Credit Guides And Credit Services

The U.S. Privacy Protection Study Commission, in its 1976 report, noted the link between third-party recordkeepers, privacy and the rights of individuals. The intrusiveness, unfairness and unrestricted disclosure characteristic of so much organizational record keeping today is largely the result of weaknesses in the relationship between the individual and those who need to know intimate details of his life... As long as America believes, as more than a matter of rhetoric, in the worth of the individual citizen, it must constantly reaffirm and reinforce its protections for privacy, and ultimately the autonomy, of the individual.³²⁹ credit pacific service union

In fact, Equifax explicitly recognized the importance of Fair Information Practices principles in its groundbreaking, 1990 public opinion survey, entitled, Equifax Report on Consumers In The Information Age ³³⁰ credit first service union

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Personal Privacy In An Information Society, Op. Cit., ³³⁰ Equifax Report on Consumers In The Information Age, ( Equifax 1990), A national opinion survey conducted for Equifax, Inc. by Louis Harris Associates and Dr. Alan F. Westin, professor of public law and government, Columbia University. Westin has served as a consultant to Equifax for several years since the 1990 report. He was a special consultant to the PPSC and a member of the 1973 HEW Advisory Task Force. card credit mobile service

However, despite extensive literature on the subject, there is not general familiarity with it outside of a small community of privacy experts and consumer advocates. Starter List of Harms Here s the short list of the ways in which consumers are damaged by inaccurate credit reports, non-responsiveness and faulty reinvestigations by CRAs and furnishers. card credit discover service

• Inaccurate data can lead to the unjust denial of credit or insurance. credit public service union

• In the age of risk-based pricing, inaccuracies can result in the granting of credit or insurance on less favorable terms. card credit processing service

• Attempting to correct inaccuracies can be time-consuming, causing a loss of time, energy and opportunity. center credit service union

• Often the most profound damage that consumers suffer is the emotional distress that accompanies the discovery of inaccuracies in one s credit report; and/or the frustrating process of trying to correct errors that were to not of one s own making; and/or the unjust denial of credit; and/or of being told that false information has been verified, and/or that information that was previously deleted as inaccurate was reinserted without notice. card credit service wireless

With identity theft, all of the above damages apply, compounded by the fact that a criminal is joyriding on your good credit, ruining your name. History Offers Abundant Evidence One of the first recognized harms resulting from inaccurate data is the unjust denial of credit, insurance or employment. A 1994 House Banking Committee report on FCRA legislation said that an immediate damage from inaccurate credit reports was that they can impede the ability of too many consumers to obtain credit or other benefits. Referring to the 1989 Williams study and the 1991 Consumers Union study, the Committee further specified one reason why inaccuracies were damaging: Both studies defined serious errors to mean those that could, or did, cause the denial of credit, employment or insurance. credit security service union

Similarly, the 1998 US PIRG report stated: In many instances, credit report errors cause consumers considerable harm. The results of mistakes can range from the rejection of a credit card application to the denial of a job. Also, errors often cause consumers to spend weeks - sometimes years - calling creditors, writing credit bureaus, and worrying anxiously in an effort to remove the inaccurate information from their record. One California victim of credit fraud who contacted PIRG was denied financing on her new car, even after she had contacted all three credit bureaus numerous times about the mistaken delinquencies on her credit report. Another California man had to hire an attorney to send a letter to the credit bureaus, stating that I am who I am, before he could finally get a stranger s bad credit accounts removed from his credit report. While credit report errors almost always lead to a little consumer hassle, they also can create a ticking time bomb waiting to wreck an unsuspecting consumer s good name at any moment. credit report service

As Trans Union s Web site points out, a negative credit history will lower the credit score. A lower credit score means that a consumer will not be able to obtain credit or insurance, or will only be able to obtain them on less favorable terms. blogspot com christian

The damage of inaccurate credit reports will become clearer to more and more consumers because in the era of risk-based pricing, the credit score will define the terms of credit. As we said before, the lower the credit score, the worse the interest rate or insurance premium. christian counseling credit

Time Lost

The process of cleaning up an inaccurate credit report can be time-consuming. In its 1994 report, the House Banking Committee wrote, Compounding this high error rate problem is the difficulty that consumers face when they attempt to correct inaccurate or incomplete information contained in their credit files. The Committee cited the 1991 US PIRG study, based on the review of 155 consumer report complaints on file with the FTC, which found that the average duration of complaints against CRAs was 22.5 weeks, or nearly 6 months. The 1991 PIRG report was entitled Don t Call; Don t Write; We Don t Care. credit federal service union

