July 20, 2011
WASHINGTON — Consumers Union, the nonprofit publisher of Consumer Reports, today wrote members of Congress to urge them to hold hearings on the so-called “fourth bureau,” a collection of private companies that compile and sell consumer data to entities such as lenders, landlords, employers and health-care providers, saying these firms “unfairly use consumers’ data to draw potentially harmful and unreliable conclusions about their creditworthiness and ability to pay.”
In a letter to members of the House and Senate committees on commerce and banking, Ioana Rusu, regulatory counsel for Consumers Union, wrote, “Unlike the three major credit bureaus, which track consumer scores based on credit card activity, auto notes and mortgages, the ‘fourth bureau’ tracks and investigates traditionally unreliable indicators of creditworthiness, such as magazine and cable subscriptions, utility bills, and child care tuition payments. No standards exist for what types of information should be collected and how it should be used, nor are these companies required to ensure the accuracy of compiled information.”
She cited a recent Washington Post article (“Little-Known Firms Tracking Data Used in Credit Scores,” July 17), which reported on how information collected by these firms is used, as well as the story of an Arkansas woman whose credit was destroyed by incorrect information contained in her “fourth bureau” file.
Rusu wrote, “Most American consumers have no way of knowing that this information is being collected about them and used in ways that could affect their interest rates, housing, and employment. Even when individuals find out about the ‘fourth bureau’s’ existence, accessing and correcting data about them is nearly impossible.”
Consumers Union is urging lawmakers to consider whether the requirements of the Fair Credit Reporting Act (FCRA), such as an annual free credit report and a consumer access to a toll free number, should apply to such data brokers. In cases of adverse action or risk based pricing, consumers should be entitled to receive the same credit report that creditors received. “Consumers are entitled to accuracy, fairness and transparency in the way their information is used to establish creditworthiness,” Rusu wrote.
Rusu added that some recent bills in Congress would begin to address activities of such companies by requiring them to maximize accuracy of consumer records, to provide consumers with access, and to establish a process by which consumers can correct inaccurate information. But many consumers could still be left not knowing that these entities are aggregating and selling information about them.