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Fair Credit Reporting: 4.3.3.4 Mixed Public Records Information
Another category of reported data that undergoes a matching process is public records. Each public record contains some identifying criteria such as name, address, and sometimes date of birth or Social Security number (SSN). The CRA matching process is applied to these items in much the same way as for furnished credit accounts. This matching process may even occur first at the public records vendor.365
Fair Credit Reporting: 4.3.3.5 Mixed Files Resulting from Subscriber Inquiries
Another source used by the CRAs to build and match data is the subscriber’s inquiry. When a subscriber inputs identifying information to request a report, this information is then used by the CRA to do two things. Applying the same matching process and criteria as used to assign accounts to particular files, the inputted inquiry criteria is used to determine if there is an existing file with a sufficiently close matching score to permit the CRA to furnish a report. In addition, the inquiry criteria are used to determine into which file the inquiry history will be placed.
Fair Credit Reporting: 4.3.3.6 Consumer Source of Information Used for Matching
A final source that may influence mixed files is the consumer herself. While the CRAs’ response to disputes over tradelines is often less than satisfactory,392 the CRAs are more flexible when a consumer disputes a current or previous address reported in the file.
Fair Credit Reporting: 4.3.3.7 Mixed Files and Identity Theft
The problems that lead to mismerged files aggravate the effects of identity theft.394 Most identity theft problems are actually caused by the CRAs’ loose matching procedures. In fact, identity theft is a misnomer. The criminal actually steals from the creditor using only a partial set of a consumer’s identifiers.
Fair Credit Reporting: 4.3.3.8 Fixing a Mixed File
Consumers face significant proof issues when trying to prove that a file does not belong to them. Trying to prove a negative such as “this is not my account” is a common problem when files are mixed or mismerged. Consumers may have to submit affidavits or provide documentation such as birth certificates or driver’s license numbers in order to prove that an account does not belong to them. The downside of disclosing such information is the potential for identity theft or other misuse of the information.
Fair Credit Reporting: 4.3.3.9 Fragmented Files
In addition to mixed files, the nationwide CRAs’ matching criteria sometimes result in “fragmented” or “frag” files, that is, multiple and incomplete consumer reports for the same individual.405 These fragmented files are created when there is neither an exact match, nor a match of sufficient closeness to exceed the matching score threshold, and is the opposite problem of the mixed file.
Fair Credit Reporting: 3.5.3.1 Generally
The FCRA mandates that CRAs require the consumer to supply “proper identification” as a condition of the consumer receiving a consumer report.417 In addition to this legal mandate, CRAs have good reason to request proper identification from the consumer, because the CRA may be held liable for furnishing a report to a person who does not have a permissible purpose for obtaining it.418
Fair Credit Reporting: 4.3.3.10 Consumer Reporting Agency Errors in Retrieving Consumer Files
Inaccuracies in a consumer report may also be caused by file retrieval—that is, when the CRA retrieves and sends a consumer’s file in the consumer report it issues in response to an inquiry.
Fair Credit Reporting: 4.3.4 Identity Theft
Identity theft poses a unique combination of inaccuracy problems. It is caused by multiple failures of the credit industry to protect the privacy and accuracy of a consumer’s credit file. The 2003 FACTA amendments to the FCRA added a number of protections intended to address identity theft, which are discussed in Chapter 9, infra.
Fair Credit Reporting: 4.3.5.1 How Public Record Information Is Collected
There are many different types of public record information that can appear in a consumer’s file, e.g., bankruptcies, collection judgments, eviction proceedings, criminal records, and tax liens. In contrast to how nationwide CRAs passively receive data from creditors and others, previously they had affirmatively sought out and obtained public record data from their own third-party vendors.432 These vendors may also be “furnishers” governed by the FCRA.433
Fair Credit Reporting: 4.1.1 FCRA Places Two Separate Accuracy Obligations on Consumer Reporting Agencies
The FCRA does not impose liability on consumer reporting agencies (CRAs) simply for reporting inaccurate information. Instead, the Act requires that CRAs utilize reasonable procedures to ensure maximum possible accuracy of the information in a report (as described in § 4.4, infra).
