Wew.. Credit Cootro! verified 

WeslnI'$ name, address, iIIld date of birth ."d senllhc CDV baek 10 TransUnion. 

Had TransUnion given Credil Control OOlite th.al the natlltli of the dispUte 

concerned fraud. !hen perhlips • more thorough mvtslilltion would 1IaVi: bto:n 

WIITJ./IIed.Ol 

0. DURDEN OF PROOF 

lk result of the brokm credit reportinB ~·stem i. thai the bunIeft of proof lias 

dTec:tiveJy shifted from the frcdiw or deb! colltcror 10 the COIIsumn. Creditors &lid 

coll«1011 an ~11owtd 10 take loCI;on 19ainst consumcl"l witholtt being required 10 justify 

their contenoons. Consumcr.s ROW hive the burden to prove IlIeg.ti,·e. th:lt they dQ nOI 

owe. dtbt - and an: rebufftd wilen they 2nempt 10 do so. When they fail because they 

deck is sacked a~in$l. !hem, the creditor or colk<:lor will continue 10 report the 

oortSUrTom IS liable. In fact, in litipi"" the Johnson y, MBNA ease diotU$SCd in Pat! 

IIID, Ml. Johnson's anomey Inmcd from ~mNA's IIOOOUIIt =ords thai the ............ 

was c.\f'Il$$ly 1(I~·h is not our b\Itdo:n 10 pro".)'0\1 Q\fI"C 1M deb!. Ifs your bunko 10 

prove)'O\l do not 

For debt collectors. the credit reponing system all ... iates !hem from the need to 

pro~ in ,cOIH1.oflaw by I "preponderance ofth. evidence" !hat I wns~mer is liable for 

• debt. _lid INI the amounl of the deb! is C<JlTttt [nslC3d. the debt colleclOr simply 

piKeS the blaek mark 01\ !he cons!l/Tlef"'s crediln:port, and wailS until the wnsum"l" fIffib 

to buy • car Of bome or insur&ncIi comage. The: rom.umer is either fan:ed 10 pay off the 

IfOOII/IIIO improve her emlil n:port or fllKed to ply higher prices (irlle or w can gt1 the 

cn:dil or i ... ~ ~, aU). 

For ronsumm to r;cI enon in tbrir credit reports lixed, they must dispute 

multipk limes ""d in some uscs rellin. t.wyer 10 file a lawsuit Conwmcn who &l 001 

~.e the lime, educational $kllls, and I"e5OU1« to send multiple disputes, like the single 

mother of twins in the FTC study, are simply OUI of luck - plagued by B Searlet "Ffl of 

emlit that they did not C~UlSl.: but ,.."not get fixed. And O:Ven time who manage to ""nd 

m~ltiple di$pute!; cannot alway. eel justice 'll-itllool beina able 10 find ." attorney 

apcrienced in litigating credit repol""Cins d~ 

• 'It .... ~C_ofPioolloo,.'.u.n<1*CiI ~""'"' •. __ NA._1L'i Duo 

UOOS 1:Mllo.Miao.JWly7 _~ 

"~a.-1"""".1' 

" 
121 

--

Yd:I'~ ApOOaca IIIa$ a~ .. Nfo'lluiol ~ bblly 11wst. Tot.Imw.1he ~1Ier~Cld~II*:III\e~~II!dD~n:lIr3II ___ !IIi 

"~3S!Zcbe. ,/p'dy,~"adhlr3ll~1I'blI:I1I1IiIIII'Aldl'd;xj;J 

Lcpu~buMllf\'lr3IIe._lill.nlh-._al"_ape; ..... SociII 

Seal!:!' ruDn IUI:Md. -Illy IdI rIIiIea iI h IIiIII! 01 New l6III:o. 

~ *,berfnl\tspull tI Eq.A. iloW <003, 'IiIW AiIIdl!l She~ IlIll8:! 

~ i'Ir;i.1di>g ~ __ liIpAtooAllgusll2, :ro3, 1Ibdi IicWId III ~ petlal ol 

Lcpu ~ i'!d po;mgrutfltditQ'J SocWSean,o rM.IIW$ ~ '''I0I0. ~ *' 

1I!I'II:i:Ined1lla!le!e SItf1 ... ~. kimp.nl\a$i'lg ' _ filii'll'" ~ dose 

oo,.ta;allllS She~fIII.lIId~iI'I.-.bn~"'~dbdlier'lbr.se 

_nl~ E ..... ,._~Ecp!DiIII~b:~·,ad"lDl 

~w:tnm.i'lC/I.tJIa'llXi.1, ........ "'*d'*_, ... a!dSocil 

Swiyo:ad "'II$~_jIOI'IIIdooJ"~fIaI_Idt.s.~ilGWC DI 

1lIIaMrFf".-.aI.Ia:tuI. ~ .aillal cilpAeoo ~XGt lIjIiIililcql ~dtqez 

~ tIoril'.4'£1 pebo1 III:! ~"'1Ie ()IACnI~ 1IXtM1tI_lIlItIws, The 

~n:lGKACa<:WlI"frIII\'li!IeIed tMrlQllIe~_ fnmlld,~ 

maIe<J blling alm\il CW!' .. 6d E~deIeII hi DiIccwI mlIrII. 

lNi'9ilt~ ~cInId fIIIO P*J" bdtrlell i'CIIuku IIQIIIlot:Irep:I1i1t1t 

_pV/ide$~'~ ThI!uu.i~lIdnol=--tq.sd" 

