Report to Congress 

Under Section 319 of the 

Fair and Accurate Credit Transactions Act 

of 2003

December 2008

Federal Trade Commission

William E. Kovacic, Chairman

Pamela Jones Harbour, Commissioner

Jon Leibowitz, Commissioner

J. Thomas Rosch, Commissioner
Third Interim Report to Congress Under Section 319 of the FACT Act

 The two prior reports to Congress are: Federal Trade Commission, Report to Congress 1

Under Sections 318 and 319 of the Fair and Accurate Credit Transactions Act of 2003,

December 2004; and Federal Trade Commission, Report to Congress Under Section 319 of the

Fair and Accurate Credit Transactions Act of 2003, December 2006. The reports may be

accessed at the FTC’s Web site: December 2004 Report: 

http://www.ftc.gov/reports/facta/041209factarpt.pdf ;

December 2006 Report: http://www.ftc.gov/reports/FACTACT/FACT_Act_Report_2006.pdf.

 The contractor’s report is included as Appendix III to this report. This attachment 2

presents the work product, findings, and opinions of the contractor, which are not necessarily

findings or opinions of the FTC. 

1

Executive Summary

The Federal Trade Commission (“FTC” or “Commission”) submits this report pursuant to

Section 319 of the Fair and Accurate Credit Transactions Act of 2003, Pub. L. 108-159, 117 Stat.

1952 (“FACT Act”). The FACT Act, which was enacted on December 4, 2003, amends the Fair

Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”), and contains a number of provisions

that are designed to enhance the accuracy and completeness of credit reports. Specifically, Section

319 of the FACT Act requires the Commission to conduct:

an ongoing study of the accuracy and completeness of information contained in 

consumer reports prepared or maintained by consumer reporting agencies and

methods for improving the accuracy and completeness of such information.

The study takes place over eleven years, with the final report due to Congress in 2014 and five

interim reports to be completed every two years from December 2004 onward (until December

2012). In its final report (or earlier, if advisable), the Commission will provide recommendations

for legislative and administrative action that it deems appropriate. 

Pursuant to this mandate, the Commission submitted its first report to Congress in

December 2004 and its second report in December 2006. The present report is the third interim

report. In its first report, FTC staff reviewed existing studies of credit report accuracy and 1

proposed a pilot study that would employ an expert-assisted survey approach for studying credit

reports. Briefly, the design of the study was that consumers would review their credit reports with

an expert who would help identify potential errors, and the consumers would then be encouraged to

dispute potential errors that the expert believed could have a material effect on their credit

standing. The study would further track the outcome of disputes filed with credit reporting

agencies in keeping with the FRCA dispute resolution process (further explained below). The pilot

study was implemented in 2005 !2006 and the FTC assessed the results of the study in the second

interim report. In response to certain challenges uncovered by this study, which are discussed in

the December 2006 report and also noted below, FTC staff formulated a second pilot study to

further assess whether the stated approach of the initial pilot study could serve as a potential

methodology for a national survey.

The results of the second pilot study are now available. This second study has been

2

designed similarly to the first but with two main modifications: (i) better procedures to help
Third Interim Report to Congress Under Section 319 of the FACT Act

 A participant (also called a study case) is a person who completed an in-depth review 3

of their 3 credit reports with the contractor.

 In conducting the credit report review, the contractor explained the difference between a 4

small error and one that could affect the consumer’s credit standing. For example, an incorrect

listing of a prior employer would not affect the consumer’s credit score; still, it might be deemed

important by a person who is presently looking for new employment. If a participant decided to

dispute information believed to be erroneous and to have an adverse impact on the consumer

(whether material or not to creditworthiness), the contractor prepared a dispute letter and helped

the consumer file a dispute. (As further discussed below, the methodology employed primarily

addresses alleged errors that adversely affect the consumer.)

