60 Minutes & the FTC Reports on How the Credit Bureaus Fail to Correct Serious Errors in Consumers' Credit Reports
Last night, 60 Minutes aired a fine report on the failure of Experian, Equifax and Trans Union to comply with the FCRA's requirement that they investigate and correct errors in consumers' credit reports.
Steve Kroft of 60 Minutes traveled to Santiago, Chile where Experian employs most of its credit dispute employees. Three ex-Experian employees, who handled disputes sent by US consumers, told Steve their only function was to reduce the dispute to a two-digit code and forward it to the creditor that made the report and if the creditor said its report was correct, they verified the report to the consumer. They had no authority on their own to change the customer's report if the creditor said the report was correct. They never contacted the consumer to ask questions and had no way to do so. The were required to handle 90 disputes a day which means they spent about 5 minutes on a dispute!
After interviewing consumers who explained they were not able to get the bureaus to correct errors on their credit reports, Steve Kroft posed as a consumer and called Equifax' 800 number to resolve a dispute; he was connected to an employee in Mumbai, India, who admitted he had no authority to change a consumer's report if the creditor said it was correct.
The credit bureaus' method of dispute resolution saves them tons of money, but does little for consumers.
The 60 Minutes story was based in part on a FTC study released today that found that 21% of consumers had verified errors in their credit reports, 13% had errors that affected their credit scores, and 5% had errors serious enough to be denied or pay more for credit.
The FTC study, which took 10 years to prepare, found that the percentage of serious errors was about 10 times the percentage reported by a May 2011 industry-funded study, which had claimed that only 0.51% of credit reports had errors serious enough to cause the consumer to be denied or pay more for credit. The FTC Chairman said on 60 Minutes that the new study provided “pretty troubling information” and that the error rates were “pretty high”.