Better Consumer Guards in Credit Reports Urged
James Russell Wiggins was fired from a good job as a salesman for a cable television company after a credit reporting firm confused him with James Ray Wiggins, a man who had pleaded guilty to cocaine possession.
When the error was pointed out, “it didn’t do me any good. They didn’t offer me my job back,” an angry Wiggins told a congressional hearing Thursday.
Wiggins joined other aggrieved consumers and several members of Congress who were making unusual appearances as committee witnesses. All called for strengthening protections in the credit reporting laws to keep consumers from becoming victims of credit bureau mistakes.
The major credit bureaus, pouring out 450 million reports a year, may have errors in as many as 40% of their files, Rep. Richard H. Lehman (D-Sanger), told the consumer affairs subcommittee of the House Banking Committee.
“The tragedy is that consumers don’t know what information is contained in their report until it’s too late, after they have been denied credit for a home or car or after they have been denied a job,” said Lehman, a former subcommittee chairman. Lehman has drafted a bill giving consumers the right to inspect all information in their files and get a free copy of the report once a year.
Current law allows individuals access only to “the nature and substance” of credit information about them. And credit reporting firms have made a profitable business of charging as much as $35 for copies of an individual’s report.
There are nearly 1,000 credit reporting firms, but the business is dominated by three: Equifax Inc. of Atlanta, Trans Union Corp. of Chicago and the TRW credit data division in Orange, a subsidiary of TRW Inc. of Cleveland. On Thursday, they defended their handling of information about consumers.
“The objective facts prove that we have done and continue to do our job very well,” Walter R. Kurth, president of the Associated Credit Bureaus Inc., said in prepared testimony. “Few would disagree that our quality of life and standard of living to a large extent come from a strong consumer and mortgage credit system.”
The errors emphasized in testimony Thursday most frequently occur when credit reports mistakenly mix information about individuals with similar names, as happened with James Russell Wiggins.
Wiggins, a Washington resident, had worked for a cable television firm for two months in 1990 when his employer sent for a credit bureau report. The company was following an increasingly common business practice of relying on credit information to help screen the reliability of new workers. He was fired when the report combined his address and Social Security number with the arrest record of the other Wiggins.
“This information is sold over and over again,” Wiggins said. “My name will pop up . . . as a cocaine felon. Something must be done so information of this type cannot be coded into databases.”
Another witness, Mark F. Guimond, said he has spent two fruitless years trying to correct errors in the file compiled on him by a credit bureau, including reports showing that he owes money on a bank loan that has been paid. “Consumers are not asking blindly for protection,” said Guimond, who did not state his hometown. “Our concerns are based on fact and experience, personal experience.”
Gregory N. Evans of Englewood, Colo., said he had been plagued by bill collectors trying to recover money owed by another Gregory N. Evans for overdue bills on a credit card and a bank loan.
“I have owned three houses, six cars and numerous credit cards,” Evans said. “I have never missed or been late on a payment.” Evans first received phone calls from bill collectors last September and couldn’t get his file cleared and the errors finally corrected until this week.
Rep. Esteban E. Torres (D-La Puente), the subcommittee chairman, expressed sympathy for the witnesses and anger about their plight.
“You add a human face to the tragedy going on around the country,” Torres said. “A system that produces errors in almost half its reports, while requiring more than six months to remove those errors, must not be allowed to continue.”
Torres said the subcommittee will work to strengthen the Fair Credit Reporting Act, legislation passed in 1970, a time many credit reporting companies still relied on hand written cards in files.
Today, massive computer systems enable the reporting firms to amass and manipulate huge amounts of data. The companies can combine detailed reports to sell lists of names of potential consumers to a wide variety of businesses offering credit cards, home loans and other services. The concern about mistakes in credit bureau files crossed party lines Thursday, with Democratic and Republican members of Congress asking for new legislation.
“The credit reporting industry is out of control,” said Rep. Charles E. Schumer (D-N.Y.), who appeared as a witness. “Lots of names do get mixed up.” Schumer called for legislation that would require firms to supply consumers with a free copy of the credit reports about them.
Rep. E. Clay Shaw Jr. (R-Fla.) said the law should be amended to give consumers automatic notice whenever a creditor reports negative information to a credit bureau. Rep. Matthew J. Rinaldo (R-N.J.) said one of his constituents was rejected for a mortgage because his credit report had 16 errors, including “13 listed accounts that were not his.”
The records are “more than just account numbers. They are a consumer’s reputation,” said Rinaldo, who also supported amendments to give individuals a free copy of credit reports and notification when adverse information is added to the files.
Meanwhile, the California Public Interest Research Group issued a study Thursday of 155 consumer complaints about credit reports to the Federal Trade Commission. The study indicated that in 63% of the cases the consumers contacted the credit bureaus five times or more without success in having errors removed from the files.
“This report’s results argue strongly for reform of the credit bureau laws,” Jeffrey Francis, the California group’s consumer program director, said in San Diego. “Now we know how difficult it is to get rid of these errors.”
Errors Endure; Reputations Don’t
Serious errors by credit bureaus caused consumers to complain an average of six months without solution, according to a study released Thursday. The report analyzed 155 complaints to the Federal Trade Commission. Highlights include:
* 63% of the consumers contacted the credit bureau five times or more with no relief.
* Up to 33% of consumers had errors on their credit reports.
* 32% of consumers couldn’t get the credit bureaus to fix errors in their accounts.
* 70% of all consumers who were denied credit alleged that someone else’s negative credit information appeared on their accounts.
* 95% of the consumers with someone else’s bad public record (derogatory tax lien or court judgment) on their credit report were denied credit.
* 12% of consumers were denied rights granted by law: the right to a reinvestigation of disputed items and to include a 100-word statement in a disputed credit report.
Source: California Public Interest Research Group