2

consumers who say they want to dispute certain credit report information to follow through with

the FCRA dispute process; and (ii) alternative methods for recruiting participants to help ensure

that the study sample represents consumers with a wide range of credit scores. Helping consumers

file disputes when warranted proved very successful. The alternative recruitment methods were

also beneficial to the study but we still observe certain problems. Relatively few of the potential

respondents agreed to participate; further, with respect to national norms, there was an insufficient

sample of respondents with below-average credit scores !a challenge that was also uncovered in

the first study. This pilot study, like the first, did not rely on a nationally representative sample of

credit reports, and no statistical conclusions are drawn. The pilot studies are employed only to

uncover and explore methodological problems and thereby help improve the design of a national

survey. Additional methods and resources will likely be required to improve the response rate in a

national survey and to investigate whether a non-response bias would pose a significant limitation

to a nationwide study.

Through a series of recruitment channels (described below), the contractor invited 4,232

people to participate in the second pilot study, and 128 people (3.0%) became participants.

3

Eighty-eight of the 128 participants (69%) found no errors and 40 alleged one or more errors that

they wanted to dispute, whether material or not. Fifteen of these 40 cases involved the allegation 4

of one or more material errors; 3 cases were not fully completed. In total, the outcome of the

FCRA dispute process regarding material disputes is known for 12 participants. For these 12,

there were 7 cases having credit report changes made fully in keeping with the consumer’s

allegation(s), 3 cases having some changes (though not all) made in keeping with the

allegation(s), and 2 cases for which none of the alleged errors led to any changes in the

consumer’s credit reports. Overall, 7 out of 128 participants (5.5%) had credit reports with

confirmed material errors via the dispute process. 

The data from the second pilot study illustrate the type of information that may be garnered

from the methodology of the study, while a much larger and more representative sample would be

required to estimate the percentage of consumers nationwide who would similarly dispute credit

report information. Again, the pilot studies serve only as a vehicle to improve the design of a

national survey. For a next step, FTC staff plans to develop and submit for OMB approval a

specific proposal for conducting a nationwide survey of credit report accuracy. As noted in the
Third Interim Report to Congress Under Section 319 of the FACT Act

 In consultation with Fair Isaac’s analyst on the research team, the contractor used the 5

following criteria for materiality: a credit score less than 760 (a cutoff widely used to identify

consumers with lowest credit risk and for extending credit on most favorable terms) AND 

an alleged error regarding any of the following matters: (i) negative items (such as late

payments); (ii) public derogatories (such as bankruptcy); (iii) accounts sent to collection;

(iv) number of inquiries for new credit; (v) outstanding balances not attributable to normal

monthly reporting variation; (vi) accounts on the report not belonging to the person who is the

subject of the report; or (vii) duplicate entries of the same information (e.g., late payments or

outstanding obligations) that were double-counted in the reported summaries of such items. To

enhance the efficiency of the study process, the stated criteria modify somewhat the procedure

used in the first pilot study (contractor’s report at 27). 

 By direct instruction of the data furnisher, the following outcomes may occur: delete 6

the disputed item; change or modify the item (specifying the change); or maintain the item as

originally reported. Also, a CRA may delete a disputed item due to the expiration of a statutory

time frame (the Act limits the process to 30 days, but the time may be extended to 45 days if the

consumer submits relevant information during the 30-day period). All of these actions track

certain categories of response on a form called “Online Solution for Complete and Accurate

(continued...)

3

December 2006 Report (at 2), the ultimate goal is to perform a study that is based on a nationally

representative sample of credit reports, uses a reliable method for identifying errors, and

categorizes errors by type and seriousness in terms of potential consumer harm.

The Methodology of the Second Pilot Study

The FTC employed the same contractor for both pilot studies – a research team that

includes members from the Center for Business and Industrial Studies (University of Missouri-St.