Not Responsive

The dispute correction process is prolonged when the CRAs are not responsive. This is what one unnamed consumer told US PIRG for its 1990 report: After 5 1/2 months of phone calls and letters, the CRA has absolutely refused to rectify the incorrect information on my report... I have submitted comments from institutions and from my own records that should clearly show that their report is incorrect. . . This has caused me untold humiliation and embarrassment with banks and credit agencies from which I have tried to obtain credit.³³¹ credit monitoring service

Nancy Ross, a Washington Post writer, had a similar experience: For the past two years, I have been the victim in a case of mistaken identity that has ruined my credit rating. Despite my efforts to rectify the situation, I m beginning to fear that my epitaph may read: Here lies a deadbeat. ³³² On October 3, 1989, Privacy Times ran a lengthy story based on consumer complaints to the FTC regarding credit bureaus. One consumer s letter referred to the frustrating and time-consuming nature of fixing the problem. [It] looks like another round of letters is in order, the consumer wrote. credit division service

The article noted that in several complaints, consumers referred to their attempts to correct errors as humiliating and frustrating experiences. One outraged consumer said 30 days after he had submitted corrections to TRW he received a reply stating that his disputes are frivolous or irrelevant. Therefore, they will not be reinvestigated. card credit online service

After a year, the consumer was convinced that TRW was violating the FCRA, but said he was powerless to obtain their compliance, explaining, The FTC advised me to seek private council [sic] and pursue a civil action, while, at the same time, the FTC advised me that they would shortly file an action against TRW for similar and other violations of the FCRA. consumer counseling credit inc

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Nightmare On Credit Street, Or, How The Credit Bureau Ruined My Life, U.S. PIRG, June 12, 1990 ³³² Ross, Nancy, Washington Post, May 31, 1990 The Center for Law in The Public Interest advised me this was not the kind of case they do. The law firm of Allred, Maroko, Goldberg Ribicoff declined the case because the firm has no expertise in the field. A meeting with an attorney provided by the L.A. County Bar Association yielded the opinion that it would be time-consuming and too costly to litigate. card credit fleet service

The 1993 US PIRG report, based upon consumer complaints to the FTC, found that 16% of corrected errors subsequently reappeared and that the average consumer had already contacted the credit bureau 3.6 times by phone call or letter without satisfaction before contacting the FTC. card consolidation credit

The 1998 US PIRG Report found that CRA non-responsiveness relating to basic communications and simple access to their consumer reports continued to cause frustration to a significant percentage of consumers. Moreover, inaccuracies continued to cause damage: credit free online report

If a consumer s credit report is inaccurate, she may appear to be a bad credit risk because of a variety of factors: because she appears to have been delinquent on accounts that she was never late on, because she looks like she has too many credit accounts open at one time, because she has court judgments against her that are actually against a stranger, or many other unfortunate scenarios. Credit report errors can cause the denial of not only credit, but also employment, insurance, housing or even the right to cash a check, use a debit card or open a bank account... The most valuable thing we have is our good name. Identity theft can cause substantial harm to the lives of individual citizens potentially severe emotional or other non-monetary harm, as well as economic harm. Even though financial institutions may not hold victims liable for fraudulent debts, victims nonetheless often feel personally violated and have reported spending significant amounts of time trying to resolve the problems caused by identity theft problems such as bounced checks, loan denials, credit card application rejections, and debt collection harassment, it wrote.^{335 334}

Prepared Statement of Jodie Bernstein, Director of Consumer Protection, FTC; http://www.ftc.gov/os/2000/03/identitytheft.htm ³³⁵ (Identity Theft: Available Data Indicate Growth in Prevalence Cost, GAO-02-424T, (www.gao.gov/new.items/d0242t.pdf) FTC 2003 Survey In its September 2003 survey, the FTC found that the longer it took to discover the identity theft the greater the damages. While 63% had no out-of-pocket losses, victims reported a wide range of problems, including wrongful bank and credit card charges, harassment by collectors, loan or insurance rejection, cut off of utilities, civil lawsuits, and criminal investigations. credit federal first service

Mental Emotional Distress

Whether it be inaccuracies resulting from a mixed file, or identity theft, many of the studies above have alluded to what might be the worst damage to consumers: mental and emotional distress. It is evident in the testimony of victims that we cited in previous chapters. Here is what two victims of mixed files described it in U.S. PIRG s 1990 report, Nightmare On Credit Street, Or, How The Credit Bureau Ruined My Life consumer credit service