GIll pIIbI";~I.cp!~illlJIiIIcI SliB~CcutIl bI~ 

~~~_,CI'tIIP"l'(:IIId~b"""~(:(I,It~ 

I'Id _IaN. hOlde lblll cr_ plea! pr:M:Ie~ll: ~*,aca5fll:! 

~'I!ii;d!(I'lIecq:oe$d"'~~ CblioIp:Irt~ ... ~ 

o:u1'l ~ tu!ailidbnt<lc:l"~iI S:diI Seanj'fIrien. hired. C'Q:ep:ln 

'/!dIed tit ~r.l:mm IJI~'I rep:I1 aso:md. 

TlMJa:tflal~6dr.:t~"'~ilSlxi/llSomiIJMben_"'lh:Iqol 

III U:IJiiIed erN sya.n_ ~I '*' b p:va,l¢lcil'ldiIpdI bbftll:l:r AI hctlll1 

_ ..,~ I:z!bAdId cqieldll .. i1c:II*I~ r:,Pldlbil~ 

iMIlgDQ' ~ lIlIIIb"..md""'re:b:nJlloIllllllb:mlUltl.~adt oo.~ctN ... ~II .......... hI~ ... __ _ 

emadllm ... .. 

" 
122 

IV. THE ECOSOMICS OF CREDIT REPORTISG 

A, WHO IS THE CUSTOMER 

While critically impolWlt to consumers and the national eronomy, the =lit 

reponing indWr)' is unlike most OIher industries in wme fundamo:nt.1l rtSpeCtS. It is 

essential to undersund thai the paying dienll of the eredil ttponing induwy are not 

eooswntrS, but the Cltdilon libel fumlsh or use the infonnatiOll OOIllllined in the .ltdit 

bureaus' dallibases. Desp~ the growing profits in emlit monitcring SCI'\'i~, the ~il 

bureaus make me;t of their morleY from furnishers. For example. diseo,'ery in lawsuill 

IIIKO.md the rae! that Ttar\SUnion bad =ivtd ol'tr S6 million ~r )'W from MBNA 

alone.6i 

MOmJvcr, OOIIlI!mers ha ... no S<ly in IIhcther!heir infIl/TTlo11i",,;' iro;l...bJ in the 

credit bureaus' databases, Mo>! Amemans eaMOI avoid having a emlit himKy. Un~ 

they are very Ilealthy, OOIl~rs need 10 borrow monty if the)' "311110 bIIy a IIOUS< or 

an.r.:! coIkgc, Cro:dit reporu are abo used in other nliaJ ~IS of life, such as 

tn>ll!"lOO: and employment. Thus, unlike ~Imost aU ~ business relationships, 

00Il~ who are unhappy "'ith the ilCtions of I credit bureau cannoI VOle with their 

feet - they W'UIO! remove the informalioo or take their business elsewhtrt. 

Cmlitors, in eOOIrast, iIo hive the ability to switch between crtdn bureaus if they 

wish. Furthermore, .ipous investigation of romume' disputes is likely to dtj,'e 

cn:dilm away. The creditOf who reports I delillquent IoCrount 10 W crediT bureaus does 

50 in the hope of col\cr:ting that debt. ertelil bureaus have 00 intertSl in derm1ng to a 

00IISUIIlef involuntarily captured in I relatioruhip lIith the burea .... when doing 50 ro.dd 

cause ill paying CIl.SIOnler 10 lose rolkct1on opportunities ar.d prof!Ll. Bo!h fumishm 

IJId crtdit bureaus also bcncflt ffOll1l S}sIrn1 t/at alkl ... ~ them III spend only IiCtonds 0/1 a 

di5jlllk: ratber than the time (el'm if minimd) required 10 actually 11:50" .. it 

Thus, traditional competitive mar\;tt fl)f'Ce:5 provide link in<:ellti'le for ertdit 

bureaus III incur the eoru of irlSlituting new proctdures thai ensure infl)Oll3.t1on is 

atturtte Of 10 undataj(e investigatloos 10 torrttt errocs, since \he:;r: lcti'lities primarily 

benefit toIISWIIeI$. Only the FCRA. itself compels such bcha~ior. 

HQ"' \""', !be risk of an omsiooal FCRA lawsuit appears IlOIlO hal'e Ol'tmllM these 

ttollOHtK: i!\t:entives. The result is pmistent inaccllf3Cies in (redil reports, whith harm 

I>Jth a:mumers and crtditO!S, Until the failurt to wnduct ~ real i~vestigatioo ~ 

mon: (xpeusr.'e than the saving:! from these cost reducing meliSures, tht (um:nt S)'strm 

""ill mnain brQhn, FurthrnnoIt, 1liiy prOlcr:tioru for identity Illtfl I'u;lirns cannot be 

dfccti"e in the IMe"" of I !'tal inl'estiglltion, 

" 
123 

B. fAR AND AWAY 

AIIOIbtr fador ill ~ inadtquaey of mdilltpOItin& in>'tSlipm: is dw IIOQ of 

~ Wee IIItiDrlaI aedit bureaus !live 0\IbIlarted these !alb to IlI'Idon who lISt.mas 

in romp to\IllI'ies. Vr'bile _.-e IIIlII)' policy issues conteI'IIintllhe DffsboM, of 

jobs Wt are beynnd !he leope oflhiJ ~ til intportant o:or«I'!l from, emiilltpO!ting 

perspective is dI3Il worker in lIIO!h« country is Il0l1$ likely 10 \lllClers1and the Amcritan 

credit systtm. In addition. foreian comptnit$ may lit governed by I dirr~nt St'I of 

pril'ICY IIIlts IIwI u.s. bw proI'idcs. 

or !be Wee national eredit bureus, OIIly Expcrian ptlCt$Sts _ displltts 

domtstieaIly. TnmlJllion recen'n d"1$pIItS II its _ rehliOIIs flri/ity near 

Philadelphil, StII)$ the cfu!xne inIo III elertooUc . IIId dItn IIWmiIs \he ~ 10 

IlI!eknet. i!$ subcootracIor Ioturd in MIIIlbai, Ind:Wllllelmrl in Mtimbai tan ~ directly to lral!lUOKIII'J CkONUS ~, rttric\'e I conswner·s mclil nle and Initlale 

!he ACDV mhange, 

E'.qijifu uses , n\llllbtr of OUISO\IIte vendors for its dispult proetSSing. COIISllmt'T 

dispuks 111: inaged by I~ btsed in AIIanti. M A -.l of the dispute is logged 

illo \he ~J filt, 1Dd!be disr..u- is lberIeleo..1nWcally ~ 10 J-n,!be 

Mppines, or: ("$a Ria." The fcrrigtl IXIIII!KI(If ~ Equiw'J dliabase, 

rtIrievcs!be comuma'i mdiI file and wtWts the ACDV =haDge 1$ applieable. Tbe 

multi oflhe ACDV excbangUtl: then IUIOmItiaIIy rdlttted J.:k mlO!be tiWllma'l 

credit liks.lt 

C. QUOTAS 

AI d~ m P:II1 IV.A, _ is linIt eeorKInIk inctrI\iI:e to toI>JtICI INe 

in~ bco;a\ISIC \hey do IlOl fWOChn !t\'CIRIo:. Real ilriestiptions ... -ogkj rost the 

aNd bure....ts and fumisbas raJ 1IlOIItY. f(I' the·aedil burellII, Ihh is _y ~ 011 

pecplt .. 110 lie IIOIlbeir raJ CIISIOmm. for furnisbm, !his is 11\ invtSliptioo IhIl could 

mnnine lIxil' deb! ooIkaioo dfom. 

Thus, until retendy \\i!h \he !IkII'li of E.Qsear into, for'p!Ofit mtity, the 

irWtSlig.llion i'lI<lC1icn Iw bet'll ~ cnl~ U I eOS! burden, to be minimized and reduced 

IS mueh OJ possible. As pMt of !his tOIl. rc.:Ilrlion. litigation discovery hal rel'taW 

quota sylleaU w:ed by the atdit bureaus 10 fom: employees to process disputn rapidly 

and witboI>t meaniDgful inquiry. For example. ~ . syJ1tm to ~ Ihe 

IUI!ber of "m!.rncd \mits" p:oduo:cd by w empIo)~ 11 b:tI wt is I$$igrx:d 1 

dilfcmu nlue. To met! Expc.;..'J mirIirlun stuhrds for: I pay ~ i( ~8 

"~_~.ll. ". 

"

". w 

~ DqooiIjoo oI ~ IIopos. W ! Eyg!. Ci.. M, No.I.ts<.'m1(E.D v. ~}w It, M .<*d .. 

~"'T __ .11 

" 
124 

the IIIOIC difflCUk of dilJllUS - tm.l wi idmtity tbeft elIims -the anpIO;iet_1e! 

bave 10 pafOIIlIa least 9115 dispws ptt diy, or III per bour.ll The quoII minimum 

.. TruslIBioa ~ iI ~ its ial"diption fiD:tims "'"II iIcr.>."ftII 10 10 I~ 

dispute ktlm per bour.lI In other 1rA1IIits, mdit burtau mIjlIo)m han LCstiIicd IbaI 

mtpIc)m are rtqIIirtd 10 procr51l one oISplk ~~ far or six minutes in order 10 mttI 

quow.l< 

In fK\. 11K« rm:nl lil igalioa di5C01"e!}· has sho-.; ... Ihal1he cn:dit burull:S b:lve 

Uri~cn (O$\S CVtIIlower. Befort rnid-200t ,,"hen EqIIifu still hIndkd!iQllle di$pUlt.! illbouse, its mragt" CO$! per displlk ~ $(67.

15 By lilt 2004 nI iDIO looS. !'Jr.Iifu us 

~ 11\ 0Ul\llIIItt ,-mclor calkd ACS ill ~bIrtgo Bay,.Iamllea. Its ACS investipJDu 

tO$! Equiflll only SI.M.lI Now, afiet IlIr !IIO\~ 10 DOC in the Philippines, Equifu pays 

oaIy SJl per rortSlDCI dispw 1rner,!tp!dIcss of how I11III)' ilal"ll or KtOUDU m It 

_.71 Th:sc: dramatK mt.ocIic:m in CO$! per dispute described ib;Jve "',·e III rome 

durinl' period of ruml ~r.ti1y !heft and fnud disputes. 

TrwUnion has. diITem1t eonlrIetUllJtlation!l\ip with its 0Il1SWrt¢ vrnOOr. It 

plys the llIdian compan) .• ftaI SI.DO per man-boo.- the ,·em tnwr1., but it nainllins 

riJorous poduaioII ~ 1lIe ,"tIldor mlGl ."eet"ll 

To add insulllD injury, !he crtdit \utaII$ 1IiI'"e fo!IId aaocba ""1110 mIutt lbeir 

tO$!ludms fa: illl"Miptions - by ~ !inishm for invatiplioIls and ICtIIIIly 

rnakirq! • prorK (rom them. For mmpk, Equiflll pays its 0\I1S0wtc ,·cndor in ~ 

Philippines up 10 S.57 10 proceu each C9DSumcr di$[lU\\: k!Icr it rmivrs. B\II1hrcIo.IgIJ ~ 

Osc:. $)'Stem, the ~us c~ no lUI" 1IwI $.25 W 00 fumiWr for each ACDV 

djipluc form IgII cle<:1ronie1l1y. ThIl5, if I consumer di5pUlt$ nvc iMCeurate IWJ\iIlts 

alte.- I file is miXC<lcr III identity iIOim, Equiflll would Pl'Y its ,·tIKIor • fraction of !he 

IJ"OO IIIII01JIlI (q. $115) it cllargC$ its Q'tditor C1ISlOmI:rs t!wooab E-Osw. III fact, tbr moIt:ll.llOmlltd disputes it $Cals 0IA,!he __ y it gaICIlIleS. 

This is IS milt!! "tO$!~ informllion IS tImlIIIIm b:I'~ )"tI distol't"ltd. 10 fld, i:'1 

lWO m:ml U$a, 1Ix cmlit OOrtall:S d,imed not 10 mailUm budgets, proj«tiws or gn"ISS 

tO$! tSltm.1\C$ fl'l" 1Ixir irl\"cstigatiOll J\.nc;1ions, •• em that is flirly incrtdiblc., 

'w 

~.fIro.,..rltiIoool..ilk. E_.(l.Lc..,.~Cio _lILfKY·II.(E.D.h.""~ 

"'" ~.fIr c... T __ c.,.. IU fJd ~Il~l$ p.lC" •• I!'91). .fIr.~ rI~-' 

_. r...a:_Cir._IIot:.l1lGU!.D.Mn/a,.!OQl). 

L-"a.-or.-,.OIlt. 

.... .rCory l'I>ol.fw.. ~ (1< • .\<.lIL U""ll,MJI<\Il~ 1001. 'w 

·t....ta.-or......,.OIlt. 

"/01.1 

._. '"-0.. A<. ..... 1-t!CVM1(ED v.~ .. Fall •. f.ti*.o. A<. ..... l*"IJ 

" 
125 

The~_!lIp!d:iai:n:lpert:.'Id!rj~oIad.~~ieslf.arlllllalfed 

ce:tailpeopIe,5io:Ilani:\erlti5e(!~.rerp:a!clor~oIIcit Wolh!fI:ee~ 

(J1Q11;Jo.:rMJS~aisl.ct!lllStKl"l!nlhe7iJenitilSW1ies. ATF3"ISIJitll~ 

Ies..~il ildepI:r;1UI:~ 

Q. M:lme~~betJlnweillp'Q"ca5e$bm8JtuVF~.lsoo 

SIQl ar:Wpfl ~ .. I For~.r ~ _ mRs adispu'B, I'limje,l by)W" 

......, 

A. That ~ o::md. 

Q. 'i ptJiIio:BIor[a persoolkflO\lfl \:) be a~ mal~ ~.;relt!ose toe types 

~ol9;I.1e$)QJ~!lMe? 

A. y~. 

a. W~3$weI1 

A. Yes. 

f<.Jr00Vi00s reas.n. ilesafiles, P:tI miW1e1n'dl OOi5llJ~. re(e/re sped ~ 

_t TheyIl1Mld1!!dbyli'Jlle'/eI~ ~kr~:n:IT~iI 

si;lbllifielence is IllI fIey;re limed by ad.~~ ;r::tJaIf1xa'.ad illhelliled 

'''' 

D. CREDIT REPAIR ORGANIZATIONS 

Crulil bureaus may anempl to jusli[y the pertilIlerory fCRA inl·e$~galion proms 

IS I response to fri.·o\ous djspul~s g~nm !d by C!tdit repair organizations. Some of 

these Of8Miutions do oRceplively market false promises to otMin lite reJllO~al of 

olherwise atrurate credit data. The Consumer Dab Incfustry AssocialioJ\ lias e$lima!ed 

that 30% of the credit bureau disputes in~olve eredil repair OfgMizalions. 12 

Howe~er, tri~ializing III COIIsumer disputes in the name of coping "M crtdit 

rtpair dispute$ i~ Ihrowing the baby 0\11 with the baihWlltf. Cred it bureaus mllSt assume 

l/1al, IS FTC guidance SUItes, I o;oosumer', dispute is boIu fide. unless thm is nidc:nce 

to !lie C<)Iltrary. The moo-s/uil\ing of legitimate subsanti'·e dispule$ may ao:tUa!ly 

encourage more OOllSumm to turn to credit rtpair orglll1izations in their desperation. 

Morwver, mdil bureaus hll·C al~ady delelopcd metbods to spoI credil repair 

dispules i1 Credit rtpair disputes a~ often generic in J\3IW"t, making a claim Mb IS 

"This accoWll is inmuratc" wit], nothing mort, and l/1us easily separaled from ~ 

legitimate disputes. Aoother hallmarI: of eredil repair disputes is thai they will dispute III 

[)(gatil·e information in a cre<lit report ,..ithout specific allegati~ concerning any of the 

• ~of_" NorIoOOd, M"' •• Jbm;!!Noo, Cio.M. So.l.~W.S.ll.lII06, .. ,io>;! io 

,"-"Be-oT_O:S. 

C CmIiI..., eo..-.. dWiI}"lO Oltpw 1lNi~ ~ ~ -.. t<fon III< I!.s< 

~ .. F..-itJISmiw,llliI:ICqt.(2«l1)(_ofS- """""*",,C\JlA.~~lO._ ",1IIIp;.i'w>o .. ~~ __ 'o!pnIIIIiI!Ol.pit: 

~_olb_ .. 4<o<ribo;lio~""T_1.I!ooo.U.c.l4f.R.D.m lll (E.D h.lOD1). 
126 

irodi,idllll items. 0tlItT signs art disputes made using a wmmon form.n, m~ mailings 

",ilh!he same ttwelopes Of po:!\age, Of disputes in ",hi\:h!he OOIISumer ha$ included !he 

cover letlCr and irlSln!<;lions from !he eredit repair organization. 

A dispute bearing such Nlimarl<s Wld ~nsuwoned by spe-:ific allegations Or 

e,idrnc:e, ,,·ithout more, is IIOt entitled to an in-dcplh, meaningful investigalioo under !he 

FCRA. In fact, the FCRA already permits I credit bumou to refuse to investigate 

di&puted information if the bureau "reas<JII3bly determines" a di;pute i$ fri\1llous or 

irttl,vanl 

Tho problem of friYolous eredit repair disputes does nol justify the credit buruus' 

failure to put appropriate reso= into resulving legitimate disputes. Consumers whose 

disputes do IlOI show the hallmarl<s of a credit repair dispute art entitled to a meaningful 

inHStigation, 1101' farce. 

" 
127 

v. TlrS &I ReSOURCES 

A. HOW TO DISPUTE ERRORS IN A CREDIT REPORT 

Whik Ihi$ rrpon sIlo"1 that the i1l1"estigati.Jns «Inducted by the CItIlit bureaus ill 

response to dilplltes will \lSually be perfWlClOIy, it is >till important for ronsumer:s to 

dispute mors in theil tmin!tpo!lS and to follow up with IIlO!t dispUtes. 

Frrst, the furnisher rna)· be willing to fu: !he em>r, either because the fwnishcf 

actuaJly does fmd an error or to mai ntain good customer I':lalions. ScWnd, if the 

furnisher does no! respond, the =lit bureau is legally lCIjIlil':d to dekte the displlttd 

information from the coosumu's credit rtpOII. Thin!, if the error is no! COrrettro, the 

consumer has I pottrnial legal cWm under the FCRA - bot ONLY if the CO/I!\II'IIe1" tw 

sent a dispute to the credit burtau. 

The follov.ing are some tips (Ill smdmg a dispute to =lit bureau. E,-en if the 

disputes themseh·cs do not get mtllts.thest tip$ wiU msurt that the consumer pttsetl"CS 

his or net legal claim undu the FCRA. 

I. Rtqww Q Im"tJligQ/i~n in ff'ri/ing. Rmrn Rutipl Req~tsled (Do~) UJt liIe 

Credit B~aw J Web Sitt) 

Allbough no! required by the FCRA, it is safest to request 311 ml-estig3li<.o!1 m 

writing (keeping copies of all cormpond=), Of to follow up I telephone Jtques! with a 

written confimwiOlL Tdepbone disputes do not C!Ule ill adequate record in the evm a 

consumer Mtds to follow up I failed dispute "ith litigation. In addition, the eoosumer 

"ill not be able 10 pro~id1: documentary Sllppon of the dispute by telep/torle. 

Funbctmore, aJlhough the rCRA requ ires national cred it burwIs to miintain I lOll-free 

number for consume"" telepllone IIC<:tSS to the .ltdit bureaus is not IIW3;IS C(I!Isisterlt. 

It is e>cn advisable t{l send the request by certified mail, rrtIIm rtteipt req~ed. 

Even though the «IrlSlIIl1Cr rttIIiru 3 mailing pmumptioll, this mily stilllea>e her with a 

ffllrginal claim. If thr =lit bureau can claim !hat it IIC'er received the dispute, it will 

arg\lt.lhaI it merely made a misuke, rother !hat be forced to !IdeM iI daim mat its 

jlIOCedures thtmse l"es are inadeqUJIC. Avoid using the internet to foomd dispute!. for 

5QIIle of the same IUSOnl. 

1. Do~ I Be limiltd by Credil B~reau RtqueJI Form.! 

When to/lSUII\C/"S request «IP~ of!heu- credit reports fnlrn Ihe !\Itiorlal cltdit 

oorwus (Experian, TransUnion, and Equifu), lhty will r=r.e! dispute form lballhty 

are encouraged to use. "lhe:!e fO/lllS attempt 1~ pigecn lIoie the di>pUl~ into Il/le of se\·crn.1 

gtnerall)pcs, and do not facilitate a detailed ronsumtr displJte. "["bese fO/lll5 provide a 

1i5t of"cbeck box~ displlte choicl)S, and appeal to discounge a more subsunti"e dispute. 

Omlumers using such fomu f~r a dispute should supplement the fOrm! with additional 

" 
128 

"TitIftI deIIib and ~ $IIppo!\. Inttrnel di$pulcs ~finc tcmumm !D I 

simililllilll of cb«~ boxt$, and IhIlS should be avoided. 

1. TItt ClHUlII/ttr SIrorli lap" Fill 0/ All C~ioou 

A request For inllStigation lilly be jll$! !he Iqinnina of I protrxled '-tt~ "ith 

the credil bureau th.al may ignon: oorrupoodcnu or fa il to follow up as promi$td. Thus it 

is goaI!,ndke For tho; _ to ~isfl a fik of til ~c SC!!IIO IIXI 

Rttil"tCi !hlm !he cralit bureaa, mel VlI!aI'C prooflhal !he credit but<au bas rmjo,'ed !he 

OOIISUIIlCI"'S WiltspJO..xnct. Similarly, thr «mUIlXf JIioIIkI keep dated II(.(eS of all 

leltpbone ealls. 

COIlS1llTlm II the lime time $hould di~ly ootify the treditor or OIlIer furnisher 

of!he disputed information. The mtittlllO!ice of disputt is dirtcttd 10 the credit burau, 

"hieli!riJ!m lite rishtlO .. invemgllilllllhllllte _ tall rnforre. The bureau 

will diM ask the timiIIttt 10 ia\~ Bill ah:i RIIdini • detaikd notiu 10 the 

furnisher will finsull any ItJIIIlIeIllS by !he fumisha- ihM the ao6ce !hlm Iht tredil 

burtau ,,-as IIOL ideqwte for it to eooducL I ItUXllbIe investigation. 

s. S,1Id" DispW' III i.t1JJt I"Al/lMtl Morjor B,.,,1fRI 

II is IISUI!Iy IIDi enough 10 dispJtt ao error Ii one credit 1Nmu. I~, tbe 

«mS\II!In" sbovld mj~ I emlil rtpOIt from .1 leas! Experiln. TI1IISUnion. mel Equifax, 

am disJW aron individloally "ith eW\oflhe IfIre.e ~K$. A fiI"IIisher supplying 

inconm infonnaiorI 10 one of Ihese apcic::s "ill oftm JUppIy the _ ia:omcI 

information 10 the odicr 1\00. MoItom". c~ , WiIIIIIICf'S file "ilh one of!bc:sc 

Ibm: does ...... bd 10 COIm:tion at Ihe other !VI"\). 

A IIIIn cumpcllin& om! to WiUCI iDOIt 1II1II one mdit buruu can .me wbm 

the _ is infOl1!ltd by. cm.titor (or odicr pmo!I) that lIkem IC6on. was based Oil 

I etedil ttport m:eil"td frQm • emlit rurau "bkb is IIOt one of the "Big Three." 5IIdi IS 

IltsellC1. Wh ile it is impo!tll\t to diSjllllt iIIc: atcUl1l¢yofmformatiOll "ith the mcllC1 

woo JUpplicd it 10 !he cm!itor. and while $ptCill rules requi:e restllcn to handlt or 

1"cf1I"ard lilt di$puIt,. _ should abo amidcr goin& smigIit to tbe "Big 11ute.. 

6. & Carr/wi Ho" an Artolllll /I'umber Is Dtmibrd 

'!"be dispIliC ~ !Iioo:akI ~ idcitify Iht o;oo!$lIilel, fully idmti(v die 

iltCOId 01 oIba iIcm brina dispMd. and npl.in .. "fly it is ofuFwd. 0dIm0-;", the 

mdil burr.lUS may Ilh (OOSUII)tr dUptrtes 1;lmUy. and dQ lIOthing more than ,,"hat is 

expre.uly ~.IItd. 

If 1ho: _lWtS, "I bm IIMf bad I MBN.", aN~ cvd. so ddtk MBXA 

.ecowtt 11234," Lhc cro.:lil bw'CIu \loin OIIly cklC1c art .uouaI willi th>t 1I'IIIlbtt, rd 1101 

" 
129 

ocbef ~ !be 00IllWIItI' may !alIt ""ith MBNA. This is 1 rommon probkm bmllIc 

IIIIfI)' fvraisher$~aocounIlIIIrIlber$ * an iIIiIiII ~ is!illdt.. C\:nediogjusl 

!be old at((UI\ wiD IIClI affttl b DeW 1CaUXI. O!ber Iimc:!, !be lC«Ul !IIIIlIbtt !be 

_ ~ in I periodic ItatCmmI is difflmlt thm!be runbcr used ill !be toIISUIIIa'S 

filt II tIx credit burut.i (or by I debt coIlcd!I" to whidJ the 6cbt is msfmt:d). 

To pn:Vtfltthesc: problems, an inl"CSlijaliOll 1I:q\leSl should dmri~ tIx full r.IIlge 

of ICCQUIllS 11-.edispu:e culm. For examplt, ., hav~ Ae'i!T bad 1 MBNA ~it can!. Any 

MBNA KWWlI in my cmlit filt is IIClI mine and sbould bci deleted. This includes 1OXOUn! 

IIUI!Ibtt 12J.4, 1$ ,,'til 1$ any odItr ICCOIIIlI ~ 1IlI~ be rtponillz, 1$ ... 'tlll$ any KCOIIU 

!hat RIIy be rq:utcd by III)' dcbt mlktIor who is !tpOIting I Deb! originlcq frooJ I 

MBNA Kt(lIIIII.' For Fins USA ICUIIIII, whid! ~ Bank One and lhrn Owe 

1ItCOIIIlJ, I 00IlIIWer alUJd SIIIC, "1l1li dispulio!!be Fint lISA _112345.11 may 

abo be reponed 1$ I Bank One or I Jl'MCIfpI! Oasc ~ " 

7. Sig" 1M DisplJlt .Nitr Oalh 

Signing !be: dispw letter II!Idet oath "'111 rom'al the diipUlt iNo 1IIllrlCbvit . 

... nII KI'mIIt1UItins bmd"JIS. This shoIIld pwide p'!3la' rndibilily kJ the IXIIWImef'S 

ccarpIaD, cspcciaIty ill rorrtrUIlO!be IIIII:II\IUd. lIlS'IoOOl n::sp:me of I fwnisba. This 

abo 1Ih"an:es I c!.aim tpiMllhr: credit barQII 1M ~ Ili!cd. 10 b-..vd "aD rebw 

informaIioII" 10 Ihr: iIIfmmliorI fIni#Ia. Flnishc:rs may ba,'t policies IIIIl &M pier 

"'tig\ll to COI1\II!IItI" dfmvils and lbaTby IIlIn rn6ily tctept the ~s venion of 

the dispute and resolve it in !heir favor. Bill be careful; if lht!e is I qutStionablc 

sUlemcnl in the affidavit, !he ~sumer may be challenged Illel if Ihctt is litigatiOll gil'tn 

lhat Sta1ement WJS sworn to under Old!. 

I.. btc/wit All Dcx1uN1II1II)' £,i/kna Il1IIi SMggw IlII'rstigflflw SUpt ,IK C~dil 

BlomI. SAo'" TaU 

It. IXInSI.IIJI!T's ttqUCSI for im-atiption sb3u.Id ir>;:ho:;Ie aU ~ evidtnc: 

and OIlIer infotm3liorr ilia! ~!be displte. If !be creditor l1li JIfO"idtd I kucr 01' 

SLltnnent COIIfwming its IIIIdmtanding IMI tIx reported infOi'lllltion was irutcllflle, the 

IeUer 5hould be provided with the dispute to tho credit ~au. 

While it is ~inIy IlOl • rtqUlmncn~ I oon;umcr may ehoosc: \0 1IIW'Sl"1'!zl 

tilt <min burm rould rio 10 be$! ac:compli1h lhe iII>cstipIion. In ~ dispAe over 

o"'Dmhip 0( 11\ KalUII. • _ shoIIld ~ WI the credit I:mau obIain I copy 

0( the uaderlying ippIiation or IXIIIII'kl from the fIIIlIisher, anrIlhouId prowide 5('"ocni 

MrwJIo,ritinc sampln,!ilICh II ~ oF~kd dt«ks, I &ivcr', Ii«u: or ~ of 

credit c2!ds that include htr sip'llitt. 

The mdit bureaus may claim that n IIIOOId be U!lreUIJ!\lIble 10 t.\pttI them to p,ay 

For I handwriting iI/IIlym. To IlIlIid Ihis,!he: _ rould olTer 10 pay this t.'<pen5C. 

Comlllll(rI un al$o provide the IIIlW IIId clrtaCt infortnlliorl of third-jlll1Y ... i1lxSieS 

.. ho I\Ip\lOII thcirdisp.na. Forexample, if 1_ has bem in dirtCt~! .... iib 

" 
130 

I furnisher ~·t ",flo 'illS belpfullnd Igrted 'IIitil btr po5i!ioII, Lbt disp.u Idle 

~ provioX the IIIIIIe and tddrus of ~ penal. ~ I rtqIlt:Il dial the tte4iI !!IlItau 

IIIIIIIIIIIy smd !be d~ direetly 10 IIIaI perm, rather b ~ .. rlo:tmnit 

mtWie. If tbr dispIIt __ I jlIbIl: mxmI. I rtqUCli for in"diption c.ouId 

incIu&: the name and teltp/lQar. IUIlber of tilt oourI tlerk.. If there ... lS prior titigztioo 

involv~ ~ dispute lent! eoukl irl:1udt 1M namr and telephant number of !he !tIOIIley 

,,110 p!C'Iioauly represented the rndilOr. 

A dispute kacr sbo\IId tIso illelude III)' 1I"1ilable iafannatioII qurstioaing the 

xancy of the fwcisIIer'l infOl"llllliocl j, 0Ihn oontnlS, ill onItr to n:bu Illy claim IIIaI 

the furnisher', n:porIing eoWd lit tonSidm:d presumpti'-ciy 1CWr1Ie. Then: an: 1\0 

limationJ M 1(1 11" .. """"'" of!Ucll idditional infoonation: GOpies ~f relevar.l twII 

opinions 'gainst the furnisher in emfil repmins ronIQlI, or similar compIlinu by O!her 

tOl\llll1"len IgJinst Iha! ftll"nisha-. A C¢mUITICI could t".'/ll inclllClt PfW clippings !hit 

referenced I panic:ull! furnisher. 

I 0 H II't II /.J;noyu 

If !be o:murm bas bea'I UII.lbIe oIuin I SIlisfat1o!y n:$Uh Ifter setIdiq: multiple 

d~ 10 Lbt burtM., lit or sbe \I'IIy 11m 10 111m: aboI:l hiriIIc I ""la". II is bcsIlO 

hi~ 1"")(1" «ptrienctd ia handlina fCRA cases on behalf af ~ The FCRA is 

I (QfJIplic:a1e\l $Wute full ~rpithlll for innperieoctd pnctitionm. For enrnple, __ 

of thr rtq\IireJl!mts ofthi: FCRA do IIO! pmnit lhe e¢I!$U.fflerlO seek rtdress in court fm 

thi:[r vicillion. A rommon rookie millaie is to we under one of I.Itm ptOVisions. 

listings of tOIl5UIDCI" laW)m handline FCRA wes CI!l be fQ\ll!ll II the following 

-N~ Amciatioo ofConsulnc:f AdvOCIIes: ~ .... .t\!CI.JXI 

My Fair Cn:4it ... " .... ,m)'fajrcmli!.com 

B. RESOURCES 

I 8tx!i.t 

The lOIIoo.inI publiwicm illdoilc: lIddililml irlfonnatioa abouI !be FCRA di!pUIt" 

pmccs:s. orM imponI!II rip IIDIlu Ihc: fCltA, W fCRA litipbon. 

EVII1 I kndricks, CmJ~ Sconl & Crtdil Rep()rI1: I/owIlle S,1ltlll Rtally !forb, I/'Iral 

Yow (.""" Do (priV:ICY Tunes 2007) 

" 
131 

~Iari frJllk,F""", V-..n.r1O f.\'w: A ~BySlfpGwidtj;w btt/ilt:Urt /I';gbartfJ( 

kltlltlly 'fIIt1 (l'oIpoist I'ltu, I~. 2OOS) 

1. Ustfoi It',bJlltJ 

My Fait C~ii: "" .... .myflu.redit.o:om 

PrivllCY TllIlCS: """"".pri..-.c:yIimes.eorn 

ETC l(!entity Tkft site; ,.'w ... ·_,go~r!dllltft 

ldtntity Theft R~ Centtf: ""'lw.idIbdlcenter.org 

ldtn~ Theft J'm"tlllion nI Survn."ll: .W •. identilylkft.org 

NItional Consumer law Cmttf: www.consumerlaw.cq 

NIIiooaI A.uocialioa. ofCmsumer AdY«atts; WWW.I\IeI.M 

~ Union: ............. ronwmmtllion.OI1 . 

Consumer Fedmlioo of America: ... " ...... C()fISUDItTfed.org 

U.S. Public lnttrtsl R~~arclJ Oroop: W\\"W.uspirg.org 

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132 

C. REFORM RECOMMENDATIONS 

TN Rtgw/tllllrl Mal Act 

As disnmed th!oughiM IIIiI rrport, IIIIIlY of 1bc problems and Ikrocimcies .1bc 

FCRA dispuIot and im"C:5liptioD PfOCm may Ilrtady violate 1bc a.tn"t law. bo faa. 

I11III)' of the «mlImCf CI!n bOOed in Ibis rtplI1 rtSIIlted in 5UC«$lI1id 1I,,1\Iits IX 

Jesal ~I$ IIAder the FCRA. Yet the credie ~ "'vr noI ~nenull,. 

rtformrd lheir d"1SjlIICe II\d invtstiptiod proctdum, preferring \0 fliN individulJ 

~wnm: in tollrl, and p,aying the OI:euional judgmnn agaiml Ihm.. 

ID additioo, some ofthc pro>isions of!he FCRA QMO! be mfcxced b). 00Il$IItIlm 

Iwmed by !heir viollotioo, indudin& 1bc al~fiIponant ImIfX)' reqWremmu for 

fumisbm. lbII ~ Q/\ only be mfarced by ttdml rtplJI(W$, indoding tho: 

fTCand bIakin( rqIIbtm. 

De$pice 1bc probkms illuslnud ill Ibis repon. ","bic.h haw bmI docanmIed in 

CO!JII"Wionallostimoay and lrntri III rept.lIors.!be fTC has only ~ IJundfuJ of 

(lSd curing Ib i! ciec.ade agai!Ulthe Bi, Three eredn buRaus. More imporwrt~ .. none of 

tOOc CISCS involY..:! the ~un.ey of infOllllJeion or their failure to WIdueI rraningful 

;.,\'(Stipcions. 

The banj;inJ rtgllblors Ire e'·m wonc. We 6a 1101: know of Ion'J FCRA 

!OI~ IIt60as cbaI fcdml bInkiDc rquIakn 1M...: IIkm ipinsI !Iris. If thert 

ba~ bmllI'j SId! .aioDI.. tbry 11m 1101: bmt publicized. The lIlnUq: rtgvlar(n an: 

the sole entities o;apl'bIc of cnb;inJ 1bc ~ ~ of 1bc FCRA IgJinsI 

blink fumiWrs. .. hlth in;1\dr; llmost III oftbt major ~il tard 1mJm. Tlq o:n-e 

Ibdic.ated thil ro:spoMibilil)", Ic ~vinB Cllmwners UIIproCetted aglinst inac;= and e>"tll 

dtiiberalr milrtponing by iwlb. 

Tah rttylalory nI mfOlmnelll .,;bon 1pinst 1bc mdit boR-_' b!aunt 

_pli3oct "iIIt 1bc FCRA dGpv<.( IIIil in.~iprioo req-. Thn 

iJocbln: 

o Requiring \be cMfA buttau 10 mwtilg!"wly rtvitw and t,"lhralo boIIt !be 

romumer', di3pule (ine/uding supporting docurroenUtioII) and Illy !be 

rt5pOIlSC from me f\lmi$her, "'ther than rntrt!y parrocil\i it 

o RC'iuiring credle burmrs to send 10 m. flllllisher .u (\o(:uments iubmitled 

by tho: comumc:r in III FCRA disp\IIC pursuant 10 1bc FCRA '$ «quimnmt 

IlDt '"all rehl/ll iQflll1llllion~ be forwarded. 

a DevdopinJ JII appelI ~ Ni\he _ till iavok., iacludia& I 

Idc:pUIc coafemocc "ill! I buItm employee "bel has \he _'J 

dispw: and all Ik 6oemnmIa1ion pnI'Iidcd by !be IinI$her and ck 

,~. 

., 
133 

Require c;Nit bureaus 10 iaIpro>'l: their ~ 1)'SItmi by: 

o I'romulpring ItclrdeaI Ipttifntions far the Slmllrdiml repriIg 

ftmaJ. (e:al1c4 MellO 2) IhII aIbw cndit bamillS 10 uxk nnsfartd 

1IIX0IIIl$, pm'ePI olIpIitaIe IIIX\lIIII!S, and pm'CIlI n:inscrtioa by Iimishm 

of del&.! ineonect items, 

o Require the crtdil bun:atl$ ro use the lUll idcntif)'ing iIlfmnatiol! of 

coruumm ... t.c:~ maLChinl information ro . fi le, including .11 n~ digits of 

tho: 00IISIIIlICf'1 ~ill Security number. 

TakiDg n:gubtoc}' lIld rnfO!«lJl(nt aclionl apimlliInli!:Mn far their &il\n!(l 

anIun jIQpCf iIr.'CSliptioM. IIId requin: IbmJ 10 mW I lUbsranlin 

dcIcnlIirItlioII oldie I'IIidiIy oIlhe 1pC'tiflc: diIpde II iIsve. l\is Induda: 

o Rtqmng fumiWr1 10 inftSliplt the ~iroc dilpJte raiJrd by the 

..".."..... r.other INn mml)' \'erifyini thai the lfupuitd infonn.tlioA ~If 

appears ill their own rteonl$, The furnisher's inveltigation m\ISI invoh'e 

n:ming the lCIual dacumelHs prmided by the c011sumer,lJld re'liewing 

cIocuments in ilS O'i!I pouession or ill the JlOI$I:~ion of 111 wlier hollie, 

Dfthe debt It ~y illt:11Ide mjlIiring /inishm to contICIlhi:d ~ 

o RcquiriIJJ fumishm to rrlIuI the COfISUIm'1 spmfK d~ by providing 

10 ~ _lIld !be emI~ bun:au ~ thai Wroo'S thai !he 

infom!:,rion !\nisbcd is eomeL FIIIIIisbe!s sboI1Id IlOl be alltrwro siqIIy 

II) lell !he rndi1 bun: .. thai !he CUISllIIItf is 'l\TOI1 and tho: oriziMl 

infO<lll3lion W1I eomeL Instead. the I'umim shtlald be n:quiml to give 

the 00IISUIlIer and the crtdit burnu the underlyinS information - copia of 

dacl!!Mt(1S with original sigllltwtS 10 n:but a f0l'8!T)' claim. for example, 

IX copies of the (II)1!IC1! record to demonstrate th&t the claimed balance il 

~ 

o Taking..:tion against del( rolkdon ",bel INge illfonnation 50 thai it 

Ai}'S 011 _' erediI rtpOrts p3Sl the SIIlWlriiy pamintd sr>-.o 

y= 

Rcquin: tWnishm 10 improYe the KCurat)' of!beir ttportinS by: 

o Requiriltg fumishtfs 10 retain specifIC opmti\"t n:eonIs for Illy 1CC0Wl1 

for y,hid they are n:ponini to a emlit burtilU. For mmple, credit card 

furni5hen mid be m,uiml !(l rwin miginal x:counl appliCl1ions, 

original tontrICI or ~ Ill)' billinl IWnnttIU, tIIId Illy re«II1b of 

...... I) Rcquirinc del( rollcrtn and deb!: buyer 10 ntuin !he oripIaI re«II1b 

nccd:d 10 miry • deb!: from the atdiIor ani ro re'lRw iIIan befon 

rurnishias iDfucnwiDn 10 I eRA_ Forenmpk, in I mil. gnj ~ tile 

deb!: buytr mUSl be rcquimllo ob!3ir1 lind re'licw tile _'saccount 

applicalion. Dfii:.NI ~~ hiSlOr)' Qr ~ic $l.Uemmts, IIIIl Illy 

rwml showing whetllcr any of the deb! 1m disprttd with tilt cmlitor. If 

the consumer dispul" the rkbt lIIII me debt burr! doe$ no! bave ~\Ia((: 

original OOeumal\.ltiol\ tilt ICOOII!It mllSllx del&.! from the ~I 

'" 

" 
134 

2. C~ssioJwl ,jrlioll 

The numbtrone riilulhat ~ tack WIder IiIe FeRA is the Ibility to ask I 

judge 10 \til mdit MtIIS 1IId1i.mishc:rs:"fix that repon." With one minor~, 

the FCRA 0DIy alIolo1 injllml wnsumm II sn IIDIC)' for damages thai thty sutrrrtd, 

:md. pma/Iy if the rioillion "A"l5 "iDfuI. TJw. _u IIIIjority of COUIt$ bll-e hdd that 

roum 40 001 hl.·e tilt jXI"'"(l" to mile In injWICtioo undtr Ihe FCIlA, i.t. 10 orrk! the 

mdit bureaus 10 do« not do somdhina:. 1M FCIlA ism anomaly in this rtSpe(t, u. 

Supn:me: Court dmsioa pnlYicb the basis f« iIIjlllttin relief r« mosIOIherIu'S. .. 

Considtf I cuuumer .... "bo h.u filed di$pllt~ ,fla dispw "AM Ihe crtdi! bureaus, 

"'00 has supplied e~idenc:e of fraud 01" miSlIke, and ... ho has rued to protect ha- rights 

uoda the FellA. If 1M can show thai lilt credit btttaus« furnishen "Am IIIIRIIIIOIbk 

ill their iIIn::stipliom, •• be abC to en tctuaI damages if slit can p!O\·e the mill" 

cauKd I dmial of CRdi! Ifttr !Ix diljlW « is in ,jurisdiction lila! pmnits intIql"bk 

damages. If sh~ can show the credit bwuus« fumisha1 blew thty wtre .iawing the 

IJw or ICI("(j ",·ith recl:kss disregard, she can!«k sutulOry 01" punitive damages. But she 

wmoI ~ rile one lhin3 she really WII'IU, the reme4y II1II ~ ha- """11 this I!dwus 

path in lilt r!/$l place . III ~ 1t"Ilin,: tilt CIe:Iit bureaus lnillinishcr III coma lilt 

error. Pro'liding OOWIS "M explic~ IU!hority 10 il.u injunc:tin relie( WO\Ild furtha!lxpurpose oflhe FeRA 10 "assure maximum possible ac:curacy." 

Coagrtss I1\1III .... kI 10 ru: thc tnlm CIe:Iit IlJ'OItio& aod dispu system, 

especilUy if !be reguJw:n do IIOIId.. If the regulMon do not XI, Conptss _lei 

amend the FCRA 10 5UlUIOri1y impose the essential rtqUirtme!ds distussed in I'In V.C.! 

,00..( on cmlit bureaus and furnisher'S. 

-c.w--. V __ "1U1.Nl\I,."r_ .. __ ... _ .. Ooopao. ..... --........... -.... ~.---..,.. .. .--"). 

" 
(135) 

RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN BROWN 

FROM COREY STONE 

Q.1. One theme in credit reporting issues has been that, even if 

consumers are vigilant and try to check their credit reports (or purchase credit scores), they can still miss substantive credit issues 

that arise when a consumer goes to use a line of credit. 

Consumers may not be able to understand the information contained in their credit reports, and, as the CFPB has reported, consumers who purchase their credit scores see a materially different 

score than a creditor would see 19–24 percent of the time. 

Is this lack of clear information consistent with the spirit of the 

FACT Act? 

A.1. The FACT Act has provisions to make the information in credit reports and the scores derived from them more accessible to consumers. The FACT Act entitles consumers to obtain a free credit 

report annually from each of the nationwide consumer reporting 

agencies and from nationwide specialty consumer reporting agencies, as well as additional free reports from nationwide consumer 

reporting agencies in connection with initial fraud alerts and extended alerts. Additionally, the FACT Act gives consumers the 

right to purchase a credit score at a reasonable fee and requires 

mortgage lenders who use credit scores in connection with consumer mortgage applications to provide the scores to the consumers. Subsequent amendments to the FCRA in Dodd-Frank further expanded consumer access to credit scores by requiring lenders to disclose credit scores with adverse action and risked based 

pricing disclosures. 

In October 2012, the CFPB published a study, ‘‘Analysis of Differences between Consumer- and Creditor-Purchased Credit 

Scores,’’ comparing credit scores obtained by consumers with those 

used by lenders. For the study, the CFPB analyzed 200,000 credit 

files from each of the three major nationwide consumer reporting 

agencies. 

While the CFPB found that the educational scores sold by the 

credit bureaus generally correlate highly with the score most widely used by creditors, the correlations are not perfect, so as you 

point out, a substantial minority of consumers could find themselves with educational scores that would not be reflective of the 

score a lender would be looking at (most likely a FICO score). 

Given this variation in outcome, the CFPB concluded in the report that ‘‘firms that sell scores to consumers should make consumers aware that the scores consumers could purchase could vary, 

sometimes substantially, from the scores used by creditors.’’ 

Q.2. How can we improve access and information for consumers 

given the discrepancies? 

A.2. Improvements can be made in several areas. 
136 

In the CFPB’s recent study on credit reporting, the CFPB found 

that only about one in five people with a credit history (44 million 

consumers) check their free credit report from the nationwide consumer reporting agencies each year or obtain reports through paid 

credit monitoring services or notices of adverse action or risk-based 

pricing decisions. Regardless of the credit scoring model used by a 

lender, a consumer can benefit by reviewing the underlying information in his or her credit report. Consumers who identify and successfully dispute incorrect derogatory information in their credit 

files (e.g., an account reported as delinquent that was not in fact 

delinquent, an incorrect collection) will likely improve their standing with creditors regardless of the credit scoring model used. The 

CFPB encourages consumers to exercise their legal right to review 

their credit files. 

Improvements can also be made in the disclosure of information 

to consumers who purchase credit scores. The CFPB noted in its 

October 2012 report that providers of educational credit scores 

should ensure that the potential for score differences is clear to 

consumers. As we noted in the report: 

. . . for a substantial minority of consumers, the scores that consumers 

purchase from the nationwide CRAs depict consumers’ creditworthiness differently from the scores sold to creditors. It is likely that, unaided, many 

consumers will not understand this fact or even understand that the score 

they have obtained is an educational score and not the score that a lender 

is likely to rely upon. Consumers obtaining educational scores may be confused about the usefulness of the score being sold if sellers or scores do not 

make it clear to consumers before the consumer purchases the educational 

score that it is not the score the lender is likely to use. 

Q.3. Does the variability in credit reports make it more difficult for 

consumers to monitor and correct their information? 

A.3. The CFPB study on credit scores found that for most consumers, the scores produced by different scoring models provide 

similar information about the relative creditworthiness of the consumers. For 19 to 24 percent of consumers, variations in scoring 

models could lead to consumers having an inaccurate perception of 

how lenders see their creditworthiness. In the cases where educational scores were higher than a score used by lenders, consumers may overestimate their creditworthiness, and might be 

lulled into a false sense of confidence. In cases where consumers 

have an educational score that is lower than what a lender might 

see, consumers could be motivated to improve the information in 

their credit file, both by changing behavior and correcting errors. 

Q.4. Is there any evidence that a person’s credit history has any 

connection with their job performance? 

A.4. We are not aware of evidence on this topic. 

Q.5. Would it be practicable or advisable for each credit inquiry 

listed on a credit report—whether a hard or soft inquiry—to include the inquiring party’s contact information, the nature of their 

business, and the purpose of their inquiry? 

A.5. File disclosures to consumers currently provide the contact information for hard inquiries (inquiries that would impact a consumer’s credit score). The contact information for soft inquiries 

(e.g., account reviews, pre-screening inquiries) is not provided. 

Since soft inquiries do not impact a consumer’s credit rating, it is 
137 

not clear that adding contact information for soft inquiries would 

assist consumers in improving their credit standing. 

Q.6. Do you agree that FACTA inadvertently repealed the existing 

right of consumers and State officials to sue for any violations of 

the adverse-action provisions of the FCRA? 

A.6. FACTA amended section 615 of the FCRA so that sections 616 

and 617, which create civil liability for certain violations of the 

FCRA, do not apply to failures to comply with section 615. 

Q.7. Would you support or oppose restoring the original intent of 

the FCRA by restoring this private enforcement right? 

A.7. As an independent regulatory bureau, the CFPB is focused on 

carrying out, implementing, and enforcing the laws that Congress 

and the President enact. If there is a specific legislative proposal 

we are asked to review for purposes of providing technical advice 

on its likely consequences, we would be happy to do so. 

RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN BROWN 

FROM STUART K. PRATT 

Q.1. Is there any evidence that a person’s credit history has any 

connection with their job performance? 

A.1. A 2008 study by Edward Oppler, et al., showed a correlation 

between using a credit report for employment purposes and what 

Oppler described as ‘‘counterproductive work behavior,’’ defined as 

theft and related behaviors. In short, Oppler concluded that employees with financial history concerns were significantly more likely to engage in counterproductive work behavior than those without financial concerns. In fact, a job applicant with a troubled financial history was almost twice as likely to engage in theft as an 

applicant who lacked any financial history issues. 

Additionally, an Eastern Kentucky University study conducted 

by Jerry Palmer and Laura Koppes stated that there are reasons 

why a credit report could be useful as part of an employment 

check, especially when considering potential losses due to theft or 

concerns about negligent hiring liability. Palmer has noted, ‘‘These 

all seem like good reasons to include a credit check when considering a candidate for employment.’’ 

The importance of managing risks via the use of a credit report 

becomes evident in the context of data released by the Association 

of Certified Fraud Examiners. It notes that employee thefts account for nearly $1 trillion annually. The average theft totals more 

than $175,000, but that number increases to $200,000 for organizations with less than 100 employees. The top two red-flag warnings 

present in these crimes were instances where the fraudster was living beyond his or her financial means or experiencing financial difficulties. That’s important because employee fraud and theft can 

very well determine whether a small business survives or not. 

As I discussed during the question and answer period it is important to remember that employers’ use of credit reports is responsible. A survey of human resources professionals conducted by the 

Society for Human Resource Management (SHRM) found the following is true with regard to use: 
138 

• 80 percent of those surveyed had hired someone despite a poor 

credit history. 

• 87 percent use a credit report for positions with financial responsibilities. 

• 42 percent use a credit report for senior executive positions. 

• 34 percent do so for positions with access to highly confidential 

employee information. 

In a survey of our own members we found that employers ordered credit reports as part of only an average of 10 percent of all 

background screening products. 

In summary, credit reports are used responsibly based on SHRM 

data. They are used discretely based on CDIA data. They are useful when you review the academic literature. Finally the fact that 

the FCRA permits the use of a credit report does not absolve an 

employer from its duty to comply with Title VII of the Civil Rights 

Act and to consider guidance issued by the EEOC regarding this 

Title. Employers are also subject to enforcement and investigative 

actions by the EEOC. 

Q.2. Would it be practicable or advisable for each credit inquiry 

listed on a credit report—whether a hard or soft inquiry—to include the inquiring party’s contact information, the nature of their 

business, and the purpose of their inquiry? 

A.2. No. CDIA believes that Congress has already struck the right 

balance regarding the amount of information that should be disclosed to consumers when an inquiry is included in their credit file 

disclosures. 

The law states that ‘‘the name of the person or, if applicable, the 

trade name (written in full) under which such person conducts 

business’’ must be disclosed and then, upon request, the consumer 

reporting agency must provide the address and telephone number 

of the person. By layering the amount of information a consumer 

sees, it is far more likely that consumers will take the time to review inquiries and to then to seek additional information regarding 

only those for which they have questions. 

The theory that more information being immediately available is 

better is simply not true. It is very likely that when presented with 

a large volume of information a consumer may find the task of reviewing inquiries too great and simply skip this section of the credit file disclosure. This would be a bad policy result. 

In terms of expanding the data made available to consumers regarding an inquiry to include ‘‘the nature of their business, and the 

purpose of their inquiry’’ we believe these data are best provided 

by the company that made the inquiry. This is why Congress requires consumer reporting agencies to provide contact information 

upon request in the first place. CDIA believes that FCRA Section 

609(a)(3)(B) strikes the right balance and the result is a success for 

consumers in terms of transparency and effective, meaningful disclosure. 

Q.3. Do you agree that FACTA inadvertently repealed the existing 

right of consumers and State officials to sue for any violations of 

the adverse-action provisions of the FCRA? 
139 

1 Jerry K. Palmer and Laura L. Koppes, Further Investigation of Credit History as a Predictor 

of Employee Turnover. Presentation to the American Psychological Society, 2003. See also Press 

Release, Society for Industrial and Organizational Psychology, Credit History Not a Good Predictor of Job Performance or Turnover, January 16, 2004, available at http:// 

www.newswise.com/articles/credit-history-not-a-goodpredictor-of-job-performance-or-turnover 

(summarizing study by Drs. Palmer and Koppes). 2 Jeremy B. Bernerth et al, An Empirical Investigation of Dispositional Antecedents and Performance-Related Outcomes of Credit Scores, Journal of Applied Psychology, Oct. 24, 2011. See 

also Ann Carrns, Bucks Blog: No Link Seen Between Low Credit Scores and Bad Job Behavior, 

New York Times, November 8, 2011, available at http://bucks.blogs.nytimes.com/2011/11/08/ 

no-link-seen-between-low-credit-scores-and-bad-job-behavior/ (summarizing study by Dr. 

Bernerth). 3 Andrew Martin, As a Hiring Filter, Credit Checks Draw Questions, New York Times, April 

9, 2010, available at http://www.nytimes.com/2010/04/10/business/10credit.html. 4Statement of Richard Tonowski, EEOC Chief Psychologist, EEOC Meeting on Employer Use 

of Credit History as a Screening Tool, October 20, 2010. 

A.3. CDIA believes that Congress itself is in the best position to 

speak to its intent when it repealed the right described in the question. 

Q.4. Would you support or oppose restoring the original intent of 

the FCRA by restoring this private enforcement right? 

A.4. At this time the CDIA would oppose opening up the FCRA to 

any amendment. The Consumer Financial Protection Bureau is 

midstream in the exercise of its considerable powers with regard to 

the FCRA and our members. We should not expose the FCRA to 

open debate which would insert unhelpful and unnecessary legislative uncertainty. 

RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN BROWN 

FROM CHI CHI WU 

Q.1. Is there any evidence that a person’s credit history has any 

connection with their job performance? 

A.1. The overwhelming weight of evidence is that people with impaired credit histories are not more likely to be bad employees or 

to steal from their employers. The earliest study on this issue, conducted by Professors Jerry Palmer and Laura Koppes of Eastern 

Kentucky University, concluded there is no correlation between 

credit history and an employee’s job performance.1

A more recent study from 2011 also failed to find a link between 

low credit scores and theft or deviant behavior at work.2 Indeed, 

the study found a correlation between low credit scores and an 

agreeable personality. 

A representative of TransUnion, one of the three major nationwide credit reporting agencies, has admitted that: ‘‘At this point we 

don’t have any research to show any statistical correlation between 

what’s in somebody’s credit report and their job performance or 

their likelihood to commit fraud.’’3 Richard Tonowski, the Chief 

Psychologist for the Equal Employment Opportunity Commission, 

agreed. In 2010, he testified that there is ‘‘very little evidence that 

credit history is indicative of who can do the job better’’ and it is 

‘‘hard to establish a predictive relationship between credit and 

crime.’’4

Promoters of the use of credit histories in employment have tried 

to link credit history to job performance by citing an Association of 

Certified Fraud Examiners report noting that two warning signs 

exhibited by some fraudsters were living beyond their financial 
140 

5Press Release, FICO, Growing Number of Consumers Nearing the Perfect FICO Score, Apr. 

30, 2012 (chart showing that number of consumers with FICO scores under 600 was 24.7 percent in 2011). 6Legislative Hearing on H.R. 3149, the Equal Employment for All Act: Hearing before the 

Subcomm. on Financial Inst. and Consumer Credit, House Comm. on Fin. Servs., 110th Congr. 

(2010) (written statement of Chi Chi Wu, Staff Attorney, National Consumer Law Center); Use 

of Credit Information Beyond Lending: Issues and Reform Proposals: Hearing before the 

Subcomm. on Financial Inst. and Consumer Credit, House Comm. on Fin. Servs., 110th Congr. 

(2010) (written statement of Chi Chi Wu, Staff Attorney, National Consumer Law Center). 7 Barriers to Employment: Employer Use of Credit History as a Screening Tool: Hearing before 

the Equal Employment Opportunity Commission (October 20, 2010)(written statement of Chi 

Chi Wu, Staff Attorney, National Consumer Law Center). 

means or experiencing financial difficulties. However, while some 

thieves may have had financial difficulties, it is a far cry to say 

that any worker with financial difficulties has a propensity to be 

a thief. This conclusion would imply that the 25 percent of American workers who have impaired credit are likely thieves.5 Note 

that the same study found that men are responsible for twice as 

much in fraud losses than women; that fraud from workers over 50 

resulted in losses twice as high as fraud by younger workers; and 

another significant warning sign for fraud is divorce. Yet no one is 

suggesting screening out men, older workers, or divorced workers 

because they are supposedly prone to committing theft. 

Finally, there are a number of other problems with the issue of 

credit history by employers, such as: 

• Credit checks create a fundamental ‘‘Catch-22’’ for job 

applicants. A worker who loses her job is likely fall behind 

on paying her bills; with the increasing use of credit reports, 

this worker now finds herself shut out of the job market. 

• Use of credit checks in hiring could prevent economic recovery for millions of Americans. The use of credit history 

for job applicants is especially absurd in the midst of still-toohigh unemployment and the aftermath of the Great Recession. 

• The use of credit in hiring discriminates against African 

American and Latino job applicants. Study after study has 

documented how, as a group, African Americans and Latinos 

have lower credit scores than whites. If credit scores are supposed to be an accurate translation of a consumer’s credit report, that means these groups fare worse when credit history 

is considered in employment. 

• Credit reports suffer from unacceptable rates of inaccuracy, especially for a purpose as important as use in employment. 

These issues are discussed in greater depth in our written testimony for the December 19, 2012 hearing before the Subcommittee 

on Financial Institutions and Consumer Protection, as well as 

hearings before the House Financial Services Committee 6 and the 

Equal Employment Opportunity Commission.7

Q.2. Would it be practicable or advisable for each credit inquiry 

listed on a credit report—whether a hard or soft inquiry—to include the inquiring party’s contact information, the nature of their 

business, and the purpose of their inquiry? 

A.2. We do not see any barriers to including more information 

about the entity that obtained a credit report—referred to as the 
141 

8For a list of cases, see National Consumer Law Center, Fair Credit Reporting § 8.5.5 (7th 

ed. 2010 and Supp.). 9M. Heller, Regulators Scurry to Close FACT Act Loophole, American Banker (Dec. 12, 2003), 

at 3. 

‘‘user’’ of the credit report—for each inquiry on that report. This information could include the user’s contact information, which is already required to be disclosed upon the consumer’s request under 

the Fair Credit Reporting Act (FCRA). It should not be difficult to 

automatically include this information instead of requiring a consumer request. 

The additional information could also include the nature of the 

user’s business, and under what provision of the FCRA did the user 

have a statutorily permitted purpose to obtain the credit report. 

The credit reporting agency should have this information, because 

it should have screened the user to ensure it had a permissible 

purpose. This information would help consumers understand for 

what reason their credit reports were obtained, and would ensure 

that users actually do have a purpose that is legally permitted 

under the FCRA. 

Q.3. Do you agree that FACTA inadvertently repealed the existing 

right of consumers and State officials to sue for any violations of 

the adverse-action provisions of the FCRA? 

A.3. Yes, we agree. A number of courts have held that FACTA repealed the existing right of consumers and State officials to sue for 

any violations of the adverse-action notice provisions of the FCRA.8

We believe that this repeal was inadvertent, unintentional, and not 

part of FACTA’s legislative bargain. 

FACTA itself clearly indicates that Congress had absolutely no 

intention of abolishing the consumer’s right to seek redress of this 

important right. The uncodified version of FACTA states: 

Rule of Construction.—Nothing in this section, the amendments made by 

this section, or any other provision of this Act shall be construed to affect 

any liability under section 616 or 617 of the Fair Credit Reporting Act (15 

U.S.C. 1681n, 1681o) that existed on the day before the date of enactment 

of this Act. 

Pub. L. 108–159, 117 Stat. 1960, § 312(f) (2003). 

This provision expressly preserved all private enforcement rights 

that existed under the FCRA as of the date of FACTA’s passage, 

and indicates Congress’s intent to retain all existing consumer remedies under the Act. 

Indeed, after FACTA’s enactment, the credit industry did not 

claim to have eliminated the consumer remedy for the adverse-action disclosure, with the American Banker only noting that FACTA 

‘‘perhaps inadvertently eliminates the existing right of consumers 

and State officials to sue for any violations of the adverse-action 

provisions of the FCRA.’’9 Had Congress intended FACTA to carve 

private damages suits wholesale out of the user liability section of 

the FCRA, the banking and credit industry would have trumpeted 

that change in the days following the President’s signature. 

Q.4. Would you support or oppose restoring the original intent of 

the FCRA by restoring this private enforcement right? 

A.4. We absolutely and unequivocally support restoration of the 

ability for consumers to seek relief in the courts when their right 
142 

10 Credit Reports: Consumers’ Ability to Dispute and Change Inaccurate Information: Hearing 

Before the H. Comm. on Fin. Serv., 110 Congr. 50 (2007). 

to an adverse action notice under the FCRA is violated. Consumers 

have been deprived of an important remedy because of this scrivener’s error, which needs to be corrected. 

We note that in previous testimony, industry representatives declined to claim that FACTA had intentionally abolished this private 

enforcement remedy or to oppose its restoration. In a 2007 hearing 

before the House Committee on Financial Services, then Chairman 

Barney Frank engaged in the following colloquy with Stuart Pratt, 

President and CEO of the Consumer Data Industry Association, 

and Anne Fortney of Hudson Cook, another industry representative:10

The CHAIRMAN. We will look into that. Let me just ask, the other question is to Ms. Fortney and Mr. Pratt, because both Ms. Wu and Mr. Bennett 

talked about the interpretation that we had sub silentio repeal of the private right of action. Do you agree that was something that was not done 

intentionally? And what would your view be to our restoring it? Mr. Pratt? 

Mr. PRATT. We didn’t work on that section of the FACT Act. It relates to 

the date of furnishers and the date of—— 

The CHAIRMAN. OK. Ms. Fortney? 

Ms. FORTNEY. I think the statute is clear, and that is why the vast majority—— 

The CHAIRMAN. That wasn’t the question. 

Ms. FORTNEY. OK. I know. 

The CHAIRMAN. Then why don’t you answer it? 

Ms. FORTNEY. The answer is, I don’t know that whoever drafted that—— 

The CHAIRMAN. Fair point. But would you like to leave it the way it is? 

Ms. FORTNEY. I am sorry? 

The CHAIRMAN. Would you object if we restored the right of action that 

is in the bill? 

Ms. FORTNEY. I don’t have an opinion on that, sir. 

The CHAIRMAN. Oh, OK. Then it is two to nothing, two abstentions. 

It was not until several years later that industry representatives 

began opposing restoration of this private remedy. 
143 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Hon. Richard Cordray 

Director 

ilnitro ~tatts ~cnatc WASHINGTON, DC 20510 

August 2, 2012 

Consumer Financial Protection Bureau 

1800 G Street, NW 

Washington, DC 20522 

Dear Director Cordmy: 

We write to express concern about the impact of medical debt on the consumer credit market. In 

recent months, national press covemge has helped highlight the unfortunate fact that fully paidoff medical debts are needlessly constraining the ability of millions of consumers to responsibly 

acquire credit. This state of affairs is bad for consumers, bad for lenders, and bad for our 

economy. 

The issue of consumer debt is usually discussed in relation to a consumer's abjJjty to pay. But for 

medical debt, the problem is one of information. Consumers frequently do not even know there 

is a debt that they are personally responsible for paying before it goes to collections. Often, by 

the time they find out, the medical office has already reported the bill to collections. In this case, 

even if the consumer is still in discussions with the insurance company, the damage to the 

consumer's credit score has already been done. In fact, the Fair Isaac Corporation estimates that 

any unpaid debt sent to collections, whether for $100 or $10,000, can shave up to 100 points off 

of a credit score. 

These black marks, which remain on credit reports for seven years, can translate into large and 

unforeseen costs for consumers. Creditworthy consumers look artificially risky and their ability 

to contribute fully to our economy is constrained. As we all know, markets do not work well 

when the information they rely on is not correct. 

The uniqueness of medical debt-the unplanned nature of the purchases, thc opaqueness ofthe 

costs, the complex billing procedures, the exceptionally high error rate in reporting, and the lack 

of predictive value for lenders-and the implications of the informational inaccuracies it creates 

require all involved to craft careful and thoughtful solutions. 

One potential approach put forward by us is the Medical Debt Responsibility Act (S.2149). This 

bill would amend the Fair Credit Reporting Act to require consumer reporting agencies to 

remove medical debts from a consumer's credit report within 45 days once they have been fully 

paid or settled. This approach has already won the backing of a number of key industry 

participants, including the American Medical Association, the Mortgage Bankers Association, 
144 

and the National Credit Reporting Association. It also passed the House of Representatives last 

Congress with a bipartisan majority of 336-82. 

But there may be other approaches that could also address the challenge of medical debt, both 

legislatively and through the regulatory process. We therefore ask you to begin to process of 

addressing, through your authorities and in cooperation with us, the problems related to medical 

debt collections and scoring. 

Addressing the unique challenges of medical debt would be helpful to all involved. Consumers 

would get access to credi t at the prices they truly deserve, while lenders would get better and 

more accurate information about consumer creditworthiness. But the real winner would be our 

economy, as millions of creditworthy consumers would be released from artificially-low credit 

scores that misrepresent their ability and likelihood to pay. 

We look forward to working with you and with colleagues on both sides of the aisle on this 

issue. 

Sincerely, 

Sen. Jeff Merkley Sen. Chuck Schumer 

_i SWtJfl1 

Sen. Sherrod Brown 
145 

cfpb Consumer Financial 

Protection Bureau 

The Honorable Jeff Merkley 

3 I3 Hart Senate Office Building 

Washington, DC 20510 

The Honorable Robert Menendez 

528 Hart Senate Office Building 

Washington, DC 20510 

August 30, 2012 

Dear Senators Merkley, Schumer, Menendez, and Brown: 

The Honorable Chuck Schumer 

322 Hart Senate Office Building 

Washington, DC 20510 

The Honorable Sherrod Brown 

713 Hart Senate Office Building 

Washington, DC 20510 

Thank you for your letter about medical debt. The CFPB shares your concern about the 

impact of medical debt on consumers. Unfortunately, dealing with medical debt is a daily 

reality for many Americans. 

Perhaps the only circumstance more vulnerable than bcing sick is being sick and in debt. 

Medical debt is a major contributor to eredit problems and personal bankruptcies among 

American consumers. Medical debt is also a major source of negative information in 

consumers' credit files and is reportedly the largcst source of consumer debt sent to collection 

agencies. According to a study by the Federal Reserve Board, over half of all collection 

actions on a eredit report were associated with medical bills. Consumers who have medical 

collection actions reported on their credit file face real-world consequences; they can face a 

harder time getting a loan approved or even getting a job. 

Over the past decade, consumers have had to pay, on average, a growing share of medical 

expenses out-of-pocket, even when insured. Those who are uninsured have it worse. And 

due to the complexity of the medical billing and repayment process, consumers can face 

significant hurdles in keeping track of their financial obligations when they receive care. 

After receiving treatment, consumers may receive bills from multiple parties, and often face 

challenges in knowing exactly how much to pay, whom to pay, and when Lo pay. In some 

cases, consumers may not even be aware of medical debts reported to collections due to 

billing errors. 

In light of these challenges, theCFPB has begun a review of the treatment ofmeclical debt in 

both the debt collection and credit reporting industries. We want to make sure that medical 

debt and all information that goes into a consumer's eredit report is reported accurately, and 

that consumers are treated in a fair and consistent way when providers send debt to collection. 

consumerfinanco,gov 
146 

As you may know, we recently adopted a rule to begin supervising larger market participants 

in the consumer reporting industry, including the large national credit bureaus. The final rule 

extends our supervisory authurity tu consumer reporting agencies that have more than $7 

million in annual receipts. This authurity will extend tu about 30 consumer reporting agencies 

that account for about 94 percent of consumer reporting revenue. This will be the first time 

these companies will be supervised at the federal level. Wc are also currently working to 

finalize a similar rule that will allow us to begin supervising larger market participants in the 

debt collection industry. 

We will certainly keep the issues you have raised in mind, and wc look forward to continuing 

to work with you to protect American financial consumers. 

Sincerely, 

Director 