Louis), George Washington University Business School, and the Fair Isaac Corporation. The

contractor solicited participation from adults to whom credit had been extended in the form of

credit cards, automobile loans, home mortgages, or other forms of installment credit. As in the

first study, participants obtained copies of their three credit reports and credit scores by using the

Web site myFICO.com, including one report and score from each of the three nationwide

consumer reporting agencies: Equifax, Experian, and TransUnion (“CRAs”). The contractor

reviewed these credit reports with the participants to identify alleged inaccuracies and gave

advice on the difference between a small inaccuracy and a potentially significant error that could

affect credit scores. The research team evaluated alleged errors for materiality and they further

encouraged consumers who alleged material errors to file a formal FCRA dispute so as to obtain a

review of the items by data furnishers and CRAs. The research team did not encourage 5

consumers to file disputes that were deemed immaterial to creditworthiness. Still, if the

consumer wanted to dispute certain information (material or not), the contractor prepared a

dispute letter, which was then signed by the consumer and filed in keeping with the FCRA (which

permits consumers to dispute any credit report information they believe to be inaccurate).

The pilot studies use the FCRA dispute process and its related outcomes to categorize

6
Third Interim Report to Congress Under Section 319 of the FACT Act

(...continued) 6

Reporting” (e-OSCAR) that is used by CRAs for resolving FCRA disputes. (See also Federal

Trade Commission and Board of Governors of the Federal Reserve System, Report to Congress

on the Fair Credit Reporting Act Dispute Process, August 2006.)

 December 2006 Report (at 5). The contractor could experiment with various methods 7

provided that no method would violate the permissible purposes for obtaining a consumer’s

credit report (FCRA §604). In all cases, consumer consent for participation was obtained before

credit reports were drawn and reviewed.

 At an earlier time, membership in Navy Federal Credit Union was restricted to members

8

of the military; today, the organization has both civilian and non-civilian membership.

4

certain outcomes as confirmed errors (as well as other possible outcomes). We recognize,

however, that the dispute process may not always provide a definitive answer as to whether the

consumer's information is accurate. For example, there are cases in which the consumer

maintains one thing and the lender another. The methodology of the pilot studies cannot render

a conclusion about such instances and leaves them unresolved. As a different example, a

consumer may allege that a specific payment which was recorded as late on a credit report was

not truly late, and the lender/creditor further agrees to change the information (i.e., this payment

is no longer recorded as late). In this case, although one cannot say with full certainty that the

original credit report was erroneous about this item, we do not know of a general cost-feasible

method to assess the matter further; the methodology of the pilot studies would thus categorize

this outcome as a confirmed error via the dispute process. 

FTC staff’s statement of the scope of work for the second pilot study strongly encouraged a

variety of methods for identifying and recruiting potential participants. In addition to the random

selection procedure employed in the initial pilot study (which used telephone directories to obtain

addresses for direct mail) the contractor could engage financial institutions to refer consumers to

the study. The contractor used this approach and it led to beneficial results. In this pilot study, 7

however, an under-representation of people with credit scores below 760 may have resulted in an

under-representation of alleged material errors. As further explained below, in future studies we

will devote special attention to ensuring that individuals with below-average credit scores are

adequately represented.

Subject Recruitment

In line with the noted directives, the contractor engaged certain financial institutions and

various methods to refer consumers to the study. Agencies that agreed to participate were: Navy

Federal Credit Union, Commerce Bank, and Volunteer Income Tax Preparation Assistance 8

(VITA), which has a service site at the University of Missouri and local libraries in St. Louis. 

The contractor solicited participation as follows: (1) direct mail to a random sample of

approximately 200 people with names obtained from telephone directories and public records
Third Interim Report to Congress Under Section 319 of the FACT Act

 Direct mail was followed by phone calls to confirm receipt of the letter and a request 9

for the consent form to be signed and mailed back to the contractor. The other channels did not

use follow-up phone calls (consent was registered by electronic signature at the study Web site).

5

throughout diverse regions of the country; (2) a first mailing from Navy Federal Credit Union to 9

a randomly selected sample of 500 members; (3) a second mailing from Navy Federal Credit

Union to 500 members with a greater concentration on individuals expected to have low credit

scores than individuals expected to have high credit scores (see below); (4) a third mailing from

Navy Federal Credit Union to another 500 randomly selected members; (5) a Commerce Bank

mailing to 500 randomly selected customers via an insert with the monthly billing statement that

announced an opportunity to participate in the study as an offering from the bank’s Marketing

Department; (6) a second Commerce Bank mailing to 2,000 randomly selected members via a

personalized letter from the Customer Service Department announcing an opportunity to

participate in the study; (7) invitations to VITA clients extended through circulars at counseling

sites and through direct personal contact; and (8) miscellaneous engagement of associates from

participating financial institutions in order to experience the study process before sending the

invitation letters. The recruitment yields of these respective channels are summarized by the

following table.

