The New York Times today has an article about freecreditreports.com. You've probably seen their commercials, which feature actors who sing songs about how bad their life is since their identity was stolen. Though advertised as free, the company's ultimate goal is to lure unsuspecting consumers to pay for its credit monitoring service, so apparently the FTC worries that its tactics are misleading. That may be true, but I have a different concern.
There are several companies that offer these services, despite the fact that, by law, you can already get your credit report from each of the three credit bureaus once per year for free. Of course, such monitoring services offer better surveillance for paranoid Americans. But the Times notes something specific about freecreditreport.com -- it's owned by Experian, one of the three major credit bureaus.
One of my biggest objections to last spring's credit card regulation legislation was that it completely failed to address the credit bureaus, which include Equifax and TransUnion, along with Experian. These bureaus' scores arguably have more to do with consumers' ability to get credit and the price they pay than any other factor. Yet, consumers are utterly powerless to the bureaus' whims.
So let's think about what Experian is doing. It's compiling information about consumers' credit histories on behalf of creditors. Those creditors provide Experian with that information and pay for its credit rating services and broader database access. So Experian's profits are wholly based by it owning your credit history. How is it fair that consumers should have to pay for full access to their own credit histories? They should be able to access that information whenever they wants, not just once a year. After all, the histories are theirs.
Of course, this is just one problem with the bureaus. I have no clue why they have no duty to consumers to ensure that their credit histories are accurate and fairly depicted. As I learned some years ago, no matter how correct the consumer is, it always boils down to their word against the creditors'. Consumers can file "disputes" that appear on items in their credit histories, but unless the creditor drops an incident, it still affect the scores. Sure, consumers could escalate a dispute to a lawsuit, but few incidents are worth the legal fees they'd have to incur.
Why, I wonder, don't consumers have more rights when it comes to the practices of these credit bureaus? They're private corporations, yet they virtually control the consumer credit market. If they say you have a low credit score, then you probably won't get credit.
Clearly, Congress has bigger fish to fry when it comes to financial regulation right now. But once things calm down, I would really like to see some attention paid to the credit bureaus. They have a lot of power and virtually no oversight. That's usually the ideal situation for the government to take note.
Some company pays to collect data, some of which involves you.
Why should you have a right to the fruit of that labor? Just because it involves you?
Right, but the data is about you and other companies make decisions based on the validity of that data. So shouldn't you at least have complete access to it, and significant power to question its accuracy?
You and I are in total agreement sir.
Personally, I'm waiting on some innovative young law clerk or Congress person to realize the anti-trust angle of this arrangement and act on it.
The credit reporting agencies are in business to collect personal financial purchase and payment activity of consumers and sell it to anyone who will pay for it. While Experian, Equifax, and TransUnion collect information and sell information, they assume no responsibility for the validity or protection of the personal consumer payment history, employment history, or address or SSN information.
A major contributor to the level of identity theft activity in the United States is that the credit report agencies have convinced financial institutions, government institutions, and businesses that they cannot make their own decisions without the incredibly widespread dissemination of personal financial, address, and employer information by the credit reporting agencies. The result is an incredible amount of sensitive consumer information distributed widely without the consumer’s knowledge or approval.
Credit reporting agency customers include the banks, businesses, and other financial institutions that are too lazy to set up their own credit qualification procedures, or make assessments of individuals requesting credit or services.
Almost none of the highly paid financial and business experts are capable, or able, of making credit, or other, decisions on their own. They still wonder how they almost destroyed the economy.
There is hope for consumers, but is doesn’t come from the credit reporting agencies. Consumers have three powerful tools to monitor their credit reporting activity, and also limit who can see it.
The first is to request their free credit reports from each of the three credit reporting agencies from www.AnnualCreditReport.com. Consumers can request a free annual from a different credit reporting agency every four months to keep informed about their credit reporting activity informed.
The second options for consumers wanting to protect their credit report history is to request a Fraud Alert from each of the three credit reporting agencies. The fraud alert is good for ninety (90) days. The credit report reporting agencies are supposed to notify the requestor via e-mail each time someone requests a credit report in their name or if an inquiry is made about the consumer's credit history.
