The Federal Trade Commission hasn’t always done a great job monitoring the sleazy industries that can financially ruin our lives, but lately, under the leadership of the soon-departing Jon Leibowitz, it’s been doing a pretty good job. Pay day loans. Identity theft. Mortgage relief scams.
And lately, the FTC has been up to its eyeballs monitoring the credit reporting industry. In 2010, the agency issued new rules about those deceptive and often irritating “free credit report” commercials, advertisements and websites. They aren’t. Free, that is. Wish that were the only problem.
Today, the FTC released a new study finding that when it comes to the three biggest credit bureaus - Experian, Equifax and TransUnion, “As many as 42 million consumers have errors on their credit reports, and around 20 million have significant mistakes.” Says the FTC, “One in four consumers identified errors on their credit reports that might affect their credit scores,” but only “[o]ne in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports.”
So as beneficial as FTC monitoring is, sometimes it’s not enough. And that was made clear in last night’s 60 Minutes piece about how nearly impossible it is to get a credit reporting agency to fix a mistake once they know about it, sometimes with ruinous consequences for the consumer. And that’s where lawsuits and state Attorneys General can step in.
First the lawsuits. Judy A. Thomas, who had a great credit history, was denied car loans, credit cards, etc. etc. because her credit reports confused her with someone named Judith Kendall who had a lot of debt. It shouldn’t have come to this, but until she took those credit agencies to court, nothing got resolved.
As for AG’s, back in 1996, Congress amended the Fair Credit Reporting Act (FCRA) to include state enforcement provisions. (See more in this law review article.) And last night’s piece, based on a series that first appeared in the Columbus Dispatch, showed how valuable a move that was. Writes the Dispatch:
Ohio Attorney General Mike DeWine [who appeared in the 60 Minutes piece]… and at least 24 other state attorneys general launched an investigation into the three national credit-reporting agencies after a Dispatch series Credit Scars, exposed systemic flaws in their operations that prevent consumers from correcting costly mistakes.
DeWine has discussed the problems with officials from Experian, Equifax and TransUnion. No solutions have been proposed yet, he told The Dispatch on Friday, but his work with them will continue…
Without that power, these 24 state AG’s would have no tools to help their own citizens, if only to try to push Congress to strengthen the federal law. This is the kind of state power that groups like the U.S. Chamber of Commerce and the American Tort Reform Association want Congress to strip away. Seems they don’t want to sully our federalist system with too much state power. … Oh wait.