Table I. Yields from the Respective Recruitment Channels

Recruitment Channel Letters Sent PositiveResponses

(percent)*

Reports

Drawn and

Mailed

(percent)*

Finished Cases of

Credit Report

Reviews**

(percent)*

(1) Random Direct Mail

(includes public records) 203 13

(6.4%)

12

(5.9%)

12

(5.9%)

(2) Random Mailing to

Members of 

Navy Federal

500 25

(5.0%)

25

(5.0%)

24

(4.8%)

(3) Weighted-Random

Mailing^ to Members

of Navy Federal

500 19

(3.8%)

19

(3.8%)

17

(3.4%)

(4) Further Random

Mailing to Members of

Navy Federal

500 8

(1.6%)

8

(1.6%)

7

(1.4%)

(5) Random Mailing to

Members of Commerce

Bank

500 7

(1.4%)

7

(1.4%)

7

(1.4%)
Third Interim Report to Congress Under Section 319 of the FACT Act

6

Recruitment Channel Letters Sent PositiveResponses

(percent)*

Reports

Drawn and

Mailed

(percent)*

Finished Cases of

Credit Report

Reviews#

(percent)*

(6) Further Random

Mailing to Members of

Commerce Bank 2000 48(2.4%)

48

(2.4%)

39

(2%)

Subtotals 4,203 120

(2.7%)

119

(2.7%)

106

(2.4%)

(7) VITA contacts

(direct

contact) 10 10 9

(8) Misc. Contacts + (direct

contact) 19 13 13

Totals 4,232 149

(3.5%)

142

(3.4%)

128

(3.0%)

* Proportion of letters sent for indicated channel.

 Each case represents one consumer for whom 3 credit reports were reviewed, counted as finished review

#

for those who determined whether or not they believed there were errors in their reports. 

^ Mailing directed towards those with (expected) lower than average credit scores.

 Employees of financial partners who went through the study before recommending it to their members. +

Alleged Errors and the Filing of Disputes

The methodology of the pilot studies can garner alleged errors of a variety of types, such

as: incorrect report of late payment; multiple reports of an account with late payment; paid

account reported as delinquent; closed account reported as delinquent; incorrect financial account

reported (“not mine”); incorrect collection balance; incorrect collection account reported; multiple

reports of an account in bankruptcy; chapter 7 accounts discharged but reported as delinquent, as

well as further types of alleged errors (contractor’s report at 26.)

The second pilot study was comprised of 128 people who, after an in-depth review of

their credit reports, determined whether they believed there were significant errors in their

reports. As further summarized in Table II below, 88 people stated they found no errors and 40

people alleged one or more errors that they wanted to dispute, whether material or not. Of the

latter group, there was a sub-group of 15 people who alleged material errors:
Third Interim Report to Congress Under Section 319 of the FACT Act

 Participants agreed to let the contractor know of the outcome of any dispute. Follow- 10

up calls were made (repeated as necessary) for consumers who alleged material errors. If a case

did not involve alleged material error(s), it was counted as “complete” whether or not the

participant reported the outcome of a dispute back to the contractor. The 3 incomplete cases

(continued...)

7

Table II. Allegation of Errors Associated with Recruitment Channels

Recruitment Channel

Cases

with

finished

credit

report

reviews

Cases with

alleged

inaccuracies

(percent)*

Cases with

alleged

material

errors

(percent)*

Cases not

fully

completed

(percent)*

(1) Random Direct Mail

(includes public records)

12 7

(58.3%)

3

(25%)

0

(0%)

(2) Random Mailing to Members of Navy

Federal 

24 11

(45.8%)

4

(16.7%)

0

(0%)

(3) Weighted-Random Mailing to

Members of Navy Federal

17 5

(29.4%)

2

(11.8%)

0

(0%)

