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Under FCRA, the consumer has a circuitous route to get at the credit information after
a credit denial. This causes delay in the consumer's ability to correct his record. The
consumer's credit report should be (a) given to him by the creditor who relied on it to
deny credit or (b) sent to him by the credit bureau automatically whenever it is
transmitted to any credit grantor.27

6) Eliminate archaic disclosure conditions of Section 610. The act does not even provide for a credit report to be mailed. Since this is standard practice, it ought to be codified. Consumers should obtain a copy of their actual record, whether in person or by mail.

7) Amend Section 609 to prevent CRAs from asking consumers for excessive identification. Many credit bureaus are also collection agencies. The extra identification -- 0.g., how long have you worked at your present job? -- aids collection, but is not required by FCRA

According to Attorney Faulkner:

Add definition of proper identification, to limit to name and address, prohibit social
security number, and only if there is still confusion, allow either age or sex or one past
address. The requirement of "proper identification is often abused by credit bureaus
which are frequently also credit bureaus... The FTC has long taken the position that
requiring this additional information is improper, but without the force of law, credit
bureaus ignore the FTC's position....Creditors ordinarily access a consumer's file by
computer entry of name only. (This has caused problems for at least two of my clients,
whose names are similar to others'; they get denied credit based on that other's record.)

8) Amend Section 604 to provide explicitly that reports can be disclosed at a consumer's request to his or her attorney. The amendment can be crafted so that it would not require disclosure to credit repair clinics, but only to attorneys. It is currently difficult for a consumer's legitimate attorney to obtain credit reports.

9) Amend Section 604 to make check cashing and landlord screening explicitly subject to FCRA notice requirements (Lehman).

IL To Improve Accuracy of Credit Reports

The amendments included in H.R. 4213 make a good start toward improving the accuracy of credit reports. We are working with other consumer groups to develop additional ideas to improve accuracy. The proposals discussed below primarily address consumer disclosure as it pertains to reinvestigations and accuracy. We believe more work needs to be done to ensure that the final draft of the bill adequately addresses Section 607 compliance issues.

1) Amend Section 611 to require that reinvestigation procedures include notification of corrections to other repositories, at the expense of the user or repository, not the consumer.

2) Increase duties of providers of information to Consumer Reporting Agencies by requiring advance notice to a consumer that information about his or her account will be sent to Credit

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Reporting Agencies, or CRAS (Lehman, new section, 622; Rinaldo, Section 609); it is unclear whether the proposed sections would require such providers to make corrections when information is wrong.

3) Amend Section 611 so that consumer dispute statements, or a reasonably obvious code, appear with the trade line in dispute, not only at the end of a multi-page consumer report.

4) Amend Section 611 to include a 30-day maximum time standard for reinvestigation (Lehman).

5) Amend Section 611 to require standards for reinvestigation. As Attorney Faulkner states:

Most 'investigations" consist of asking the creditor orally to verify what's on the
creditor's computer! If there is no other source of information, or no documentation to
back up the creditor's computer entry --and there almost always is the item should be
deleted because the consumer, rather than the creditor's computer, should be presumed
right.28

III To Prevent Reporting Of Obsolete Information

1) Amend Section 605 of FCRA to state that the earlier of the date of adjudication or date of entry of order for relief prevails and to state that the earlier date of placement for collection or charge. off prevails.

2) Section 604 should also be amended to prohibit reporting of inquiries over a certain age, perhaps six months. Inquiries are a negative factor, but reporting of obsolete inquiries ought to be prohibited.

IV. To Protect Against Pre-Screening Privacy Invasions

Amend Section 604 to: (1) give consumers an opportunity to protect their credit records from use in pre-screening, the industry practice of using credit reports to generate mailing lists (Lehman-Note that Schumer and Rinaldo would ban pre-screening) and (2) require that a credit report be usable only for the one permissible purpose it is accessed for (Lehman);

2) Protect Pre-screen Data: Congress should affirmatively state that records of pre-screen inquiries can only be released to the consumer.

3) Allow Post-screening, provided that denials associated with post-screens are suppressed from being reported as inquiries.

4) Prohibit Deceptive Offers such as "You have been selected because of your excellent credit rating..."

V. To Strengthen Federal Trade Commission and Consumer Legal Rights

1) Amend Section 621 to increase the administrative and rule-making authority of the Federal Trade Commission, the agency with jurisdiction over the Act (Lehman);

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2) Provide for minimum damages in Sections 616 and 617: As Attorney Joanne Faulkner states:

The most effective way to ensure compliance with the FCRA is to allow consumers a
minimum damage recovery of $1,000. A minimum damage provision has been a very
effective means to promote compliance with consumer protection laws by encouraging
private attorneys general lo enforce such laws.?

3) Amend Section 616-617 To Impose Stria Liability, with good faith/reasonable procedures defense. Eliminate negligence fintent standards:

Credit bureaus have long been shielded by an overbroad negligence standard. Other consumer protection acts, such as the Truth In Lending Act and the Fair Debt Collection Act impose strict liability. If the credit bureau, for example, sends out an impermissible report, why should the consumer need to prove negligence?

As Attorney Faulkner states:

Recently, a client sent in a dispute notice for herself and her husband. When they
received their corrected reports, the credit bureau had put his sole debts on her report
and vice versa. Strict liability is the only to discourage this type of uninvestigated,
discriminatory presumption about spouses' debts. Now, the credit bureau is liable only if
the consumer can prove negligence or intent. This information is exclusively within the
reporting agency's knowledge. Putting the burden on the consumer to prove
willful/negligent intent deters private enforcement of the FCRA.

VI: To Stop Credit Repair Rip-Offs

1) Pass Title 2 of H.R. 4213.

