CDIA Says "60 Minutes" Story Misleads On Credit Report Accuracy
Story Ignores Study Results that Credit Reports are Materially Accurate 98% of the Time
WASHINGTON, Feb. 9, 2013 /PRNewswire-USNewswire/ -- "The promotion released yesterday for a '60 Minutes' story airing this coming Sunday, February 10, demonstrates that '60 Minutes' has selectively interpreted an upcoming Federal Trade Commission (FTC) study to ignore the most significant results," stated Consumer Data Industry Association (CDIA) president and CEO Stuart Pratt. "The FTC study shows that 98% of credit reports are materially accurate, a fact it appears '60 Minutes' is set to ignore."
The "60 Minutes" promotional spot reveals that the show has been given access to a Federal Trade Commission report on the accuracy of credit reports that has not yet been released to the general public. Having obtained a copy of the report, CDIA found that the show has missed the most critical point in the research; 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. 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," stated Pratt.
"It's easy to selectively hype snippets from the FTC study to sensationalize the issue, as '60 Minutes' has done, but the number important to consumers is the one they ignored – that only 2.2% of credit reports contain materials errors. The shared goal of our members and lenders who report data about consumers is to get it right every time. We will continue our efforts to push down the material error rate even further in credit reports," stated Pratt.
The show also states that a disputed error is "nearly impossible to expunge." Pratt reacted, "The notion that it is difficult to dispute an error is just wrong. It is irresponsible to suggest to consumers that they might as well not take action when they have a question about their credit report. CDIA and our members encourage consumers to get a copy of their credit report from each of the national credit reporting agencies at www.annualcreditreport.com." Research released by the Political and Economic Research Council in 2011 shows that consumers in their study were satisfied with the results of the dispute process in 95% of the cases.
Statements made on the show suggest that the actions of CDIA members are in violation of federal law. Pratt responded "Federal courts have found just the opposite on multiple occasions." Further, Congress directed the Federal Trade Commission to conduct a year-long review of the dispute process and they did not find any violations of law.
"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," Pratt said.
- The 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 required this because it correctly recognized that a credit bureau cannot, on its own, determine whether or not a consumer, for example, missed a payment.
- Congress imposed a duty on lenders to reinvestigate a consumer's dispute because it recognized that lenders have the relevant data about their customer's loan.
- The statement "They're not doing an investigation at all" in the "60 Minutes" piece is incorrect. First, it ignores the timeframes dictated by federal law under which a dispute must be resolved. In almost every instance, we not only meet that deadline but complete the dispute process well within the time allotted. Second, it ignores recent findings by the new Consumer Financial Protection Bureau (CFPB) which show 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 process."
"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."
Included with this release is a full statement CDIA submitted to 60 Minutes.
CDIA Statement Provided To 60 Minutes February 6, 2013
The core business of credit reporting agencies is ensuring the accuracy of consumer credit files. This helps lenders rapidly and accurately assess the credit risk of individual consumers and assures consumers that credit files are an accurate reflection of their credit and repayment history. The more accurate our data, the more accurate assessment the lenders can make of consumer risk.
Repeated studies have shown that despite the fact that billions of individual pieces of data are received and processed each year, the credit reports assembled provide highly accurate assessments of consumer history that both businesses and consumers can use to make informed financial decisions.
For example, the Consumer Financial Protection Bureau looked at the issue of credit accuracy last December. Their analysis found that only between 1.3% and 3.9% of consumers disputed information in their credit report that they believed was in error. Even that number may overstate the number of actual inaccuracies, since the study did not indicate how many of the disputes were the result of an actual error, instead of mere requests to update information or the result of fraudulent credit repair companies who attempt to scam consumers into disputing accurate data. Another recent study by the Policy and Economic Research Council concluded that only one-half of one percent found an error that would cause the consumer to pay a higher price.
It is possible that a credit report might include inaccurate information. For example, information may get into the wrong credit file because of identity theft or a consumer's lender may only have partial identifying information when an account is opened or the consumer may not choose to provide it. That is why we encourage consumers to check their credit reports for accuracy, preferably before applying for credit (www.annualcreditreport.com) and why credit reporting agencies have instituted 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.
Studies show that consumers who use the dispute process are generally satisfied with the results and that credit bureaus are handling disputes in a timely manner. The Policy and Economic Research Council study found that 95% of consumers were satisfied with the outcome of their disputes.
Credit reporting agencies have a simple goal: we want to provide the most accurate data possible, and in those few situations when it's not accurate, we resolve 3 out of 4 disputes within 14 days.
While, as in any business, there are examples of disputes that are more difficult or instances where human-error impacts a result, we are proud that every statistically valid study has shown conclusively that the vast majority of credit reports are accurate and that 95 percent of disputes are handled quickly and to consumers' satisfaction.
SOURCE Consumer Data Industry Association
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