Credit Bureau Association Disputes 60 Minutes Contentions of 40 Million Errors

The credit reporting industry's trade group, the Consumer Data Industry Association (CDIA) is vigorously disputing much of a CBS 60 Minutes (watch below) report that aired last Sunday, February 10.  CDIA has issued a barrage of press releases documenting its correspondence with the show's producers and presenting its responses to the show's assertions.

The 60 Minute segment which can be viewed below focused on the dispute resolution process used by major credit reporting agencies (CRAs).  It presented some findings from a Federal Trade Commission eight year study due to be released the following day and interviewed FTC Chairman  Jon Leibowitz who said that one out of five of the 200 million credit bureau files has an error and one out of ten has an error that might lower the credit score.  CBS reporter Steve Croft also interviewed Ohio Attorney General Mike DeWine who said that "there was no doubt" CRAs were breaking the Fair Credit Reporting law.

The centerpiece of the show was an interview with a woman who, after repeatedly being denied credit starting in 1999 finally found that, while the free credit report provided to her was clean, potential lenders were uniformly provided a different version with highly negative information on an unrelated party. It took better than a decade and a lawsuit against two of the CRAs to get her credit cleared.

CBS said it approached the major credit reporting companies in December requesting interviews about their dispute resolution procedures.  The companies referred CBS to CDIA which declined to appear.  CDIA said of the invitation, "Knowing 60 Minutes reputation for the sensational at the expense of the factual, we decided the better alternative was to respond in writing to any questions they had rather than on camera where most of our responses would be edited out of context, if at all."

The Association provided a formal statement to CBS which said in part:  "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."  CDIA quoted a Consumer Financial Protection Bureau (CFPB) study which found that between 1.3% and 3.9% of consumers disputed information in their credit report that they believed was in error and another from the Policy and Economic Research Council that concluded there was only a one-half of one percent error rate that would result in a consumer paying a higher price for credit

The statement continued; when errors are found, "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."  Consumers who use the dispute process, CDIA said, are generally satisfied with the results; the Policy and Economic Research Council study found 95% consumer satisfaction.  

On February 1 CBS provided a list of questions to Stuart Pratt, President and CEO of CDIA which asked for comments on the DeWine statement and on assertions by former Experian dispute resolution employees to the effect that they processed up to 90 disputes a day without having access to phone, email, or documentation supporting the consumer's complaint.  Pratt responded with statistics from a Federal Trade Commission study of the dispute process done in 2003, results of a more recent internal study and with a statement from Experian which directly contradicted the information provided by its former employees.   The questions and responses can be read in their entirety here.

On Friday February 9 CDIA saw a promotion for the Sunday broadcast and issued a preemptive press release that said the promo "demonstrates that '60 Minutes' has selectively interpreted an upcoming FTC study to ignore the most significant results.  The FTC study shows that 98% of credit reports are materially accurate, a fact it appears '60 Minutes' is set to ignore."  Further, CDIA said, FTC found 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, Pratt continued.  "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."

The show also states that a disputed error is "nearly impossible to expunge," Pratt said.  "It is irresponsible to suggest to consumers that they might as well not take action when they have a question about their credit report."

He also disputed allegations that actions of CDIA members are in violation of federal law saying that federal courts have found just the opposite on multiple occasions.  "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," he 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 recognized that only the lender has the relevant data to determine if their reporting is in error.  
• The 60 minute statement that "They're not doing an investigation at all" ignores the timeframes dictated by federal law under which a dispute must be resolved. In almost every instance resolution is well within the deadline.  Second, it ignores recent findings by CFPB 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."

On Monday the long-term FTC study cited by 60 Minutes was released.  CDIA said the report "Reconfirmed the findings of several recent studies that conclude that credit reports are highly accurate and play a critical role in facilitating access to fair and affordable consumer credit. The FTC's research determined that 2.2 percent of all credit reports have an error that would increase the price a consumer would pay in the marketplace and that fully 88% of errors were the result of inaccurate information reported by lenders and other data sources to nationwide credit bureaus. The study also showed that 95 percent of consumers are unaffected by errors in their credit report."