Secretive Credit Bureaus Plague Consumers
Today's Washington Post reports on virtually unknown credit bureaus such as L2C, an Atlanta credit bureau that collects consumer credit information from such sources as magazine subscriptions, cable bills, auto warranty companies, prepaid cards, payday lenders, and rent-to-own companies. L2C's reports cover the 30 million people who live on the margins of the banking system.
L2C is not the only credit bureaus that are virtually unknown to consumers. ChoicePoint, which is owned by the parent company to LexisNexis, sells reports to creditors based on tax assessments, and criminal histories. Chex Systems, TeleCheck and SCAN report to banks and others on bounced checks. Teletrack has payday lender consumer information. Alliant Data provides consumer credit information on installment lending.
Some 63 telecom companies provide customer credit information to three companies, National Communications, Telecom and Utilities Exchange. Whether a consumer can get service or pay a deposit may depend on information collected by these companies.
When someone is rejected for a job or credit because of a report from one of these companies, the individual may not be told the source of the report or given a chance to correct errors in the report.
This situation cries out for regulation. Fortunately, the new Consumer Financial Protection Bureau, which goes into business on July 17 has the authority to regulate these companies.
To go to the Washington Post article, search the headline, "Little-known firms tracking data used in credit scores."