~~~ 
147 

December 18, 2012 

The Honorable Sherrod Brown 

Chairman, Financial Institutions and Consumer Protection Subcommittee 

US Senate 

Washington, DC 20510 

The Honorable Bob Corker 

Ranking Member, Financial Institutions and Consumer Protection Subcommittee 

US Senate 

Washington, DC 20510 

Dear Chairman Brown and Ranking Member Corker: 

The National Association of Credit Services Organizations, fhe leading trade association 

for the credit repair industry, actively advocates legal compliance, consumer and 

industry education, ethical practices, and consumer fairness in the credit repair process. 

NACSO is pleased that the Committee is holding the hearing entitled, "Making Sense of 

Consumer Credit Reports". Every day, credit report inaccuracies preclude honest 

consumers from attaining their dreams. A single inaccuracy can often have devastating 

consequences. Credible, law-abiding credit repair companies fulfill a vital role in serving 

those who request assistance in removing inaccurate and unverifiable information from 

their credit report so that it accurately reflects their probable credit worthiness. 

The Columbus, Ohio Dispatch newspaper conducted an extensive investigation into 

credit report errors. A copy is enclosed. To quote one consumer, Brenda Campbell, in 

the Dispatch investigation, "It nearly destroyed my life, and then fixing the problem 

consumed my life." 

While the Federal Trade Commission has jurisdiction of our industry pursuant to the 

Credit Repair Organizations Act (CROA), we have maintained an open dialogue and 

served as a resource to the CFPB. We commend the agency for the keen focus in 

studying the credit reporting agencies' activities impacting consumers from all walks of 

life. 

One key takeaway from the recent CFPB report: "Key Dimensions and Processes in the 

U.S. Credit Reporting System: A review of how the nation's largest credit bureaus 

manage consumer data" is that "the credit reporting companies resolve an average of 15 

percent of consumer disputed items internally, without getting the data furnishers 

involved. The remaining 85 percent are passed on to the furnishers .... the report 

however, found that the documentation consumers mail in to support their cases may 

not be getting passed on to the data furnishers for them to properly investigate and 

report back to the credit reporting company." 

NACSO Non-Profit Business League. Inc .• a 501 (c) (6) Non-Profit Organization 

1611 Wilmeth Road· McKinney. TX 75069 

Phone: (866) 97-NACSO • Fax: (972) 838-1244 

www.nacso.org 
148 

That is just one unnecessary hardship consumers face when challenging inaccurate or 

unverifiable items on a credit reports. What's more, in recent testimony before the 

House Financial Services Committee, Chi Chi Wu of the National Consumer Law 

Center, discussed "Automated Injustice" because consumers spend hours documenting 

disputes and the bureaus turn the complaint into a data code, transmit the code with a 

sentence to creditor or collection agency, and don't submit the consumer's dispute 

file. As Ms. Wu stated, "It's very hard for consumers to get their errors fixed. Some 

people just don't have the literacy or educational backgrounds to file the disputes by 

themselves." 

The Federal Trade Commission's own Congressional reports explain the necessary role 

that experts play in helping consumers obtain an accurate credit report. This relief often 

enables consumers to obtain a car loan or home mortgage, to qualify for a lower interest 

rate, or in some instances, to get a job. However, we would be remiss if we did not 

inform you that the FTC staffs statutory interpretation of the Credit Repair Organizations 

Act (CROA) threatens to eradicate legitimate credit repair companies and expose 

consumers to the dishonest, poorly organized and unlawful credit repair scams that will 

fill the void of legitimate professionals to assist them. 

Credit report inaccuracies can have a devastating effect on consumers. The FTC's 

FACT reports to Congress have acknowledged that many consumers need expert 

assistance to navigate the process of obtaining an accurate credit report. As credible 

credit repair companies have become established and benefitted the marketplace, 

consumer complaints regarding credit repair have plummeted over the past few years, to 

where credit repair was not within the top 60 producUservice subcategories attracting 

consumer complaints. 

Professional credit repair companies have served tens of thousands of satisfied 

customers; positively impacting lives and helping consumers achieve the American 

dream. Just as consumers hire non-attorney advocates to assist with social security 

disability claims, there are profeSSionals who help consumers repair credit reports. 

Credit repair companies cause consumer benefit, not consumer harm. FTC staff has 

interpreted CROA's outline of "services" in an overly broad, overreaching and 

inconsistent manner that departs from CROA's plain language, creates undefined 

parameters, and allows no viable business model for a legitimate credit repair company. 

Credit repair is a much-needed solution for hard working American consumers. It's time 

to stop treating credit repair as if it were the problem. 

We remain at your service to assist with issues that may arise before the Committee. If 

you have any questions or need assistance, please contact our executive director in 

Washington, Nicholas Owens, at 202-495-0701 or nick@nacso.org. 

Thank you for your consideration of these views. 

NACSO Non-Profit Business League, Inc .• a 501 (cl (6) Non-Profit Organization 

1611 Wilmeth Road· McKinney, TX 75069 

Phone: (866) 97-NACSO· Fax: (972) 838-1244 

www.nacso.org 
149 

April 16, 2012 

The Honorable Tim Johnson 

Chairman 

Committee on Banking, Housing 

and Urban Affairs 

United States Senate 

Washington, DC 20510 

The Honorable Spencer Bachus 

Chairman 

Committee on Financial Services 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Richard Shelby 

Ranking Member 

Committee on Banking, Housing 

and Urban Affairs 

United States Senate 

Washington, DC 20510 

The Honorable Barney Frank 

Ranking Member 

Committee on Financial Services 

U.S. House of Representatives 

Washington, DC 20515 

The undersigned organizations strongly support H.R. 2086 and S. 2149, the Medical 

Debt Responsibility Act, introduced in the U.S. House of Representatives and the U.S. Senate. 

The bills require credit agencies to remove FULLY paid or settled medical debt from credit 

reports within 45 days. 

Annually, approximately 73 million Americans experience medical billing problems or 

have accrued medical debt. Medical debt is unique in that it is not typically reported to the credit 

bureaus by healthcare providers, but instead by collection agencies. Typically, medical bills are 

reported to the credit bureaus only after they have been assigned to collections. It is frequently 

the case that medical bills are sent to collection due to uncertainty over who should pay. The 

medical billing system is fraught with errors and confusion, further compounding the situation for 

consumers. 

Indeed, when information is inaccurate, markets make decisions on less than perfect 

information. With regard to medical debt, this can mean significantly reducing a consumer's 

credit score and subsequently impeding economic activity and consumer borrowing capacity. 

According to the Fair Isaac Corp., any unpaid debt sent to collections, whether for $100 or 

$10,000, can shave up to 100 points off a person's credit score; - even if this collection is a 

mistake, made in error, or is in dispute. This can have a dramatic impact on an individual's 

ability to obtain a mortgage, a car loan, or any other form of credit, thereby limiting economic 

activity. 

Many consumers in states throughout America are adversely impacted by this issue. 

The current system punishes consumers regardless of the underlying facts (e.g., mistakes, 

errors, or otherwise). Congress can create equity in the current system and dramatically 

increase economic activity and growth by amending the Fair Credit Reporting Act to require the 

removal of medical collection accounts that are paid in full or settled. 

The Medical Debt Responsibility Act will prevent the credit records of millions of 

consumers from being unfairly tarnished. Credit records will show that these hard working 

consumers, who successfully paid off or settled their medical bills, are more creditworthy than 

their credit report would otherwise indicate to a prospective lender. 
150 

We urge Congress to pass this common sense legislation. H.R. 2086 and S. 2149 will 

help responsible consumers and at the same time reignite the economy. 

Sincerely, 

Americans for Financial Reform 

American Financial Services Association 

American Medical Association 

The Asset Building Program, New America Foundation 

California Association of Mortgage Professionals 

Consumer Federation of America 

Consumers Union 

Corporation for Enterprise Development 

Demos 

Leading Builders of America 

Mortgage Bankers Association 

NAACP 

National Association of Home Builders 

National Association of Independent Housing Professionals 

National Association of Mortgage Brokers 

National Consumer Law Center 

The National Consumer Reinvestment Coalition 

National Credit Reporting Association 

U.S. PIRG 

'Jessica Silver-Greenberg, How to Fight a Bogus Bill: Many Medical Bills Contain Errors That Could End Up Wrecking 

Your Credit Score. Here's What You Need to Know, Wall Street Journal, February 19,2011. 
151 

SECTION: NEWS; Pg. IA 

LENCTH: J71l2 WIlrds 

i of29 DOCU.MENTS 

Copyright 2012 The Columbu$ Dispatch 

All Rights Resen'ed 

<the <ftdans Jllispatdt 

The columbus DIspjltth (Ohio) 

December 16,2012 SundEI)' 

Page I 

HEADLINE: DISPATCH tNVESTIGA TION; CONSTANT BURDEN; 

Federal otudent loans can become IJIiforgivilig monstl!l'5 of debt for borrowers who delilull. The most common ways out: 

PIlY up or. dli!. 

BVLINE: Jill Riepenhoffand Mike Wagner, TH.E COLUMBUS DISPATCH 

BODY: 

The dec~ion to pay for colli:ge with ti:derallQanS turned fmllDcially fatal for milliOns ofAmericllDl. 

Their credil.iCOret have sunk. They've been unable to btl)' cars, rent apar!ments and, in some cases, land jobs. They 

arc trapped ,by ballooning studenl"Iollll debt lIIat has overshadowed many of them 'for deeades. 

Without question, lni1ljDiI~ ofpeQple have choSen to ignore theIr student-debl obligatilllis, c;osting taxpayers millions of dollat!. 

Yet a Dispatcb investiption found tbat many want to pay but tan't dig out of mounting debt, such as a teacher who 

fell intO serious financial trouble aftc;r a·carcrasb,.a Kent Stategraduatc stuck with her ex-husband's loans and a woman 

who quillnlek-driving sehoolllfter tWIl days, 

"The system is extremely unlOrgivl1lJ!," said Deanne Loonin, a Nlltional ConSumer LiM' Center attom~ w~o dl-

~!be Student LQan BorroWer Assistance Project.for the BoSfdn-besednonpro.fit agency. "We've ch(lsen •. as a p.ublic 

policy, y~ punitive eollectioli. From ltaxpayer-rewm.pnin! of view; it makes more sen" to help them Slltccell." 

RepubliCIIII. and DemQ!:l'llts in Congress :recognize problems wil/l federal sllldent-Ioan programs and have offered 

refonns in dozcnsofbills. Yet littlc h ..... ;lull\&ed. except the siz!= ora growing default rate. The U.S. Depanment GflidtIC.tion. tracks StudeR! loans for the first three years of "'P!lyment The most remrt data show that n.4 pen;ent ofborroweD who were to begin :n:p8yn1ent ill 2009 had defaulted by the end oflO) I. 

But millions of i!1hcrs also are in ""fault. and soine nave been there fOr years. 

To gal!ge the lingering consequences. The Di$patc;h eolleded BIldlllla!yzed a random 8amplo of394 eases from the 

nearly 16,000 lawsui~ that the U.S. government has flied against defaulted student-loan debtors since 2007. 

More than 73 pem:nt oftbe ca8\ls were filed a decade aft~r borrowers fell !ntlJ defBult, which is generally defined 

as not making payments for nine ~Se!:utiye montb$.N~arl)' a thint of them were fl~ 2!J year. after default. 

The defendants owed a medi8l1 debt onS.l00 - nearly twice what they originally borrowed. because O! compounding interest 8I1d debt~olleetion fees. 
152 

Page 2 

DISPATCH INVESTIGA nON; CONSTANT BURDEN; Federal student 100000s can beeome unf"'lliving monsters of 

debt for borrowers who default. The most common way~ out: Pay up.Dr die. The Colombus Oispalt:h (OhiD) 

MOR 1IIlin 4Opei'Cent owe double what 1bey originally bomrwed, mOst Owing more in interest Chan on the principal 

balonce. More than 8 pen:ent owed .• t li:ast triple. dll; origirtal amount. One owed a tOlaI oUI 5,227 on a $2,500 loan 

from 1985. 

"Intorestan.:l fees start compfIing and building WilY beyond what peopicborrowc.cl,·1!IId lhat's WIlli! malte$ tlds problem sotraumatizing,n saI!l1J.S, Rep. Hansen Clarke, aDemQ!;nt from Michigan wbQ introdI!ced a stUdent-loan forgivc.ness bill. "Student debt is the. next big financial bllbble.to burst. The system needs.to be cbaIiged to help people doal 

wl1ll 1111. debt. " 

RcQ,nt publlc attention has sinj!.led out the prlvaie atwknl-loan IlUll'ket for its toxic producta bc.cause of variable interest niles and other rislCytcrm •. But private lenders·iIoa'l have the same arsenal to collect on debts .. the Ii:deraI govc.mment and. at some pOint, the priVate delinquent debi beco~ obsolete. 

The Educalion ~\*1JIIc.nt pOints out that borrIlwerli ~ erase: the demull - and its damniRl: eredit-S<:Qte impact -

Ibr()llgh variOus progtams, $UCh as. loanconsolidll!kin Br by making. payment. But th(l$e opti\lD$ sometimes offer 

only Band-Aida to flJl8ncially 51n1pped consumers, and ano~ default often follO'Mi. 

Borrowers ranoly can escape their federal student loans, and the conaequc.nces for not paying c;an lead to a lifetime 

of credit scars. 

Unlike pri\'1ll\:lende .... the federal government can garnish paycheckS, stize income-lax returns and take 8vcial Security bc.nt:fits from b!IrroWers who defaulted, ilCllding themflu1htr Into fiDancial distresil. 

ThetederaJ loansllRJl't subject to a statute oflimitations 1UId are virtually impossible to discharge in b~. 

And the U.S, Departmcilt of Educatlon nrely negotiates with defaulted !KirrQwers; even though In sotne ClISe$, half 

of the debt ia derived from collection feesllitd cbmpounding interest 

The loans gc.neraIl)' follow borrowers WlIlI the debts are paid or the borrowers die. 

"The f'edetal gomiIli\Qlt ~urmrtly plateS a ~ prlorityon recovering defaulted lo1in5 111l1li on treating bo.l'IQwers as human beill/lS." said Murk KlIilIrowitz, 8Il.expert on finantilll aid llIId publisher bfthe websites FinAid.org and 

Fa.snveb.eo.1P. 

The Dispatch provided the Eiluc;ation Department with 8 summlllY otthe newspaper's.findings, but officials there 

declined requests fOr l1li 'interview and sent l1li email response Instead. 

"We wan! to make sui'e we are doing eVerything we can to smkethe right ~ betWlleiI h~lping OOITOWCI'S who 

have hit hard limeunci honoring Our re'SpOIISibilily 10 be good s.te....-ds of taxpayer dollarS .. Fedel8l studel1lloall$ are 

not like other funna ofpriv1ile credit. The American lai<payc.r lends IiIoncy tb students wi!bout anyc:redit or eollatetal 

i'equlreiiJenls and provides Plunc:rous iqlayIlIcilt optiD115 and benefits," said the SIldOmelIl from a depattm'ent spokeSwoman. "Ourgo.1 is to provent borrowers from defiwlting in the first place,lIl1d the vast ~Ority of borrowers stay in 

good Slanding and ultimately repay their kians." 

This year. siudenl.IOI!Il !le!Jt hil a dubIoU5 milestone: It surpassed o$tandillg Cfedit-eard debi lIS !be largest form of 

COIISUIIIc.r debt. Man> than 37 million borr9wers owe mar. Chan $1 trillion in studeat loans - the majority in government 

loans. 

More Chan S million people an; in default. An unCounted number of other borrowers are delinquent and wuggling 

to make regular, on~time payments. 

U.S. Sen. Sherrod Brown.D.Ohio, said the fiodcraJ government and universities aren~ doing enough to maltcroll~g, .ffordable or helping students avoid the student-loan·trap. 

"We lIS a nalioil have fal~ peopleirl helping them att~ college withilut the burden of these buge debia: BI'QWII 

said. ·We say on on.c hand tb,at Y()ll D~ to go tD.school.and then toO many people Ill!' in a worse-qffflnancial situation 

after they leaw: college. That is Ii faUure of society." 

P~ty of blame 

Bofl'OWCB, col~t$ and the f~l govmomel1l all sharcthe blame for SI\IdeDt-lQilo defaults; experts oid. 
153 

Page 3 

DlSPA TCI:lINVESnGA nON; CONSTANT BURDEN; Federal studenlloans ~ bcI:oine unforgiving monsters of 

debt for borrowei9 Who default. The most common ways out. Pay up or die. The Columbua Dispatch (bhio) 

Collllge5 dOnhdequate1y counsel studenis aboUlthe debts they lake on. Borrowers_ blindly signing loan \:Ontracts wilhoul fully understanding th. risks. And the federal governmenl, includingC~.has created a system !hal 

is punitive, UJlbending lind shan on key dais. 

BUlin !he end, "!he COJIseCjU\lllces are borne by !he borrowers," KanIrOWitz Sliid. They si~ up for the debt. and 

.thDllc who don'l pay on lime or complelcly face ruinedc:redil. 

Schools presenlIOBIIs.fl& part oftoial financial-aid packages to studenls and !heir parenlS. It's a confusing tan:gle of 

paperwark in which,some otthe aid could be iii !he funn cif scholarships and wrious differenllOBllS: subsidized and 

JlllSubsidi2Jed; federal and private, For many ,!he procea of accepIing loans Is done eleclraniqdly during college registi'alion - and without a single conVersation. 

Cotteges atcn~ rcq~ to providedehl.managemenl toIUIsclhlg,cven as they .11/'011 stlidelilS whosefillancial Situation clearly puts them at high risk of defilult. StudenlS who drop oilt are fOur limes more libl)' to default. 

The Education Department said it now requires students 10 undergo iilUlllCial counscling, bill It did nUl saywbere til' 

how, and irhas asked sc;hools to be morctnln8pacent about IlOSts and fllllllcial aid with its students. 

The federal government doesn't track defaults OP parent 10000, which 'aTe made dlrel:tly to JiIIm1IS for lhemto help 

financelheir chikInm's ~chlcatiOllS. It dbeSn't know Ihe average ikIllat grailuatioiJ by f'Hlld·of study, and Its loan limits 

don~ consider botrowcrt ability 10 repay the debt. ''1bQy dbn't bave a basic heartbeat Oflbe system,"· I<;antrow·itz IIIIld. 

And over IIle pasllWO decades, after the govemmenltlloll heat for allowing too num)' borrowen toslalte from their 

deblll, Congress has eliminated Ibe Iast-resort SlIfeIy nets forbolTOWeTS In deep financial trouble -!he statute of limi~­

!ions and bankruptcy, even though few toOk that route. 

"There'$ DO WIlY 0111 for a borrower. There'. no ws)' to gel a elean sIa!e,' Kantrowitz said. "These borroWers lin! In 

perpetual pwgllory. The moreli~ that panes, !he blgterthc bole becomes." 

. Highest default rates 

Thcoi)!y way Oomtliy KeJUcut cOuld endure more )'Can of bavinb her husband 0111 on the road was to climb into 

tba cal:> with him and take tIIms helping him milllCuver an 18-wheeler across the country. 

Tho Michigan woman'~ children wcrelllmostOlll of school, so the time seemed rigl1ffor Kellkllt to make the 1IBDsitlon from homemaker to InIck driver. 

hi 1988, she borrowed S3.131from the.rederalilovemment for a three-week program thai, upClllcomp1etlbn, would 

earn ber a commercial driver. license and more lime with her hUSband. 

BllllWO deys into the program.. KelliC)Jt l""",d !hal she, Wouldn't bcallowed to drive with her husband foral least a 

year and W()II.ld have to be DI1the roadwilhanother driver. 

"The Sebool decelved me,and it waSn't What I signed up for," said Kcllicut, 59, Who hIlS bOon married almosl 41 

yean and ha$ two cbU~ lind leven gnindC:hillfml. "I borrOwed !hat money and never golanytbina bUt ofit. " 

Kellicut dropped O!II~ and the for-profit, Michigan truck-drl,vingschool ktpt1he money .he borrowed. 

For-proflt schook, wbicbtypital1)' oftbr tc:rtifica1es for trades such lIS cosmetology and welding, haveibehighesl 

!tUdi:nt·loan defilult rlIIl:s in the oountry. Amciilg bonowen who atiended a for-proflt school.and were to begin repaying 

in 2009, mOlllthan 22'percent hid defilulled within three ycaJ1I, the most recent EdllC8tion Departmenrdata show. 

For-profit,schools alsq bave low completion rates, a.mk fa!:tor fur defalJlt. TIie:Educ!!lion Department has taken 

aim at sc;hools,,;th hig/l derault rates and will bl!IIlhom from the student-loan program if moretblin 30 percent oflheir 

loans fail three years in It row. 

But that's liitle .corisolalion to KelUeIII, who bas been paying S6Sa month sinl:e ihe settled her stodent~laan cOurt 

we in 2008. 

"I blame myself sqmewbat,bot alICe you get into :this aitualiOI). no one ~lIy cares ,about the circumstanl:es, • lhe 

sald. "Whether irs a truck-clrlving schooler the Univcrslty'ofMichiS/ID. people bet\I:r lenow what they are getting into 

when thl:)' borrow that money." 

Crushing interest and tees 
154 

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DISPATCH INV'ESTIGA nON; CONSTANT BURDEN: F~eral student loans _ bealme unforgivingmonstenof 

debt for borrow= who def!\l,lh. The most common ways 001: Pay up or die. The Columbus Dispan:h (Obio) 

hfook three d"ys 10. help make the high-$Chool gymnasium look Uke a Ra,ve party for the prom"bul finally. Terri 

Crtii1!ec5 had hUIIl! the last of the decorations. She was driving Imme III shower beforl: her chaperoning duties in the 

spriJigof2008 when lUI oversize pldwp lnick smashed into the back of her ;ar. 

TItougb the middie-Sl:1mo1 ~1Ii Gallipolis. in southern Qhio,spenlju$lIO hPUn in the emergeDCY room,lingering injurieS required expensivasurgery and stints in ~!I~',and left her with one leg shorter tIi8n the'1Ilher. 

The medical bill~ S!lOIl piled up for the 49-year'Old who. until the accident, said shehali a goqd cl'/;'dinuing and 

paid her bills on time, incIudingber student-loan debt. 

Crothers had left heir unfoifilllngjobas II customilr-service reptesentatiy~ in 1995 and enrolled in cOllege 10 become 

a tead1.r When.she WBlI in her mi.d-30s. 

She borrowed about $40,000, wbich helped payfor her !lathelol's and master's degrees. 

For ~ yean, she made IIlOnthly paymCJits OIl her siudent lOaDs. Then came the CTlISb. She'Slalted drowning in 

her debt; 

The loans went into default, and the ba.Ianw quickly escalated to $7Q;ooo bec;ause. of interest and eol\eglion fees. 

Ctolheili is making payments o(S'oo a month and expects to repay 'the'debtabotit the time she tunIS 80, 

"I did things the right way with paying baclcm}' klanl, n Cro\herl said. '\ cOuldn't help that I got hiut It's notrigbt 

that t!'We S!l much more \han I borrowed. even aftcrpaying (~n)them ... fililhlUlly." 

No one knilws bow many borroWllrs tall behind after years of on-tlme payments. Ilxperts SlY lhat's key data to <01-

Iect to help piloplc who fall bnan wteXpeCted flllincial hardship. 

Crothers' credit history was severely damaged, and she aIn\ost lost her home after the ~'loans defaulted. 

She now mainly worries about how she will help her 12.year-old daughter pay for college. 

"Ii's terrible to think I will still be paying fol'my cduclltion when I am tr)'ing to help her,'" she said. ''No OIIeUII 

take awa)' myedueation from m~; IIIid ) 10,"" being "'.teac:her. The lpans j\l$! have me !nipped." 

Congress gets tough 

'ThC!hougbt offiling for bankruptcy made TWyIa Manning side to herSlomac/l, but she belieVed there WBlI nootheir 

way toe8i:aJie from thedoflwhed student-lOan deb! that had crippled her fm8llcilllly. 

S1ie had borrowed about $3,000 in the late 19805 to earn It teachinJrdep, but b)' 2003. it had grown to almost 

$20,000 with compounding interest and fees. 

She knew' baillauptcy would destroy her 'Credit, but she needild those 10000S cJeansed hID her filllIltial past. 

"I met with a lawyer.and he !cld me the student-ioan debt wQUld be erasedl!lHll would get a clean SIIIrt,. said Manning, 54, of Springfield. "But he was wrong. and \hose loans stayed right with mI:.· 

Fearing that borrowers would finlHll:e expensive educatioD$ with,government moDe)' and thco wipe out the debt 

Waugh bahlauptcy, CongreQ in the 19905 dectarcd thatstudeirt loans could not be erased except in rare clrc:umStanccs. 

Today, borrowers !lave .to prove "hopelessness, n a standard that means the borrower has DO reason to expecc their 

dire finanoi'al circUIIIStance!l to change. 

or72,OOO. banJaouptc:y casCI filed na~Uy last)lClll', only Z9 were able 10 discharge all or part of their SlIIdent 

loans, ,said Kantrowitz. the financial-ald expert. 

COIISJIlIW' advocates have long aske4 Congress to o;tum bankruptcy prote<:tions for 'federal student loans. 

"Bankruptcy is noia panDtea," Kantrowitz said. 'Irs 10 yeatS of great difficulty." 

But a!lbe end of that period, debtors can reblilld their financial lives and crcdUsoores. 

Manning, who lost hiir full-time job in child development h.St'.sprins, remains in debtors' hell. She tried to return to 

Sl:1mo1 again this past September at CllU'k State ColllDlUliityCollege in Springflfild IItd tIioughther student-loin mess 

was gone. She had made some payments, and both her wagCtaild incomc-t/lX-tetlim checks had been pmishedseveril 

times. 
155 

l'age S 

DISPATCH INVESTIGATION; CONSTANT BURDEN; Federal student loans _ become unforgiving monsters of 

iIebt for borrowers who default 11Ie most common ways out: Pay up or die. 11Ie Columbus bbpalc:h (Ollio) 

But llie lidmissions clleck revealed that she Still owed SJ,200 - more !ban sIIe had borrowed 25 year! ago. 

"llOOk out thl;JSc small loans to better my life. an<! it wai tile wets! mistake of my life," sIIe said. "It's been morl:" 

aggra\'lltlng than an)1:hiDg I've dealt W11b." 

More stress than canM 

The expec1aDtllllither. exhausted froin anoIherl'O\llld ofnigbt etliSSe&, pulled' on tile car door with.1I her might. but 

il. wu li'ozenshutmKi she CoUIdJi~ open it. 

In thai m..tratmg moment in 1971, even though sbe ~juSlIWO classes to finish her degree;. Susan McNeal 

surrendered to tho rigors of school, Wj)I'k IU a clerk III,. wlil;e statiQll and her pregnancy. 

SheSl!lPped takiilgclassu III • illliall college ilIlllillols; but her quest to pay off about $4,000. in federal student 

loans lias cQIltinued for more than3S yecs. 

McNeal, '6., or Canal Winc:hestar, said she COllide'! afford ber SlUdent-loan payments initially, but her incoJlle-tax 

retum5 have been garnbhed by Ihc govemmentonand off since 1981. 

McNeal, woo eventually earned a degTcc In 1985, estimales that'Sbeaire8d)' bas paid iIbout $12,000 - three times 

whlll she originally bornlwed. That includes parmerits she made over the yean; "" well as the money from tax returns. 

She still owes SJ,715. 

"The SIUdent loan luomething 1 can't get away from, "Said McNeal, who e8ms about $46,000 a year in an ac<:Ounting tech job for tile fedensl government. "Ii just keepS fullowitig ·me.· 

McNeal bas twi~ battled breIIst cancer, hilda doilble mastectoJ!IY \astyearand ls.sIllll!ll!iergoing treatmenlS. 

BIIt she says the studeiit·liIan debt bas caused her more stress dlan the canter. 

She now tllilkes paymenlSof $77 a mQllth. 

"I wUl probably die before 1 pay this 0"," she said. 

CoIis.blidalion can cripple 

The likelihood of 17-year"'Old Taylor followIng.in her mother's I'ootmps and altending Kent State University inaeaedu sIIe strolled through its spacious student media center the day after Thanksgivin8' 

MaJbm BI!be!>asked in her daugbter's.~itcment from a few~t away. but her mind drifted to the student-loan 

debt !hat has haunted her for tile past several yelII's. 

She eurrentlyowe.J about $290,000 in student loans, even though she borrowed only II fraction of thai iIIIIOunt to aIiend Kent State in tile early 1990s. 

"I'm hopeful &n.d fearful'for my daughter,· said Babe, '16. who traVeled With Taylor from Irvin .. Calif.. !ilr tIM! visit. 

"I will do everything in my pOwer to make sure What hapPeDed to me doesn~ happen to my daughter." 

Babe'. miotake was. consolidating ller $ I 7,000 .uudent loan with her then-husband's S 117,000 deb!. At first, Babe 

and her ex-busband were exempt from making.pay!II8I1ts because they taught in low-income Ohio lH:hooJ districts and 

wore granted forbearance by tile government 

After tile cOuple divorted in 2OOS, the loan t:VeiII\UIlly wentbilD defilult. Babe's fonner husband didn't tellllerthlll 

he bad stopped mliking paymentll,lm;liuse oflhe cons"lidation. that inas.!ve debt belonged to her as well. 