(4) Further Random Mailing to Members

of Navy Federal

7 2

(28.6%)

0

(0%)

0

(0%)

(5) Random Mailing to Members of

Commerce Bank

7 0

(0%)

0

(0%)

0

(0%)

(6) Further Random Mailing to Members

of Commerce Bank (format change)

39 9

(23.1%)

3

(7.7%)

3

(7.7%)

(7) VITA Program 9 4

(44.4%)

3

(33.3%)

0

(0%)

(8) Misc. contacts 13 2

(15.4%)

0

(0%)

0

(0%)

Totals 

(percent)

128

(all)

40

(31.3%)

15

(11.7%)

3

(2.3%)

* Percent calculated with respect to the finished reviews for the indicated channel.

The focus of the second pilot study (like the first) was to track the outcomes for material

disputes. Accordingly, the contractor counted a case as “completed” if (a) there were no alleged

errors, or (b) any alleged material error was disputed with CRA/lender and the outcome of the

dispute was known to the contractor. Three cases were not fully completed. For these, there

were material disputes but the contractor does not know with certainty whether the intended

disputes were actually filed and, if they were filed, what outcome was reached.10
Third Interim Report to Congress Under Section 319 of the FACT Act

(...continued) 10

involved alleged material error but the contractor could not ultimately reach the consumers

regarding the outcome of the disputes (if filed), though repeated efforts were made.

 The files are called “frozen” because no new credit information was added to the 11

consumer’s original credit reports obtained during the course of the study; any rescoring would

thus apply only to potential changes, or actual changes, directly related to the contractor’s

review. The results of the rescoring of frozen files were not passed on to the consumers; they

received new credit reports and bureau scores six weeks after notifying the contractor about the

outcome of their dispute. The results of rescoring are given in the contractor’s report (at 25).

8

A shortcoming of the first pilot study was that many participants who said they would

file a dispute did not carry through with their intention. Specifically, the first study had 30

participants, of whom 7 alleged errors and said they would file a dispute. The contractor gave

the participants complete instructions on how and where to file, but this approach proved not to

be successful. Only 2 people took action in an effort to correct their credit records; also, only

1 of the 3 people who alleged a material error subsequently filed a dispute. The second study

addressed this issue by securing more participants and by having the contractor prepare dispute

letters, with self-addressed envelopes to the relevant CRAs and pre-paid postage, for cases

in which consumers alleged errors and stated that they wanted to file. There were 40 such cases,

of which 15 involved material disputes. The new procedure proved very beneficial especially

regarding material disputes: at least 12 of the 15 cases were filed.

Regarding the disposition of disputes, the noted 12 cases involved allegations of material

error and the respective outcomes for these disputes are known. Many of these cases involved

disputes of a number of credit report items and also multiple CRAs (from one to three). In brief,

for 7 of the cases, credit report changes were made fully in keeping with the consumer’s

allegation; for 3 cases, certain changes were made in keeping with the consumer’s allegation

(although not regarding all of the challenged items); for 2 cases, none of the alleged errors led to

any changes on the consumer’s credit report. (See also contractor’s report at 24.)

Whenever it appeared that a consumer’s credit score could be affected by “correcting” an

alleged error, the contractor marked the relevant credit reports with explanations of the

discrepancies and sent copies of the marked reports to Fair Isaac for rescoring. (The attached PIA

explains the security protocols involved.) The purpose of rescoring is to further evaluate cases

where the creditworthiness of the borrower might have been materially affected, should the

alleged errors be confirmed. If changes were subsequently made by CRAs and lenders in keeping

with the consumer’s allegation ! thus, confirmed error(s) via the dispute process ! the rescores of

the frozen files render the impact of the error(s) on the consumer’s credit score.

11

Errors of Omission

Credit reports could also exhibit “errors of omission” but this matter is extremely difficult

to ascertain. Given the different reporting cycles of data furnishers and the voluntary basis on

which information is reported to a CRA, there may be different reasons as to why a certain
Third Interim Report to Congress Under Section 319 of the FACT Act

 As noted in the contractor’s report (at 9), this matter was discussed in the context of 12

each credit report review, so that the consumer would not allege an error simply because an item

appeared on one credit report but not on another.