2) Amend Title 2 to include Connecticut Public Act 87-146, which requires repairers to use a strong consumer disclosure notice. I spoke last month by phone to an official of the Maryland based "Credit Doctor.' This 'official' would not give his name and would not send me any information. He did, however, have a slick sales pitch that said his firm could 'exploit Naws in the Fair Credit Reporting Act."

In addition to these amendments to the FCRA, Congress should look hard at the ways information is being collected and disseminated in the new databases and database networks available. While credit histories are protected by FCRA, other consumer information, such as public record information and demographic data, is not. Please see our testimony of 13 September 1989 for a more detailed treatment of these issues. Also see references in the endnotes.

Thank you again for considering U.S. PIRG's views.

FCRA Testimony of U.S. PIRG

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FOOTNOTES

1. Page DS, Washington Post, Nancy Ross, 'It's Not So Easy Getting Credit Where Credit Is Due," May 31, 1990.

2. Page 62, Time, Michael Riley, "Sorry Your Card Is No Good," April 9, 1990.

3. TRW, CBI Equifax, and Trans Union comprise the three national credit data repositories and provide services to credit bureau affiliates and also to information wholesalers, called super-bureaus.

4. See Credit File Errors, A Report," James Williams, Consolidated Information Services, August 1989. CIS is a large New York metropolitan credit bureau: its work is only on mortgages greater than $20,000, so mistakes do matter.

5. See, for example, oral testimony of Walter Kurth, President, Associated Credit Bureaus, Page 34 of Hearing Record, Subcommittee on Consumer Affairs and Coinage, FCRA Oversight Hearing of 13 September 1989, Serial 101-50, U.S. House of Representatives. Testimony that day of each of the Big Three credit bureaus is similar.

6. "Credit Reporting Complaints," Pat Donahue, New Jersey Department of the Public Advocate, April 1990.

7. See Pages 38-39 of FTC Statement of General Policy or Interpretation: Commentary On The Fair Credit Reporting Act. (Or see FR May 4, 1990.)

8. See page

Privacy Journal, March 1990, Vol. XVI, No. 5, "Easy Access To Credit Reports Leads To A Scam.' The article also quotes a super bureau owner stating: "There are all sorts of people (in Orange County, CA) peddling credit reports to anyone."

9. Except for pre-screen entries and such entries as employment reviews for jobs the consumer has not applied for.

10. E.g., see Page 9 of testimony of John Baker, Equifax, Hearing Record of House Subcommittee On Consumer Affairs and Coinage, September 13, 1989, Serial 101-50, page 123 of record.

11. In particular, see 13 September 1990 testimony of Elgie Holstein, Bank Card Holders of America, Hearing Record Serial # 101-50, p. 92 et seq. for a discussion of a particularly egregious breach of credit bureau records through an unauthorized entry from an authorized subscriber's terminal. An employee used credit records to identify and then harass a woman he had run into.

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12 P. 19, 'Credit File Errors, A Report" James Williams, Consolidated Information Services, 7 Aug 89.

13.Page 5. "Credit File Errors: A Report James Williams, Consolidated Information Services, 7 Aug 89. 14. Sce Page 7. Credit Reporting Complaints," Pa Donabue, New Jersey Department of The Public Advocate, April 1990.

15. The state received 568 credit reporting complaints from July 1, 1989 through April 1990. Letter to Jeff Francis of CalPIRG from John Lungen, Deputy Director, California Department of Consumer Affairs. 16. Page 2 Final Judgement, Commonwealth of Massachusetts vs. CBM of Massachusetts, d/d,a Chilion, 23 November 88, Massachusetts Superior Court

17. See p. 11, Annual Report of The Attorney General, State of Texas, Fiscal Year 1989. Note that these consent agreements address identical credit reporting problems 10 an FTC consent decree of 1983: 'In the Manier of The Trans Union Credit Information Company,' August 25, 1983, 102 FTC Reports 1109. 18. See 1973 TRW Code of Ethics Pamphlet: To safeguard the consumer from invasion of privacy, it has been our conviction that consumer information collected for one purpose should not be used for another. To this end, we will not compile or sell lists containing names of consumers from our files to any person or organization

19. See the opening statement of Senator David Pryor, Chairman, Senate Select Committee on Aging. Hearing on 'SSA's New 800 Telephone System: Service or Disservice?, April 10, 1989, Ako see New York Times, page 1, April 10, 1989, U.S. Checked Private Data For Business

20. Page 1, the Friday Report, Hoke Communications, as quoted in a letter from Marc Rottenberg, Computer Professionals For Social Responsibility, 1o Congressman Richard Lehman, April 42, 1990.

21. See Page 1, Privacy Journal, 'Using Medical Information For Marketing.* February 1990, Page ASA Wall Street Journal, "Phone Data Enters The Junk Mail Morass," May 4, 1990, Page Bi, Wall Street Journal, 'Personal Data Travels, Too, Through Agencies," March 29, 1990, Page 52, U.S. News and World Repori, 'Unwilling Players In The Name Game,' May 1, 1989, Testimony concerning Point-of-sale database development (e.g., linking personal information to grocery product scanner data), Jerry Salızgaber, Citicorp Point-of-Sale information Services, before the House Government Operations Subcommittee on Government Information, Justice and Agriculture, May 16, 1990.

22. Page 6, For Their Eves Only: The Insurance Industry and Consumer Privacy, Josh Kratka, MassPIRG, April 1990.

23. Also see testimony of David Czernik, Director, Louisiana Consumers League, Before the House Government Operations Committee Subcommittee on Government Information, Agriculture, and Justice, Hearing On Data Protection, Computers, and Changing Information Practices, May 16, 1990.

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