It WlISIl' Ulltil slle moved to California In 2008 and att,empted 1<\ finance a car and obtain home loans thIII she 

teame4the tnrth: Her credit !(lore, which was once BOO, bad dr!JPped into the soos, making her ineligible for credit. 

After leamingofibe loan JDl1SS. Babe c~ tho ~olleclion company, but it refUsed to give any intormatiOtl. saying it 

was an invuion of her ex-husband's priVlll'Y, n.n thOqgb her name was listed on the loan. 

"I've tried to fiX t1Ils om and over. and \'vealWll)!s paid Sonl~in8 on the loan .. " Babe said "BQtI'm powerles. in 

this situali.on.· 

Babe earns $85,000 as a middlo"lH:hool teacher but lives pa)'l'lIeck to payd\ock. 8ne hIlS drained her savings, maxed 

out her credit card, and, at one point lids past 5\lmmer, she hed$2remaining in her checking 8CCO\lDI. 
156 

Page 6 

DlSpA TCH INVESTIGATION; CONSTANT B,URDEN; FedeIJ.1 sI!IdenIlOIIIIS can become unforgiving monsters of 

debt for borrowen; who default The most common ways 0!It: Pay up or die. The Columbus Dispatch (Ohio) 

Througb tile ·government's incom"..based repayment plan, Babel"lYS I·S percent of her discretionary income - about 11·$1,000 a monih - toward her loans. . 

But for ~.sons unknown to Babe, the colleetWn comp8lly hasn't done iIie same to her ex-husband, who. still lim in 

callfolnia. 

Govemmentofficials, including President Barack Obama; have tooted the incotm:-based repayment optionlSooe 

solution to the studenl-deht l:risis. Rep. CllI!'kc's proposal would make the option a requirement and eliminate the need 

for third-party debt wllcctors, !Ulwngbol1'owers such 1ISBIbe thousands of doUan. 

The Education Departnient hires debt coDman to i;hase-defaulti, ThOse nongovernment businesses tick on as 

much 83 30 percent ofthl:' 101m amount to the billlIIIccand share the cOllection fees wlih the government 

Ssbe's balance now stands at lIIQI'e than $290,000, and she has. been unable to get a trUIl utmlnting of how the iHllIDee skyrocketed. 

"I've spent many nigtiis crying my eyes iIUI; begging them to work with me, but the·answer is alWays no,' Babe 

said "COnsolidating thox loim. wa. the biggest miStake ofmy life, lIIld it's.draining everything I have." 

Her daughter doesn't know aU the details of her mom's:ordeal, but it $eJVeS8S a constant reminder ofttowdaunting 

it wlI1 be to pay for a college education. 

"lfs nat something you want III Iltlnk about ona college visit,"Tayklr said. "The cost ofcol)~gII is out of control, 

and most ofus have no choice buHo bon:uw money to make it thrOugh. Y OIl just have to hope you WI pay it back when 

the lime tomes." 

jriepenhotr@dispatch.com 

@jriep 

mw~isplllt-h.c:om 

@mike~er48 

CREDIT SCARS: STUDENT LOANS 

Student-IOIIII debt ~5 ata stll(l8eling 51 trillion, IIIld millioDll of people are in defauli. That cripples tile credit reports and finaneiill ruturo of studems, parents and grandparents. 

• TedBy: lneilCllpablede1>t 

• Monde,y: No golden )'e1ll'5 

• Tues4y: Future debtor~ 

Read previous "Credit Scars" Installment.!! on credit n:porh at Dispatch.com/credit. 

Benefits and risks in fiOn'Owilig 

Federal Student Loans 

• You will nnt baYe to,stan repaylllli;, federalstudenl 10ans .until iilblr you graduate, leiille school or change your enrollment statusto less thac half~tim •. 

• The interest r~ is rJl(ed .and often is lower than private loans - .and mucll10wer than some CRdit-card interest 

rates. View cwnnt ..... on. federal studenll~ at http://studentaid.ed.govlo/Pcslloansl'mter1''t''nlles. 

• Ulideipduaie students wlth finilm:ial need likely will qualify for subsidized loans, for whitb the gOvernment 

pays, the inierest willie you are in school on at leUSI a half-time buis. 

• You don't peed to get a cn:dit check for most fi:deral studenlIoIIIIS (Cl<ccpt for PLUS loans). Federal student 

l~ ean help you est!Iblish a good CRdit _ord . 

.. You won~ need a eo-signer to get a fedenll student 10IIII In mosr cases. • Inte!'C$l may be tax-deductible. 
157 

I'\Ige 7 

DISPATCH INVESTlOATlON; CONSTANT BURDEN; FedenJl stuclentloans.oan become unforgivingmcnstel'5 01 

debt for bom>wers who default. The most common ways out: Pay upor ,die. The Columbu! Dispatc:!r (Ohio) 

o Loans can be consolidated into a iedOJ1ll Direct COIuolidatioo Loan. Learn about your conllOildaliDII options at 

http://studentaid.ed.&9vlrepay~loanslCOll&Olidatipn. 

• .If)'OU have trouble lqlIIying your lban, you might bcilbleto temporarily postpone or lower your payments. 

• There are several repayment plans, iocludiDg III option to tie' your monthly payment 10 your illctm\e; 

o There Is no jmpayment penally fi:e. 

• YOll miglIt be eligible to haye some pnrtian clfyo.1D' loans fQrgi\'l;ll if)!ou work in public service. Learn about 

loan forgiveness programs at http://5tudentaid.ed.gov/repay·l~orgi_-<:aneeUation. 

• Free bell' Is available at 1-8004·FE()"AlD and at studentaid.ed.gov. 

Source: U.S. Department ofEdUQtij)l1 

Private Student LOans . 

o Many private !lUcien, loans require payIiIents While you are stilllnSl;hooL 

• Private student loans can have variable interest rates, some more than 18 percent. A variable rate could substantiallyincreasethe total amount you repay. 

• PrivateSllulentloans are not subsidized. No QnC pays. the interest on your loan bUt you. 

• Private student loans might require an estabUshed credit record. The .1:051 of a private studeut loan will depend on 

your. credit score'lIId other CICIo.,. 

• Yau IDIIY lieed 8 co-sl8l\er. 

• Interest might nOl be tax-deductible. 

• Private student loans C#IIIIOt be Wnsolidated Utto a Direc;) Consolidation Loan, 

• Private student loans might not 0$9- Corbeanmce or defennent options. 

• You should check with your lcnder 10 find out about repaymenioptlons. 

• You need to make ~ there are no pIqlIIyment penalty fees. 

• It is unlikely that your lender will offer a loaiI·forgivenass progMm • 

.. The A;nsurnerFinancial Proteclion Burea,,'s privale-5ludenl-loi\D Qlltbuilsrnan might be IIble lQ assist y!,u if you 

have c:QIlcomsabout your private student loan: WW\\'.colISurnerfmance.gov. 

GRAPHIC: Illustration; Photo; Oraphic 

(I) CHARLIE ZIMKUS I DISPATCH illustration (2) EAMON QtJEENEY I DISPATCH Twyla Manning stands outside Clark Slat~ CommunitY College, where she leamed thai evena1ter 23 years, she still carried student-loan debt. (3) 

TOM DODGE! DISPATCH SouthernQhio teMherTerri Crothers fdtht\illy paid on herSludel1t IQIIII for ~ years' 

befOre a devastating car crash. (4) ERIC ALBRECHT I DISPATCH ABOVE.: A student loan has hung liken dark cloud 

over Susan McN.,.J since the 1970 .. The· Canal Winchestllr woman doesn' think she11 ever be rid of it. (S) RACHEL 

KILROY I FOR THE DISPATCH LEFT: MaHssa Babe, 46, show, offbe •. a1ma mltOt, Kent State Univmity, to her 

daughter T~I9r; 17, during a re«;elIt college vilit. Babe struggles with student Joana ihat she and her nowex"husband 

consolidated. They owe Ilwmbined 1290,000. 

WAD-DATE: December 16,2012 
158 

.~ LexisNexis~ 

SECTlON: NEWS; Pg. lA 

LENGTH: 280S words 

4 ofJ<) DOCUMENTS 

~pyrig\lt 20 l2 The. Columbus Dispatch 

All Rigbl$ Reserved 

(1M C&IambIs .iDispattb 

The Columbus Dispatch (bhio) 

HEADLlNE~ DISPATCH INVEsTIGATION; Incurable tlnaiwial WOund&pL8g<!C many; 

P8g~ 8 

DebI collectors pursue III eotimatcd 40 pen:ent of Americans for medical debls, which can silly on credit reports up to 7 

years 

BVLlNE: Mike Wagner and JUI Riepenhofl: 11m COLUMBUS DISPATCH 

BODY: 

Few In Congress who now debate the mtrits of S1ripping n~gatiye medical debls from credit reports know the woman who insp~ the original bill. 

Julia Mueller never publicly told her story, until now. But in 2008, the Ohio Slate University student was drowning 

in the fallout ofmedicaI deb! and later sent II lotter to then-U.S. Rep. Mary Jo Kilroy asking for help. 

MueJler was workingpvo)l1ird shifts and plowir!& her way through a chernieai-engln~ng de~ when doctors 

ordered asleep study to ~ her chronic fatigue.. 

Her health-insurance company reneged on a promise to pay for the study, causing the $6,200 bill 10 fall delinquent 

and onto her credit "'JlOft. 

She mBnl!ged to JIIlY il off with Ii/Ilp from othets; bill the debt still baunts her financial biatorytoday. 

And it will follow her until2Cin. 

Themed.ical bill was tumed·QVer to a d~tol~r, who repomd it to the a:tdit ~8US. As a reSult, the interest 

rate on Mueller's crediltardjumped by 18 percentage points. -and she was fon;ed to use whallittle cash she had left to 

pay for a u~ car. 

The Cohunbus. nativc'sstory compelled some members ofCongnoso in 2009 to press for cbanges to the Fait Credit 

Reporting Act. Their ~I'fort came up short. but the bill was reintroduced in 2011 and is now in committee hesrings. 

The bill would erase paid medical debt from ..redit reports. Those deblo i:IID remaia on "'J'Ol1s for up 10 seven years. 

M~ thaD tb= yean al\er the bill was ftrS! Illtroduced.an alBr1nlng percentage of Americ:ans - estimated at up to 

40 percent - have medical bills on their l:1l:dit I'IlpIlIU thai have ~n turned over to debt collectors. Many of!he debts 

are for lea than a few bundnu1dllllm, """ even one for $20 can be financially devastating. 

A Dispatch investiglilioillind studies by go\<etilnIent SlId privll~ctor researchers show !hat me,diClll deb! is en!>" 

pIing some ctmswners. 
159 

Page 9 

DISPATCH INVESTIGATION; Incurable financial wounds plague many; Dobt collectors pursue an estimated 40 

pereent of Americans for medical debts, whiCh can stay on credit reports up to 7 yws The CollDllb 

More than half ofthe220 consumel$ who complained toth. Ohioll1torDey general about a medleal debt in ~(IUecIloo between January 2009· and July 2012 blamed their In5UJ1llll)Ccompany or hcalth-gue provider for the problem. 

some (If the mediclil debts, liI!:e Mueller's. involve a diSpute with ail insuraileec(lmpuIy (If WOrkera'compcnsation. 

Otben we fOr medical bills they never received or had paid long ago. 

1'he! Federal ~e reported in 2001 thatll pe~1;Itt of all credit reportS had a collection account aild that half of 

!bern WCl'Il relJted tQ a medical debt. 

The CommonW\llllth Fund, a private fo1llldatlon In New Ymk City that !I!Ivocates for an improved hl:l!lth-care systern, reported two years ago that 30 million consumers were called bycollectioo agenc:ie! IIvcr UDpaid bills. l1!at's iIp 

from 22 million in 200S - • ~6 pemmt increue. 

I'e!lj>lc c.n't tontre,1 wben they gclt flick and ofte!l,8re, overrun by the expen5el. Bill they are even man: helple!S in a 

llationaI credll,reporting system thai ttea!s all debts in CIlllection equally. 

Medical debt differs from lither types ot debts, sucb ~ car Icans, lIHllIgages $Id credit tards, becausa it o~n involVe!~ third part)' - a health·lnsl!f8llcc company. 

It alsO dltferilliom thOse oth~r traditional debtsbecaulldt~ly comes wlthoui a monthly statement that spells 

out the payment due dale and IimoIInt. PatieJita ~ hi",. nil idea when the bill f(lf services will IJI'rive .qnd then may 

haw to arguewitb the provider or the ilIsunIni:e company. 

"lbis Is not like someone has defaulted 011 creclJt-card payments for buying a fiat.o!Cl'Cen TV." said Mark R,ukavil14, 

ot'rhe AcalSs Center, a Boston-based resource center for hcalth"Qre issues. "False medical debts or debts that have 

been paldsh9uldn't lingCf ouo_'s credit report. • ' 

l1!e lhree big nationill credit-repotting agencies oppose etTbnsby Congress to strip paid mediCal debt from credit 

reports because they say sUch d~ help predict the creditworlhiness of aconsmnCf. 

Vel Equiflix, ~ian and TransUnion rarely. irevor. ",pan on medical bUIs that are paid on blne because bospitals, jlOctOTS and other health-care providera amI't furnishers of inf(lfffi~ion to the credit-reporting agencies. 

SO COIlJUtIlerS lII'Yer receive's good mark f(lf paying medicalliills oli'tinie. Rather, they lire affected only by delinquerit,liiedieal debts, because they have been lumedove.. to debt i:Ollectorswlio routinely reporifo t1Ie credit bureaus. 

Industry insiders say that rcportingdelinqucm: mediClll debt actually beIps CODS\IIlICl3-

"Isn't it tnie that .. household that is under serious financial dismiss is nn! weU-senred by being extended additlonal 

lines. of mdlt that putitfurtlier into debt'1" said Nann Magnuson, vice president of public affitirs for the Consumor Daia 

Industry AlisoeiaiiOll, the trade OI'g8IIlz8IIon in Washington, D.C:, that speaks for the CI'1Odit-rep6r1ingagencies. 

The Consumer Data Industry Association is opposed to removing paid mediC\ll debts from credit rep(Ifts. 

It $IIyB theWs ample time'bctwoen when an acoolUlt becomes delinquetltand when irs sent to • wnsumo:r'scmlit 

flIe to resolve problems. 

"An average of 135 days elapsell prior to the rcpert1ngofa delinqueot medical debt to, a crecfrt bure!lu, whiCh 5\18-

ge!its a very ro~ vetting process. even if there are cOmplexities regarding ins\l1anCe companies,' M~U$Dn said in a 

,written statement to The Disp81cli. 

Orily 0.2 pen:ent oftbose who filed a dispute with !l\ecreclil-reportlng,ageneles did SO because oh ileJay in payment from an insurer, he wrote. 

Wide-ranglngefWclll 

Credit reports today are used for miny purpbies beyond&etting loans, s~h ... determining who gels ajob and what 

price. consumer pays for car in,WiIru:e_ 

Julia Muellcr believes she is qwght in BD unf~1r system. 

"Ii is frustrating, because I shOuld not have to delay fullllllulthoOd beellllSe of a bad system, and getting the MIlIround 011 erasing medical debt that wiIsn't my fiwlt,· said Mueller. 29; now worldng 'OrIa doctorate althe Unlvmity of 

Queensland in AustJalia. 
160 

Pagel!) 

DISPATCH INVESTIGATION; Incurable financial wounds plague many; Debt coUecton; pursue an estilnaled 40 

pei"ceDtof Americans, for medical debts, whii:b £an stay <Xl credit repans lIP to7 yean The Columb 

Her debt from the sleep study was paid otf'malnly beca_ oflhe compassion ofOSU's stud.nt inswance prognun, 

which took care of the bulk of Mueller's bill after hearing her, story. Her doctor's billing off1ce also furga~ a smaller 

piece ,of the debt. 

Even 10. th~ medical debt remams a part wiler credit hiStory more than four yearsiater. 

When she IeIUrns to the United States. she said, sbe fears that high intmst rates are waiting for her. 

The words she WtIiIe in 8 2009lellerto Kilroy,stlll ringlrue tOday: "I am financially I'Csponsible. and I WDuld like to be treated dHit way." 

Complainl$ to state and federal officials about debt collect!on often reflect tales of devastating c:oosequenees of 

wronIJIy IJSSi&ned medical debt. 

fvlore than 12 pem:nt ofc:oosumers whlicomjllained to DeWine's office about a medical bill in collect!on silid the 

debt did not belong to hiin or her. It's lID oill:!Kiml'cOmp\aint to the FTC, too. 

A Virginia WOIllll1 injured in. W 'mal! tbat W8.\ not her fault found that • mcdleaJ bill bad been turned over to a 

collection agency and landed on her credit report. 

"This Is not anenorOn my part. and I iIm notat Iliull BecaUlleofthiJ, my credit SCCI'C has sutTered a hUIJD blow, 

and 1 need thii problem fIXed. Please help me; my fubue is on the line: the woman wrote to fedend offiCials. 

A eredit-card company denied an application from a 21-year-old IP8II in Lorain !.Aunt)' in n01'\heastcm Ohio because of an unpaid doc:tor bill. "I was 12 yean old theD.' he wrote. 

A Univ.ersity of Michigan 5tudent wrote !bat Ibe IOBII bc needed to pay ror his senior year Of college bad bc:tn JeaparlIizedbyllSI30 caUection ilccaunt. The sllidenthad been injuredal biajob, and the medieaJ bills·shauld have been 

i;overtd by workors' compensatiOn. 

"My parents lmve since paid the $130 to tile c(illcctioo agen~y. being that it WlI$l!Iinlng my credit; however, be· 

cause this bas shllWll upon my creditrepart, I am unable to receive the loan that I need for this upa>ming'SCbool }'f:IM:: 

he wrote. "I win not be able togtllduate. I am eomplc;telyde\'llSIatl:d and at a !oos·far oplions lI!! to h\>w to fix thi.issue." 

Such stOries prompted fcderallawmakerS tD rein~ the bills to make changes to the federal credit-reponiJJs 

taw andCllSe some of the. Consequences of dCIinqucnt rilcdital debt. 

"The c:oosurnlm iA this,country are flghlingan unknown entity," U.S. Rep. Don MIlllZllUo, R-lII., 5.ill It a HOlisc 

Financial Services Committee bearmg last month on a pending medical-debt relief bill. "In timo after timo aftvr time 

again, things show lIP on tbe credit repon and people baveno idC!l it's ~ there.' 

Stunned in TeXAS 

CanlJl'CSSional bearings 1118)' not M\'I: happened if not ror Texas ~ banker Rodney Anderson: 

In 200a, Am:Ie1son WlI$ working on a mortgage for II couple in their 70s when he dis<;overed a lOO-pointdrop in 

their Credit score because ofafil1s'e SUO medical debt.. The couple paid thau!lllDds of dolm in dlisingcOlitobcyond the 

IIOnn fo,oblilin lIIe 100. 

AnOlin:r client, •. lawyer who Anderson .. id made S 1.3 million Il ye,"'. was denied a loan because. a $30 medical 

debt dIQpped his credit $Core, bela"" 700. 

After seeing dozens ofpei>ple'denied loans or rorted into hi!Jber interest rates, Anderson condUcted. a study <if medicaLdebt. 

The findings stUnned Anderson: Mare than 45 percent oftllel,70l C)OII5lIMer$BPPlying for 108115 liom him had 

same type \If medical debt wcighiDg-OOwn their credit reports. 

So Anderson do •• intO Washington palitlCIJ and began crusading rora bill that would erase paid medical debt !Tom 

a consumer's credit report 

He ~ventuaIly COIIIiI!Cted with Kilroy. the blll'dirsl spotI$OT~ The bill won approval in the House but time nurout in 

the congressional lIeuion before the Senate1:l)1Ild 1Itt. The bill died, Kilroy 1051 rWlectionand the measure seemed 

dead wml Ande~ found a new sl/PPOftcr. 
161 

Page II 

DISPATCH INVESTIGATION; Im:w'Ilble fmancial wounds plague man)'; Debt collectors pursue an estimated 40 

percent of Americans for medieal debts, which can sta), on credit reports up to 7 )'Om TheColumb 

The bill ·WIIlI.reintroduced in June 2011 and has bipartisan suppolt 

''TIti, bill would lift a huge fillancial weight off so man)' AmericanS,' said AndersOn, who added \hal be has. sPOnt 

$ 1.6 millionofhis own money puShing the issue: "It Would help creditworthy b6rmwers have access to the best inimest 

!lites III1d closing I:OStJI and improve conaUmers' ovcraI1 finimclal health.' 

AI their mercy 

The bill could bave /lln!ed Ed Browning's ctedIt. 

DurIng a routineappomtment after a COIoII()SI;OPY, Browning p1Iid the S43Q1-p11y for the doctor's vi.it. 

Nineteen months later; the Worthington ..ment received a bill from the pathology mediCal office 18}Iing he stili 

owed S43.Hodisputed theb\l1 and a shori time later received a notice fI'Om a debt collecror. 

He feared the false debt would end up 9n his credit repoJt. so be paid the $43 again 110 it wouldn't become a bigger 

linllllcial headache. 

"I thought It would go away Ifl just paid it," Browning said. "But itJlllt got wone from there." 

B~ing \VIIS among the \J percent of collllumers who wrote to DeWine's office COIliplaining that !bey were pursued b)' oebt collectors even after they paid off the debt 

Browning discovered the debt had been applied to his credit report in August 20 10 when hill application for a credit 

card WIllI denied 

Ho 3e1lt evidence to' each pfthe three cte<lit...epDrting agencies showlngth~the bill had been paid. One, however, 

was. untonvinccd lIDd refused 10 relD<lve il from his credlt'.eport. lowering Browning's ooce-impeccable credit store, 

"As a consumer, you hive no control 0_ what the collection company or credit ageodes will 00,· Browningsliid. 

"We are at their mercy." 

The law currently allows that debt to remain on 8rliwning'scredit tI:jJorI wltil 2014. 

Consumers in situations.similar to Browning's across the U.S. also say they IIR at the mercy of a system that has 

cost tbcm jobs, 108115, ins=eand higher intmst rates. 

When TerrY Story of DaUu went to Andmon til rcfiollllCe his mortgage earlier this yqr, he learned that a tinHerlnll 

$20 medical debt would have coSt bim S8,«lO in additional fee$. . 

Story was contaen:d b)' '" debt collector in 2011 who said he o.wed the $20 fur what likely was a co<p1IY forlldoctor's visit b)'hi~ daughter In 2008. The Tuasman~lI is unsure there was ever a doc:tor's visit b)' his daughter, but ifit 

happened, he Is caUin they would have p1Iid the $20 co-pay. 

But like Browning, Story p1Iid the small bill fO .void fUrther credit trouble. 

He then found the paid medical debt on his ftee credit report when he went 10 refinance his mortgage. 

StOry, 4S, vice prell.ideni of <ljICl'Iltioils for an elevator company in Teus; said thr\le other peopleln his o!'flc;ealso 

suffered fmancielly from similar medica1-debt problem" Story said his credit report also li$ted a mobile home tha.t he 

never puri:based, a job he nev.er beld and other ~oUJlts thlJf didn~ belong to him. 

"Thai's why I call this a racket," Stcry said. "The information is not ri&llt,1 stiU paid the debt even !hough I didn't 

thlllk it was. lagit and it still ends up burting my credit." 

jriepenhoft@dispatch.oom 

@iriep 

mwagner@diSJiatcb.COrli 

@mlkewagner48 

CREOIT.SCARS: DEBT COLLECTORS 

Credil reportS are primary weapoJlll tor debt collectors. And lax oversight by credit-reporting agencies and loopholes in federal laws allow debt collcaon 19 ruin the credit of unwining consumers. 
162 

Page 12 

DISPATCH INVESnGA nON; Incurable rmanciial wounds plague many; Debt collClllorS fIIIlSUe an $illl$d 40 

per<:ent of Americans for modi~a1 debts, which can stay on credit ",ports up to 7 yean The Columb 

• Sunday: Strcng"llml tactics 

• Monday: courts ~pliclt 

" Today: Medical debt 

Read lI1e series online at Displlti;b,;i:Oin/credit 

When: to find help 

The Consumer PrOtection Sec:1ion ofObio AttlimeyOeneral Mike. oeWine' •. office entourageS consnmen to report 

errors in their credit RPOlUor problems with debt collecticin. The liffice can help mediate disputes. 

Complaints may be submined: 

• Online: ohio8ltortie),general.gov/conswnercomphiint 

• Byphon.: 1'·800-282-0515 

• By mail: OhioAttorney~imIlConsumerl.roleclion Section, 3D East Broad St., 14th Floor, Columbus, OH 

43215. 

Contact information fOr other stales' lIttorn~ general can be found cn the National Association .p( Attorneys GemeIlI\ website, www.naag.org,under AG FilS! Facts. 

Stuck in CPDgress 

F_ U.S. Rep. Mary Jo Kilr!iy WIIS the.tim 10.spOnsOi' a bill to strip credit reports of medical debt. Though supported by the HouSe, the billltalled iii the Senate. New ver!lions have been httrodueed within the past two yean in boll! 

the House and the Seruite, but CongreSs has yet to vote on either. 

S.B. 2149 Medical Debt Responsibility Attof21l12 

.. SponSor: sen. leff Merkley, J>-Qregon 

• Co-sponJOn: Five Democrats - SI1errod Brown. Ohio; Dick Durbin, ItI.; Robert Menendez, NJ.; Charles 

Schumer. N.Y.; and Tom Harkin, Iowa 

• Introduced: March 1,2012 

• Slatus: Referred to Senate Banking, Housing and Urban Adm oommittee 

• Recent.activity: None 

• What the law wQIIld do: Require the !rredit-reporting agencies to delete from a WDSumer'S cn:dit report negative 

information ",Iated to a medi~a1 debt once the biU I!lIS been paid orgttled. 

H.R. 2086 Medical Debt Responsibility Act of 20 II 

• Sponsor: Rep, Heatll Schuler, D-N .C, 

• Co-sponslirS: Nine Republicans and 43 Demoerats, including Ohioans Marcy Kaptur and Oerui;" J. KUCinich 

• Introduced: June 2, lOll 

• Siatus: Referred to House Committee on Finaneial Services 

• Recent activi!)l: Hearing lasl mPDm 

• Wliat the law would do: Require the crediHeJ1ortin~ agencies to deleie from a coftswnet's credit n:port negative 

inf<ll'mlltion relared to a mediCal debt of $2,!100 or Iwaller!be bill has been paid orscttled. 

Sources: GoVTrack and OpenCongress 

Closer look at the big 3 credit bureaus 

EXPERlAN 

• Founded: 19S0 
163 

Page 13 

DISPATCH INVESTIGA TlON; llICIII&ble financial wOWlds Plaaue many; Debl collocton pursue an cstlmated 40 

pen:ent of Americani for medical dc~ which can stay on credit report. Up 10 7 yean The. Columb 

• Corporaie lieadquanm: Oublin, Ireland 

• U.S. hcadqll8l'fer.l: Costa Mesa, Calif. 

• Employees: I S,OOO in 40 cOlllllrie3 

• AnnUIII ~~iIe: $4.2 billion 

• Ustedon thr: London S~k Exchange (EXPN.L) 

• Own$ FreeCtedltRepOlUiIm and eonswnerinfo.com, where access 10 free III1mial tIportS often I:omes with fees 

;0 Poliileal intluellce 2011-12: lobbying, $.1.1 million; campaign CQIl\l'ibullOll$ •. $S S!,06S 

• Regulatory IrOUbles: Fined SI million in 2000 by·the Federal Trade Commission for nat providing phone help to 

consumers: fined S950,000 in 200Sand $300,000 in 2007 by the FTC for doceptive merkering offree credit reports 

• Contact. www.experian.comipenonal-crcdillrepon"and-credit-IICore.html 

EQUlFAX 

• FOlllUled: 1899 

• COIJIOrate headquarter.l: Atlantll 

• Employ""": 7,000 in IS CIlWltries 

ok Annual revenue: $1.5 bUliOn 

• Usted on the New York Stl)tk ~ChllltBe (EFX) 

0: Political influence 2011-12: lobbying, S814,~; campaign contributions, $46,983 

• Regulatory troubles: Fined SSOO,OOOin 2000 lind $2S0,ooo in 2003 by the FTC forililt providing phOne belp to 

.. Contact: www;equifiIX.comleslSatcIHte'!pagename=amtaei~us. 

TRANSUNION 

• Founded: 1.96l! 

• Coqiomebeadquartm: Cbicago 

• Employees: 3,000 worldwide 

• Annual revenue: SI billion 

• Political influence 20 11.12: lubbying, S542.OOO; campaign contributions, 161,300 

• Resu1alory troubles: Fined $1 million in 2000 by the FTC for not providing phone help to consume", 

• Contact: www.tntnsWlion.COIII 

Sources: Company ~bsites, Sealritiesand EKchange Commission, Federal Trade Commission, OpenSecrel$.org 

GRAPHIC: Photo and Graphic 

(I) COUrtesy or Julia Mueller Columbus native Julia Mueller struggles with paid medlcaldcbtaffoctini her tre.dit report 

ewit while illestudi .. chemical engilieeril\g in AusIJalia. (2) TOM DOOOE I DISPATCH Ed Browning said hI: always 

paid hiS bills on rinieand was rewarded Witb anlmpccx:ablc eredftllCOl'IJ until u dispute over a $43 meditlll bill desiroyed his financial reputation; "Ii's tragic what C8/I happen to u .... the WOrthington resident said. (3) PETE 

MAROVICH {FOR THE DISPATCH Texas mongagebanker Rodney Anderson told Con~s last riKinth: "The consumer is th. only party whO pays for the erroB, mistakes and confusion of the pri:iCess. Those making the .e1T01l ... bear 

no responsibility." (4) A $20 mildical debt hampered Teny Story's elfons to refinance his Texas home. StOlY doubts 

that he oWed the debt. 

LOAD-DATE: OctOber 9, 2012 
164 

SEctiON: NEWS; Pg. IA 

LENGTH: 1981 words 

5 ofl9 DbcuMENTS 

Copyright 10 11 The CoJumbwI Dispatch 

All )Ugh'" Resem:d 

m.t «Umbus .Illi&paKII The Columb~ Oisp$ldt (Ohio) 

O$lber8,2012 MondaJl 

HEADLINE: Dispatl:h invemgation; Law, courts involved In prolOnginj! agony of debt; 

The s)'Item for resolving disputes is broken: even debt collectors Il1'O asking for dlllllge 

BYLlNt: Jill RiepenhOft' IIIId Milce Wiigner. nfE. COLUMBUS DISPATCH 

BODY: 

Page 14 

When debt collectors tum to the courts III compel payment ofclelinquent bills, con~umen In some SIllIeS. including 

Ohio, c;an suffi:t1he consequelices f8r longer than Americans in the majority of lb. countJy. 

Decades longer. 

De.ht col1~ alSo are IiOt required to produce origin"l contradS or other conclusive eliidence to prove an account 

is dellpquent to ~cure a iudilment in Ohio IUId scvoral CldIerstatts. 

And unknown to most IlODSlDllers in that predicament is a ~ 1hat will MlIIIl them: Coun-ordctl:d judgments 

are financially crippling marks 011 a creelit report. Their lasting e~ts vary betause ofa patchwork of laws 1hal _11 

Itom censwner-fiiendly to almost punitive. 

More tban a q\l!ll'ler orlbe 22.s00.~0\IUIj:TS who oomplained to the Federal Tnide Commission ovet'. :z ~ 

period .beginning in lBnUlll)' 2Q09 about prc>blems with their ..... dit reportaJald the im/. involved, CO\lIt record. a OJ .. 

patl:han~lysis found. 

They had judgments that did not belong to lhem.liadbeen paid or had been dismissed by 8 judge. cOFI'eeting those 

emm is a burdeniome process that largely is blind to consumers' proofbeclIIl$I: of an alll0mBleeI credit-reporting system. 

The FalrDeht Collecticm PnIcIfces Act sets standards !If cOIldWl for collectioollut is virtuall)' silent abl;UI whaI 

happens when 1I debt !;mds in court. Rather, state laws and local court rules llctermine stlltUt~.of limitations and evidence $\lUJdards. 

The FTC, 11 U.S. govemmentconsumer-waIl:lldog agency, save 11 blunt lISSemllent of the state of debt-colleciion 

lawsulta in un 0 after a series of mCCtin.8l' with industry insiders, consumer advocates and judges: °The ~emfor re.- solving disputcscpbout OOll3wuer debts is broken , •• betause consumersar. not adequately proIectild." 

The CUIrl!nt. sys)em is $0 convoluted and unfair that the indu5try Itselfis calling for ch8l18G-

·w. jUII want a clear set of rules to be governed by,' said David Rllbingcr, spokesman for DBA lnierilatiooal, ihe 

debt-buylng industry's trade associatiOJl in Sacnunento. 
165 

Pag,u 

Dlspak:h investigation; Law, eoul1s involwd in prolonging· agony of debt; The system for resolving d~UtIIs il broken; 

even debt ~ollecton are asking for wnge Th .. CoIUlIlbus Dispatch (Oblo) ~tober B 

The Indo group for debt collectors agrees .• Any way we can make it mere WlUorm, the better," sii4 Tim Collins, a 

member of ACA lnletnational in Minneapolis. 

Court-iirdered jUdgmeilts .an appear on • credit report for seven years. eveJi iflhe original delinquent debt bas 

long-.in!:e tallen ott To the natlonall;l'Cdit-reporting lystem, a judgment is a new piece cifinformatioo that is ~ieal to 

determio1ng consumers' cmlltworlhl_. 

Experian, EquilU and TF8JISUnion, the three llIIi8Sl U.S. credlto.repQl'llng agencie$, hire mJdors to collect judgments from ~ourthowes for theagencwS to iuclude in consumers' credit filcs. 

But even with such high stakes, emirs abound. 

"The credit report has taken on a life of its own - way beyond what the ind.1IBtIyor Gongress thought when it fl/'St 

enacted the law," 'said Mary Spector, a consumer-llIw professor at Soutbern Melhodlst \.Jniversity In Dallas .. 

Heavy Consequenceo 

One glance at chris DrapCr'samtSofl'ers proof that he plllhes 1I!Id pulls hundreds of po1!Jl(ls during his worl(outs. 

In 2005, die Dayton man signed a threo-year conlnH:twith World Gym, mainly because it had the volume of 

weights be needed for his lifts; tbere was a I!)'III close to his home; and 'the. 1111 ... rejm:sentative could wad< out at World 

Gym IlICIItions nationwide during business trips. 

Six weeks after Draper became 8 member, the World Gym near his home dosed. 

This August - more thanteven years after the gym closed. - DnljJcr teceiv.d a summOns from Fairborn MlDlicipal 

Court. He hid been saedby a finance cOmpany for a'gym'membership he used for less than two months. 