9

anticipated item is not on a credit report. The item may be missing because (1) a data furnisher

did not provide it to a CRA, (2) due to differing reporting cycles, a data furnisher provided it at a

time after the credit report was viewed by the consumer, or (3) the item was submitted to a CRA

but in the further processing of this information some error occurred (e.g., the information was

placed in the wrong consumer’s file). Instances (1) and (2) are not indicative of error, while

12

instance (3) is. FTC staff does not presently know of a cost-feasible way to address this

complexity and formulate a procedure from which reliable conclusions could be drawn. Thus,

we do not address possible errors of omission in this study.

Over-Sampling of Individuals having Credit Histories with Higher than Average Credit Scores

As in the first pilot study, this study also shows that a purely random selection of

consumers to whom invitation letters are sent results in an over-sampling of individuals having

higher than average credit scores. With information supplied by Fair Isaac, the contractor was

able to compare the distributions of credit scores in the study with the national distribution using

50-point intervals (table below). The study sample exhibits a greater proportion of people in the

upper credit score intervals and a smaller proportion in the lower credit score intervals:

Table III. Score Distributions over Fixed Intervals in Credit Scores

Score Range Sample Percent Bureau Percent

Under 600 7 12 

600-649 3 12

650-699 9 15

700-749 17 20

750-799 41 28

800 plus 23 13 

 Totals 100% 100% 

As the sample was being developed, arrangements were made to see how one might

address the problem that people with higher credit scores are more likely to participate (which

was identified in the first study). Using data from past loan applications, an analyst from

Navy Federal Credit Union constructed a statistical model to predict the credit score quintile
Third Interim Report to Congress Under Section 319 of the FACT Act

10

in which various members would likely fall. (The model used records from Navy Federal,

which were not shared with the contractor.) In the second mailing from Navy Federal, twice

as many invitations were sent to individuals predicted to have credit scores in the lowest

quintile than were sent to individuals predicted to fall in the highest quintile, while still

retaining 40% of the addressees across these two groups. This effort proved successful, as the

distribution of credit scores more closely approximated national norms (see contractor’s

report at 19). As another effort, the contractor employed targeted recruitment from the VITA

program to obtain participation from individuals more likely to have lower credit scores. 

Table IV. Allegation of Errors According to Credit Score Categories

 Score

Category

Total

Number

of

Reviewed

Cases*

Cases

with No

Alleged

Errors

Cases

with No

Alleged

Material

Errors

Cases with

at least

one

Alleged

Material

Error

Percent of

indicated Score

Category with

an Alleged

Material Error

under 610 10 4 5 5 50.0%

610!689 12 8 8 4 33.3%

690!749 27 19 23 4 14.8%

750!789 35 26 33 2 5.7%

790 plus 44 31 44 0 0%

Totals 128 88 113 15 11.7% 

 (of all cases) 

*Each case represents one consumer for whom 3 credit reports were drawn and reviewed in-depth.

In general, credit records that have lower credit scores have more entries with negative

connotation and prima facie a greater likelihood of containing items that may be challenged. 

That is, consumers more readily identify potential errors that hurt them than identify potential

errors that improve their credit scores. It should be added that there is no known method in

the context of a consumer review of credit reports that would equally identify errors having a

positive impact on a consumer’s credit score. The employed methodology primarily renders

estimates of alleged errors (and estimates of confirmed errors) that have a negative impact on

a consumer’s credit score.

As seen from Table IV, the results from the second pilot study are consistent with the

expectation (just discussed) that credit reports with lower scores have a greater likelihood of

involving disputes. This fact highlights that a national study would need to use special

methods, such as weighted random sampling and direct targeting, to secure a proper
Third Interim Report to Congress Under Section 319 of the FACT Act

11

representation (i.e., reflective of national norms) for credit reports that have below-average

credit scores.

