Consumer Finance Insights
January 7, 2020

FTC and CFPB Host Workshop on Consumer Reporting Accuracy

On December 10, 2019, the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) jointly hosted a workshop on accuracy in consumer reporting.  The workshop was divided into four panels and featured a variety of speakers ranging from consumer advocates to industry representatives.  Each panel sought to address the unique challenges, complexities, and recent developments that impact accuracy in consumer reports.

The first panel discussed the role of furnishers of consumer reports, the need for accurate data, and the policies and procedures that furnishers can implement to ensure accuracy.  The panelists were Leslie Bender (Chief Strategy Officer and General Counsel, BCA Financial Services), Francis Creighton (President and Chief Executive Officer, Consumer Data Industry Association), Syed Ejaz (Policy Analyst, Consumer Reports), Nessa Feddis (Senior Counsel and Vice President, American Bankers Association), and Elisabeth Johnson-Crawford (Chief Technical Officer, Credit Builders Alliance).  Mr. Ejaz spoke on the broadening role of credit reports, stressing that credit reports may affect a consumer’s ability to finance a house and impact his or her employment prospects.  Mr. Creighton sharply criticized credit repair companies, emphasizing that removal of negative, but accurate, information has become a significant problem.  This problem arose in the context of credit repair agencies challenging accurate items on credit reports, which are then subsequently removed from credit reports when bureaus and furnishers fail to respond to the dispute within proscribed time limits.  Toward the end of the panel, the speakers addressed the use of alternative data.  Alternative data refers to non-traditional forms of payment history, such as rent, utility, and telecom bills.  They found that, while alternative data can be used to demonstrate that a consumer is meeting his or her monthly obligations, there can also be negative consequences, such as the inclusion of unreliable data.

The second panel addressed accuracy issues as they relate to traditional credit reporting agencies.  The panelists were Roberto Cera (Senior Manager, Data Acquisitions, TransUnion), E. Michelle Drake (Shareholder, BergerMontague, PC), Troy Kubes (Vice President and Deputy Chief Compliance Officer, Equifax), Ed Mierzwinski (Senior Director, Federal Consumer Programs, U.S. Public Interest Research Group), Donna Smith (Chief Data Officer, Consumer Information Services, Experian North America), and Michael A. Turner (President and Chief Executive Officer, Policy and Economic Research Council).  The panelists all generally emphasized the need for maintaining accurate data.  Mr. Kubes contended that accuracy is demanded in the marketplace by consumers, furnishers, and regulators, while Ms. Drake took the position that enforcement and litigation are the mechanisms that largely drive compliance with accuracy requirements.  Mr. Mierzwinski argued that any changes banks and credit reporting agencies have made to improve accuracy are not working—especially given the fact that one-third of all complaints in the CFPB database are related to issues with credit reporting.  Despite any skepticism, the panelists did find positive potential to improve accuracy and increase transparency for consumers, such as through the use of new technologies.

The third panel largely focused on accuracy issues arising from reliance on public court records.  The panelists were Terry W. Clemans (Executive Director, National Consumer Reporting Association), Eric Dunn (Director of Litigation, National Housing Law Project), Jamie Gullen (Supervising Attorney, Community Legal Services), Ariel Nelson (Staff Attorney, National Consumer Law Center), Melissa L. Sorenson (Executive Director, Professional Background Screening Association), and Matt Visser (Chief Executive Officer, VICTIG Screening Solutions).  The panelists cited redaction of important personally identifiable information, common names, and incomplete resolution information as common problems that lead to inaccurate or mismatched reports based on public records.  Mr. Dunn explained that public records are not prepared with the intention of using them as guiding sources in background checks, which renders them susceptible to inaccuracies.  He further addressed the unique challenges in the housing context.  For instance, unlawful detainer cases are often filed against groups of people, as opposed to individuals, and they generally end in settlements, resulting in important details of the case being absent from tenant records.  Ms. Nelson explained that, because consumers often do not see the background checks that are used to make decisions about them, they cannot challenge or even identify potential inaccuracies.

The fourth panel focused on disputes in both the credit reporting and background screening context.  The panelists were LaDonna Bohling (Chief Compliance Officer, Receivable Solutions), Eric J. Ellman (Senior Vice President, Public Policy and Legal Affairs, Consumer Data Industry Association), Stephanie Froelich (Chief Executive Officer, True Hire), Kristi C. Kelly (Attorney, Kelly & Guzzo), Rebecca Kuehn (Partner, Hudson Cook), Chi Chi Wu (Staff Attorney, National Consumer Law Center).  The panelists first touched on access to credit reports.  Mr. Ellman noted that consumers can now more easily access their credit reports than ever before, while Ms. Wu contended that that there is still room to increase transparency and free access to credit reports.  In terms of inaccuracies, Ms. Kelly explained that it is common for consumers to have tenant and employment screening reports that contain data collected from many sources, rendering it difficult for consumers to pinpoint inaccurate information.  She commented that this is a particularly difficult problem in the tenant screening context because properties move quickly through the market, and negative inaccuracies may result in a tenant’s loss of a unit and his or her application fee.  On the furnisher end, Ms. Kelly discussed that many furnishers are expected to process a certain amount of disputes per hour, facing repercussions for failing to meet quota expectations.  Throughout the course of the panel, the panelists emphasized the continued need for consumer education in the dispute process.

During her closing remarks, Maneesha Mithal, associate director of the FTC’s Division of Privacy and Identity Protection, found that a common theme among every panel was that further guidance on accuracy is required.  She reasoned that a concept of accuracy cannot just be learned through the dispute process.  Instead, accuracy must also come from the front end of consumer reporting.

Editor’s Note: This post was authored by guest author Briana Whinnie, an attorney in Goodwin’s Litigation Department.

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