Michael Riley

, Time Magazine. Suddenly, the credit-travel enticement had turned into a Kafkaesque nightmare of mistaken identities, computer screw-ups and human errors, all spilling out of the vast and powerful credit-reporting system... not only was my credit a disaster, I was officially dead. (Time Magazine, April 9, 1990.) center credit family service

Unnamed Consumer

. Early part of last year I was denied because of wrongful report... This past December... I was denied again... I was furious as this was to have been corrected the first time... There are exactly seven accounts that do not belong on here and I want them removed for good. On January 23rd of this year I received my credit rating and again they have many accounts incorrect. credit reporting service

This author, along with other experts, not surprisingly has observed that invasion of privacy causes emotional distress. It is distressful to learn first hand that your good name and credit history have been tarnished, through no fault of your own, by the derogatory credit data of a complete stranger. It is distressful to find that, despite repeated efforts on your part, a credit bureau continuously fails to delete inaccurate or unverifiable data from your report, or a creditor continues to report false data. It is distressful to find that information, previously deleted because it was inaccurate, was inexplicably reinserted into your consumer report. It is distressful to be wrongly associated with highly derogatory credit data, and to have to clear your name. It also takes time and energy to try to correct the problem, often involving numerous phone calls and letters. It s distressful not knowing everyone who may have associated you with highly derogatory credit data. It can be difficult to maintain constructive personal relationships under stress.³³⁶ It can be difficult to perform adequately at one s job. cca credit division service

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In fact, the insurance industry says that stress, stemming from financial problems, can cause auto accidents, and therefore justifying its use of credit reports in setting insurance rates. credit free report service

ITRC Study

In September 2003, the Identity Theft Resource Center (ITRC) published research that enumerated the many harms that victims suffer, and concluded that the emotional distress might be the worst of all. In the largest survey of its kind, the ITRC surveyed 173 actual victims of identity theft, and then had two experts review their responses.³³⁷ One was Paul Colins, a credit industry analyst. The range of emotions is wide and rather painful to read. Three-fourths of victims were left with a feeling of financial insecurity, 88% experienced anger, and 75% expressed a feeling of helplessness, Colins commented. card credit customer discover

While these feelings do appear to subside a little over time, the survey clearly shows for many victims the feelings linger on. While most surveys have focused on the financial costs to victims, these psychological impacts are generally unreported. They may, however, have far worse consequences for victims. ³³⁸ credit repair report service

While each crime has its own specific triggers and emotional responses, upon examination of these results, this study clearly proves that the impact of identity theft on its victims leaves similar scars and long-term impact as demonstrated by victims of violent crime. credit legal repair service

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Identity Theft: The Aftermath 2003, Identity Theft Resource Center (Sept. 2003); http://www.idtheftcenter.org/idaftermath.pdf ³³⁸ Id. ³³⁹ Id. This comes as no surprise to victims of identity theft. Although there is no direct physical injury in this crime, identity theft victims know all too well the psychological, emotional, and social destructive swath of pain that has been cut through their lives. Furthermore, it is clear that this crime has a ripple effect on the relationships in the victims lives. This study found that numerous victims of this crime suffered a significant strain in the relationship with their significant other. Anecdotally, during ITRC focus groups victims have shared that this crime was a major contributing factor in a divorce due to the intense strain on one or both of the partners, he continued. cic credit monitoring service

Nelson noted that some ID Theft victims said they felt dirty or defiled, guilty, ashamed or embarrassed, being an outcast, undeserving of assistance or having brought this crime upon myself responses similar to the ones we saw after an extensive media information campaign on rape and sexual assault prevention. ccs credit division service

Consumers are being told that they are the responsible party, if a crime occurs. Top ten lists of how to avoid victimization add to this perception, he wrote. For the self-blaming response to stop, victims need to learn that they are not the responsible party for this crime. Victims are victims, each with his or her own fingerprint of painful responses to the crimes committed. There are commonalities within the victimization responses found in each category of crime victims. This study discovered that there are also far more response similarities that identity theft victims share with ALL victims than previously realized. ³⁴⁰ credit service union worker

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. It Shows In The Statistics The high value that Americans place in protecting and preserving their good names is reflected in FTC complaint statistics. As the 1993 U.S. PIRG studies revealed, in the early 1990s, the leading cause of complaints to the FTC was inaccuracy in credit reports. Notice how complaints about mistakes, which do not always involve out-of-pocket loss, outpaced other categories which did entail loss of money. 1st credit service union