"\ couldn't lIelievcit, • said DJ:aper, 48, ".ho 1$ mlllried with three Children. "To not hearllllything for that long and 

!hen get sued for something I didn't get to use w.as insane.· 

If Draper loses his case, his credit report could suffer the consequences for an additional seven years. 

EedI state has 8 statute-of·Jjmitarions t.w thaI determines when debts becomc too old and cannot be targeted for 

JaWSllits. 

In kentucky; debt collectors can plll'Sue 11 judgment for up to 1 S years after 811 ac~ount becomes delinquent. The 

law W8ll the same in Ohio until last month, when il dropped the stlilUiC of limitations to eight years. 

And regilrdless of when judgments are Qblained,1hey can appear on credit reporIls for the follOWing seven years. 

So that means that consumers in Keniueky and those in Ohio who filII delinquent up to Sept. 2B can be haunted by 

debts for 22 years. 

Ohioans who fell behind on paymelits after Sept. 28 can be on the hook for IS years. 

But bad debts In WashitJ&ton, D.C., the Carolinas andrew .otherstates can bun ~on~umers for only 10 years. In 

fact, 39 states have5tatutes of limitations that are liiendlier than Ohio's. 

In teal terms; OhiDllis with judsmentson their credii reports could have 10 wait mlJ(:h IOn8.,.!ban the vast majority 

of Americans to buy 8 hOUle, land a job or get better ear· and property-insumnce (II!es --simply ~8U'C they live here 

instead of elsewhere. 

~Irs important that people pay their debts. Ir. also important that people be viable fuwiclaJly. That's why, a&r a 

period ofeime; debts are forgiven," said Robert J. HObbs,depl!l)' director oftbc National Consumer Law Center in Bas· 

ton. ''You C8I1llOIllquldate 8 family.llcbt colJcQtion cannoI become a perpetuaJ issue." 

The fndustly itselfsaid the current situation is unliJir. 

"We need to balance around l:onswner prolel:tion and collectors who need to do Ihelr jOb," said D8vid.Schiflin~n, 

spokcsman for the. i~tly's trade lISSOOiation. "But wc'regoverned by this patch1'l'Ork quilt.· 

Chris Draper said he mede two monlhly paylllenls for $3~.22 for the time he 'lias able to \lse WQrId Gym befQJ'e it 

cloUd, theJi he stopped payment oil the ch~ka. 
166 

Page 16 

Dispatch investigation; Law. court! Involved in prolonging agony ofdcbl; The system for resolving dis~ i. broken; 

even Iblbt collectors ire IiSldng for change The Columbus Diapeteli (Ohio) October 8 

About a mon1b later. the company that financed Draper's membership con\aCted him and expeeted him IP honor Iris 

3,yesrcontract with a different g)'IIl. But Draper believed that was an offer - not" contractual requirement. 

He declined because that gym was about 20 mileS from bis home, akin to drlvinil from Downtown ColumblilllP 

Pataskala. He ~aid the gym also didn' have wtigbl$ h. needed Or locationa across me countJy. 

Instead, he found a new gym in me Day\on suburb of Beaven:reek, where he has been lifting weights since. 

"If.! bad wanred 8 diffi:n:nt gym baCk th.en, I vrolIld have joined it In the flrst place,· Draper said. "But the wOrst 

part ofthia i. them coming liftefmc sew,n yeJirs 1a1er." 

H~ was UDaware until three yesrs ago that th, compilllY holding the closed World G)IIlt's .accOUnts bad notOd the delinqucnC)' on his credlI report cvery month since '2005. 

Julia WOOds, a IllImBgCr for Colorado-based Credit InvestmentS Inc., said the colilpany plans til pursue the suit; 

Woods ~id.that the sec!lJ1d gym "ffered IP Draper was a few miles away from the World Gym that closed and had 

the necessary Ilea\')' weights for the Dayton IllIm'S workOllt, She ibp said Draper still could have used WgrldGyms 

IICFOSSihe country because the new gytnwus.afttliated witb the same nBliona! fitness BS5OCiation. 

Drapetnow Is trying to defend himself in a system tipped &gains! con5linim in Ohio. The deb! that he consideB 

in ... lid may be harder to lift trom his finanCial proflleihari all those w.igha. 

No proof, no problem 

TWO 'ye8rSliso,lhe FTC called fur more ttansparem:y in debt-<xllJcc:tion 1aW!Um.: 

Too many lawsuits were based 011 IllSufficient evidence and too.many ended With defaulljudgmcnlS bewue the 

cOllsumer did not appear in court. tkc agency said. 

Thllt llll:k of'docume~on leaves consumers confused about who is suing them and fur what. 

The FT.c CII~ states and local courts to follow the lead QfColUlecticut, Massachusetts and Mfchjgan to require Ib.t each lawsuit contain, atll minimum; 

~ The identity orthe original cn:ditor. 

• Th6 date ofdefilult and amQunt due at thlll time. 

• The name· of tile cum:nt debt holder. 

• The amount cwrently.due with Ii breakdown of hoW much is owed in Ilrincipal, interest 8IId fees ad.ded by the 

debt collector. 

A Dispalth IIjIlllysis of23S debt-col1ection lawsuits filed in F,lIIIkfin County Municipal Court the week of Oct. 10, 

2011, found _lacking the FTC's recommendations. 

More than 4Jpe=nt of the cases tailed to ldclrtilY the date when the debt fell delinquent; 

In morc than 16 percent of the cases, the court: files lacked lIDY documenlation from th. origillld credil1lr but rather a 

.mtement created by the debt collector. 

Nearly two-thir"ds Qfthe· cases inVolved credit..;ard tkbt None of those flIes contained signed igreements but rather 

cepiesofcredit-<:iird slatemerits. 

More than 28 percent ofibe lawsuits were filed on behalfpfdeht buyers, companies that buy portfolios of del inq~t1lCcounts forpeMies on the doJlar·and then coJlec\on the full amount plus tllCked-oll interest and fees. 

ThO majority oflbc 235 eases -- neaI'Iy70 percent- ended wlthadefaultjudgmentbe~ the co~er never respandedto the swnrilOns, !hi: official notlflcation that a lawsuit has been libid. 

However, in m.ore !han .55 percent of the' cases. there was no proof in the files that the CtlnSllIl1ClI received the 

summons. whicb.arc first sent by certified mail and then by regular U.S. mail. 

The envelopes came back marked "unClaimed" (If "un.delivCrable.· 
167 

P..!!e 17 

Dispa%clllnvestigafion; Law, cow involved in \il"olonging agony of debt; The system fur re8Olving. disputes is broken; 

even debt collector.·"", aakingfur change The COtwnbU5 Dispatth (Ohio) October 8 

In New York City, courts can not grant defiwltjudgmcnts in cases in Which the summon ... have'been returned .. undeliverable. .. 

Spector. lIle SMU law -professor, eonducted asimil8r stud)' last year of debt-collection "",es in Texas from 2007. 

TIie. findinp in Fl8llklin COunty are ·very consistent with what I WOJ seeing in Texas and, frankly, is aJanning becauSe ii's still happening. n sbe said. "The fact that these pracilces are continuing is cause for concern," 

But even when cQIIswner. li:knowlCdge tht sumJUOlIJ, the)'fac4nm uphill baIt~. 

A debt ~lIectcr won·. default judgment 19ainsi an ~lderI)' woman suffering from dementia who now lives in Florida. Her 30Il wrote lellm to the Fnnklin County court explaining how her memory is forever I\llne. Th. collector objeaed to the son's leiter because it didn~ meet court rules onanlWers to lawsuits, and won:ljudgment. 

In another ~, a Columbus min scmt doI;wnents to show that wheil he signed up rDr the Credit card that e~tually 

feU dalinquc.lll, he ·also carolled in an insunlll(;o policy that would PlY off the debt if halost his job. 

Hia credit can! was charged $30 a month for that poUc)'. 

The 62-YCV-01d man, who asked not lobe n!lll1ed. lost his job "llscJmo.l-bus di'iverln Dctember 201 0, couJdn~ 

pay on the mdit card and was. sued last October. 

For nearly five mQllihs, tb~ deb! colJeetor rdUsed to aceept the man's credit-canl statemenl!i as proof ofpayn1en1 

even .. the company was using the same d~uments to prove its validity. 

"They kepi bounding me and halmding me II> pay," he said. "But there was no way I was I\lllngto do that IIfterl 

was paying10r the protectiWl in case Ilostajob. That just wasn~ right. 

• And I know It prol)ebly happens to other poople, too •• 

jriepenhofl@dispaii:h.com 

@jriep 

mwagner@dispatch.com 

@mikewagnc:r48 

CREDIT SCARS I DEBT COu.ECTORS 

Credit reports arc. iJrimaryweapOl1l! for debt colICI)tors, .},nd ,-,<oversight by credit-repol'tiDg ~c;nclcs and looplIotesin federal laws allow debt COllel:tlllito ruin the mdlt of unwitting COIlSIImers . 

.. SIInday: Strong-arm tactics 

.. Toda)': COU/tS eOmplicit 

• Tuesday: Medical debt 

Where to lim! help 

The COnsumer ProtectiQll Section of Ohio Attorney Genenl Mike DeWine', office encourages cOMUllltrS to report 

errors in their credit reports or problems wi1h debt ccUCI)tion. The offiee can help mediate disputes. 

ComplDintJ,may be submitted: 

• Online: Qhioattomeygencral.gpyiC<m5U1Dercomplainl 

• Byphone: 1-30().282,t)!iU, 

.. B)' mait: Ohio Attorney Genera) Consumer Protection Section. 30 Ea,n Broad SI., 14ih Floor, Columbus, OH 

43215. 

COIlIac;t infonnalion for other states' attorneys.general can be fbuil!lon ~ Natiollal A~ion of AllQrneys General webSite, www.nDlg.oll,under AG Fasi F~. 

GRAJ'HlC: PhOto IIIId GtaJihie 
168 

Page 18 

Dispatch inve!ltigation; Law, cowts involved in proloqging agony of del!!; Thesyslem for resolvingdisputcs is broken; 

even dobt collccton are aslcingfor change The Colwrl~u. Djopatch (Ohio) 0c:I0ber 8 

Skip Petenon I Forthc OispatchChris Draper, who works.Ollt near Dllyton, it fighting a disputed bill for Bgym he 

joined seven years ago -six weeks before it clOsed. 

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The Columbus Dispatch (Ohio) 

October 7, 2012 Sunday 

HEADLINE: CREDIT SCARS; Primer on ~ collect""'; 

BODY: 

Typos of debt· coUectors 

• Third-par,ty debt co\lectors:~k rIlparment9f a 'debt that they did not originate . 

Page 19 

• Debt b~rs: Purcba$e.large portfolios lifdelinqilent debt, typically li'omtredlt-catd, medieal, utility, telecQJn. 

muniCBtklnlind auto-Ioen trailsactions, for pennies Oil the dollar and then li\tmlpt to collcet frolll consumers. 

• CollectionattomeY5: Seek judgmeJ1lS to coUe\ll. unpaid debt through cow1-orderedwase or bank·_ount prnisbment, 

Trade organization 

ACA IRternational was founded in 1939·11!1d RprCSCIII!! more thai! 5,000 tbird-pany coUc~lion I18CRcies, debt buyer.!, colleetion II!tDmeyund creditors. U's based in Minneapolis. 

• 2011 cempaisn coti1ributions: $222,129 

• Top recipients: David McKinley, R·West Virginia, $14.000; SpeI!cer Bachus. R-Alabama; John Boehner. ROhio, S7,s!lO 

• 20 II lobbyirig: S&30.000 

.• Key issue: AdV<M:ating fora bill thaI would bave allowed deht collectors .to contact consumers on their cellphones. The bill eventually was withdra_ by il!! sponsors. 

The industry at a gIanee 

• CollCi:led $SS bUli(m in: delinquent debt. in 2010 

• Einployed 148,272 people with a payroll ofS5billion 

• Donated 585.2 million 10 charitable causes 

Regulatory troubles 

In 2011, the Federal Trade Comml$SiOll i$Sued 1\ reeotd number Qf eIlfon:e~t aclions lIgBinst debt collectors for 

violating federellaws, Those receiving the molUeven: penalti .. were: 
170 

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CREDIT SCARS; I'ritrIer on debt collectors; The ClJlumbus Dispatch (Obio) October 7, 2012 SUnday 

• West Asset Management, lIlC., with offices In 13 states. was fmod $2.8 mlUion fur calling ClJDSWl\Ilr.l muJtlple 

limes a day, often about debts that did riot belong.!o them. 

• AQet Accep~, of Warren, Mlth., wufined $25 miiUon for attempting to colleet .ddrtsthat were too old to be le8ally enforceable. 

SOUR:es: ACA International. the Federal Trade Commission, SunlIght Foundation 

Laws gemming debt collec!o~ 

The Fair Debt CQllectioD Practic;e.s Act _ pused In 197781111 prohibits deb! collectors from using abusive, decqIlive and unfair dcbt-coUection pmltices. It 11130. prohibita collectora &om: 

" Calling ConSumers befure 8 a.m. or altei' 9 p.m. and iufurming employers about II consumer's debt.. Consumen 

also can wist that collecton cease further cOntact. 

• Harassing consum=, threatening violence, using obscene langllage, or annoyingqonsumers with repeated phone 

call$; 

• Misrepresenting whe they are and the legal status of the debt. They also CiIMoI imply nonpayment is a crime. 

• Trying !oconee! the wrong.amount ofdebt or ad<iing.W1authorized feeJ, interest or other charges. 

Debt cOllectors mIlS! provide consumers with 8 written notice that includeS !he IIII1OW1t orthe debt and the name of 

the owner of the debt. Consurnem have 30'days to dispute the debt, and collec!ors much SlOp all contact until they can 

prove consumers owe the debt. The law does nOt spell out debt-verifl<:ation proced~. 

The F.u- ~it Reporting Act, enacted in 1971, regulares agencies that campllo credit reports and those whb:,.,rt 

CODSll!llers' lQanand payment informlltion, sueh Ill! debtcolleclon. Credit-n:portlng agencies and "liunishers" - those 

who provido information about comumers - lite requin:d to meet a standard of "maximam pc)lSible accuraey" and to 

investigate cons\lmers~ claims of errors. If a del)t ClIIIllot be verified, the ctedit-repot!ing qgencles arc RlQuired !o delete 

the Infonnation permanently. The act, howev«, does not spell out !tow ,an investigation should be conducted. 

Soun:e: National Consumer Law 'Ceitter 

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The CQlumbust:fupatch (Ohio) 

October 7, 2012 Sunday 

flEA01,INE: CREDIT sc~; Take r.tlCti.OII if a debt collector COllIeS calling; 

BODY: 

Page2l 

Consumer advocates say !h81. people facing a collection notificaliOll should !aIk to.& lawyer. SollIe debt colledOtS 

lire trying to collect paymcntson accounts. thilt SbouJcllI't be in collectiOn, IIICb as .debts disclulrged In bunkruplty Or 

debtS generally olcler "'an 7112 years. Conmmers Clin fllrtlier hilrm their credit reportJ and credit SCores by paying Ibose 

debts without legal assistance, 

But the National Associa!iOll·ofCQnautner Advocal4ls Sl)l$ \bat consumers need to be aware of the following: 

What IyjJes afdebts are camed by the Fair Debt Callc:Ction l'tactkes Act? 

Perwnal, fllllllly and household debts, Including money OWed.01l a personal credit-card atCOU11I, an auto loan, a 

medical bill and a rnortgag~. 

How can I stop debt-colleet« contacts? 

Said. letllor by certified mail \bat says ·you an: hereby notified to cease .and desist all further tl)1IIIJlunication with 

me in reprd to the rel'ereneed debt." A eoUeetw """ make further contact only to notify consumers that a lawsuit has 

II.- filed against them. 

Can a debt colleclor cOntact anyone else about my debt? 

They can contoct a OODS1!mer'$ attorney-to disc\l$$ !be Clebt. They can aontaet friends, ·n:latives; neighbors and coworkel1 only to gather the conllllller's address, home phone number andplac:e ofemplo)'lDcot. 

What does the debt collector h1l\le to disclilsC Bboui the debt'I. 

Every ""lIector must send a Written 'validatlon notice" expiaUllng !tow mum is owed within five days after the first 

c:ontacL The lIOtice must include the name orma creditor and how to dlapute a questionable debt. 

What bappens ifa deb! fs disputed? 

Send a letter within 30: dayS of tho validation notice askingfQt vetlficatiOll of the debt. 

Can B debt collector garnish bank IICI:OIIIIU· or wages? 

Debl collectots can sue to eoUcet ill unpaid· debt, Ifthcy win, the court will ent~r ajudgment ag8inst the consumer allowing the collector to retrieve the balan4;e througli b8JlkaCXOlllltS or wlIge garnishmelll. But they can't garnish several 

f..:lcral benefi13, iDcl.uding Soeial Securitydisbursoments. 
172 

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CREDIT SCARS; Tllki! fBst action if a debt colleetur comes calling; The Columbus Dispatch (Ohio) October 7. 2012 

Sunday 

What ira debt collector Is suspected of breaking the law? 

The law aUoWs\:Ol\"",,er5 til sue a collector in a sWear federal o.oWt within a yQT of the violation. 

Whatsboulll consumeD do If $lied by a debt collectm'l 

Respond to thl: lawsllit either persouaIIy or tl!roup a. lawyer, by !hi! date specified in !Ire court papers to preserve 

yoW'righl$. 

For more infOl1lUltion: 

www.naca.netiis&uesldebt-col\ec:tion.abiJse 

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abtC&lluabas .IDlspatth 

'lbe Columbul Dispatch (Ohio) 

October 7. 2912 SlJIKIay 

HEADLINE: CREDIt SCARS; First'tredit Scars' series brings action; 

BODY: 

Pljle23 

They can loole like llannlesa elTont A mi$Spelled naIili:. A b'!lII$J1O:Ied number. A paid debt listed as pat due. 

BjIt mistakes on credit reports can inflict widcspnoad damage. And becaux there are insufIi~ien! rules on how credII-reporting a,gen~les must correct them, Americans are left virtually powerless to enue the mislakes. 

In the fltSt in.!allment onts ongoing {;redit SCan series, The Dispatcll presented a (our-day ~ docJImenting the 

plight ofthO\lSllnds of Americans wbo, through no fault ofthclr own. have been htrmed by flawed credit reports. Their 

stori""Were documenied In nearly 30,OOO'CQRiplaint$ filed with the Federal Tl1Ide Commi$Sionand altOmeys general in 

24 states that the newspaper cOllected lind analyzed. 

The~eries, published May ji-9,.~ swift response - bipanisllll calls for reforms and invc~igationa Id the 5III!CI and 

federal level 

Ohio AttOrney General Mike DeWine has iecruited other aitoI'neys general 10 iJivestigate and take .action. Me.mbets 

ofCongrcss called fora legislative fix. And President BariH:kObaina expressed com:enumd said hts ncw·Consu~ 

financial ProIedion BW"CIIU would make ita priority lU acldreis problems o:RSted by the Fair Credit. Reporting Act. 

In ~u1y, the Col15~ ~gency. heMjed by Cormer Ohio Attorney General Richard Cordra~. announced thai it would 

usc its new regulatorypoW.TS to investipte the three national credit-reporting agern:ies. The agency aOO beld a national 

pllblic hearing in Detroit to take Iestim01lY from advncates, experts and COllSllllleTS on the widespread problems within 

the credit-reporting indllStry. 

DeWine bas been particularly criticallifthe way the ~it·reporting agencies handle Diistekes. 

"These rndit &geIIc~ act like they're God; they think they're God, and they lord it over people," he said. 

Read the ful\.seriesat Dlspatdl.comletedil. 

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(Ibt «etambas Jllispafda 

The CoJumbll8 Dispatch (Ohio) 

May 9. 20 12 'Wednesday 

HEADLINE: DISPATCH INVESTlOATlON; BAll JUDGMENTS; 

Page 24 

The mysterious process by which coun rec:ordsend up in cmlit reports allows for1l1TOl'S ilia! II!'e among the most damaging and difficult 10 resolve 

Bl'L1NE: Jill Riepenholfand Mike Wagner. THI> COLUMBUS DISPATCH 

800": 

Anire Vila!e wasn~ alal:med when $helint'fliseoven:d a court Jud~t. for an l!IIpaid payday lQ8ll on her credit report. Slie iIiought. "r CID lixthis.· 

All that was needed was • little common sense 10 see that the debt was n<It hm. Also in her favor: She's a lawyer 

who knows her way III"IlUIid the legal system. 

But neithcr eoWcl help her repair her damaged cre'flit report. Ju<lgments, which are cQQl't..ordered repayments of 

debts stich as medkal or utility bills, can destroy a pristine credit score, the number use(ho decide who receiv .. a loan 

ami how mUch they will pay in interest. 

When credit-"'I'ort errors come from cODl1 records, th~ caD dash drUmS of homeowners hip, like the dream Anlie 

Vitale had. 

And judges and othdr rourt officlala have no standing to eorrect thcproblems. The crcdit"l'l!»Oltingagencies won't 

accept their wotdthat a mistake WlI$ made. 

Court ~rds 1:onlaln tbe mosl damnin8financlal infonnatlon - judgJnents, tax liens. 1OreclosuRSand bankruptcies. They are fmaneia! scarlet letters that can scar ronsumera Ibr at least seven years by barring them frilm access to 

credil or ~g them high ~s to obtain loans. 

Yet the proceSs by which co.urt records land QD =dit reports is mysterlQus and ripe: for em>rs, a Dispatch investigalion fOWld. 

With infOl1llll1ion about credit CIIIds,. mortgag~$ and other types ot consumer lOami, the credit-reporting agencies IlCI 

as repesitories. They receiw and sIOre information gil!ClllO them by lenders. 

Bul in the ease of court records,.1ho crCidit-reporting agenci~ hold dual roles as both gatherers and keepers of in· 

fOrmation. EJPIlrian, EIlulfax and TransUnion, the three major credit-reponiDg apncies in the Uiti)ed SIIItes, hire vendors tp collect the Information for them and then disseminate It. The specifics of bow that process works, though, an: 

largely I!nknown by CODSmner IIdvoeates ond industry observers. 
175 

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DISPA TCfllNVESTIOATION: BAD IUDGMBNTS: The mysterioua process by which cowt ~ end up In credit 

reports snows far errors that are Il1IIOII& the most damaging and dimwIt to ""'Dive Th. Columbus. D 

Nearly IS percenl of the 6,035 consumm who tomplaincd to the fedora! govemmentsaid the mistakes involved 

their own COW1 ~. They filed complaints with the Federal Trade Cpmmission over II JD-lIIOIIth period beginn!rJg in 

2009 about ac:coum-related errors in lhoir credit reports. . 

Additionally; nearly B quarter of the 1,094pcople who saki they found accounts thit did riot be long to them on their 

credit reports id!mtifiQd the ml_en aeblll8$ a Judgriilm, tax Iillli, lbrecIoslII'C or bmkruj)tcji. 

Among those who complAinQd was an attorney who found a judglDCll! on his crQdiI report. He said he was not the 

debtor hut the attorney who filed the lawsuit seeking repayment of a long~verdue debt. 

DolCDS offadters and sons sepliratQd only bya "Sr." or "k: I1lhe end of their I!I\!IICS fuuDd tax Ileus 011 theine .. 

ports that belonged 10 the other. 

One. homeowner said ltis bouse had been paid Qtt, but it showed on his credit report all a fureclCJSW'e. 

At least 80 consumers diiSCovered bankniptciesthit did not belong .to them. A single pel10ll in Florida found seven. 

A Jmln in T~ said he couldn't persuade the credit-reportingoagem:ies to remove a tax lien thai did not belong to 

bim.As 8. result, he had to pay an extra 54,000 in fees wben he bought his house. 

A California woman said an errant tax lien apptatod on her ~. "They rq>ort flIIse infonnation with ease, needing DOIbing but my name and an address," she wrote in a complaint 10 the T_ attDnley general that was obtaiocd by 

The DispatCh tIuough Ii public-records /equcSl ''This monopoly oftbree -Experian, Equiru and Tf1IIIlIlJnion -- needs 

to have oVersighl'and accountability ... , They ate obSlJUctini! my right to fair credit reporting." 

Part \lfthll problem rests in1heeourt recmds. To shiol4 against i<k;ntity \heft, court documC!\1B .at<cessiblC: 10 tho 

public. art; stripped of Social Securilynum~ and, 11 least in Ohlli. birth da.tes. ThlUlCIMS only two blU of information 

10 match court cases to consumers: oamtsllnd addresses. 

"This is how you iritroduce emn,· isaid Chi Chi Wu, staff attorney at the NIitionaI Consumer Law Center, which 

advoc:aies for consumer rights and protections. "Name-only malcbea should beprohibiled. • 

Last DlOIith, her om~ issuedan:~ivc report on "'"'" found in ·criminal-background cheekJ. which also rely on 

eourt records. 

Civil and criminal reCords Change Consiantly.CasoS"'" dismissed or settled, hut thoSe changes aren' alWays re- flected in credit reports. And that dOesn~ account for bow jlidgmenU are assigned 10 IMocent bystanders' credit reports. 

"There certainly should be a higher standard" lOr reporting court ~, Wu sa.id. 

Industry spokesman Stuart K. PrItt says re5ilareh shows that less than I pertent of credit repoitli contain errors. His 

association, the ConsUl11er Dal4lndustr)' Association, funded that study. 

Pratt $uSpects thai the V1I$I niajority of errors. in Gourt records are caused by COW1cler1a or aliomeys who file the 

caSes. H. ab<:l .$aid the credit-reporting agcnGie.o lire hamstrung by decisiollllto remove Social Security numbers from 

public cowt rucQrlls, making ntlUching more challenging. 

"We are obligated to take the n::cord and associate it with a (credit) file," Pratt saId. 

If then:: is im error reported by nonsumer; 1he CTIIdit..repDrting agencies somelimes ",lit check eoprt recOrds on 

their O)Nn, said Nann Mq;nuson, 1he as....,llIIjoll'. vice president ofpublic affairs. 

The federa\ law that governs credit reporting does not require the agencies to collect court re~ords but allows them 

to, if they so choose. 

Former industry insidc!r Jolm Ulztleimer ~Id thaI court ~cl$ ate impor!lU11 piellC5 of informalion lh8l1en~ 

need. ~ they show thI1 the potential borrow:er hl!8 !UI elevated risk of default. 

"By and large, the vast majority of public records are COITe<:L They are connecting the public reCord with the t:orrec:I consumer," said Ulzheimer, president ofCOOsumer education ill SmartCredit.eom. He formerly worke.d at both 

Equifax and Fair Isaae, the complllly that developed the most widely used credit score, called FICO. 

"I don~ kn!IW hoW it could be 100 ~ correq 100 peWent Qftbe time,· he said. 

Bill even when the credit-reporting lIgonties .,.ign debU 10 the correct consumers, errors ellis!. 
176 

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D1SPA TeH INVESTIGATION; BAD JUOOMENTS; The mysteriQu$ process by whIch court records ~ up in credit 

repOT1S allows fur errors that are among the most dam.,ging and difficult to resolve The ColUmbus 0 

In mte and federal complaintJ, mllllY said that debts discharged in Ilbllllkruptcy were listed as IlCtive debts, Tilt 

liens and judgments thaillad been paid in fWl .howed as unpaid. 

In 50~ CII$U, cOlISumen wOn the CCIUJ't Cll$CSand weren't obligated to pay the debt, yet the credit njportsshowed 

otherwise. 

Conswners !'aced with inacc1mIcie;s that they can~ erase essentially have two opIIOIIS: livo·yfflh it or tile a lawsuit. 

Anne Vital. cbose alesser-lcnQWh path. 

In Augw( 2009, she received a certified letter at her CIIlwnbu$ apartment hear Grandview Heighls from the Franklin CoIlnty Counhousenotjtying her that she faced a civil lawsuit over the nonpaymenlofa PlIYdQ)' 10lI0. 

Vitale, now 33, knew thm had been a mistake. She has never U!ed a payday Jeridel'. She. called the attorney who 

filed the lawsuit, who agreed she was not the right Anne Vitale. 

Thecorrcct Anne Vitale had a different Social See\lrity nwnbenllld lived on Colwnbll5' Ell$! Side. 

The Grandview-area woman ihought the matter had seen settled. But as alt. prepIired in 'the winter Dr 20 I 0 to buy 

her first ~ with her sOOo-to-be-husband. John Lang, sheleamed thllt the pIOblem was far from over. 

The judgment appeared on her ~ reports. 

"' WII$ all tim1 up;' Vitale,saiei. She called the attorney. "You told me this. Willi taken ~.Dt:. she said 10 hinl. 

He told her she would haY.c IOconlal:[ the credit~ing agencieS to ~ the mi~. 

She tiled disputes with Experian and TransUnioJl. Her report from Equifax didn't show theJudgmenl. She included 

documenta with her Soc:ialSecurity number and a wpy of ber appticlrtion to the. Ohio Slate Bar that listed,lIJlIOIlg other 

penonal information. every address where she had lived dating to childhood, That application i$ a sworn, legal slatemellt. 

"Threeda)1llater. an emilil·came back il8ying it will remain on my Ctedit repon. "she said. 

She called the credit·reporting agencies WIlItingtoknow specifically how they determined this deb! washers. She 

received no IIIISwers. 

She drafted !lletlcl' to the credit-iq)OrthJg lIIIencieli for the attorney to sign saying that she was oot the Anne Vitale 

with the bad debt He: i~ her repeated c:alls. 

She called small-dalms Ct)Urt. An employee there said. "This has nothInfl: to do with us. There are people with laptops who check the records all day long," Vitale recalled. They are the vendors hired by the crediHeporting agencies to 

peruse COW1. records. 

She filed a motilJll with tho coun to have her address remOved fiomthe IaWsui~ hoping that coak! separate her from 

"'e bad debt. But the judse wouldn't sign it with.,.;! notificatlonto Ih. attomey who was ignoring Vitale. 

''It just sucked up SO much time." sbesald. 

Vitale warks:1IS a stan-attorney for the Ohio Department ofPubIi~ safety, At the tlnie·1ihC WIIlJGealing with the 

crediHl:porting ~ie .. she was servin$ 0118 multi,"""te agern;y coll\Dlittee ClllIIDining issue. Rlllled 10 iilc1Jlity Iheft. 

She happened 10 mendon her plight \() an asslstant.lIUOmey general also C1I the committee. Thlt attorney directed 

Vitele to the Ohio attorney general's consumer-prot~tlon deplll1menL 

Once the attomoygenma\'soffiCe.intcrvened, the credit-reportinl\ asencie' al:ted quickly.to cleanse Vital.'. record, 

"Finally." Vitale said, "W,..thlnk it was cleared up." 

In Mareh 20 I 0, Lang proposed to Vitale at Trevi Fountain iii Rome. They dec:ided it Wilt time to. house hunt. 

Within a month, Vitale. found the house she wanted on Cplumbus' Northwest Side. It hIId a great yard and kilcllen. 

SOon after the couple applied forthemortgaga. the IOBll officer calJed. There .wasa problem OIl Vitale's Equlfax report Ii w.s a judgment - the other Anne Vitalc'~judgment. 
177 

Page 27 

DISPATCH lNVESTIGA TlON; BAD JUDGMENTS; The mysterious prOcess by wltich court rewrd.!H:nd up in credit 

reports allows for erron that an: among the niost darriqing and difficult to resolvo The Columbus D 

Vitale explained what had happened. Though sympathetic, the loan officer said he couldn't give them a rnortgBso 

with that judgment' on her record. 

He told her how to lUe a di~. Vitale: IIild l.aD8 ftme<I tm.I they would \ose the hDuse and the OIu\iiCe at receiving 

an $I!,OOQ fadCl1ll twc credit because they bad only days hefurethe deIHIline. 

Once again, she gotberc!d her packet of proof - which by then iDcluded lcilter5from the attorney gencnll'. offi" -

and faxed them to the ageney. 

To her S!JlPri$e. tbal effort wOrked, and Equiflll ~emoved Ihe j~t. 

"Why can' this be simple?" said John, now Anne's huslland. "II was bluk IBId white. • 

Vitale keepS bandy a file lif all the documents she ClIlleC!ed throU&h the months-long ordeal. "' worry IbiS will come "-ck to ilaunnne." 

jriepenhoft@dispatch.cDlD 

@JRiep 

mwagnCl'@ldiseptcb.cQIII 

@MikeW&gner48 

CREDIT SCARS: PART 4 OF 4 

Credll reports.affect all aspectS of life. The agencies that create them are largely wUqubltl:d, and consumers ue 

viitually pOwcrlese to erase errors in their reports. 

Sunday; MJlTod by mistakes 

Monday: Mixed reports 

TIIOSds),:SIOIen identities 

Today: Courthouse chaos 

Cn:dil Scan '" a four.pait'Scric;IJ 

Cn:dit reporting afI'ccts. all aspe<:ts of life, and tb~ IIgIlnaes thaI produc:e the reports mla!Jely UlII1IgIIIated. Con5)lmers IR vim!ally powerless to moe errors from cn:dit reports. This Dispatch investigation highl~1lI the problems. 

"ToWiy: Marred b;y mistakes. When COIqumeTS discover errors on their credit tepOrts, there IR no true investigalions. The federal law gp'i'eming credil rt'portIng leaves conl\llllel'S with few QpliOlJ.' to figbrqainsf crroneoIIJ infurmatlon. ESsentially. you ttousllive with h or ftle a liIws!Iit ~ident Oa:rack Obama and by lawmakers ue calling for 

refurm. A groupdf anomcys :general ftQm several.~ 1& launching an investigation. 

'"Monday; Mixed reporta. The way the credit-rcporting agencies malch conswncrs 10 accounts sometimes resldlll in 

assigning the deblll to the wrong people. Victims of mistaken identity have 10$1 jobs. their homes ana their !inane ill 

reputations. Some han been wrongly labeled IS terrorists . 

• Tuesday: Stolen idenlities. Thieves have hijllCkIid the idenl.itles ofthowandsofchfldrei1. some III birth. The victims faCe foreclosures. bankruptcies, IIld buge debts years befOlV they !lie old ClRlUghto apply for their first credit c4rd • 

•• Today: Courthouse troubles. 