The credit reporting agencies require a Fraud Alert to be renewed every 90 in the hopes that the consumer will forget. The credit reporting agencies also assume no responsibility if they fail to notify the consumer of new credit being extended in the consumer’s name.
Consumers wanting rigorous protection of their credit report information can request a Credit Freeze (sometimes called a security freeze) which stays in force until the consumer changes it. A Credit Freeze allows creditors to report payments or other financial activity such as late payments or non-payments to the credit reporting agencies, but rejects all requests for the dissemination of any consumer credit report information.
Any individual or business requesting credit history about a consumer with a credit freeze will be informed that no information is available. The result is that any business requiring a valid credit report will turn down any request for credit.
Consumers wanting this level of security should place the Credit Freeze with all three credit reporting agencies. Consumers under age 65 will pay a fee of $10 each.
The credit reporting agencies will provide consumers using a Credit Freeze with a phone number and password that enables them to end the Credit Freeze, or lift it temporarily for a $10 fee if the consumer needs to request additional credit, such as mortgage, car loan, or credit card.
Temporary Credit Freeze lifts take a few minutes to request by phone and are generally in place within a short period of time. The credit reporting agencies will also notify the consumer in writing by mail each time a Security Freeze is lifted or cancelled.
What is surprising and depressing is that the financial institutions, the financial columnists and media, and the credit reporting agencies that all pretend to be interested in the protection of personal credit, address, along with address and Social Security Number information rarely mention the advantages of the free Fraud Alerts and Credit Freezes that are available at no cost to the consumer, and only infrequently talk about the (really) free credit reports available on the Internet at www.AnnualCreditReport.com/.
The activities of the Experian www.freecreditreport.com and similar activities of Equifax and TransUnion are disingenuous and do not significantly contribute to providing the consumers to enhance their knowledge of personal financial management.
Most of the financial services sector, including the credit reporting agencies, has become so enamored about extracting every dollar possible from American consumers, they have totally disregarded any corporate responsibility for the safeguards to protect sensitive consumer credit and personal information, or providing products and service of actual value.
Can you really fault people though for offering a service that might not exactly be necessary? A whole lot of the services that people pay for might not exactly be vital, but they are after all services. If people want to pay for them then they have that right. That’s really the basis for our whole free enterprise system.
What I really think is happening here is that the government is kicking itself by getting outdone by someone with a better idea. freecreditreport.com is certainly more catchy and memorable than annualcreditreport.com, that probably is indeed responsible for some people not getting to the site they intended too. However, I don’t think that’s reason enough to go after the people.
What it basically comes down to in my opinion is how smart do you think the average consumer is. For someone to pluck down their credit card number for something and not read exactly what their getting into, is just plain idiotic in my opinion. Do we have to constantly provide safeguards to protect people from their own stupidity. I sure hope not. Credit monitoring is a service that these companies are providing, it is something that some people might like and find useful. Its not wrong to try and lure some people into it by offering them a little free incentive to try it out. It really is just Capitalism at its finest.
Check out my blog on whether or not the free credit report ads are misleading at... http://www.thedebtgazette.com/2009/11/are-free-credit-report-ads-misleading/
I am in agreement with several points - for example, the difficulty with which a consumer may access, contest, and revise incorrect information - but believe that this post is basically mistaken.
Credit reporting agencies are like google.
Like google, credit reporting agencies act as a vast repository of personal information, compiled from a number of sources, any of which may be incorrect. Access this information is widely available, and incredibly important (even life-changing) decisions are based upon it.
A person who is stung by false information cannot call Google and ask them to change it. (Ever try to remove a search result?) Instead, one must rely upon the good graces of the very person who posts false information (for whatever reason) to remove it.
Consumer protections should be strengthened, but the appropriate actor needs to be targeted. We don't target the library for defamatory books; nor google for defamatory blog postings.
Consumers need a quick, easy, and readily-enforceable manner to require lenders to update inaccurate (or simply disputed) information. It will not help consumers to require credit reporting agencies adjudicate credit dispute between lenders and borrowers. They have neither the resources (millions of tradelines are entered daily) nor the expertise (as do, for example, the courts) to do so.
We need to target those who initially publish the false information - e.g. credit card companies.
(Note: the above is simplified, and does not take into account a number of consumer protections provided by the Fair Credit Reporting Act. These protections are not given to people with respect to googled information.)