1. Credit Bureaus (30, 901); card chase credit customer

2. Misc. Credit (22, 729); card chase credit service

3. Investment Fraud (12, 809); citi credit monitoring service

4. Equal Credit Oppt. (11, 634); credit plus service union

5. Automobiles (6, 901); credit farm service

6. Truth-In-Lending (6, 303); 1st credit federal service

7. Household Supplies (5, 835); credit paychex service tax

8. Recreational Goods (5, 747); credit service tax

9. Mail Order (4, 687) aeon credit service

10. Food/Beverage (2, 738). credit one service union

Starting in 2000, and continuing for four consecutive years, complaints about identity theft far exceeded all other categories. Again, notice how an issue that is more concerned with one s good name than it is with out-of-pocket loss, far exceeded categories where consumers lost money. Here are the 2001 numbers: bad cell credit phone service

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http://www.ftc.gov/opa/2002/01/idtheft.htm The 2002 numbers were 43% of the complaints, identity theft, and 13%, Internet Auctions.³⁴² For 2003, 42 % of the complaints were about identity theft. The FTC received more than half a million complaints in 2003, up from 404, 000 in 2002.³⁴³ A Formula For Identifying and Measuring Damages In a 2003 FCRA case, ³⁴⁴ plaintiff s counsel calculated that Plaintiff worried about or was tormented for 15 hours per week, or slightly less than 2.5 hours per day, about inaccuracies in her consumer report. While this was a good start, a more robust formula is needed to fairly gauge damages. counseling credit debt service

It seems logical that since we are relying so heavily on credit scores to summarize a consumer s credit-worthiness, we also should have a scoring model for measuring the damages and costs to consumer caused by defects in the national credit reporting system. Perhaps such a scoring model would finally help the financial services industry appreciate the extremely damaging nature of credit report inaccuracy. card credit payment service

To that end, this author in 2003 unveiled the following proposed methodology, which first requires one to identify the applicable categories of damage in the given case, and then determine which of the factors listed below are appropriate multipliers.³⁴⁵ card credit merchant

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http://www.ftc.gov/opa/2003/01/top10.htm ³⁴³ http://www.ftc.gov/opa/2004/01/top10.htm ³⁴⁴ Boris v. ChoicePoint: USDC-W.D. Kentucky (Louisville) - No. 3:01CV-342-H; March 14, 2003 ³⁴⁵ Prepared Statement of Evan Hendricks, The Accuracy of Credit Report Information and the Fair Credit Reporting Act, Senate Banking Committee; July 10, 2003 http://banking.senate.gov/03_07hrg/071003/index.htm; and, Presentation of Evan Hendricks, Information Flows: The Costs and Benefits to Consumers and Businesses of The Collection and Use of Consumer Information. Federal Trade Commission National Workshop; June 18, 2003. http://www.ftc.gov/bcp/workshops/infoflows/030618agenda.html counseling credit family

Some Categories of Typical Damages/Costs of ID Theft Inaccuracy:

1. Inaccurately described as not creditworthy to third parties annual credit report request

2. Improperly denied credit because of inaccurate data area bay credit service

3. Expended time and energy to correct errors not of one s making atlanta consumer counseling

4. Wrongfully received debt collection calls account card credit merchant

5. Chilled from applying for credit aspire card credit customer

6. Sleeplessness, physical symptoms card counseling credit service

7. Sense of helplessness, loss of control over personal data card credit online processing

8. The emotional distress stemming from, and associated, with all of the above consolidated counseling credit

I propose a formula that takes into account the following factors. check credit service

FACTORS

1. The nature and substance of the category of damage card credit online payment

2. Time energy to solve the immediate problem civil credit ontario service

3. The expectation that the problem was solved antonio credit san security

4. The number of recurrences card cardmember chase credit

5. The period of time over which the problem persists clean credit repair service

In essence, the formula, like a credit scoring model, would need to assign weights or points to each factor and then multiply Factor (1) by Factor (2); then that result would be multiplied by Factor (3), and then by Factor (4), etc. The purpose is to measure the compounding nature of the damage. credit management service

As a preliminary example, take the Category 1 inaccurate characterization. Let s say John Doe, a victim of identity theft, discovers in January 2001 that his credit report was polluted with highly negative collection and charge-off accounts generated by a fraudster. This would be a momentous event, deserving a significant assignment of points under the formula. After all, the inaccurate credit report was not the result of anything done by John Doe and was totally unexpected, so the shock value (Category #8, emotional distress) was relatively high. colorado credit public service

Rather than routinely extending him credit, the system falsely branded him unworthy of credit. Further points are assigned because this inaccurate characterization coincided with the unjust denial of credit (Category #2). It s possible that this unjust denial resulted in being humiliated in front of a store clerk or others (Category #8), and with being unable to do anything about it (Category #7). Thus, the formula assigns a relatively large number of damage points for John Doe s first interaction under Factor #1, as compared to a consumer who only finds a few minor inaccuracies on his credit report that did not result in a denial of credit, humiliation and sense of helplessness. consolidation counseling