SERIES CONTRIBUTORS 

• Reporters: Jill Riepenhotr. Mike Wagner 

• Managing editor/news: Alan D. Miller 

" Pbotograpbers: Eric AJb~1, Shari Lewis 

• PbQlo editon: !WI KIII1IZ; Craig Hp\mait.LisaMarie MlIler 

• Page designer: CharUe ZlmJcu~ 

" Graphics artists; AarOn Harden, TOm Baker. MIllY Nguyen 
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DISPATCH INVESTIGATION; BAI> JUDGMENTS; The mysterious process by which ~ourt n:cords end up in credit 

repom allows for errors that are &monalhc most damaging and difficult to resolve The Columbus 0 

• Copy editor: lenny Applegate 

• D.m proecJSin8: SusaitStaniclc. Jieun Kang 

GRAPHIC: Photo 

(I) SHARI LEWIS I DISPATCH BecaIJiC of. ~ judgment misblkeJlly asSigned to Anne Vita~ Lang's lltCdit report. 

she and her husbanli, lohn, aImost were denied amorlJlage for the house they bad set their hOlll15oo - IUId nearly lOSt lUI 

S8.0Q0 federal tax credit. (2) MANUEL BALCE CENETA I ASSOCIATED PRESS Stuart K. Prall. spOIiesmllll for the 

credlHeponing lildusl!y. suggemtourt clerks and aIIomeyureat faulHor mOSI of IheK einn. (3) Jill Riepenboff (4) 

Mik~Wagiler 

LOAJ)..DATE: May 9, 2012 
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Copyright 2012 The Cohlmbus Dispatcll 

AU Righls ReservCll 

mtJt. <reIallbas'lllispakIa The Columbus Oispetch (Ohio) 

MllY 8, 2012 Tuesday 

HEADLINE: DispetdJ investigation; Younp! victims; 

Poge29 

Kids are Increasingly targets fIR" ID thieves who can spend years running up. big debts in their names, ruining their fu. 

ture credit 

BYLINE: Mike Wagner and Jill Riepenhoff, 11IE COLUMBUS DISPATCH 

BODY: 

By lhe ti)tie KImberly Dean waS in eighth grade, she had a mortgage, doZA!llS' of credit eards and ~oughdebl to fill 

six pages lln a cmlit report. 

The Coilimbusgirt's financial lire WIIS In ruins •• bIIt she didn't know it 

N.ot until she was a college fn:shman BIId tlenitd a JCPenney credit c:ard would Dean Ieam th~ someone bad Stolen 

her identity when she was 14. The! she supposedly 1lwed debts ofS 150,000. And chat this WOUld balDt! Iierfor d«ades. 

.A terrified Dean could find no one to fix the problem, including the big three credil-reporting.agem:ies, Experian, 

Equifax II!Id TnmsUnion. 

She _ roferttd 10 a IOClOI jud,gc who slgned.and stamped an affidavit SIl)'lng Ibe debts didn't belong to th. teenager. He wamcd her that sbe .hQuId always carry the plec;e of paper ~ .that no OiIe WOuld identify h..,r lIS a deadbeilt or 

aimimd. 

on wu like living in.a foreign country, always having. to prove who J was," said Dean, now 3!l. "This started wben I 

was'aldd, and it still haunts metoda)'. Ifs like the junk drawer in the kitchen Dr the dirt)' rug in the garage that no one 

ever cleans up •• 

Identity theft remains a growing threat to all consumers. but cliildteil motu thail4:VeI' have become a favorite prey 

fortriminals. Parents are almost powcrreu to prevent the cri~ because th,re is nO w.-y ofknoWing v;hen an identity is 

sltJlen, and the credit-reporting agencies won't coiIduct searches using Only a .Sotial.Security number, mainly bCealIst of 

pri\-acy issues. 

For smne, it gelS worse when they disco_the problem. 

A DispatdJ analysis Dfnear\y 30,000 Ibderal and staI.ewnSlUller complaints showed that two-thirds of people who 

said they were yictims ofldentity theft alsO Complained that tho credlt-'repdrtingagencllll fiIlled to removo l'raudIIlenl 

aCeiI\lIIl$, nallles and/or addressesftoll! their filos.·Some c;ornpJalnild that the credit"reporting agencies would nil! accept 

""lite rcports.iI$ proof that they had been Victimi>:id. the firSt stop toward clCliring fraudulent ac~unts. 
180 

Pogc30 

Dispatch itivestigatiOn; Youngest victims; Kids are increasingly targets for ID thieves wilD can spend years running up 

big debts in their names, ruining their futUre =dit The Columbus Dispatch (Ohio} 

By comparison, a _tsurvey by the Federal Trade C9IIIIIlwion of 3,000 identity~ft victims showed that a IlItle morc than halfofthe victlll!$ said the tillseinfonnation bad been com:cted or rc:moved. 

"The cn:dit agencIe$ aiKl c:reditQrS dOll't do real investigations. ~ Just dou'tdn it, "said IAonard Bennett, a Virginia-based consumer-law attomeyWho hiss testified In Congms about tfedit-reportingproblems. "Most peojile complain about ilien1ity theft beI:au$i: they cu't get it ~.' 

. When a case of child identity theft is detOtted. pmnts often have to _k help outside the credit-rcportingagenci~. 

One resource has been AnClearID, a California-based company that ofiCfs identity-theft protection services and will 

cleanse a child's credit bistory. 

Studies done by the company found Iliat dul1dentities efmore than 10 petceDt ot'thecblldrenin its $y$tem had 

been hijacked bySO\!IeOne usin&Soclal Security nUlilben. 

The childrc:1\ who are in its ~ luyiy are. Ibm because their confidential iJd'ormatlon was compromi~ 

when a computer was buked, stolen or lost. The .dWdrc:n's identities had been used to open more than 17,000 accounts, 

including aedit cardJ, ~rtgagC5, car IQIlIIS aod \ltility services. Alarmingly, most oftbe~agc bad bappeaed long 

beft>rethe data breaches pointed to it. althOllM it's not certaln how. 

·The stvdy identified a girl in Florida with inQrcj than $1.5 million in~ebt tied tQ her. A 17-year~ld from Arizona 

had S725.000 in loliOs and credit. A 14-~-<lldin Kentucky bad a $605,000 California hOliSt In forecl~iue. The Sotial 

Security number of ail Olrio tee;n was tied 19 a dozen dif\ereht jleopl~who used ill9 obtain credit and jobf . 

. "These kids! Social Security numbers are partieularly valuable to thiev~1 because they can go years without detectiQo," said SO Holland, chief IIX!l\luti've of A1lClearlD. "Because of privacy restrictions. the eredit bureaus can1 share 

with parents what they find in their (cbildlS)fi1es. So tbeydon~ know who i. using the Social number or what accowrts were: opened.1I 

Foster thlldrtn especially an: \'U.lnerablc 19 ID tbleves. 

Last year, Les Angllies C!lunty found that 5 percent"" its Ibster children who were 16 or 17 years old bad credit 

bi~es. 

The Dispatch Investigation has ptolnpted Obio Attorney General MIIalDcWine io launch an tnV03t/ga1!QII into 

whether any of ObiD's 11;&50 Cosier cbildren haw been ,iietimitecl by IdMlity theft. 

stuart K. Pratt, president and chiefexcamve oflho Consumer Data 1ndU&try AllllM:iation, which speaks for Experian,. Equifax*'ld Tn!nsUnion, said the\IPDCies are worldng 19 develop lIIOnl programa and proteI;tions for children. 

-It'sa tragedy. There is nota slntle American that thlnb. we should Shrug our ~ulden." Pntt said. "No one wants 

any .child to he a viCtim." 

From scary stary to rwily 

The newspaper story he had read about. 17-yoar-<ild girl haYing her identity stolen wu. keeping David Martin, the 

father ofthrte, awake one night. 

The JIII!ll fr'bm Cuyahoga FallJ, near Akron, decided to add his entire ramUy to bispald 1:tedit,monitoriJ!g service, 

and he S()Op learned the newspllper story had ~mo a frightening reality for bis II-year-oldson, Tanner. 

Someone had been using his Sou's identity to ~ for bills ata medical centar in Florida for more than a year. Tannersulfered from It serious liver diseaSe and was treated at a local hospital. but he hall never .hecn In Florida. 

Martin soon would discover tb\It IUs .SOD.'S Social SecIlrity num\>er and identity had been sto.len &um tIm:e ~ 

entitits. He received fom! letter~ from a IQcaI bospital, a brokerage finn and the state gfOhio, all telling him that a CD 

containing his SOIi's Information had been lost or stalen. 

·Voujust keep thinking, 'How canlhlB happen'?' "said Martin, 49, who wOrks for Goodyear. "You do everything. 

you canto protectyourchlldrc:n •. and thOn this happens." 

While parents or family members an: oc:casionally the culprits in child identity \beft. .there are plenty of other criminals who find ways to access a thild'$ .Social Sel:urity nwriber or other personal information. 

Children .... especially vulnerable wilen massive dlltabml .t schools ane! hospitals a:e lost or stolen. 
181 

Pl!!lc31 

Dispatch in_ligation; Youngest victimS; Kids are inc:mIsliIgJ), targets ftJr 10 thieves who can spend years running up 

big debts in their OBlm!S, ruining 1heir I'uture credil The Columbus Dispaich (ohio) 

Since 2005, schools and healtb-care providers experiem:ed more dwl40 percent of all data breaches in obio, compared with 6 percent nationally. That's according to data COIDpiled by the Privacy Rights Clearinghouse and analyzed by 

The Diap8tdl. 

The Califurnla-based nonprofit agency combs media repons,g,ovemm~t websilcs iInd b~ 10 track btead1ri of 

senSitive, personal infort1Uitlon. Ohio i~ol1e orabolrt 40 stalri thardo not rcquin:statewil\etrackhrg of data losses. 

Near~ S million rewnIs bavehem compromised bcc:aus.I,lr data breaches in Ohio since 2005. 

And it's thoSe bteadles tb8lleave families such u Martlil's vulnerilble tt> identil)' theft. 

After struggling fOt'more than a year with tbe credit-reporting agcnciesand other enlitles, his son~ financial history 

was cleared with help from AIICIearIO iii 2.010. 

Still. the father wornes Iblil the tbeft lrould 80mdloW come b8C.k 10. baIInt Tanner, now 14 iInd healthy. 

·We shred everything that we don't Deed DOW, and we still worry about Tanner's IDfo," Martin said. ·We dOD~ kllow 

ifthere is anylhing else haking in the system. " 

A fear that never ends 

The_worker didn't din;ctly ~use DorIe McLemQrll olslealing her 1-)'CIIHl1d daughter's identitY. but the tone 

of her voice IIiadc the mother feel more like a suspect thana victim. 

McLemOre had been dcnledgovcirmnellf medical in_e for her two chUdren because Califoml, ~ rcconIs 

showed that her daughter Kenna already had 811 iitcOllle. SOMeOne bad Slotentbe lIU1e girl's SOIlial Sccuril)' number. 

For the ncxt six months, McLemore and her ftusbtmd. Bryl!l\. flIed eompillnu "'lth the polke ADd government ollicials, but no one seemed IIlO .oncerned that a I-year~td alreadyba/l ajob. 

"The poli<:e just kept saying. ·Wel!. 1hey didP~· steal 8IIytbing,' • said McLemore. now 36 and the mother ofthrce 

living in Dalllls. '1 tried V«Y hard to get to the bottom of il then, but rio.olie seemed to iake It seriously or want to do 

an)tthingto fix iLSD {just figured it would woildbelfoutand tried to ftqet'8bout jt;" 

Identity thieves often count on their victims 10. for.get .tQUt it. Once identil)' theff ls suspected on a credit rcpol1, the 

c:riminal hOpei tho.gtucling. time~on.suming.process of.eleaming a credit ~ will wear /lDWI1 a consumer. 

Adults can III least check their credit reports to guard againSt mere. trouble, but children remain vulnentble becau8c. 

they arc invisible in the financial system. 

Mclemore nc\'tr truly forgot IIboUt the identity theft Involving ICenna, nllW 9. It was a cltance encounter that likely 

saved ber daughter Ii'om financial hardlibip when shegoe$ olfto college. 

At a children's birthday party near their new home in Dallas, Mclemore mel a woman who worked for AlIClearlO. 

After hcaringMdemore's .ttKy. the woman cheCked 011 KCIIIla'$ history and discovered thieve. had raclted up JToOI'C 

tbaII $34.000 in debt. It remains unknown bow ber idr;ntily was stolen, iInd DO 0IIII bas been IIJTeSIed. 

AllClearlD helped the family deal with the credilon and credit-reporting agencies tostraigbten out the me~. hut 

the family Jtill isn't sure1heordeal is truly over. 

"ItS.8 me§ ofa SYstem," McLeI11ORO.said. ·You can't assume It'iI ever going to be truly ·fixed." 

Financial shadow 

Kimberly Dean looked at the pieee ofpapcr the judge had signed - tile one she c:anied for 10 )lemio prove her 

identity - .rumpled it. and threw it away. 

In her mind, she had. Uone everything iii ber poWl;r to clean up the finanoial mess liIRl1~ CI'OQk created for ber when 

she waJ 14. She bad spent hundreds orhours pleading With the ercdit-Rponing agenciC3i1nd creditors to corrcc1 her 

credit history. 

She applied fur and was ~a new Social Security number and assumed thll creating a new ideotil)' would 

solve the problem. 

But creditors kepi ~allinll and a(cwiing her of owing them thpuSands for furniture, clothing and food bought by the 

lhicf. 
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DJspatc;h investigation; Youngest vktlms; Kids are increasingly targCIJI for lD thieves who can spend yean running lip 

big debts in their names, ruining their future credit The Colwnbus DiSJIIIICh (Ohio) 

"Ba<:!< in the early 19905. 1).0 one realiy understood IDthctt ~t well,· said De!m. a single moth,r of four who li_ 

on ColumbwJ' East Side. "1 didn~ think to go to the police; bccau$e I thought the credit l\gIlIlcies wen! the police oflhis 

system. I couldn't afford a lawyer. Eventually, Ijust01'" up." 

Some identity-theftvict:lms ne\'er truly receive tile belp they ~ S~ try to f!ghtthrougb the meSs alone and 

don't $UCCeed. Smile don't know who to call or Where to file! a complaint .Som~ are intimiclaled by thes)'$l\\m. Othen 

assUlllC it will just go away. 

Dean still doesn't know how 'be became a victim or whether her crecUt problems will ever dlsappeer. 

She did learn iii 2009,. milre than 17 yean aftel' $be flBt realized that her identity had been Sloko, that her old Social Security number was still being assoi:iated with her name. 

That explainlld why the credit reports she received lookedacCUlllle,· but those seen by credi\Ol'S stili were filled with 

the m>Ok's debt. 

"I don' even request my cieditrepOrts anymore," DellJrsaid. "You just gel tired, you know? Youjusl'get tined." 

mwagner@di$patch.cDm 

@MiIr.eWagner4~ 

jriepenhoff@dispiIICh.com 

@1Riep 

CREDIT SCARS: PART) OF 4 

Coedit reports affect allllS)*!s of liCe. The agencies thaI cmue them are largely unregulaled, and consumers are 

virtually po_less to erase enol'S in their reports. 

<0 Sunday: Mistakes abound 

• Monday: Mixed reports 

'Today: Stolen identities 

.. Wedoesday: Courthouse chaos· 

... ,. 

GuanI aga!nstID theft 

An)'ooecan be a victim of identity theft, ~e5S ofali\e. MilIlOll$ of peOPle are affected each year, and in2111 0, 

identity thl""", caused$S.4 billion in damage, sc.:onIingtO the Identity Fraud Survey RcJlllr!. Experts offer theae tips to 

help protect ~.iirself andyilur cbildreri: 

FOR Your CHILDREN 

.. Watch your mail for olfm of credit in YOllt'l:hild',.name. 

• Wilm chlldten about sharing sensitive iliformation online. 

• 00 not ever \IH your child's Social Security number to open .1Itility or 'credit accoonU. 

• Do not carry their Social Security cards in walIets or purses. 

FOR yOU 

.. Use Ii mdlt card ror online purchases. Debit cards can expose ),alll' checking aCCOUllf to thieves. 

• Contact each credit-reporting agency and all creditOrs when a loved Oile dies . 

.. Online, createpasswlJl'ds with at least eight ~harec:te1'S with a mix of capital Jetten,numbers and symbols, 

.. Never divul$c personal infonnation when scilicited Ill' phone at email 

.. Do no leaVe oUlgDing bills in an~ttended mailbox. Shred all canceled chec:lB. 

For more information,visit www.alklearid.comlchiIciorwwwJdtheftcenter:org; 
183 

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Dispatch invesrigetion; Youngestvietims; Kids III't increasingly targets for ID thieves who can spend yelll'S running up 

big debQ in their names, ruining tholr /Inure credit The Columbus Dlsp_ch (Ohio) 

SoW'c:et: AlICleariD, Identity Theft RJlsolll'CO Center 

Credit Scar.! ... a four-part series. 

Credit reporting affects all BS~ oflife,an<l the agencleo that produce the reports·8R largely unregulated. Consumers are virtually powerless to erase errors from credit repot1s. This Oispatl:h Investiglllion highlights the problems. 

• Sunday: Marred by'mistakeS. WhencoosUJDCA di1K:Ovor erton On their credit fq)D!U, !hereBre Ii<) true investigations. The Ibderallaw governing mdit reporting 1_ amsumers with few options to fightagafust CITOileoIIs information. Essentially, )'Ou must Ii~ with it or lUe a lawSuit. President SMack Ohama and key laWmakers are ~alling fQl" 

rcronn, A group ofatlorneys gc:noral from several Slates is launCbilllPIII Investigation. 

• Monday: Mixed reports. The way the credlt-reporting agencies mlllCh consumers to accounts sometimes results in 

assipingdelrts to the wrong people. vicdms ofmistaken identity have lost jobs, their hQlllCS IIIId their financial rq>Uta--

tions. Some have ,been wrongly labeled as terrorists. 

• Today: Stolen ideiltities. 

.• ' Wednesday: COW1house troubles. When cmlit-report elTOlS come from ·coUllI'CllOl'ds. Judges and other court officials have no $1III1ding 10 correct !hDll1. Court fCCO{ds contain the most,damning fmuncial information - judgments, tax 

liens, foreclosures and bankrup~ies -- Jl]d are ripe for elTors. 

GRAPHIC: Photo and Graphil: 

(I) Shari Lewis I Di~b Kimberly Dean, of the East Side, didn't realize until she was 18 that her identity had been 

stolen when she was l4. Thethaos it created in her credit report hasluumtod her farlO years; and sbe IIOwtriel to avoid 

both looking ather credit report and borrowing IIIOney. (2) Lawrem;e JenI<im I For the Dispa~ The identit)' of Done 

McLemore's daughter Konna wasSlolen when she was I year old. The problem has plagued the flllllily for years, and 

the Dallas residents stilllRn't £oofldent that it is resolved. 

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4ht QUmbls JDispatdl 

The Columbus Dispan;h (Qhio) 

May 8, 2012 Tuesday 

HEADLINE: Credit scars: Stolen ~ntities; Thiefstole her identity,dream.; 

BYLINE: Mike Wagner, nm COLUMBUS DISPATCH 

BODY: 

Dateline:' CA TLET'f, Va. 

Pag~ 34 

While SU2'lIIIIIc Sloane was givlng birth to her seeond child, aconln!ct worker in the Imspital's accounts-payable 

1:IeparbJ!0nl wu stealing her identity. 

During the next six months, the thIcftook out dozens of credit cards, lollllS IIId cash advances using SloBilC's personal infonnatlon, aJid went on a wild spree. spending 530.000. 

Sloane had n0 idea, unlil onelflD' she opened a piece of maill'rom a debt collet:tor saying me ewed money from a credit card that didn't belOng to her. The card was issued to SlI0VlI/I8. Sloan - tho Woman who worked at the hospital 

That night, Suzanne Sloane typed her SociaiSeCllrity numberin!o the webSite for Equifax, one of the Ibm: major 

"'e\lit-reportinll ageneies in lhe United Stain, and discov.ered that her repon wu lit1l:rcd with 2O-plus pages of the other 

woman', KCOunIS. 

"I had just put the kid. 10 bed, roy hushlllld WBsII't home, and I was panicking when I saw that name," said SIWII\JIe, 

now 4S IIIId a charter-school principal. "You're in disbeliefln the beginning. I thought it must be a typo or some kind of 

mis","." 

SIWIIIi1e spent months working with local and fetlcralllllhorities, calling creditors and deaiiDg with Equifax. The 

thief; who had It previous convlcdon for idCnlity theft, COnfessed to 3iealinJ! Suzanne's information at the haspi"l and 

later wU !lCnienced to 18 moDths in prison. 

Suza",", thought 1IIe ordeal was finally over. 

Like so IIIIII1)' others who suffer through an identity theft, SlJZanrie soon realized that restoring ber Ilfeviously exeollen! credit would consmneher life. 

Her struggle to fix het credit report would threaten her tlnanciallife and nearly cost her something even more valuable. 

Suzanne and her husband, belli tcacben at the time. had built the family life !/My had alway, wanted. Pan of it 

tuJie Ihlm the sweat anti time they put loto fixing up 0110 hous". seUins it and buying a nicer one. The couple had made 
185 

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Creditscan;: Stolen Identities; Thiefstol. her identity, dreams; The Columbus DispalCh (Ohio) May 8, 2012 Tuesday 

the homo impmvcmenis ooaeiher and decided it was a good lime for her husband to. follow hi. dream, quit tcwchingand 

make a living restoring and seUing hames. 

They fOUild 1I~ homes 1I!at were perfect to get \heir buSilleSutarted. They wentlo ammge fillllilcing but kneW 

it wu bad news when1l!ey saw!Jle l!lOk on the lIlOrtpge brobr's face. To make matters worSe, the broker was otie of 

her husband's former SludeulS. 

Suzarme'scredit report was stilt ~inl! the debt of the identity thief, lowering her a-edit ICOM 200 poinlS, Into the 

SOOS. They were denied a 10IIII - and ih.ir dream. 

"1 felt like 1 kiI1ed his dream," SUl./IMC said. 

She ~vionsly had been turned down for a c.er loan for the same reason, butw lholJ!ht her ~it report was now 

clean. 

She had done everything possible to fix her credit hiS1C11y.She repeatedly wrestled with CreditorS and Equifax by 

phone and in letton. but .he never gOt the help she needed. 

Equifax. IJj)wever, mailed ber a form letter offering to!iell her prote<:Uon lIg8inst identity theft. The letter was addressed to tbcihief; Sbovana Sloan. 

Then the prOblem bepn to affect Suzannti's IIIlIlriage. 

Shortly after sbeand ber husband were denied the I(!an, SUZlllllle overbearda conversation between him and his til1I!er. The two Wer:c (Jiscussinggoing into 1I!e boUiing bu.liness .s parmers. 

Suzanne was hwtand felt betrayed. The coupl. argUed lang intIi the niglu. and ieosiOn only grew wwsC;during the 

summer. They were sleeping In different bedrooms and considered scpanition; 

"He just wanted tho tilUout frQm the identiiy theft to .1lI' away. "Suzanne said. "He $tuted blaming me for what happened and for no! being able to fix it. I WllS losing my husbJmd aver this." 

Wbllevacarioning willi fiunily, the Couple fOUJid tlnie at a quictoccan-side testaurant to be aJone ilDd talk thrOugh 

their trouble" They agreed they weren't going to Iillow1l!e flawed credit-reponing syBIem to destioy their fiunily. They 

would keep wnrking togeihcr to rebuild Suzanne', financial life. 

E\ll;liwatly, _Ii. h~ a tonswner-law IIIfOnieyQl!d sued EqIIiIiix. The legal dlspute continued for Iilm~ two yean. 

h included an elih~usting trial durillg which !SlIZIIJIJjQ described to 8 jury how the crime lind its lingering effect on her 

credit history nearly destroyed lier family. Equifax ergued that S~ luidn'! fOno.wed proper prQCedures when disputing the false Information DIJ her n:pun; 

The jury sided with Suzanne and then awarded her financial damages. which Iarer were cut in balfby 11 judge. Suzanne· dccliil~ to discusil1l!eawird baSed an the adVice of her altllmey. An dfflciallbr Equifax's lobbying group said 

the company docsn~ conimellt on aCtive or dosed legal _5, 

"No, I didn't gel rich, and I am still working," S1mIlUIe said. 

She and her huSband are now both scbonJprincipalS and remain unsrm: about whether the problem will reliDn. In 

tXt; just' three weeks ago, Siizanne !'Cteived a· call from a creditOr who WIIIIted iJifonnation about ShoVlllli SIIIIIiI. 

"I $III! teellike this robbed my Iwsbandofbis dream: she said. "No one shoUld ever have to gt) through something 

like this. But when it happens, it should be fuoed iMlead of anchoring down your life fOr manlbs or YClll'll." 

mwagner@dispaich.com 

GRAPHIC: Photo 

Pete Marovich I For the Dispatch Suzanne Sloane ofCatleti, Va .• sirugg!cd Ibr yean; to correct her credit reCord. a~r a 

thief stole her identity and speIIt 530,000. The thief was cllllYicted. but that didn't fixthmgs. Sloane and ber h!.Isband had 

to give up a phln to siart 1/ busInelIs, and the Itressatm:OS1 broke their marriiIgc. 

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Capyrigbt2012 TlJeColumbus DiJpatcb 

All Rlgllts Reserved 

<lilt ({011111 •• lDtspatdt 

The Columb"" Dispatch (Ohio) 

Mil)' 7, 2012 Monday 

HEADLINE; Dlapak:h in~gation; Mixed and maned; 

Wh.en aedit-reporting agencies blend your filel! with others', the financial ~ge can be devas~ting 

BYL~E: Mike Wagner and Jill Riepenboff,THE COLUMBUS DISPATCH 

BO.I)Y: 

Page 36 

Judy Thoinas Cnnnpled in her seat as the banker behind the big woodeD desk Said she wuldn~ refinBilCe her homii. 

The nurse froin northern Ohio was rejeCted for the loan because, in the flllantial world, she was also Judith Kendall 

from Utah who had bad aedit. 

. Barbara Sowers tossed "rejection letter for a govcrmnem loan 91110.8 pile wilh so many others. The disabled central 

Ohio woman -Iivmgin a200-ycar-oldhouse wi1h holes in the ceiling and rotting walls - couldn't get a loan to make 

repaJrs because credit reports confused her with her daugbter, who has a similar nllDlC. 

Brenda Campbell was certain she would be /ired by the Mi8$OurI govemor ifhe leiInCd that a collection lIgen'1)' 

WIIlgomg to garnish her wage~. The personal financial records of the state',:director of senior 8l\d di$ability~ic:es 

were iniXed with those of two other women named Brimda; Campbell. . 

The .smallest error ona credit report can cause hardship. But when II conswner's file is mistakenly mixed with one 

from someone who has questionable credit, whether a stranger or even 8 family member, the consequeDCes CWI be devastating. 

Suddenly, through no fault ofllleir own, they assume lUKilher pemm'S financial identity and personal history. Those 

new identities can label them as a financial deadbeat or cvtn afi:lon: 

"It nearly destroJled III)' life, and Ehenfbing the problem GOJlS\IIlIed my life," Campbell said. • And ira not just about 

money. 'There iSSQ.lJllIch time spent dC\lling with the fear and arudety ofhow much damllge this is going to cause you." 

A yearlong Dispiiti::h investigation found that thouSandS have been·sciJrrcd by errors on their credit ~ but no 

one is nw1 more than those whose credit histories are blended with another's, beI:euse they can take years to untangle. 

And inSODl8 caSes,,, lawsuit is requhed til separate the files: In the tiDle it ~s to clear it up, the consumer', credit 

score and financial Iifi:suffer. 

The mistaken identity can cause the COII$umer to lose out on credii eards, home and car loanS; jabs and helping their 

kids pay for college. 
187 

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Dispateh investigation; Mixed and marred; When credit-reponing I8CDcies blend your files with othen', the financial 

diImage can be devastating The Colwnbus Dispatch (Ohio) May 7, 2012 Monday 

When consumers request their credit repori, they must provide at least their full name, Sodal SeI;urity number, dale 

of birth and address. 

But creditors don't have to follow the same rules when they requeil: COPWmers' reports. They can simply search for 

accwnt infonnatiQII by nam¢ cmly. or lJli.ybe just by B SO<;ial ~uril}' number, 

That's how tI!e mixed-file nightmare begins and bow Melissa became Usa, Myra became Maria and Angela morpbcd into Angelina, as seen in federal complaints and lawsuilS IDed agalnst credI~reporting &g!:ncies. The creditreporting romputers do no( recognize gencklr, so the files of one woman named Robin, for example, were mixed with a 

man~ named Rpbin. 

In an ·extreme ease, a man from Vir,ginia with good credit was mixed with a fIi1anclal deadbeat who shared his 

name, lived ill the same town and bad Ii similar Social Security number. Alter a futile 1wo-y¢iIr baltle to dear his name, 

the man crafled a le!ierto hi. family explalning diafcnlditl"llpattingbad "destroyed hi. liCe." He then committed suicide. His survivors detailed the man'sbrdeaI in 8 Ia\\ls~it 

About 6 percent of newly 21,5OOcousJuners who complained to !be Fcdct!J1 Trade. Commisllion during a Jo-month 

period heglnning. in 2009, and nearly 8 percent of 1,842 wIIo complaiDed to stareattomeys gcnenll in 2009 and 20 I 0, 

said that their credit reports bad been mixed with another person's. 

In 8IIunprec:edented review of _ complaints to !be FTC, The DIspaW\ learned tbat cooll\llllers' files bad 

been metgcd with thosc-oftheir mothers, 1iitberS, brothers, sisters, in-laws and neighboi's. They were lI1ixed with 

strangers with tb. lame name, a similar name, a similar Scicial Security number or no knownsilllilarilies wblllsoever. 

Of the 1,252 people who told the FTC that their liIeshed been mixed with other consumers', 30 percent also c0mplained thai the eredit~g agencies fililed to carted tbemlstakosafter being asked. The: others did not indiealt 

whether they bad.sought to bave the infonnlllion carreeted. 

No one oUliiidc EXperian, Equifax arid TransUnion, the tbrCe major crccIit-reponing agencies In the United SIB~. 

fUlly undeI$llmdii bow £illDpUterlbrmUJas used by the companies match up iilformatl'on. The formulal are closely 

gnarded lndusIry secrets. 

In 2004. the FTC ruled agains,t requiring !be agencies to. use .!riclel' lDlIIIlhing criteria, such as all nine di~ of a 

Social Sec;uritynumber, to ~igrt accounts to consumers. The ~ommissi(JII admitted that mismatching ert'Ol1I are costly 

to CQII$IImers; bm it ultimately decided tballl was best to pr.otcct lenders' interes\$. Tighter standards could Increase the 

number of cases. in which no data are found when creditors request rcpgrts, 

Cdnlumers with mixed credit files are treated no differently ftornsomeOlle with a misspeUed iWne wb~ they at" 

tempt to comet~. The dispUte system is higbly automated and doesoot blvolve a true investigation by lIumans. 

Experts sa)' thembted-file problem is a long-standing issue. 

'1'he FTC signed consent de<:rBes with the ibree credit-repottingagencies in 1991 .beC:iwse of mixed-file problems. 

Twenty years laler, we have the sam¢ problem," said Evan Hendricks, editor and publisher oftbe 1iCW$1ottcr "Privacy 

Times" lind author of the bookCredlt Sl:<ires &: Credit RepOrts: How the S)'SWm Really Works, What. You Can Do. 

"The credit-reporting agencies say their computers are iICI sophisticated that they only mix B few files.· Hendricks 

said. "Jfit'sliiJ ii:w, wby ~'t they recogoizund diagnose? The 811SWer is nobody'. told them to do it And it's bad to 

mix the file. 1~5 worse to IIII1IIix it.' 

Stuart K. Pratt, president and chief executi~ oftbe Consumer Data Industry ASsociation, al$o the Jpokesman for 

EqulIilx,Experian and l'rwUniOll,said those agencies are tonstailtly looking for methedS.to eliminate the mixed-file 

problem. 

"There is an attitude that, file by file. we want to gel II right.and that's important," Pratt said. "They literally have 

scienti~tbat deal with this question of matl;blng (~. YOIII' by year and month by month, they are learning. gIlthering 

data, storing data, auditing data, looking for pattern ~hanges .and iooking 81 SIltware lDId hardware technologies for 1mprovemenlJ tD the system." 

Powerless to fix mix-up 

After spending ber days dressed in emergency-room sc:rubs, Dursa Judy Thomas decided it we time to treat herself 

toa pretty dress. 
188 

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Di3patcb investlgetipn; Mixelhud marred; When credit-reportin; agencies blend your t)leawlih others', tile fmllllCial 

damage can bedcvastatlng The Columbus Dispatcb (Ohio) May 7, ~(J12 MPndB)' 

To saw an additiPnal 10 perIleDt OD the pun:hase,she signed up for a credit can! at the women's clothiDg slore thaI 

dayiD 1999. 

BUl Thomas, w!loalways had excellent credit, was reje<:tedand dJdtI, know Why. 

the m.ldent ofBlyrla,near Cleveland,eel1ed the credl~ I\&CIlCIes and learned tim! her file had been mixed 

with that Ilfa Judith Kendall who lived in Utah. And !here were two SocilllSecurity n\!mbers other than 11m lbled on her report. 

"I didn't knoW how bad it wiluld be for me ill fix·i! at tim! time," said ThOmas, nowS I lind nuniDg manager et two 

medical liic:ilities. "But man, would it g« WOIR." 

Forabo\ll six months, she WfOtl; letter.after ~ 10 the credft-n:portinl1,agencies and sent ~ informatio .. trying !Q clear her financial idemit)'. The agenclilS responded with their own IctIen saying 1hcy would COrm:! the problem. 

A! other times, they simply confirmed tim! the false information fromthc J.udiIh in Utah _ $till on Thomas' report. 

ThOmas then tried 10 buy B car, bul she was rejeCted for the loan .. Her credit report continued 10 be weighed down 

by the other woman's unpaid dcbls and had credit. 

~ was rej~ed for a.loan again when she tried to refinance her home. Bill this time •• b.mcer did her I favor 

by leaving the credit report on the edge of a desk and waIldngaway,sO Thomas could gel' look at wlla.! was in it 

"II_just riddled with erron and debt," she said. "Ilried calUngalI ofthem myself and straightening the mess 

out, but I had no luck.' . 

Thomasstarte4 receiving leners and phone call$ from DumerouS creditors 1ICfQSS Utah. pressuring her 10 pay d~bts 

that WereD' hen. 

"I would SIll', 'Hey, UsteIl, 1 have ..ever even been !Q Ublh, so how coald I have a mortgat,e there for $147 ,OOO?' " 

Thomas said. "And they would continue !Q tell me things like. 'You are ludilh Kendall. and you IIR S3 years old with a 

heart condition, and you owe u. S r 4,000: " 

Whin 'lbotnU requested her credit rePllrt. it was clean. It didn't ~how h~r being mixed with Judith. But when creditort pol~ Thpmas' reportS. they fQund Judith's debts Ihere, \oC). 

This is not uncommon. When c.onswnefS request their reports, they receive only inforrnationihat exactly matches 

Iheir name; Social Security number, birth date .andaddms. But when creditors ask for reports, theslandan! i. ditrererit. 

Close Is good enough. 

TIiornllS never came close to solving the problem on har own. 