Fair Credit Reporting: 4.1.2 Congressional Intent to Combat Inaccurate Consumer Reports
The FCRA’s legislative history shows a congressional intent that the Act protect consumers from the transmission of inaccurate information about them.7 The FCRA was drafted to “prevent consumers from being unjustly damaged because of inaccurate or arbitrary information in a credit report.”8 One legislator has described the adverse effect of bad credit histories as: “A poor credit history is the ‘Scarlet Letter’ of 20th century America.”9
Fair Credit Reporting: 4.1.3.1 Studies and Reports Show Consumer Reports Prone to Errors
A number of surveys, studies, and reports have shown that inaccuracies occur with significant frequency in the consumer reports. These studies come from a number of sources, including consumer groups, government agencies, independent pollsters, and even the industry itself. Inaccurate information is troublesome since it can adversely affect whether consumers are granted credit, and with the practice of risk-based pricing, how much they pay for it.18
Fair Credit Reporting: 4.1.3.2 Studies By Consumer Groups
One of the earliest studies on inaccuracies in consumer credit reports was a 1998 survey by U.S. Public Interest Research Group (U.S. PIRG) of 133 consumers who reviewed their own consumer reports.22 This report found that seventy percent of these consumer reports contained an error and twenty-nine percent contained an error serious enough (such as delinquencies or accounts that did not belong to the customer) to cause a denial of credit.23 Six years later, another U.S.
Fair Credit Reporting: 4.1.3.3.1 FACTA’s mandate
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) directed the Federal Trade Commission (FTC) to study and report to Congress on various issues related to the accuracy and completeness of consumer reports. The study occurred over a period of eleven years, with the most significant report to Congress in 2014. Several interim reports were also completed. These interim reports are discussed below.35
In addition to its accuracy study, the FTC was directed to study four specific proposals to improve the operation of the FCRA:
Fair Credit Reporting: 4.1.3.3.2 The FTC’s initial report
The FTC issued its first accuracy report to Congress in 2004.40 This report reviewed the prior studies on accuracy and noted the limitations of each study. In response to these limitations, the FTC has proposed a two-phase study.
Fair Credit Reporting: 4.1.3.3.3 The FTC’s pilot studies
The first phase of the FTC’s study on accuracy—the first pilot study—was completed by December 2006.45 Thirty-five consumers were recruited. These consumers received assistance from an independent contractor hired by the FTC in obtaining and reviewing their consumer reports for errors.
Fair Credit Reporting: 4.1.3.3.4 The FTC’s large-scale study
In December 2012, the FTC issued its report on the final phase of its studies, a nationwide study of credit report accuracy involving 1001 participants.60 The study participants were selected to have credit scores that matched the national distribution of credit scores as closely as possible.
Fair Credit Reporting: 4.1.3.3.5 The FTC’s follow-up study
In January 2015, the FTC released a follow-up study to its 2012 large-scale study on the accuracy of credit reports.69 The follow-up study focused on 121 consumers who had at least one unresolved dispute from the 2012 study and participated in a follow-up survey.
Fair Credit Reporting: 4.1.3.4.1 Federal Reserve and GAO studies
In addition to the FTC studies pursuant to FACTA, other government researchers have issued findings about inaccuracies in consumer credit reporting. A 2003 study by the Federal Reserve Board (FRB) found that information in credit reporting files is often incomplete and contains duplications and ambiguities.76 The study looked at over 300,000 consumer files from one of the three nationwide CRAs.
Fair Credit Reporting: 4.1.3.4.2 FTC complaints
The prevalence of inaccuracies in consumer credit reports is also indicated by the frequency of complaints to government regulators.
Fair Credit Reporting: 4.1.3.4.3 CFPB studies
The CFPB has not yet undertaken an accuracy study similar to the FTC’s study discussed in § 4.1.3.3.4, supra. However, several of its reports generally discuss accuracy deficiencies with the nationwide CRAs.
Fair Credit Reporting: 4.1.3.4.4 CFPB complaints
The CFPB began accepting credit and consumer reporting complaints in October 2012.94 Credit and consumer reporting has been by far the top category of complaints to the CFPB, which received over 978,000 such complaints in 2022, constituting 75% of the overall complaints received by the Bureau that year.95 Between January 2020 and September 2021, the CFPB received 700,000 complaints specifically against th
Fair Credit Reporting: 4.1.3.5 Studies by Industry and Others
An early study of 1500 reports from the three nationwide CRAs found that forty-three percent contained errors.