A chance for consumers to 'know what the credit bureaus know'

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WASHINGTON — Officials from the Federal Trade Commission and Consumer Financial Protection Bureau told a Senate panel Thursday that they support the goals of bipartisan legislation to give consumers more control over their credit reporting data.

The legislation, which has not yet been introduced, is being authored by Sens. John Kennedy, R-La., and Brian Schatz, D-Hawaii, and is based on an amendment they had tried to attach to the recently passed regulatory relief legislation. Their bill would require the three major credit reporting agencies to create an online portal for consumers to check their credit scores and reports free of cost.

“Our bill tries to empower consumers to, for instance, know what the credit bureaus know,” Schatz said at a hearing of the Senate Banking Committee.

Maneesha Mithal, an associate director at the consumer protection bureau of the FTC, called the proposal a “good bill.”

“One of the problems for consumers is that it’s very difficult to know how to navigate the credit reporting system,” Mithal said. “So I think the easier we can make it for consumers, the more tools we can provide for them, the more one-stop shops for them, I think that’s very useful.”

Peggy Twohig, an assistant director in the CFPB’s division of supervision, enforcement, and fair lending division, said she too supports the goals of the legislation.

“I would say that all the issues which you just pointed out are the reason why we’ve prioritized at the bureau, supervising both the" credit reporting agencies and the credit data furnishers, Twohig said.

Kennedy said the legislation would force the major credit bureaus — Equifax, Experian and TransUnion — to come up with a system to make it easier for consumers to address problems in their credit histories.

“So those people can get it fixed, and they can get it fixed quickly, and they can get it fixed efficiently, and they can get it fixed inexpensively, and they can get it fixed so they don’t have to miss their kids’ ballgames,” Kennedy said.

The senators noted that credit reporting agencies make mistakes in consumers’ credit reports roughly 5% of the time. And the consumer complaint process related to incorrect data is time-consuming and often doesn’t lead to solutions.

Since last year's massive data breach breach at Equifax — discovered by the company at the end of July 2017 but publicly disclosed the following September — members of Congress have been grappling with how to ensure consumers can protect their personal information and hold credit reporting agencies accountable for breaches.

Senators at the hearing urged Banking Committee Chairman Mike Crapo, D-Idaho, to prioritize legislation to fix some of the holes in the credit reporting system.

Currently, the FTC has some supervision authority over the credit reporting bureaus, but cannot impose civil penalties on them for data security issues.

“To me, it’s remarkable … that they have paid no penalty to date,” Sen. Mark Warner, D-Va., said of Equifax at the hearing. “They took a little bit of a hit in the market, but they’ve almost recovered back because they don’t expect Congress to do its job to give the FTC the ability to put a civil penalty process in place.”

In January, Warner and Sen. Elizabeth Warren, D-Mass., introduced a bill that would create mandatory penalties for data breaches at credit reporting agencies.

That bill would also create an Office of Cybersecurity at the FTC, which would conduct cybersecurity inspections at the credit reporting agencies. It would also give the FTC the authority to write new regulations establishing data security standards.

Mithal agreed with Warner and Warren that the FTC should have the authority to seek civil penalties.

Sen. Tim Scott, R-S.C., also urged the committee to take up a bill that already passed the House that would allow the reporting of positive information related to telecommunications and utility payments to credit reporting agencies.

The bill, which has bipartisan support, would give millions of Americans who are currently “un-scorable” access to credit, Scott said.

Twohig said the CFPB is interested in looking at how alternative data can be used in evaluating consumers’ credit.

“Alternative data of the type you are discussing is also something that the bureau is interested in and learning more about and is monitoring,” Twohig said. “In fact, the bureau issued last year a request for information from the public to get information about different kinds of alternative data.”

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