Five years after she had been denied the qedit card while buying the new dress, the credit-reporting agencieS still 

hadn't fixed the problem. 

It roached .. boiling paiat When Thomas applied fOl" her dlllighter'scollege loan online and. wOS told she couldn't be 

a .co-signcr because of the debt on her credit. Aiport- debt that sbe knew wasn't hers. 

S(! she bired SyiviBGoidsmith, a consumer-llIw attorney from the Cleveland area, in 2005 and sued Equi1ilx and 

TransUnion. 

Goldsmith spec! 11 year battling the credit-repol'ling qeneles before theyagn:ed to a confidential settlement with 

Thomas. Repmentatl_ said Ihe credit-repl)rtiJigllgCilcies do not comment on pending or resOlved C8l;e5. 

"No one would help me with thk!'or all those yean before Sylvia, "'Thomas said."S(! many people told me this 

w~'t that big ofa delli, but it was the baI:dest thing I'w dealt with in my. life. And how do you fix something if nO one 

really uruiemands something is. reriously wrong7" 

Credii void, credit probleml 

The c~ in the.1!JISIairs bedroom"", aiJnQ5t big eDough to. look down and watch the televiSion in the living room 

below. 

Wiib:t damage from cracked pipes rotted parij of som. walls, exposing in.!JIla1ion and wiring. 
189 

Pase39 

Dispatch investigation; Mb<ed IUld maned; When credil-n:portingl\j!ellcies blend your files with others', the filUlllCial 

damage can be devastating The Columbus rn"patch (Ohio) May 7, 2012 Monday 

BarblIrlI Sowers' nearly 200-year-01d home has been on slIUc:t\D1Illife support since 200S. That's wben the woman 

who bBs endured 13 surgeries for aipplmg arthritis was fll'St denled the government loarus for repairs, 

Barbara Jean Sowers had been mixed with her dauShtcr BarbmI Louise Sowen in the credir-reporting world. And 

ber daughter's mdit !iil;tory was troubled. 

BarbmI Sowers, 67. was virtually lnvbible to the credit'l'eporting agencies because she never borrowed money. But 

to cOlDJllllCr fQl1llulu that match people to BCCOlDlts. she looked like her daughter. Their names are similar and they had 

.mared a poot-officc box. 

"lbe trcdit agenCies were niCe, but theY juSt kepi telling me I shOuld liet a !;redit card 50 it would be wicrto 

strai~ aut," said Sowers, Who lives in Homer, northeast ofColumbur in Lieking County. "My paninll taught me riIIt 

to bUy anythiag unless you had cash, so that's what. I did my Whole life. I gueSlI that _ back to h~Wlt me •• 

Sowers did everything in her power to convince the I"", adnrlnilltn$n thIII she WI1Sll't her daugh!er. She begged 

thctn to check the Social Security numbers. but it did no good. Oncagcncy even acOil5Cd herofhavlng a phoIly number. 

EWry time the credit-reporting agencies looked for Sowers' reaI credit hilltory. they found notbingbeCa_ sbe had nQ c:sIlIbllshed credit 

"It was blU'd to fill smnethirlg for me thai did!l't reaI1y o:ldst, • Sowers said. 

Finally. in 2009, Soweri' niec:. filed a complaintwilh the Ohioattomey genetal'8office, and abouta year later, the 

mess wall straighleried out 

Sower'S' old house IUld her peace ofmindfinally started receiving the repairs they needed this year. 

Jrs a start for the disabled woman Who can't carry in her owngoccries and counts on neighbOn IUld church fiiends 

to make it through eai:h dllY. 

"Me and this place are both falling 1i!l8rt.~ it's mine; she said of.the bouie. "I don't like, owing anybody money, 

but II14}'bc Irs •. good thing J do.' 

It can happen to anyone 

Brenda CatnpbeJl retumcd to he.r Ilflice aftt:r anexllalming dllY in the MilSPlIri StateCapl!\I1 and SiIWtbe note trom 

the pet10JlllCI dcpaI1mcilt on her desk. 

A debt-colleetion company had tiled papetWork togamish the wages of Campbell, the illite'. director or senior and 

dlsabiJlty services. 

"If. 001 me," sbe 10ld Ih<;m, "lI's not me,' 

Campbell knew there was something Wl'OIIg with her credit report because a few months back when she boIIghl a 

Jeep, II credit check found dcI!t thai didn't betons to her. And she had been rejected when she applied for a new credit 

card. 

Up to thlitpoiot in May 2007, the mix-up had been mostly an annoyam:e. But suddenly. it·W8!l threatening her livelihood. Campbell went bomeaftcr the meeting with the penonnel department and wept 

"J _appointed 10 my position by the governor, and I was certain I was going to be flred," said Campbell, 5S, who 

live,,! in Nix&, Mo., and 'has since retired. "Even though this wasn't my fault, 1 thought lb. governor's peOple wouldn't 

want the pUI!Ucity of an appoinlee baving her wages gamished. I was terrified this would take everything from me~" 

On that same night, Campbell did ber own l'i!searcb OIIlitleand fl)!llld the Blenda Campbell thIit the debt collector 

wlis looking for. Theolber Brenda lived a ICw counties away, had criminal chargea pending againsf her and had "lUaUy 

agreIId to pay offber debt 

~bell assumed sometme would conduct a similar invcstig,arlon,lIJld ber problems easily would he solved, 

But she was wrorig. 

Sbe evcntuallydiscovered thllt ber credit report contained three other Social Security numbers. IIJld by that lime. her 

information had been mixed with two other Brenda Campbells'. II was unclear who the third nwnber belonged iO, but it 

was lillelyentered into the system inco~tly. 
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Dispatch investigation; Mixed and marred; When mdit-rc:poning agencies blend your files with <JIbeD', the finllllcial 

damage can be devastati~'rb. ColumbU5Di5pa!cl1 (Ohio) May 7,2011 Monday 

For the next eight moJlths, Cempbett couldn't persuade the colkction CO/IIpIIIIyor the credit-reporting agencies 10 

n:mov.the false information from her acc:ounl. Sbe rear~ that. her co-workers would find out ab!nrt the mC$S and not 

believe her Itory. She even WIIS afnIid to drive inlo lIOOthcr COIDII)' on a work trip, fearing she would be puned 1)ver and 

!hen mislilken for the Brenda Campbell who bad a warraut out for her arrest. 

She mlJIllged 10 avoid having her wagesgamished, butthe bUrilen oftbe l<reclit mix-up be1;ame 100 mlll<h 10 bear 

I1000e. 

Like Judy Thomas, Campbeil hin:dGoldsmith, the conswner-law lIIlamey . She sued Equifu. Experian. 

TransUnion and the debt"<:Qllection CO/IIpIIIIy. The legal battles lasted more than two yean. Campbell WIlli forced intO a 

grueling.trlal on one of the eases belbre settlernents.were n:acl!ed with all four by the spring of20 10. 

To this day, Campbell dOes not know how the other Brendas were linked to her. Consumers rarely !tarn how the errors bcj!iu unless theycim discover i1tbemso:lves. 

"The burden offixing this problem WIlli all mine; and.no Q!lein the creditl!Pllcies would help me,' Campbell said. 

"No one seemed to QIre that this WIlli destroy;ng my life: 

mwagner@dispatch.com 

@MlkeW/I8ner48 

jriepenhi>lI@dispatch.com 

@JRiep 

CREDIT SCARS: PART:Z OF4 

Ctedlt rilpoitl affect 1II1 ~ of life. The agencies that create them: are largely unregulated. and consumerS are 

virtullify poWerless to erase errotS in their reports. 

Sunday: Mistakes abound 

Today: Mixild reports 

• Tuesday: Stolen identitie~ 

• Wednesday: Courthouse chaos 

••• 

Credit Scm .,. coming this week 

Credit I'q)Oning afTIlIlIS ~ll8SpedI of life, and the agencies that prodUce the reports are IBlJCly unregulated Consumers are virtually powerless to erue erran from credit repoitl. This Dlspatcll investigatioD hlghlights the problems. 

" Sunday; Maned by miStake .. When consumers disoover·ortOn on their credit reportS, then: ate no DUe investigations. The federal law governing credit lCpOrIirig Icaves£Ol1.Somen with feW optiOn. to light against erTOIIeous infol'-

nUllion. Essentially, you mila! liv" with it or file a lawsUit President Barack Obama and key laWJllaken ate Clllling for 

reform. A group of attorrteys general from sevual stales iii brunching an investigation. 

• Today: Mixed reports. 

• TUesday: Siolen identities. ThieVes li>Lvellijlcked the identities of .thousIlIlds of children, some at blrth. Th~ Victims face foreclosures, bankruptcies and huge debts yeanbcfon! they are old enough to apply for their Imt .~n:dit <ani. 

• Wednesday: Cowthouse troubles. Wbencredit-report errors come from court reClll'd., judges and other cQUJI offi. 

cials. have no standing to CC)n'CCt them. Court records contain the MDSl'ilamning 1lnanc:iallnfurmatlon - judgments, tax 

liens, foreclosures and bankruprcies - and are ripe for errors. 

GRAPHIC: Plio!" and Oraphic 

(I) Eric Albtechll Dispat!:b Judy Thnmas of Elyria kept detailed records of et'I'On in her credit report that developed 

af\er her information was milled with that of a woman from U~. Gelring the problem fll<ild was a fiustrating process 

that look more than five years and a lawyer'sheJp. (2) Barbar!lSowers rolls a bucket of water fiom the kitchen of her 

Licking CoWlty home to the bathroom so she ClIO f\usb II toile:!. The phunb/ng doesn't work in pari because she couldn~ 
191 

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Dispatch InvC$iipn; Mixed IUId m8l'l'ed; When aedit.reportina agencies blend YOIII' filC'5 with others', the financ:ial 

damage can be devastating The Columbus Dispatch (Ohio) May 7. 2012 Monday 

get a mnodeling loan after. her credit report was mixed up with her daoghlW's report (J) Bruce Stidham , for the Dlspatd! Brenda CampbeU of Missowi 

LOAD-DATE~ May7,2012 
192 

•• LexisNexis· 

SEctION: NEWS; Pg.:9A 

LENGTH: I082wonis 

24 of29 DOCUMENTS 

Copyright 2012 The Columbus Dispatch 

All Ri&htJ Reserved 

abt «.Iambus iDIspaldt 

The CQ!umbl!S Dispatch (Ohio) 

May 7, 1012 Monday 

HEADLINE: CREDIT SCARS: MIXED REPORTS; Car-buyer flagged as terrorist; 

BYLINE: Mike Wag_. TIlE COLUMBUS DISPATCH 

BODY: 

Page 42 

Sandra Cortez went to buy a new car on her lundl b1'ftk, and aboulan hour tater, the Denver deali:lJlhip staff was dlreaieilinglb call the FBI to haul her aWay as a ~uoipe(;led tmons!' 

The dealmhip's routine check of Cortez's cmlil report twned up something unusual on that day in 1005. It was an 

alert indicating, that the woman was on !l government lilt of suspected terroriSl$. international drug trafficken and Dillen 

associated with weapons of mass destruction. 

Cortez, now 68, was really just ali atCOImtaDt who wanted a new silver Subaru Ib better navigate the IDOlUltaiu 

roads·she traveled Ib reach her favorite hiking trails. 

The mdlt report Cortez had seen IllIIg before she walked into the dealmliip was clean. She had excellent credit, 

and sbe had 110 inkling dult $he was linked 10 a Colombian woman witiu similar IlIUQO wanted for drug b'afficking. 

But like so many other consumers, Cortez diiln~ realize that the credit repOIU issued to businessc:s are not the same as 

those gi\'ell to cons\!I!IefS. 

The ordeal engulfi;d the grandmOther fol the next five years. Hei many attempts lb. fix the problem with 

TrailsUnion and thefedei'al govmuneni On her own all liiiled. Cortez pleaded with the credit-tepoIIint;lIgeDcy to cOneI:t 

her credii bistory bui received 00 help. 

Shceventually hired Jim Franeis. a consumer-law attorney in Philadelphia, and sued TransUnion. Cortez endured a 

grueling lept battle ibat intl\lded a trial and years of appeals. She originally was awarded $750.000 by a jury, but that 

later was reduced 1o$IS0,000. And the government tDOIc about a ihird of it in taxes. 

Officials' for TnmsUnion's lobbying group, which speaks fol the tompaily 01\ all matters, declined to comment 011 

the cuc. Cumntownera ofwbat was then the Jalui Elway Saham dealership were uofarnil~ with the case and declined 

to comment. 

But it was that day in ihellUlo 1howroom tbat Co~ realized howpowerlns Amem;ans·are to defend thetn5elvCil 

against significant flaws io the credit-reporting sy.b:m. 

"' thought I wouk! be drivillg my new car bickto work afIllr lunch, "said CorteZ, who is DOW retired and living in 

La MeSa, Calif. "' couIdn' imagine what w~uld bappen next." 
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CREDIT SCARS: MIXED REPORTS; c.r-buyer flagged as terrorist; The Columbus Dispatch (Ohio) May 7,2012 

Monday 

Reno's how it unfolded on March 31, 2ooS; 

\ p.m. ··.C!x1e>:tums intoJhe Sub8ru dealership J*rkinglol in her old, red Ford T~ The Ford had been good to 

her. but it WlISno IIIlItCh for SQ~w-cOYetcd roads in Colorado. A friendly weswomM greet$~rtez lind toilS her the new 

silverSubaru FGmtor will be rt\ady Shotlly. They juSt need to go Ihrough the financing process. 

CmtlIz;' expeqing a gtl<Id interesl.l'llle on .the ,18,000 vehicle bocllUSe shehad checked a week wlier and her 

ctcdit score was 701. 

I :45 p.m. - CDiIcz is sitting in the flilance /llllllqer's g1ass-wallcdoffice wondering wily it'illliking so lOiIg for him 

and me saleswoman to return. Rerlunch houris passing quickly. 

2. p.m. - The finance manager returns, and this time, there is no fiiendly ~eting - only a stern look for the CIIIt,?mer born in Chicago. Then a 'l"ries of strange questiollS: 

"Were YOII bom in the United StateS? Rave you alwaYS lived in the U.S.? When is the last tinieyou left the coun- try?" the mana:ger asks. 

Corte>: is laughing. She thinks It is a joke - \lDtil the lII$1&ger tells he.r thaI the TransUnion ctcdit report indicales 

that sbe is on the U.S. Treasury Department's Office of Forei&!'! Assets CcintrolliSl, which ~ specific individuals or 

regimes suspected of being terrorists. TransUnlon's "OFAC Advisor" sentite had mixed'Cortez)¥ith a s.ndnI Cortes 

QlIinter\I. Butinesses use SIIch services because the Patriot Act, passed shortly after the Sept. II attack in 2ool~ preven!! 

lenders trum loaoingmoney to. anyone suspected of being Ilffiliatcd with terrOrists; 

"\ am riot thai woman," COrtei:.p\eads to the manager. "[ have my credit report, and there is nothing like that on it." 

2: 1 0 p,m. - The tinanGe mllnager tells Corte>: that they are calling the FBI if her name matches that OFAC list 

3 p.m. - Cortez sits alone in the sterile oftlceand waits for FBI ageIIm, She expects them 10 burst througb the lObby 

dClOlS with gtms dra\lll. She trembles and Imagines wbat it would he like to he handcuffed and taken away ill View of 

other customer.; and the sales staff; 

j:30 p.m. •• People are looking into' the'glass·window~ office where Cortez is sitting. She knows that word has 

spread around the dealmh11lthat they may haVe caughl. lemlrist Cortez tells the finance, manager that s.be Is hllDgJy 

and is mling Iighlheaded, bul he asks her to stay a little lonller. The dealenhip has ~ession ofber Ford keys. 

'" p.m. - Ccinel is given her car keys by a ftont-<lesk employee, ~t the finance manager asks her to wait allftle 

longer. Re then says again thai they are going to tall the PSI. Corte>: si!! baek down in the de8lenhip lobby and again 

waits. for federal agents to arrive. She could leave, she thinks, but she doesn't wanlthem fu think she has reason to run. 

~:30 p.m.- She is hungry, exhaustcdandm-aid BuUhelhinks that iftbeFBI really ~ts her. agents tOIIldjust as 

easily pick her up at home. Co~ fmalty drives away fi'om the dealership In her aId Ford Taurus .. ShOW begins to fall. 

6 p.m. - Upon arrivillg al home, she immediately talls her daughter and tells ber 1)f the onleal. She is stili convinced thai she will he arresied alany minute and cells her daughter that she might need legal help • 

. "They won't believe me,' she SII)'$. "Thl;)' just won~ beU,ve me. Everyone theno !hink. rm8Ie1Tor!sl." 

6:45 p.m. - Cortez call. the dealmhip and is tnwlb'red to its top manager. 

"We IbinkthCre has been a mistake," be say~ "We wllUld like toapologize." 

7: IS p.m. -- Cortc;z arrives baekal th~ dealership and is now tmUed like 8 YIP. Everyone is apologizmg. offering 

her $100 ii. free gas and dinner for her and her family wllerever they want to go. Com:.: fuels 8$lhough she WIIS kepI 

hnstagdorthe day, bUI ~enso, shejU5\ wants'her new o;ar. And the ooly' thing Com:.: asks them to1Jlrow into thedea[ 

Is .. copy of the c~it report they received ftom TransUnion. Cortez isn't sure if they ever really called 1he FBI. 

She flnalIy.got the new car, but a fivc..year ittuggle to ,ieiii' ber name had just begun. 

Cortez is stili drivmg her 2005 $.UDlml ~and $till stmging fi'om 1he experience of buying il. 

"Most people think If you pay)'our bills 01\ time; you will be OK in the credit world: she said. "But thai's not how 

it always works. And sometimes, the milllakes alii be paralyzing." 

mwagner@dispawh.oom 
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CREDIT SCARS: MIXED REPORTS; Car-buyer fl-Wd u terrorist; The Columbus Dispatch (Ohio) May 7, 2012 

Monday 

GRAPH1C: Photo 

John GaslBldo I For lhe Dispatch WIlen Sendra Cor1ez biud 10 buy a Subaru Forester 811 dealership in Denver, lID ~rror 

on her credit repoJ'lled to the Innocent accountant being mistaken for an international drug-trafficklng suspect from 

ColOmbia. Cortez spent flv. years trying to rel"lrlhe damage. 

WAD-DATE: May 7, 2012 
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SECTION: NEWS; Pg. 8A 

LENGTH: 426 WQrds 

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COpyright 2012 The.Columb~ Dispatch 

AU I9glus Reserved 

<hit a.tambus JIItspattII 

The Colwnbut Dispatch (Ohio) 

May7.2()12M~y 

HEADLINE: CREDIT SCARS: MIXED REPORTS; (Jood defense lit best offense for credit problems; 

BODY: 

Check YOUI' \:t'eCIiI reports 

Page 45 

COlIsumm ~entitlcd to a he ·credlt report every· 12 months from each cfth. three. national credit-RpOrting 

~de$. You alSo canreeeive. a free repOrt If)lOu have been l\enied credit within the pas! 60 lhlys. are unemployed and 

job hwttlng, reec:ivc public a$S~c or _II victim offtaud. The National Consumor Law Center offers tips on what 

toche4 in your credit report:www.ncle.orgIimageslpdfloldeuonsumenicreditrepair.pdt: 

Oct aecess to yOUI' free reports Ii AnnualCredilReport.com 

Reports sponsored b)' the credit..,cporting agencies can milllead collsumen into purebasing unwanted information. 

Free reports aJso can be oblalned by phone lit 1-371-322..n28· orb)' writing to Annual Credit RepI1It Request Service. 

P.O. B.ox 10528I,.Atlanta,GA 3034t1-S28 I. In eacl! ~ you must provide your fuJI name. birth dale, Social Security 

number and addmscs from the· past five years. 

Review credh-card offin that arrive In your mailbox 

Name misspellingsandothCr m..i:m'tCt pe~nal infonnation in unsolicited offers of credit can be a sign that something is amiss in awnswner's credit report. 

OLBputecredit-reJll1r1 erron by mail. keep copies ror y.ourself 

Send by mail all documeillSand supporting O\Iid= to each ofthecredit..,ePortlng agencies reporting Inaccurate 

iRfOnnation and keep. copy far your records: Equifax, P;O. Box 74U241. Adanta. 0,\ 303744)241; Experian, P.O. Box 

2104, Allen. TX 75.013-{)949.; and TranSUnion. P,O. ~ 1000, Chester, PA 19022. 

Beware ofcrediHcpair sums 

COII5umers who have accurate but derogl1tOl)' acco\llrtJ on their erec:\it report can lepalr the d8lllll&e they have 

Caused themselves by paying bill51)Q lime IIIId only hiking 011 additiooat debt when a!)sglillely nemsary. Some companies claim they can remove bad debts, but it is impossible to remove legitimate debts., The Federlil Trade Commission 

(www.ftc.gnvl ofters a host oftil!$ to improve yOID' credit standing: 

WWw.ftc.gov/bcpledulpuWconsumcrkreditlcrcI3 •• hlm. 

Where to find help 
196 

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CREDIT SCARS: MlXBo REPORTS; Good defense is beSt offelisc for credit problems; The Columbus Dispatch 

(Ohio) May 7. 2012 Monday 

The Consumer Prote(:!ion Seman of Ohio AItorncy General Mike DeWine's office encourages consumers to RlpOrt 

errors in their credit reports. The office can help mediate disputes. 

Complaints may be submitted: 

.. OnliDe:· www.ohloattomeygeneral.govieonsumcrComplaint 

• By phone: 1-,800-282-OS.S . 

.. By mall: Ohio Attorney General COIISIID1Cr Protection Section, 30 East Broad St.. 14th Floor, Columbus, OH 

4321S. 

Contact infOrmailon for ather statcs'attilrneys general can be fOWId o,n the National ASsociation (if Attorneys Oenml :wcb&ite, www.naag.org, under AG Fast FBct.s. 

LOAD-DATE: May 7.2012 
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SECTION: NEWS; Pg. lA 

LENGTH: 3>1.88 words 

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Copyright 20n Th~ Columbus DiSpatch 

All RiShts Reserved 

<nat C!eIa.- JIJispattIt 

The Columbus D~ch (Ohio) 

Mil)' 6, 20.\2 Sunday 

HEADlJNE: DISPATCH JlIIVESTIGATION; Credit~; 

Page "7 

Cred.it-1"q>Prting agencies' tililure to address dlimaglng e~ plaguing thousands of Americans prompts call for swift 

actiOn 

BYLINE: Jill RlepenhofJ'1Irid Mike W~, TIm COLUMBUS DISPATCH 

BODY: 

They can look like hannlesscrrors: A misspeUed riame. A transposed number. A paid d·ebtllSted as past duc. 

But mis.takes on credit tqlOIt5 can inflk;t widespread damage. And bctaU$C there are inlllfficieot rules on how 

credit-reporting agenCies must correct them, Amerlcansere left Virtually powerless to erase the mi~. 

The Dispatch documented the pllght of thousands who, through no fault orlb.ir own, havebeeii denied the chance 

to buy a home or a car, take out a loan for college, rent 1111 apartriIenl, land a job, join the Armed Fim:Q, receive medical 

care or even open a checking account. 

Slected officialS, includinll President Blinlck Obama. suspect that the problems plague millions of ~ and 

are caillni! for refuim after reviewing a summary of the new.paper'. fllldirill5. 

The lederal law thai governs credit reporting is fraught with loopholes and obstacles that make toD'Qc1ing mislakes. 

difficult, ifnOl impossible, the newspaper found. 

During a yearlong investigation, The Dispateh co!iecte<!and analyzed nearly 30,000 CODSwner oomplainl;!tlled 

wltfi Ihe Federal Tnide Commission Bn4 attorneys general in 24 states thai all~ged violations of the Fair Credit RllpOrtin~ Act by Ihe Ihree largest credit-JqlOrting agencies in the Unilcd States. - Equifax, I:;xperian lIIl~ Tr8DsUnion. 

Industry observers 511)' it is among the most comprehensive reviews. ever conducted of complaints against creditreporting agencies. 

The complailltS dOturilelit the inlIbilil}' of COD$IImen to ~ errors tha( range from minor to financially devastating. Consumm $lid the agencies can't evan correct the most obVious mi5lakes: That's nOl my birlh date. Thafs nOl my 

name. I'm· neil delld. . 

'Nearly a quarter of the complainl$ to the Frc and more than half of the cOmplaints to the attorneys general involved mistakl!S in CODmmen' f1nanciallltCOlllllS for credit c8ids,mortgagesor car ~, Houses IIOld In bank-approved 

"sbortsales,' at less than the nlue ohne mortg~, were listed as forec.losum. Car 10000alhat had been paid offwere 

reported as repossessions. Credit canb that had been paid oft and closed years earlier shOwed as delinquent, 
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DISPATCH INVESTIOA TlON; Credit scars; CRdit-reportingagencics' failure to address dillllagins errors plaguing 

tho\ISBIJds of Americans promplll call for swiftactiOil The Columbus Dispatch (Ohio) May 

More than :; ~ oomplaioed to the FTC IIJId mQR than 40 pe=ot to the attotne)';! genenl that their reporI/I had 

b!lsicpmooal infonnatiOIi listed incom:ctIy: names. Social. Security numbers •. addresses and birth datea. An Ohio man said his report identified him as havingb~ a police officer since InJ. He was born in 1968. A woman in her 60s said 

that her credit report listed her as 12 years old. 

More than S j)e'I!:ent: cotnplainedto the FTC·thIU ~ reports contained an 8CCQUIIt that did not belong to !hem. 

Many oflhOse $eeouJIls involYl:ddebls that had been twned over to coI1.ectian agem:iIIs. A woman in Georgia wm. plained ibollt a mlldicai-1;ollCctidn aceount fiil her report. It was for treIIIing proatatc c;aacer. 

Nearly 200 people told the FTC that their credit reports lisled them as deceased, cutting off their abUily to access 

credit. 

More than half of all who filed compillints with the FTC said that despite theil" best effQrt$, tbey co.uld not pemi8de 

the three major credjt-I'$lrting 8JlCllcies to fix the·problein$. 

"This.isjust a sliver of the peop~ who have been ~by these probl~," said U.S. Rep. Steve Stivers; 11 Columbus Republiwl on tI1a House Financial Sorvi;es~w!lose ~5lDent of the snvity of the problem was 

ecboedby I. bipartisan mix of lawroakers and industly observers. "It sure seems likcwe need to tum the ayslem anilS 

hea4: 

Shortly after seeing resullS of the .Dispati:h inveStigation, Ohio Attorney General Mike DeWiile asked other .attorrieys ~I to join amultiBtate investigation into die credit-t'eportlng system. 

"Whal you fouDd is ~liing and in/ilrlaling,' said DeWine, a Republican. "This is something the avenge citizen 

.ean't C!III1I'ol and ean't fix." 

Obama said in a written sliltementio The Dispateb !bat his administnilion will make regu/llinglhll Q'edit,reporting 

asencies a priority, 

''The one thing we can't afford is 10 go back to the system we had before _ .• system whcrlO risky and irresponsible 

practices on dUI part of a filwc:ould put our entirecconomy in danger,' said Obamil, 11 DcmoI:ral. 'We must continue to 

fighl for an cconomyw~ everybody pia)'! by 1/Ie same rule$, where consumers are protected.' 

Obama chose former Ohio A!tomiey General Richard ~ to lead the new CtmsumerFiiWIRcial Protection Bureau, whioh has been assigned unprecedented authority 10 regulate the tnliIit-reporling indusby. Cordray is.1lQt Qllllng 

for reform at ibis point, but his office is expected to release Ii plan in JUly that spells Out how it will oversee the c~t, 

reporting agencies. 

"This is something that Illfcctspotentially l'very adult American," Conimy said. 'I think if there are systematic and 

significant errors inpeop)e'scrodittilcs, that 1$ ofgreateoncem because ofal\ theramificatioDS creditfil .. mean for 

people now." 

The credit-reporting agencies speak througb ibeirtrade grOup, the Coilsumer Data Induitr)' AsSO\:illlion, in WahingtoD, D.C., which also Is their cdngressidnallobbylng lU1lL AsaocialkmJIRSj~ept and chief executive SI\I8lI K. Pnll 

questioned the validlly of conclusion! drawn ftomsclf-reported complaints. 

He said the ~1-repOrting lIII~ies estimate that at least a fifth of complaints are from people trying to game the 

system by having negative bill accurate information removed. 

''The FTC mikes clear (that) they IIRf unverified complaints, and !bat is important tb us," Pratt said. "You don' 

know what haPJ>el'1ed on the back end .... You don't know Wbatac:tually w8s rOsolved." 

Equifax, ~rian and Tran$UniOll.~trive to get il nab! every day, Pratt said. "nUll'! our gael: Keep what is accurate, and gill rid of what ~hould stay out of the pot. • 

BUI mistakes happen. and banks, credit<ard companies and other creditoril thaI collectively send 4 billion lecOunl 

updates each month 10 lbe agencies share the blame fOr geneniting laaceinte inlbrmatiOll, Pr:att sai.d. 

The Social Security .Administration also llaInpc;rs a~ because it will not share with the eredit-reporting agencii:B its databaSe Iinli:ing names to Social Sel:urily numbers; Prall said. 

Credii-reponing errors do not disaiminaID. They bappen to men and women, bJacksand whites, the young and.the 

old, die ncb and the poor. 
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OISPATCH INVESTIGATION; Cn:dit scars; Credit-reponing agcnclCll' failure toaddres5damaging errors plaguing 

thousands of Americans prompts eall for swift aeIi!)lt The Columbus Dispatch (Ohio)c May 

Tho. system is voluntary for businesses that extend credit; tbey can choose 10 report none, some or all pieces of infonnation related toa COIISwner'S 8CCO\01L The system is IDandatory for consumers; there is nO way to opt out. 

Despire numelVllS 5!udies, the a<:cllrilcy r3lt of credit repens 18\'8C1)' jj unknown. Esttmlltes of those hit bY error.. 

range frOm less than 1 pen;eDl frOm a study.l\mded by the jQdustJYto • high of 2' percent II)' cons~ advoeat!:$. 

. BlItS9lDc say thah.ycn a I percent error rate Is·alarmillg, be<:ausc that affects about :1 million people in the United 

States. 

"If 1 pm:ent of all can flJledand caused hom'bleaccidCDIs, Would We lily, 'ThiIt'iI OKT • said Chi Chi Wu; staff 

~ey with the National Con.suiner Law Center, based in Boston, which advOCates fur cOIIS1IJI1errights indpro!c(:-

tions. 

'rhe Fair Credit Reporting Act dces not require error-free credit reports but rather a standard of "maximum possible 

accure,>,~' 

The law requires that the credit-tq>orting agencier cOnduct an in~tigation when conswnersalert them to errors, 

but it does not spell ~ how.such an inquiry should be handled. 

ShOrt ofhiting a lawyer and filing a lawsuit, consumers are vb1uolly powerless to fight a system in which they arv 

p~ to be at multo 

Consumer always wrong 

Credit-card oflin in the mailbox tipped lIifRobert Circle tl1l4 ~omethill& was amiss. 1hey were addressed 10 Robert 

Cirlle. 

He PIIlled a. <:n:dit.report In 2QIQ and found Cirlle listed as an alias. He tbolll!hl a Bimple phone call would clear up 

the problem. But he reached only an B.utomated phone system. S!I he sent a letter til the credit-reporting agancy and included doeIunents to prove his Identity. 

'1hey ne_ gOi back to me," said Circle, 38, Wilo lives in Piketon in. !III,uthem .Ohio. 

After th= months of hearing nothing. he filed a complaint with the Ohio anorney general's office, which persuaded Equifax to correct the mistake. 

"It was probably an orraot kC)W01ce. We all ma.l!:e mistakes," Cin:lc said. "Bill once It's in the (etedlt-repOrting 

agency) computer, the computer Ii not Wrong." 

In 2007. Paul Pierce began reco=iving phone ¢/llls. at his Daytona 'Beach, FIa., home from an agtIllC)' ttyingto collect 

11 $2,S63 tellphone debt belonging to Paul Louis. orNew Yorlc. 

"You've gofthe wrong number," he tOld !hem. 

But the ¢/llls and letters de!llllnding pa)'lllClltkept.wming. Then, in 2010. Piercedisqovcred thai the unpaidclcbt 

had found ilS way IlIIJll his cn:dit rqlOrI. He said bls cn:dil score - the number derived by a.secret limnula thai indi<:ateo 

credil risk - plummded from excellent (806) 10 below average (6.88). 

Thus began a frustrating months-lillig battle to pnwe that he WIIS~'t Paul Loui •. 

He followed the dispute process and sent a 1elterto Experian. 

"No, thars your'debt,' heuid the agency told him. 

He SOilt more leltel$. Nothing ch~. 

"They say they will investlgate, but they dim'i investlple, .. said Pierce. 51. "It's the wrong name. [t's not ~n close. 

What do they think'!" 

Then heqmtilc~ the Florida lUtorney genetal's OffICe. 'Within four months, it magically disappcarvd, • he said. 

James Glaze received a letter in 2009 ai hili Monroe, Wash., home notil)'inillim thut beca\!$C ofa .ignifi~t drop 

in his en:dlt score, the limit on iii. ",edit card would be n:duCed from $12.0001J) $'00. 

Ol~ d1seo\'llred IhIIl hi. cred.it rqlOrt tontainedanother peroon's name; unfamiliar addresses and dozens of unpaid 

lax 1iei15 and acoounl3 in collection. 
200 

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DISPATCH INVESnGA nON; Crcdlt scm; Credit-reporting agencieS' filHure to address damaging errors plll/luing 

thousandll of Americans prompts call for swii'! action The Columbus Dispatch (Ohio) May 

He filed 8 written dispute. Within weeks. Equifax responded by saying that it had investigated and bad removed the 

incorrect infonnation. 

Glaze pulled his creclit report to confirm, and he fbond that the infon'oa.tkm he diSpUted had been teinoved only 10 

be ~laI:ed with ilew'e.mm. 

"There's. no quality control. there!s no lights that go •. 'ding, ding, ding - somcthing'swroug,' .. Glaze said. 

The cY"le of reIDllving lind repllll:iDg iDlH:CUI3tC infbnnilion ctliltilJued for moiUhs. 

GlIZI: couldn't filthom how such a grave milll8ke could he made. He fouud his answer in a bill sent 10 his house In 

the name of James Smith. Thatbllt showed Smith's Social Security nuniber. !twas newly· identicai to Glaze's except for 

the middle !Wll digits. Glaze's were 46, and Smith's were 64. 

H. shanid thal information with the creait-~porting agenCy and still nOthing Changed. 

F'maUy. after more ~ a yo .... Glaze contacted the Washingtoo 'attorney general's office. With its intervention, 

Glaze's repon was .cleansed. 

