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Good News for Consumers: Credit Bureaus Launch National Consumer Assistance Plan

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When you consider the power they have over your financial life, shouldn’t it feel like the credit bureaus are more for you than against you? New York Attorney General Eric Schneiderman certainly thinks so, as evidenced by the settlement agreement he announced with Experian, TransUnion, and Equifax.

The post Good News for Consumers: Credit Bureaus Launch National Consumer Assistance Plan appeared first on Creditinfocenter Blog.



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I think this action represents a significant change and huge "win" for consumers. I thought I'd post an additional article on the issues, along with a link to the NY Attorney General's press conference. In addition, I'm posting more details on the forthcoming changes for the message board's review.

 

http://www.bloomberg.com/news/articles/2015-03-09/credit-bureaus-deal-to-improve-accuracy-huge-for-consumers

 

http://www.ag.ny.gov/press-release/ag-schneiderman-announces-groundbreaking-consumer-protection-settlement-three-national

 

The Attorney General’s settlement requires the CRAs to institute a number of reforms to increase protections for consumers, over a three year period. Many of those reforms will be instituted nationwide:

 

1. Improving the Dispute Resolution Process

 

Consumers have the right to challenge inaccurate information in their credit report by initiating a “dispute” with a CRA. Attorney General Schneiderman’s investigation of the CRAs revealed that in some cases, the CRAs use a fully-automated process in which they reduce consumers’ disputes to a three-digit code and submit the code and any documentation to the creditor. If the creditor verifies the challenged information, the CRA rejects the consumer’s dispute without conducting any further investigation.

The agreement requires that the CRAs employ specially trained employees to review all supporting documentation submitted by consumers for all disputes involving mixed files, fraud or identity theft. The agreement also requires that, for all categories of disputes, when a creditor verifies a disputed credit item through the automated dispute resolution system, the CRA will not automatically reject the consumer’s dispute, but rather, a CRA employee with discretion to resolve the dispute must review the supporting documentation.

 

2. Medical Debt

Over half of all collection items on credit reports are medical debts. Medical debts often result from insurance-coverage delays or disputes. As a result, medical debt may not accurately reflect consumers’ creditworthiness.

Pursuant to the Attorney General’s agreement, the CRAs will institute a 180-day waiting period before medical debt will be reported on a consumer’s credit report. This waiting period will provide extra time to permit resolution of delinquencies that result from insurance delays or disputes. In addition, while delinquencies ordinarily remain on credit reports even after a debt has been paid, the CRAs will remove all medical debts from a consumer’s credit report after the debt is paid by insurance.

 

3. Increasing the Visibility of AnnualCreditReport.com

 

Many consumers are not aware that they are legally entitled to one free annual credit report from each CRA via AnnualCreditReport.com. Consumers searching for a credit report online frequently find a CRA’s website, and many consumers subscribe to a CRA credit monitoring service to obtain a credit report or purchase a credit report from the CRA without understanding that they can obtain a free credit report. The agreement requires the CRAs to include a prominently-labeled hyperlink to the AnnualCreditReport.com website on the CRAs’ homepages. The hyperlink must appear directly on the CRAs’ homepages or via a drop-down menu visible on the homepages.

 

4. Additional Free Annual Credit Report

 

Consumers have a statutory right to obtain one free credit report per year from each CRA. The Attorney General’s agreement requires the CRAs to provide a second free credit report to consumers who experience a change in their credit report as a result of initiating a dispute. This requirement will permit consumers to verify that the CRA made the correction to their credit report without have to pay for a second credit report.

 

5. Payday Loan Debt

 

Predatory high-interest loans made in violation of New York lending laws are often referred to as “payday loans.” New Yorkers who take these loans often have trouble paying them back, damaging their credit, and making it more difficult to obtain a credit card, get a job, or even rent an apartment. The Attorney General’s agreement prohibits the CRAs from including debts from lenders who have been identified by the Attorney General as operating in violation of New York lending laws on New York consumers’ credit reports.

 

6. Furnisher Monitoring

 

Companies that provide consumer data to the CRAs (“furnishers”) must investigate consumers’ disputes and report their findings to the CRAs. The Attorney General’s agreement requires the three CRAs to create a National Credit Reporting Working Group (“Working Group”) that will develop a set of best practices and policies to enhance the CRAs’ furnisher monitoring and data accuracy. The Working Group will develop metrics for analyzing furnisher data, including: the number of disputes related to particular furnishers or categories of furnishers; furnishers’ rate of response to disputes; and dispute outcomes. Each CRA will implement policies to monitor furnishers’ performance and take corrective action against furnishers that fail to comply with their obligations.

 

7. Media Campaign About Consumers’ Rights

 

To ensure that consumers understand their rights, the Attorney General’s agreement requires the CRAs to carry out an extensive consumer education campaign in New York via public service announcements and paid placements on television, radio, print media, and online. The campaign will be carried out over three years and will focus on consumers’ rights to: (a) obtain a free annual credit report; ( b ) dispute errors in their credit reports; and © submit documents in support of disputes. The agreement also requires the CRAs to expand the consumer education materials available on AnnualCreditReport.com, the website that consumers can use to obtain their free annual credit report.

 

All three credit reporting agencies cooperated in the Attorney General’s investigation and demonstrated a strong commitment to reforming practices to increase protections for consumers.

 

Tips for Consumers:

  • You can get a free credit report from each of the CRAs once each year.
  • To get your free report, visit www.AnnualCreditReport.com or call (877)-322-8228.
  • You can request all three credit reports at the same time, or you can request the reports separately. Spreading out the reports permits you to monitor your credit over the course of the year.
  • It is important to review your credit report regularly in order to check for errors.
  • If you find an error, you have the right to dispute the error with the CRA and with the company that provided the information.
  • You have the right to submit copies of documents that support your dispute. You may submit such documents to the CRAs online via the CRAs’ websites.
  • Watch out for websites that claim to offer “free” credit reports, but require you to subscribe to their fee-based services in order to obtain the credit report.

New York City residents who need help understanding their credit report or improving their credit score, should call 311 to find their nearest Financial Empowerment Center for free financial counseling.

This case was handled by Special Counsel Carolyn Fast, Assistant Attorney General Melissa O’Neill and Bureau Chief Jane M. Azia, all of the Consumer Frauds Bureau, and Executive Deputy Attorney General Karla G. Sanchez.

A copy of the agreement can be read here.

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