If John Doe s credit reports worsens because of the addition of an imposter-caused bankruptcy, Category 1 later earns additional points. The other multipliers come into play, as John Doe must expend time and energy to solve the problems (Factor 2), and develops an expectation that the problem was solved (Factor 3); instead there are recurrences of being mischaracterized (Factor 4) and the problem persisted over a defined period of time (Factor 5). bureau card credit service

Invasion of Privacy = Emotional Distress

Many thoughtful commentators have reached the conclusion that it is emotionally distressful, and therefore damaging, to have your privacy invaded. As Judge J. Michael Blane pointed out in his dissent in 4th Circuit s ruling in Doe v. Chao, a Privacy Act case, First, Congress created the statutory damages remedy as an incentive to suit because it recognized that damages from government invasions of privacy are hard to prove. Second, Congress recognized that the typical injury caused by the invasion of privacy is emotional distress. card credit customer service

The Members of Congress who were most active in the 2003 FCRA Amendments, known as the Fair and Accurate Credit Transactions Act (FACTA), consistently spoke of the harms flowing to consumers and to society from inaccurate credit reports and/or identity theft. credit financial service

Shelby and Sarbanes

Sen. Richard Shelby (R-AL), Chairman of the Senate Banking Committee opened the July 10, 2003 hearing by stating, This morning, we take up one of the most important issues, if not the most important, associated with the FCRA: the accuracy of the information contained in consumer credit reports. Changes in our financial services industries have made accuracy more important than ever. Credit report information is increasingly used as the key determinant of the cost of credit or insurance... With the rewards for good credit so meaningful, and the penalties for bad credit so severe, it is absolutely critical that credit reports accurately portray consumers true credit histories. ³⁴⁶ card citibank credit customer

Sen. Paul Sarbanes, the committee s Ranking Democrat from Maryland, said, Erroneous negative information on credit reports can often take a significant investment of time and money to remove. They can also be extremely costly to consumers by significantly raising borrower costs. Not only do such inaccuracies raise the cost of borrowing, but they may also actually cost the consumer a loan. Insurers, mortgage banks, and other financial institutions rely heavily on credit scores to make credit decisions. bad credit repair service

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Senate Banking hearing, July 10, 2003, op. cit.; http://banking.senate.gov/index.cfm Fuseaction=Hearings.Testimony TestimonyID=264 HearingID=49 Inaccuracies in the underlying credit reports can therefore make it more difficult and significantly more expensive for Americans to purchase insurance, homes, cars, and other big-ticket items. ³⁴⁷ Sen. Debbie Stabenow (D-MI), stated, In addition, when that information is not accurate, consumers need a quick and easy resolution process. In a fast-paced society like ours, unnecessarily long delays in correcting inaccurate credit reports have profound consequences. They can lead to denial of a mortgage to buy a home or the steering into a subprime loan. They can lead to the inability to get a credit card or an unwarranted increase in interest rates on an existing credit card. They can also create reduced work productivity and extreme stress as consumers must take off work and spend countless hours trying to correct mistakes that occurred through no fault of their own. ³⁴⁸ budget counseling credit

On identity theft, Shelby said, Soon thereafter, when the criminals handiwork shows up on their credit reports, they face the considerable task of restoring their good name and credit. Plainly, this crime has many victims. Firms lose profits. Individuals lose time, money, and peace of mind when their good name and reputation are tarnished. credit equifax information

In light of the serious nature of the consequences of identity theft, this issue would merit attention even if there were only a limited number of victims. Unfortunately, there are thousands of victims whose numbers are growing at an increasingly faster pace. Indeed, it has been asserted that identity theft is the fastest growing crime in America. credit first houston service

This issue tracks across credit reporting in so many ways that it is essential that we consider it in the context of the reauthorization of the preemption provisions of the Fair Credit Reporting Act. ³⁴⁹ bad credit expertise in

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. ³⁴⁸ Id. ³⁴⁹ The Growing Problem of Identity Theft and Its Relationship to the Fair Credit Reporting Act June, 19 2003 http://banking.senate.gov/index.cfm Fuseaction=Hearings.Testimony TestimonyID=108 HearingID=43 Sarbanes agreed. Americans have strong concerns about protecting their confidential information. Honest citizens who are victims of identity theft incur a high cost in money, time, anxiety and effort to correct and restore their spoiled credit histories and good names. ³⁵⁰ cccs consumer counseling

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