·youreel so violated," said Glaze, II 61).year-old prisoriguard. "h's 8 pei'sonal assauh lin yow- good name •• 

BIi1h of credit reporting 

Credit reponing began more than a century ago to help local merchants gauge the riskof extending credit lOCUS-

~ 

By the IlI1e 1961J$ .• as SCOl'l'; of regional Credit~ing agencies operated in to_bigand SI!1aIl. COII$Umer5 begun 

complaining thai information in (hck fepons waswrpng. 

The late U.S. Sen. WiUilllD \>roxmire, a Demoaat from Wisconsin, heanI the picas from Ameriwns and called fur I 

law toproteet consumers· 

"Perhaps·!be most serious prob~ in th.t Q'Cdit-reporting indU$lr)' i$ the probl¢m ofinlll:C\Ir'aleor ml$leading infonnation ... ' Even if it's 99 percent!lCew:ate - and I daub! that its that good - the 1 pen::ent illKCuraty represeDIS over 

a million people;" ProlU1llre said al the time. ",..,oreover. the composition aftho I million persons is constantly shifting. 

Everyline is a potential vitlim of an inll;CW'lI!c credit report. If IlOI IQda)'.then perIIaps tomorrow." 

He crafted the FalrCredit Repottinj Act as aCOQsumer's bill of rights. Bur what became law 1111971 was far 

friendlier to the ind~try than to consumers; c:rit1cs say. 

Since then, Congress has changed the law twi~ Both times. con;umers' isslIB$ abolll credit-repOlnmn were largely overlooked with cine exception: The 2003 amondmcnt gave them aetess to a free credit report every'12 months. 

The JI1IIPOSC of the free credit reparn WlI$to make consumers watchdogs of their 0_ infbrmation. Still. six years 

after the change took eflCct, not everyone takes the opponunity to review the reporl$. 

For eXample. more !han IS peramtofl,333 registered Voters who participstcd in a Dispatch PoU In 2010 said they 

n""er had seen theiT credit report. 

For those who have checked their reports. the 2003 amendment bas cmsted a new set of fiuSlnltioils, The Dispatch 

found 

More thllll21 percenfofpeople who complained 10 the FTC ani! more than 38 pen;ent who comactedlln lUOme)' 

general said that they were denied access to their credit report. Re¢ords ~w that ~y 1)00 pec!pte complained that 

they had been tricked into buyinga credit report whon they attemPted to obtain I free one. The only soun;c for the govemmeIll-mllOWited free report iii AoDl!alCreditRep!IIUom. 

CQllSwoelllalso complained that they couldn~ reach anyone by telephoncat the Credit-reporting ~ies 10 help 

them. 

A man 111 Florida said he is blind and couldn't l'eiICh anyone to help him understandSQlJlothing In his credit report. 

An Oklahoma mother couldn't re'acb aoyonetofind QUt what 10 do iIbou.t the letter slie received from a creditor about 

her deceased lIOlI. 
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DISPATCH INVEsnOA nON; Credit scar:s; CrediI-reporting'agellcioa' iailure to address danuIgiiIg errors plagUing 

thouoands of Americans prompts IlIIU for swift a~ The Columbus Dispatch (Ohio) May 

The FTC bas Q!lCked dawn on thecredit-tqXlrting ~genci\"S several times, through settlement agreements in the 

past decade, for poor cuatomer service and deceptive practices involving the free credit reports. The agencies promised 

IQ be more mpOlQive, yet !)Ie problems persist 

Industry spokesman Pritt said the ¢tedit-repOrtlng ag~ies 'WBIIt 10 help eol1sumers. 

"The kind of data I have seen suggests these I!I'e isolated probJems," Pratt said. ~ are employing the right technologies IQrespond to \lODSUIIlers and respond to consumers wllh a "ve, penon. These are not unsophisticated ~y5tem •. " 

Fot the first time eVer, !be industry faces inlen" scruIbiy by a government regulator: Ibe consumer-protettiOl1 

agency Jed by Cordray. The DOdd-Fnmk Wall Street Rd'orm Act gave the agenCy poWers that !be FTC has newr /withe ablUty to gain I\CCC$ to the inner worIdn(!S of the natiol1al credit-reportiug agencies witbout legal aCtipn. 

"This i$ sort of 8 shadowy Qperationthal no one quite knows about, • said U.S. Sen. Sbcrrpd Brown of Ohio, a 

Dl:moc:rat who has asked CQrdra.y's ¢lice III investigate. "The govermnent needs to look at them.' 

LoOpholeS vsc obstacles 

Ohio Atterney General DeWine likl!ll! the credit-rc:portlng Industry IQ ots m)'Blerious wIzard behind thewrtain, 

beca~e few outside the agencies truly lqu)w "ow lbir systems work. 

MIlCh of what is known has been learned through, lawsuils consunlerS filed against the lIgencies. 

The law i1Selfls pa!tly to blame for the mystcr)'because it fails to define accuracy or reinvestigation, the official 

term used 10 doseribe the highly automated pro<:elIli by which credit-reporting agencies detennine thHalldity of a consumers diSpute. 

The Fair Credit ReportiJ!g Act ·operates under a 1960s conception of a credit report. You literally had a file - a 

can! paper file," saldCbri$ Hoofiulgle, who is a lecturer III the University ofCalifomia-Berkeley Sdlool of Law and an 

industry crillcwho calls thfl credit-reporting agencies _essar:y evils.. "The law has rio! kepI up With the technology." 

Today, all int\\rmallonnows In .and out of a creclil-roportingageney by eompuler. When a consumer reporta an error, Ibe n~ ofthe/llistake is, conYCJ:led to a numeric Clide. mostly by c:ootraetemployeesoverseas,and sentelectroni-

.;:aUy to the «editor. 

EXcept in rare cases, no human investigates Ihe consumersevidenee; which typically is not shared wilh creditors. 

either. 

"They don' investigate. They compare,· said Evan Hcndrillks, editor·and publi~ of the newsl~tter "Privaey 

Times" and author oflhe bOOk Credit Scores & Credit Reports: How Ihe.System Really Works, What Yau Can Do, 

Ift)le informaUon is inaccurate m the credittn' daiabase, it will remain inacc_ in credit~, alid COIISUlI1):n 

will lWlivea letter saying that the inaec1nc:y bas been verified as accurate. 

"The credit bUreaus see it as their duty to !'lit oft yOur report wbat the eteditOl1l tllll them. They see themselves as a 

fibrary," Hendricks SaId. "That's going to trump how you tellth~ thaI you spell YI'JIII' name." 

The credit-r'eporting agencies naturally are suspi"ious of documents !bey receive fron\ cOnI!limCr.I beceuse anyone 

with a. computer eM create an official-looking rooord, said Nonn Magnuson, vice president ofpublie ilffain for the industry association. 

But even creditnrs say they sometimes have d1f11cu1ty correcting inaceUF8J)ies through the lIUtDmated system. 

A NnrthCarolina collection ageney tried numerous. tim .. to eom<:t an error thrOlJ$h the auiorruiied system. It bad 

ineonectly assigned. $312 pa!h01l!gy bill m collection to a woman in WashinJIIln. 

"We bave made three attempts ... 10 hM the aedlt buteaWl ~orreot this matter IUld 10 place the account on the correct credil report," the company wrlite in a letter in 2009 10 tile Washington attQtney genctal's offi<:e. "All three attempts 

have been unsU<:CeSSfuJ." 

The industry says a study on credit-report accur~y by the Polky and EConomic Resean:h Couiicil, 8 ptiblit-poJic:y 

researob group In North Carolina, proves that ~ system worts effectively and that repom of widespread ,tmOfS are 

Wlfounded. 
202 

Pa,e S2 

DISPATCH INVES'rIGA nON; Credit scars; Credit-reportinsagencics' failure to address damaging errors plaguing 

thousands of AmeriCans prompts call for swift action The Columbus Dispatch (Ohio) Mil)' 

Pmit's association paid for the Jludy, which iDcluded consuliatlon wIIb representatives ofEquifax. Experian and 

TransUnlon~ Four thousand COIISWI1C1'l1 were asked to review their credit reports for j~les. Those reports illvolved 

81,000 accounts, of which errors were found in less than 1 percent, researdlers said. 

The study also tracIced COI15WIIers thrOugh the dispute process and determined that 9S pen:ent were sati$fiedwith 

tile OIItcoml!. .. 

But other sources tell a different story. 

Nearly a thitd ofrespcndmts to the 2010 DiSpatCh Poll said they bad found errors: on dleit Credit reports. Nearly 

twb-tliirds Of tbem. however, I\CMlJ' attempted to have ,the errors correcled. 

Critics ofttie lIystem say the deck iastacked a.galn$t consumerlf, whollC only recoW'Se often ill to file • lawsuit. Under C\IITent ~w. credit-rcporting agencies face DO pcmaIty for reporting inaccurate information. 

"It's extmiIety Important to redtice the emrrs in the system. It's 1m the beginnins of the AIDS crisi$, where we 

were Screening every drop ofb1oocJ because It could be fatal to people. Well, tbc$c mars in the cn:dil-repoitins system 

CIII be fatal to people's Iius," said Lucia Dillin, ail economiCs pri:JfeS1lDf at OhiO Swe University. "1'heR I\a& to be a 

better way to polite this. Our depend",," on credit is why the big three (credit-rcportiog,ngcncics) hiM somtich pow- ~ .. 

l'ralt said thngencies have plenty of cht:cks and balances, both intemaJly and from tlUtside oversight Creditors 

frequently test the lICCUnII:y of the information theyprovi60 to the agencies. 

"Our ml!mbers alwayS have been driven by acCuracy," he Aiit 

But not all eoIIBumer$ would define ~y in-the same t.erms as does !he aedit-reporting. $ystem. 

In an internal industry memo obtained through a muitand .fIared with The Dispatch, onc insider explained ~uracy this way: "We don't have to be perfCcl. We don~ even have to be right We just have 10 have reasonable proeedures." . 

AlDer~s $CIIITed by ClTOI'$ say thl! syS1em Is qui1e unreaaonable. 

jricpeMoft@dispatc:h.eom 

@JRicp 

mwngner@dispa1ch.GolD 

@MikeWagner48 

Credil &en; Part I of 4 

Credii repOrts atl'"m all aspectsoflife. The a;:ertci~ thlll QreaI,e them are largely unregulated,lIIl<I consumers are 

virtually pOwerless 10 er1ISc errori In their ""","". 

Today: Mistakes abound 

• Monday: Mbced reports 

• Tuesday: Stolen Identities 

• WednesdaY; Courthouse chaos 

••• 

Credit Stars •.. coming til", week 

Credit reporting affects all aspeets of Hfe, and the agencies thatproduee the reports are largely IIDl"gulBted. Consumers are virtually powerl •• s to crase errors from credit report:;. This Dispatch investigation highlights the problem •• 

• Monday: Mixed ~rts. The WII'J the credit-repotilng agenties tmitclr consumers to .ceounts sometimes mults in 

assiglling debts to the wrong people. Victims of mlsliiken identity have lost theJr jobs, thcirhomes and tbeit financi$1 

reputaliOll5. Some have been ~ly labeled as lemlrisls'. 
203 

Page 53 

DISpATCH INVESTIGATION; Creditsclll"S; C'redit-l"CpOrtiog ~gencj .. 'failure to addms damaging OITO~ plaguing 

thousands of AmeriC3I15 prompts CJlI for swift ..ctilm The Colwnbll!.DI8p81X:h (Ohio) May 

• T1H>&day: Stolen identities. ThIeves haw bijad:ec:\tho idontlties OfthOUSlUlds ofcbil~, some lit birth. The victims face foreclosures. banknJplcles and hup debts years before tIley are old enough to apply far their first acdil card. 

• Wednesday; Courthouse troubles. When acdit-n:portemll'S comeftom court records,JudgeS·"'d other court ofJi~ 

cia1s bave.oo &tllllding to COIfect \bern. Court reeonb cODlam the most damning· fmancial·liifortnlitiQli - judgDIents, tax 

liens, forecloSUres and ba1Ikruptcles -- and are ~ for elTOn. 

GRAPH1C: IIIlistratian and Photo IIIId Graphic: 

(I) Charlie Zlmkiu I Dispatch (Cover ilIusilation) (2) Peie Marovich I Far the Dispatch Richard Col'dr1Iy. direcq,r .ofthe 

Cmiswrter Financial Priltection Bureau; testifIeS befure the U.S. House Finencial ServiCes Committee about rctenlllCcomplisbmenis of the new federal agency h~ leads. The agency wlU have ID1p~ted authority t& regulate creditreporting agencies. 

LOAD-DATE: May 6, 2012 
204 

SICI'ION: NEWS; Pg. 6A 

UNGTH: 427 words 

28 of29 DOCUMENTS 

Copyright 20 12 The Columbus Dispatcb 

All Rights Reserved 

Ght CIoIambas iDIspatdI 

The Columbl!S D1spa\l:b (Ohio) 

May ii, 2012 Sunday 

HEADLINE: CREDIT SCARS: MISTAKES ABOUND; Good defense is best offense for credit problems; 

BODY: 

Cbwk your credit repom 

Page 54 

COnsumers care entitled tQ a free aedit report every 12 monthsfi'om each of the three national credit-reporting 

agencies. Y \Ill also can receive a free repon if you lIave been denied credit within the pasl60 days, are unomployed and 

job bUDting, receive public 8$$btanee or!lle a victim ofliaud. The National COIIsumer Law Ccntet oflm tips on what 

to check in your credit report www.nc!c;orgllmegWpdfloldeuollSlllllel.!lcreditrepllir.pdf. 

Oet aceest to your free reports at AnnualCreditReport.com 

RepoI18 sponsOred by Ibe credit-reportingqencies can mis\eljd c:onaumer5 into. purchasing unwanted information. 

Free nipc)rts also c8D be obtained by phone It )-m·:m·1f228 or by writing to Annual Credit Repon Request Servk:e, 

P.O. Box IO~81, AIIailla, GA 30J~S281. In eacIt cue, you mun provide yoW" full name, birth date, Social s-ity 

number and lIddresses 'from the pll5t fiye yeai'$. 

Review credit-card offers that arrive In your mailbox 

Name misspelling. IIDd other incorrect pe/'!onIil ilIformation in unsolicited offers of credltCIID be • sign that something i. amiss. in • consumers credit report. 

Dispute credit-report errors by mail, keep copies fur yQUrself 

Seod by mail all documents and supportlllg eVidence to each of tile credlt-n:porti!Ig agcnc;les reporting inm:urate 

information and Iwep a copy for your JeGords: Equlfax, P.O. Box 740241, AtllIIIIlI, OA 30374-0241; E~IID. P.O. Box 

2104, Allee, TX 15013-0949; lind TransVnlon, P.O. BDx JOOO,.(;besler. PA 19022. 

Beware of credit-repair scams 

Conaumers whO have acante but d.erogatoIy acc:ounts on their credit report CIUI repair the damage they bave 

caused themSelves by paying bills on tim.elUld only liIking onadditionaJ ckbt when absolutely necessary. Some gompanics claim they can remove had debts, but it is impossible to remove l.gitlml\tC debts, 11Ie Federal Trade Commission 

(www.ftt:.gov)otfenahostoftipstoimproVeyourcreditstanding; 

Yiww .ft!:.govlbC)l/edu/pubS!conaumer/creditA:re J I.shlm. 

Where to fwd help 
205 

Page~5 

CREDIT SCARS: MISTAKES ABOUND; Good defense is best ottemc for credit problems; The Columbus Oispatl:h 

(Ohio) May 6, 2012 Sunday 

The Consumer Protection Section of Ohio Attorney General Mike IleWine's office: encourages consumerilO report 

elTOl'S in the!r credit reports. The !lffice can help medj~te dispQtes. 

Complaints may be sulmiitttd: 

• Online: www.ohioaltomeygeneni1.gov/ConswnerComplalnt. 

• BYl>hcine: )·&00·282·0515. 

• By mail: DhiQAttorneyGeneralConsumerProteai(mSection.30EastBroadSt..I4dlFIoor.Col.umbUll. OH 

4n1S. 

Contact iflformation (or other statcs'1!Itomeys general can be found on ibe NatiOnal AssoCiation of AlIOl1Ie)'5 Gen· 

eral website, www.naag.org, IIDdcrAG Fast Faa.. 

CRAPHIC: Photo 

i5lockphoto.com 

LOAD-DATE: May 6,2012 
206 

•• lexisNexis· 

SECTION: NEWS; Pg. 7A 

LENGm: 526 words 

29 of29 00ClJMENTS 

Copyright 2012 The Columbll3 Dispatch 

All Rights Reserved 

(bit <&IIII1bnS IDispaCdt 

The CQlumbui D~b (Obio) 

May 6, 2012 Sunday 

HEADLINE: CREDIT SCARS: MISTAKES ABOUND: LeaderJ In both parties Wl!Dt better regulation; 

BODY: 

Pres.ident BanIck Obama 

Page 56 

"One of the rcasOll5 I fought for W.U Slreet reform WS$ \0 protect cOilsumel'lrfrom deceptive l!Dd damaging fliIan.. 

cial ptKtices. By creating a miw !IPCY ~solc job Is to look out for American consumm- and by appointing 

experienced wnsumer advocllleand natiVe Ohio son Ricbard Cordray to' lead thatageney -. we've taken big steps toward till! impOrtant goal. This ape)' 11'/11 provKlc illlpOlWlt oversigbtof IlOII-bank financial institution. like creditreporting agencies. In fiict, the Consumer Financial Protection Bureau is aln:ady hard III work bringing the nation's large 

credit-reporting agencies .Uildei' federal supervision for the fu:st time in history, 

"The ono thing we can't afford i. to go back totheilystem we bad I!ef'<n - a ~YJlCm when: risky 1UId Irresponsible 

pnu:tfc:es on the part ofa few could put our entire economy in danger. We c8I1~ allow (or the law that aeated America's 

coIISWner WIIIchdQg lUId provided authority to oversee fmaneial players like credit-rtjIaJtIng agencies.1O be weakened Dr 

WlIIered down. We can't·afford 10 go backwards. and we must i:ontInue to fight for·an economy where evetybody plays 

by th~ slime rulc$, whon:·consumcn are protOCllld and where we CIIII prevent financial crise$like tile one we've been 

through from ever happening again." 

U.S. Sen. SlIerrod Brown; a Democrat ftQm Cleveland 

"It's almost as if conslJlllers are guilty until proven innoceilt. This is 8 tiine when the private HGtor hu overreaehed. 

They are under-regulated. The government needs to look at them." 

OIIio Attorney Gcoera\ Mil(e DeWine. B Republican 

·We S11Uted looking at th~ as lUI investigition. I've _lied out 10 other attorneys genend. It's clear to me tI1cre's interest. It. might re5\llt in legislation. We could reacll a settlement (with the Credit-reporting'agencies). or it could be a 

lawsuit. And these three an: not mutually exclusive. Clearly. somethinlj haa to be done.· 

U.S. Rep. PatTlber~ a COlumb.us Republitllll 

"It's pretty\llamiing. The lIBonci~aren't tblJowing the law. or the FfC wasn't doiilg its job." 

U.S. Rep. Steve StiVers, a ColumbusR.epobllcan on the HOUSe Finl!l\Cial ScrvicesCommiltee 

"I don~. see this as pani$llll. We all want to look out for lI«>uracy. We need to' make sure protedionnre really tI1cre 

for CO/I5umers, We don't need paper protectiOllS. It sure seems like we need to tum the system on its bead." 
207 

Page 57 

CREDIT SCARS: MISTAKES AaOUND; Leadelll in OOIh parCCIS want better regulation; The Columbus DI$patl:h 

{Ohio) May 6, 10.li Sunday 

The late Sen. William Proxmire, a DCmocm ftom Wisconsin, ~ing in 1969 

"Perhaps the mOst serious problems in the credit'reporting industry i. the problem of iiiaccUrate or mislead~ inforrrnitlon. There have been no definitiVe studies made of just bow aa:urilte i. the infonnation in thefl1e.of consumerreportintlas-:ies; Even if irs 99 pen:entac:c\Jrate - and I dOubi tbat ir, that gOOd - the I percent ihal:clll1l\:)' repmenls over It million people. 

. 'Wbile the crcdlt industry might be satisfied With Ii I pereent error, this is ·smaIl comfort to the 1 mlltiOll ~itizcDS 

wh_ ~iom are unjusw IIUlligned. Moreowr. theeomposition oCtile 1 million pcnqns is constantly sbifting. 

"Everyone is a potential vi~ of an iJw:curate creQit repolt. Ifoot todor, then perIIaps tOInOrrow." 

GRAPHIC: Photo 

(I) Obama: "We EIIII't affiml to go ba£kwards." (2) DeWine: 'Clearly, something has to be done." (3) Stivers: 'We need 

10 fum the system 01J its head." (4) Proxmire: "Everyone isa potential victim." (5) Tiberi: "Ir. pretty a1arming.~ (6) 

llrown: "Tbe priVIiW _tor has overreached." 

LOAD-DATE: November 13,2012 
208 

May 4. 2012 

Discrepancies on Medical Bills Can Leave a Credit 

Stain 

By TARA SIEGEL BERNARD 

When Ray White's son was about 9 years old, he struck a tree branch while riding his bike. Within minutes, an 

ambulance whisked him off to the emergency room. The boy recovered, but many months and phone calls later, Mr. 

White's insurance company still had not paid the $200 ambulance bill, even though the insurer had assured him it 

was covered. He finally decided it was easier to pay it himself. 

But by then, it was already too late. Unbeknown to Mr. White, the debt had been reported to the credit bureaus. It was 

only when he and his wife went to refinance the $240,000 mortgage on their home in Lewisville, Tex., last month -

nearly six years after the accident - that he learned the bill had shaved about 100 points from his credit score. Even 

with no other debts, a healthy income and otherwise pristine credit, the couple had to pay an extra $4,000 to secure a 

lower interest rate. 

"It wasn't like I ignored it," said Mr. White, 47, an executive in Internet advertising. "It's not like I'm a credit risk in 

any way, shape or form." 

Even people with good insurance coverage know how hard it can be to figure out how much they owe after a visit to 

the doctor or, even worse, the emergency room, which can generate multiple bills. But as patients become responsible 

for a growing share of costs - not just co-payments, but also deductibles and coinsurance - bill paying is becoming 

ever more complex. 

On top of that, more medical providers are using collection services and turning to them more quickly than tbey have 

in the past, some experts say. 

"It used to be that the mantra was 'gentlemen and physicians rarely discuss matters of money:" said Dr. Jeffrey 

Hausfeld, an otolaryngologist and plastic surgeon who now co-owns FMS Financial Solutions, a collection agency that 

specializes in medical debts. "But that has cbanged now." 

The reason is that the portion of the bill that patients owe has become a larger percentage of medical practices' and 

hospitals' revenue, said Mark Rieger, chief executive of National Healthcare Exchange Services, which offers software 

to help providers manage billing. "They are getting increases in their fee schedule amounts, but their revenue is 

declining because more of the responsibility is being shifted to patients," he said. 
209 

Medical providers collected no more than 8 percent oftheir revenue from patients about 10 years ago, he said. Now, it 

is closer to 20 percent, or even 30 percent, in some markets. 

Like Mr. White, people who fail to payor respond to a medical collection agency in time - whether intentionally or 

not - may be surprised to learn, often much later, that it left a black mark on tbeir credit record. 

FICO, which produces one of the most popular credit scores used by lenders, said it viewed different types of 

collection agency accounts - medical-related or otberwise - as equally damaging. For someone with a spotless credit 

history, "it wouldn't surprise me if their score dropped by 100 points or more," said Frederic Huynh, a principal 

analytic scientist at FICO. And the blemish does not entirely disappear for seven years. 

Consumer advocates argue that this is unfair. After all, medical debt is usually something people do not volunteer for, 

and billing errors and figuring out who owes what can often take months. According to the American Medical 

Association's 2011 National Health Insurer Report Card, commercial health insurers processed 19.3 percent of claims 

erroneously in 2011, up from 17.3 percent in 2010. 

In 2010, an estimated 9.2 million people aged 19 to 64 were contacted by a collection agency because of a billing 

mistake, according to research by the Commonwealth Fund. a nonprofit research group, while 30 million were 

contacted by a collection agency because of an unpaid medical bill. 

"There is enormous room for errors, whether they are intentional or unintentional," said Pat Palmer, founder of 

Medical Billing Advocates of America. 

Rodney Anderson, a mortgage banker in Plano, Tex., said be started to notice in 2008 that more of his customers 

were being hurt by these medical delinquencies. So he kept notes on 5,100 loan applicants over 10 months. He found 

that 2,200 had at least one medical debt that lowered their credit score, and many of them were unaware ofthe 

damage. 

"It's the same thing over and over," said Mr. Anderson, executive director of Supreme Lending. "You just don't let 

$100 go to collections to ruin your credit.>t 

That prompted him to take the issue to Congress. He said he had spent $1.5 million of his own money on consultants 

and on lobbying to change the rules. And his efforts, along witb those of consumer groups and others, have gotten 

lawmakers' attention. 

A version of the Medical Debt Responsibility Act, which would erase medical debts from credit reports within 45 days 

of being settled or paid, was approved by the House witb bipartisan support in 2010. The bill was reintroduced in tbe 

Senate by Jeff Merkley, Democrat of Oregon, in March. 
210 

Interestingly, support for the bill comes from a varied group, including nearly 20 organizations - from consumer 

groups and the Mortgage Bankers Association to the American Medical Association. jlThe current system punishes 

consumers regardless of the underlying facts," the supporters said in an April 16 letter to lawmakers. 

Gerri Detweiler, a credit expert with Credit. com who supports the bill, said, "Consumers have more rights when it 

comes to disputing a $10 credit card charge than they do a $1,000 medical bill." She was referring to the Fair Credit 

Billing Act, which gives consumers the right to dispute a credit card charge while withholding payment and protects 

the consumer's credit report during the card issuer's 30~day investigation period. 

When a bill is sent to collections, Ms. Detweiler said, there is nothing specifically in the law to stop it from being 

immediately reported. Ultimately, it is up to the medical provider to sign off when bills go to collections and when the 

collection agencies should report to the credit bureaus, according to ACA International, a collections trade group. 

Still, critics of the bill say that reporting the collection information is important because it can predict consumers' 

future payment behavior. The Consumer Data Industry Association, which represents the big credit bureaus, said that 

it had "deep concerns about deleting any type of accurate, predictive data" before the end of the seven-year period. 

"Broadly speaking, a precedent of deleting adverse information once a delinquent debt is paid would seriously 

impinge on the quality of data," a spokesman said. 

John ffizheimer, president of consumer education at SmartCredit.com, also has concerns about deleting data because 

it does not distinguish between late payments that resulted from errors and those that were truly late. 

"If paid or settled delinquencies were simply removed from credit reports as if they never happened, it would severely 

undermine the integrity of a credit report and the resultant credit score," he said. "That is why it is called a history." 

Consumer advocates said they believed there should be some sort of mechanism to differentiate between true 

delinquencies and billing errors. 

The House's version of the bill would erase only debts up to $2,500. Supporters of the bill said they thought that 

amount would help a wide swath of people because many errors are below that level. Still, the bill would not help 

everyone, particularly as Americans continue to spend an increasing share of their income on medical expenses. The 

tens of millions of uninsured and underinsured people are in a particularly hard spot. 

"You can't afford to buy a policy, you can't afford to buy coverage through your job, and you end up in the E.R., and 

you have to pay for that visit, and even more you have to pay at non~negotiated prices," said Sara Collins, a vice 

president at Commonwealth, referring to the fact that the uninsured often pay much more than the rates that insurers 

negotiate. "So if it becomes part of your credit history, it strikes me as really unfair." 
211 

The Affordable Care Act, a law pusbed by President Obama tbat overhauled tbe health care system, may belp because 

more people would have insurance and many would have to pay no more than a certain percentage of their income on 

premiums and out~of-pocket costs, said Mark Rukavina, executive director of the Access Project, a nonprofit group 

tbat belps people with large medical debts. 

Still, he said, "even witb tbe expansion of coverage, the out-of-pocket costs will be cballenging for many American 

families." He added, "Those struggling to pay tbeir share oftbe costs, and doing so, should not be penalized." 
212 

Medical Bills Can Wreck Credit, Even When Paid Off 

Associated Press by Carla K. Johnson ~ Sunday, March 4,2012 

CHICAGO (AP) Mike and Laura Park thought their credit record was spotless. The Texas 

couple wanted to take advantage of low interest rates, so they put their house on the market and 

talked to a lender about a mortgage on a bigger home in the Dallas-Fort Worth suburbs. 

Their credit report contained a shocker: A $200 medical bill had been sent to a collection agency. 

Although since paid, it still lowered their credit scores by about 100 points, and it means they'll 

have to pay a discount point to get the best interest rate. Cost to them: $2,500. 

A growing number of Americans could encounter similar landmines when they refinance or take 

out a loan. The Commonwealth Fund, a private foundation that sponsors health care research, 

estimates that 22 million Americans were contacted by collection agencies for unpaid medical 

bills in 2005. That increased to 30 million Americans in 2010. 

Surprisingly, even after the bills have been paid off, the record of the collection action can stay 

on a credit report for up to seven years, dragging down credit scores and driving up the cost of 

financing a home. An estimated 3.4 million Americans have paid-off medical debt lingering on 

their credit reports, according to the Access Project, a research group funded by health care 

foundations and advocates of tougher laws on medical debt collectors. 

Among them are Nathen and Melissa Cobb of Riverton, Ill., who tried to refinance their home 

last year. They didn't qualify for the loan because of $740 in medical bills that had been sent to a 

collection agency. The Cobbs were surprised because the bills - nearly a dozen small 

copayments ranging from $6 to $280 - had been paid before they tried to refinance. The 

collection action took their credit score from good to mediocre and is likely to mar·their credit 

report for years. 

"I'm not one of those people trying to ditch out on my bills," 34-year-old Melissa Cobb said. 

"I'm really frustrated." 

Medical bills make up the majority of collection actions on credit reports, and most are for less 

than $250, according to Federal Reserve Board research. 

The Parks had no idea a billing error they'd sorted out a year earlier - they never actually owed 

the $200 - could affect their credit. They didn't know the bill for a copayment on a PET scan 

Mike needed had been sent to a collection agency. 

"We've prided ourselves in having impeccable credit. We worked hard to establish that," said 

Laura Park, a 51-year-old office manager married to a 53-year-old firefighter. They are going 

ahead with the home purchase while trying to fix their credit report. 

"I'm very upset," Park said. "It's going to be a nightmare and who knows how long this is going 

to take to resolve." 
213 

Matt Ernst, a vice president at Mortgage Lenders of America in Overland Park, Kan., said 

medical collections frequently tum up on credit reports. 

"We see a ton of them," Ernst said. They have an impact on financing, he said, but even he didn't 

realize how much until he learned that someone with a FICO score of 680 - which is 

considered good, but not excellent - will see their score drop up to 65 points because of a 

medical collection. 

"I didn't know a medical collection would hammer it that hard," Ernst said. "Our investors 

require a 620 to even get a loan." 

It's a problem for insured and uninsured alike. Outright billing mistakes, confusion over whether 

a claim will be paid by insurance and disputes between insurance companies and doctors all 

can lead to medical bills being sent to collection agencies. 

Congress is considering legislation - the Medical Debt Responsibility Act - that would require 

credit agencies to delete paid-off medical debt from credit reports within 45 days. 

"We're not talking about somebody buying a big screen television and not having the ability to 

pay. This is debt incurred because ofa health condition. That makes medical debt unique," said 

bill co-sponsor U.S. Rep. Don Manzullo, an Illinois RepUblican. 

The bill has bipartisan support in the House, said co-sponsor U.S. Rep. Heath Shuler, a North 

Carolina Democrat. Shuler said the health care industry sends delinquent bills to debt collectors 

quicker than any other industry. 

"If it wasn't an industry that sent it straight to collections, we wouldn't be having this 

conversation," Shuler said. A Senate version was introduced last week. 

For Illinois breast cancer survivor Lisa Lindsay, a $280 medical bill led to state troopers showing 

up at her home and taking her to jail in handcuffs. 

Like the Parks in Texas, she, too, said it started as a billing mistake. Her hospital told her the 

radiology bill would be covered because she qualified for a charity care program. But the 

radiology doctors' office sent the bill to a collection agency and, despite Lindsay's protests and 

the paperwork she kept sending, the matter ended up in court. 

Lindsay believed that eventually the documentation would catch up with the bill and be settled. 

She went to court and told a judge her story. Later, she missed a court date - she said she was 

never infonned of it - and that's when the state troopers showed up. Lindsay, a 46-year-old 

teaching assistant from Herrin, Ill., ended up paying more than $600 because legal fees had been 

added to the original amount. 

"I paid it in full so they couldn't do it to me again," Lindsay said. She recently testified at a 

hearing on aggressive debt collection practices in Illinois. 
214 

Refinancing a home loan can be affected too by unpaid medical bills - or the appearance of 

unpaid medical bills. 

Iraq veteran Steve Bames and his wife, Tara, were refinancing their home through a VA program 

when they found out from their mortgage banker that nearly $600 in unpaid medical bills had 

brought down their credit scores. It means they'll have to pay an extra $1,700 in additional fees 

to the lender to get the lowest interest rate. 

Bills for treatment last fall related to his wife's cancer had been turned over to a collection 

agency while Barnes was still talking with his insurance company about what would be covered, 

he said. 

"We pay our bills," said Bames, 33, the postmaster in Nocona, Texas. "As soon as they were 

brought to our attention, we paid them." But the collection could stay on their credit reports for 

seven years, even though it's now paid. 

Debt collectors support the legislation in the House, according to ACA International, a trade 

association. A key foe of an earlier bill was another group representing the nation's credit 

bureaus. The Consumer Data Industry Association, which hasn't taken a position on the revised 

bill, said that lenders need to see a consumer's patterns of behavior over time and even paid-off 

medical debt is relevant to whether the consumer is a good risk. 

Most hospitals and physician groups use collection agencies to go after late bills after 60 or 90 

days, rather than hiring more staff. It makes financial sense to share the amounts collected with 

an agency. "If you don't collect anything, it's worth zero," said Richard Gundling of the 

Healthcare Financial Management Association. 

Hospitals started relying on debt collectors in the 1980s, said Chicago-based health care 

consultant Jim Unland. 

"When the numbers of uninsured started to grow significantly, hospital financial staffs had the 

perception they were getting overloaded" with delinquent bills, Unland said. "It became easier to 

turn these bills over to collection agencies." 

The Affordable Care Act, President Barack Obama's health care law, bars tax-exempt hospitals 

from using "extraordinary collection actions" until it has made "reasonable efforts" to determine 

whether a patient qualifies for financial assistance. But it's still unclear how that will be 

interpreted and whether reporting late bills to a collection agency would be considered 

extraordinary, Unland said. 

Bames, the Texas veteran, said he and his wife have learned something: how quickly medical 

bills are sent to debt collectors. "It will really happen in a blink of an eye and you won't even 

know it."