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24. Page B1, "More Employers Check Credit Histories of Job Seekers To Judge Their Character," Gilbert Fuchsberg, Wall Street Journal, May 30, 1990.

25. Fuchsberg. See previous footnote, ibid. Also see Page D1, Washington Post, "Confidential Employee Data Often Misused, Study Finds," April 18, 1989, for a summary of Linowes' report, "Privacy In America: Is Your Private Life In The Public Eye?"

26. Although we have no recommendation at this time, we believe the committee should consider ordering the FTC to conduct an investigation of scoring systems. First, scores do not take into account, for example, consumer explanations appended to credit reports. Second, the Big Three's previous testimony uniformly indicates that scoring is something users do (and therefore something that (1) the Big Three do not control and (2) the committee shouldn't meddle with). But, the available evidence suggests that the Big Three provide scoring as a service. Since they do, and since scoring is not as objective as alleged, it should be investigated.

27. See page 3 of appendix to letter from Joanne Faulkner to Congressman Lehman, 26 October 89. The letter makes many other excellent suggestions for amending the FCRA. Attorney Faulkner is a former member of the Federal Reserve Board Consumer Advisory Council and is editor of the National Consumer Law Center's FCRA manual, the primary resource for plaintiffs' attorney's on the Act. Many of her suggestions are incorporated in our recommendations.

28. Faulkner, Appendix, page 6, Letter to Cong. Lehman, 26 October 89.

29. Faulkner, see footnote 22, page 1 of appendix.

FCRA Testimony of U.S. PIRG


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Before the Subcommittee on Consumer Affairs and coinage

of the
Committee on Banking, Finance and Urban Affairs

of the
United States House of Representatives

Washington, D.C.
Tuesday, June 12, 1990

EXECUTIVE OFFICES 16211 Park 10 Place PO Box 218300 Houston, Texas 77218-8300 (713) 492-8155 FAX: (713)492-8372 GOVERNMENT RELATIONS OFFICE 1090 Vermont Avenue, NW, Suite 501 • Washington, DC 20005-4905 (202) 371-0910. FAX: (202)371-0134

Mr. Chairman and members of the Subcommittee on Consumer Affairs and

Coinage, my name is Walter R. Kurth, President of Associated Credit Bureaus,


ACB is the international trade association representing the consumer

credit and mortgage reporting companies in the United States.

There are

1,168 credit bureaus in the United States that are members of ACB.

Most of

these offices also prepare mortgage reports.

In addition, ACB represents

230 offices that specialize in producing mortgage reports.

Most automated credit bureaus operate on one of three on-line data

processing systems owned by the three largest credit reporting companies.

But more than 500 of the automated credit bureaus are privately owned, or

are operated as a service that is owned by a non-profit merchant association.

The testimony submitted to the Subcommittee on H.R. 4213, H.R. 4122

and H.R. 3740

bills to amend the Fair Credit Reporting Act


the consensus of the ACB Board of Directors. We appreciate the opportunity to present this testimony and the many courtesies extended by you and your

staff in preparation for these hearings. Joining me today in our

presentation are representatives of the three largest credit reporting


John A. Baker, Equifax Inc.

Edward A. Barbieri, TRW Credit Data

Oscar Marquis, Trans Union Corporation


31-313 0-89-6

Last September, we participated in the oversight hearing on the Fair

Credit Reporting Act. Our assessment of that hearing and the need for change differs greatly from the solutions that have been proposed in the three bills under consideration by the Subcommittee today. We believe this

legislation is unnecessary.

The industry has a history of implementing changes which are

responsive to the needs of consumers.

Furthermore, we fully expect to

continue a process by which the product that our members supply credit

granters assists them in serving the consumer in a fairer more convenient


Consumer credit is the cornerstone of the American economy.

There is

currently $720 billion in non-mortgage consumer credit outstanding in the United States. This credit was extended based on the information from a fast,

accurate and pro-consumer credit reporting industry. Obviously the object of credit granters is to make loans, not reject applicants. The objectives of

the credit reporting industry is to provide credit granters with the accurate, complete information that facilitates consumer credit transactions.

We do not believe that it is prudent to alter radically a law and a

system that has served both, consumers and the credit-granting community, on

the basis of a few horror stories, some of which were deliberate

violations of the Act.

Mr. Chairman, I believe our objectives are all the same. We are in agreement that we must assist in broadening consumer understanding of credit

and marketing practices and of the opportunities for disclosure, reinvestigation and consumer participation in business transactions.

In fact, when introducing H.R. 4213, you stated that the bill is "designed to

give consumers greater awareness of how reporting agencies get information and

who has access to that information." We support that goal.

That is why we are

pleased to have this opportunity to tell you and the Subcommittee about a

number of measures which we as an industry have instituted

or will

institute in the near future

to achieve these worthwhile goals.

Therefore, Mr. Chairman, we are devoting this section of our testimony to demonstrate constructive industry initiatives and alternatives

which address the concerns raised during the oversight hearing last September.

Non-Initiated (Marketing) Transactions

As we are all aware,

dynamic changes in the way business is conducted in the American

marketplace have created the need for expanded communication

directly between businesses and consumers.

Existing companies

and newly-formed businesses are developing new and highly
differentiated goods and services which meet the increasing

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choices at lower costs and are in a position to influence more

quickly the way resources are allocated in the economy.

We believe that consumers should better understand marketing
practices and the benefits of information technologies.

We are

committed to improving consumer education on this score, and

expanding notification about the consumer's choice to opt out of

marketing transactions.

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