The Demographics of the Study

Across the 128 participants, the following characteristics were reported:

Age Ethnicity Co-habitation

4.7% under 25 years old 80.5% white 66.1% married

13.3% between 25 and 34 12.5% black 2.4% living with a partner

21.1% between 35 and 44 2.3% Hispanic 16.5% were never married

21.9% between 45 and 54 0.8% Asian 15.0% divorced, separated, widowed. 

22.7% between 55and 64 3.9% other

15.6% at 65 or older

Employment Household Income

32.8% in professional occupations 6.4% below $25K;

14.4% in administrative/ managerial jobs 16.7% between $25K and $50K;

8.8% in the trades 22.2% between $50K and $75K;

8.8% in sales 15.9% between $75K and $100K;

8.0% in clerical 34.1% over $100K. 

20.8% retired

6.4% disabled

Regarding education, 66.1% were college graduates (of which 1/3 obtained graduate

degrees). Finally, 43.8% of the participants were female and 56.3% male.

Privacy Impact Assessment

Given the sensitive nature of the data involved in the study, the contractor took great

care to protect the privacy and security of the information supplied by participants. The

second pilot study (unlike the first) made use of a registration Web site on the Internet, which
Third Interim Report to Congress Under Section 319 of the FACT Act

Registration Web Site for the FACTA Credit Report Accuracy Study—Privacy Impact 13

Assessment (February 2008). The PIA, which is attached as Appendix II, may also be accessed

at http://ftc.gov/os/2008/02/08022pia.pdf.

 In 2009, FTC staff will develop and submit for OMB approval (involving two 14

occasions for public comment) a specific proposal that is designed to reach a nationally

representative sample of credit reports. At the same time, this will also involve obtaining a

sample of consumers whose demographic characteristics are reflective of other national norms

(such as gender, age, race, educational level, income level, and further characteristics). Upon

OMB approval for the study, the FTC will solicit competitive bids and select a contractor to

perform the study.

12

required the FTC to undertake a formal Privacy Impact Assessment (PIA). Before agreeing 13

to the study, all of the participants were given an overview of the study, the specific terms of

engagement, and a privacy disclosure statement that explained what information was being

collected by the site, why it was being collected, how it would be used, how it would be

secured, and other matters of concern to consumers (Appendix I gives a copy of the

disclosure statement). Hyperlinks were provided to the respective security policies of each of

the research partners (University of Missouri-St, Louis, Fair Isaac Corp., George Washington

University, and the FTC). Among other things, security protocols were used that suppressed

each participant’s SSN and most of the digits of the account numbers on any credit report

viewed by University research associates. Each participant’s SSN was entered and used only

once in the study; i.e., when the person entered his or her SSN at myFICO.com to set up an

account, free of charge to the participant, for obtaining credit reports. A review of all security

matters is given in the attached PIA.

Conclusion

Under Section 319 of the FACT Act, the Commission has completed two pilot studies

that use a consumer survey approach for studying credit report accuracy. As discussed above,

the second pilot study included certain design enhancements that increased the efficiency and

yield of the study, while certain problems remain. As a next step, the Commission plans to

formulate and conduct a nationwide survey of credit report accuracy. The survey

methodology to be proposed would likely be similar to the second pilot study; however, we

will pursue additional techniques to obtain a representative sample of credit reports,

particularly including credit histories with low credit scores. The Commission will further

assess whether a non-response bias would pose a significant limitation to a national study. 

The goal is to conduct a nationwide survey of credit reports that is based on a nationally

representative sample, uses a reliable method for identifying errors, and categorizes errors by

type and seriousness in terms of potential consumer harm.

14

We anticipate continued use of the FCRA dispute process. As discussed above,

knowing the results of the dispute process does not establish the “accuracy” of credit reports

with certainty. Yet, a study using the dispute process appears to be the only feasible way of

performing a nationwide survey, in view of the enormous difficulty and cost of attempting to

ascertain the ultimate accuracy regarding alleged errors. 

In the next interim report, the Commission will assess the progress achieved.
Third Interim Report to Congress Under Section 319 of the FACT Act

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Attachments

Appendix I: Privacy Disclosure Statement 

Appendix II: FTC’s Privacy Impact Assessment

Appendix III: Contractor’s Report on Second Pilot Study