credit reporting industry's trade group, the Consumer Data Industry Association
(CDIA) is vigorously disputing much of a CBS 60 Minutes (watch below) report that
aired last Sunday, February 10. CDIA has
issued a barrage of press releases documenting its correspondence with the
show's producers and presenting its responses to the show's assertions.
Minute segment which can be viewed below focused
on the dispute resolution process used by major credit reporting agencies
(CRAs). It presented some findings from
a Federal Trade Commission eight year study due to be released the following day
and interviewed FTC Chairman Jon
Leibowitz who said that one out of five of the 200 million credit bureau files
has an error and one out of ten has an error that might lower the credit
score. CBS reporter Steve Croft also interviewed
Ohio Attorney General Mike DeWine who said that "there was no doubt" CRAs were
breaking the Fair Credit Reporting law.
of the show was an interview with a woman who, after repeatedly being denied
credit starting in 1999 finally found that, while the free credit report
provided to her was clean, potential lenders were uniformly provided a
different version with highly negative information on an unrelated party. It
took better than a decade and a lawsuit against two of the CRAs to get her
said it approached the major credit reporting companies in December requesting
interviews about their dispute resolution procedures. The companies referred CBS to CDIA which
declined to appear. CDIA said of the
invitation, "Knowing 60 Minutes reputation for the sensational at the expense
of the factual, we decided the better alternative was to respond in writing to
any questions they had rather than on camera where most of our responses would
be edited out of context, if at all."
The Association provided a formal
statement to CBS which said in part: "Repeated studies
have shown that
despite the fact that
billions of individual pieces of
data are received
and processed each year, the
assembled provide highly accurate assessments of
consumer history that both businesses and consumers
can use to make informed financial decisions."
CDIA quoted a Consumer Financial Protection Bureau (CFPB) study which
found that between
1.3% and 3.9% of consumers disputed information
in their credit report
that they believed was
in error and another from the Policy and Economic Research Council that concluded
there was only a one-half of one percent
rate that would result in a consumer paying a higher price for credit
statement continued; when errors are found, "credit
robust consumer service procedures
to ensure any errors can
be quickly corrected. Offering
consumers the opportunity to dispute information either by phone or online speeds
up the process and over half of all disputes are received in this manner."
Consumers who use the dispute process, CDIA said, are generally
satisfied with the results; the Policy and Economic Research Council
study found 95% consumer
On February 1 CBS provided a list
of questions to Stuart Pratt, President and CEO of CDIA which asked for
comments on the DeWine statement and on assertions by former Experian dispute
resolution employees to the effect that they processed up to 90 disputes a day
without having access to phone, email, or documentation supporting the
consumer's complaint. Pratt responded
with statistics from a Federal Trade Commission study of the dispute process
done in 2003, results of a more recent internal study and with a statement from
Experian which directly contradicted the information provided by its former
employees. The questions and responses
can be read in their entirety here.
On Friday February 9 CDIA saw a
promotion for the Sunday broadcast and issued a preemptive press release that
said the promo "demonstrates that '60 Minutes' has selectively interpreted an
upcoming FTC study to ignore the most significant results. The FTC study shows that 98% of credit
reports are materially accurate, a fact it appears '60 Minutes' is set to
ignore." Further, CDIA said, FTC found
that "The measure of accuracy is tied to the question of when an error has a
consequence for consumers, not just when a report contains an error that will
have little or no impact on creditworthiness."
"It is irresponsible for '60
Minutes' to be reporting the findings of the study in this manner, Pratt
continued. "The FTC's study concludes
that only 2.2 percent of credit reports have an error that would lead to
higher-priced credit for the consumer. It is simply wrong to suggest that 21
percent have errors that would lead to this consequence."
The show also states that a
disputed error is "nearly impossible to expunge," Pratt said. "It is irresponsible to suggest to consumers
that they might as well not take action when they have a question about their
He also disputed allegations that
actions of CDIA members are in violation of federal law saying that federal
courts have found just the opposite on multiple occasions. "There seems to be some misunderstanding
about what the law requires of a credit bureau when a consumer submits a
dispute. This is a good time to get the facts straight," he said.
Fair Credit Reporting Act requires a credit bureau to send the consumer's
dispute to the lender or other data source within five days of receiving
it. Congress recognized that only the
lender has the relevant data to determine if their reporting is in error.
60 minute statement that "They're not doing an investigation at all"
ignores the timeframes dictated by federal law under which a dispute must be
resolved. In almost every instance resolution is well within the deadline. Second, it ignores recent findings by CFPB
that credit bureaus are working proactively to resolve disputes even when the
data resides with the consumer's lender. Lastly, it completely ignores the
advances the CRA's have made and are implementing - and which the CFPB and FTC
have reviewed - to significantly streamline the reinvestigation
"Let's have a responsible
discussion and step back from the hyperbole," urged Pratt. "Credit
reports are materially accurate 98% of the time, and when they do contain
mistakes, our members work to resolve them quickly and to the consumers'
satisfaction 95% of the time."
On Monday the long-term FTC study
cited by 60 Minutes was released.
CDIA said the report "Reconfirmed the findings of several recent studies that
conclude that credit reports
highly accurate and play a critical role in facilitating access to fair and affordable consumer credit. The FTC's research determined that 2.2 percent of all credit
reports have an error that
increase the price a consumer would pay in the marketplace and that fully 88% of errors were the result of inaccurate information reported by lenders and other data sources to
bureaus. The study also showed that 95 percent of consumers
are unaffected by errors
their credit report."