information. Each consumer should have the right to examine his or her credit file at least once each year without charge. Moreover, if a consumer finds an error in his or her file at one bureau, he or she should receive free credit reports from any other bureau which may also contain that erroneous information. * Disputes Consumers must be guaranteed that disputed information will be investigated by the credit bureau rapidly within 30 days, that credit bureaus will be required to take into account information that the consumer provides, and that the bureaus will follow established and publicly available procedures in conducting the investigation. * Suppliers of Information often, consumers get information deleted from their file only to have their bank or other creditor simply report it to the credit bureau again. Suppliers of credit information must be asked to exercise every possible effort to ensure the accuracy of the information they provide. * Understandable Format Too often, when a consumer does pay for his or her credit file all he or she gets is an unintelligible form filled with codes and abbreviations that may make sense only to another computer. Disclosures to consumers must be made in an understandable format. • Inquiries Since creditors often deny credit if a consumer has a large number of inquiries in his or her credit file, we must ensure that credit bureaus report to potential creditors only those inquiries for which the consumer is responsible, i.e. only inquiries specifically authorized by the consumer. Certainly, it should be illegal for the credit bureaus to report to creditors inquiries generated by their target marketing efforts. It should also be illegal for credit bureaus to report to creditors inquiries that the consumer knew nothing about (for instance, the automobile dealer example). The fact is that the credit bureau industry is making hundreds of millions of dollars exploiting the private credit records of consumers to develop mailing lists for junk mail in spite of current law's prohibitions. This access to a person's personal records indicates an alarming trend in the credit industry. We are witnessing the development of huge depositories for wide-ranging and highly personal profiles of individuals across the nation. As the author of legislation on the subject, I look forward to the testimony today and to working with you, Mr. Chairman, and the other members of the Subcommittee, as well as any other interested party, to craft responsible reforms to an important consumer protection: the Fair Credit Reporting Act. Thank you, Mr. Chairman. OPENING STATEMENT OF CONGRESSWOMAN MAXINE WATERS June 6, 1991 Mr. Chairman, today's hearing covers one of the most important issues within the jurisdiction of this subcommittee. The Fair Credit Reporting Act regulates some of the most sensitive data relating to consumers that exists. People's credit ratings influence their ability to make some of the most important decisions of their lives. In addition, information about our credit history has a day-to-day impact on our ability to borrow for small consumer goods. This information, if incorrect or mishandled, can prejudice lenders against consumers for lengthy periods of time, particularly if those consumers do not understand the nature of their credit problems. To that end, I am very disturbed by reports of large numbers of inaccuracies on consumer credit records that are being disseminated regularly by the credit reporting industry. There has to be a way to stop this. I know there are proposals which we will be exploring today to address this problem - among them proposals by Reps. Schumer and Lehman, the former chairman of this subcommittee. There is one other point I would like to make. before we get started. I understand that the credit bureaus charge 20 dollars for a copy of a consumers' credit report. Thus, to receive reports from all three major credit bureaus, a consumer would need to spend $60. I can tell you without uncertainly, this type of cost will dissuade many, if not most, of my constituents from ever obtaining a copy of their credit report. $60 is much more than most of the people living in south-central Los Angeles can pay to find out about a mistake in their credit history. For this reason, I am very sympathetic to proposals which would require regular credit updates to consumers on file, upon consumers' request Finally, Mr. Chairman, computers, with all their potential to increase productivity, bring with them the potential to exploit information and intrude into people's privacy in new ways. I hope the credit bureaus understand the concern of people who are suspicious of this potential. Thank you. STATEMENT OF RIP. GERALD D. KLECHIA TO THE TAE HOUSE SUBCOMMITTEE ON CONSUMER AFFAIRS AND COINAGE THE USE OF CREDIT REPORTS FOR JOB SCREENING PURPOSES THURSDAY, JUNE 6, 1991 12. CHAIRMAN: I appreciate this opportunity to comment upon the Fair Credit Reporting Act (FCRA)--a key consumer protection law which is in dire need of a facelift. When President Nixon signed FCRA into public law in 1970, few people could have pictured the invasive power of computers in our present information age. Now data about almost any man or woman's medical and insurance coverage, consumer product preferences and sensitive financial matters--private material-is regularly examined and sold for a syriad of purposes without his or her consent. Amazingly, consumers are not informed about the marketing of their credit histories, nor are they compensated for it. One of the most serious problems with FCRA, however, is the inability of consumers to obtain speedy correction of inaccuracies which may be in their credit files. If and when corrections are made, the process usually takes longer than 30 days, according to the Federal Trade Commission (FTC). This has genuinely profound consequences for millions of consumers. The May 1991 Consumers Reports suggests that three million people a year ask to have their credit reports changed because of wrong or outdated information. But many more Americans remain unaware that their credit file may include damaging falsehoods. Indeed, Consumers Reports found a 43 percent error rate in credit files maintained by some New York City area credit bureaus. Mortgages, insurance coverage, credit cards and other necessities of everyday life often hinge on information in these files. Unfortunately, correcting a mistake is a time-consuming ordeal. I am especially disturbed by the reliance of some companies upon credit histories in making employment decisions. Job applicants should be evaluated solely on the basis of their skills--not their credit files, which may be flawed. Moreover, employers should be barred from using credit reports for any jobrelated purpose without first obtaining an individual's approval. Job applicants should be informed forthrightly by employers of every factor used in making employment decisions. |