Washington, D.C. — As the Senate began debate on a crucial credit reporting bill today, the Consumer Federation of America urged Senators to strengthen the legislation by providing greater financial privacy protections for consumers.

“Americans in large numbers continue to say that they want more privacy protections,” said Travis Plunkett, CFA’s Legislative Director. “The Senate needs to toughen up this bill to allow consumers to stop huge financial services corporations from sharing sensitive financial information without their consent.”

The Senate Credit Reporting Bill, S. 1753

The Senate bill, which amends the Fair Credit Reporting Act, offers some substantial steps forward for consumers in providing greater federal oversight of credit report accuracy, medical privacy, identity theft and in enhancing consumer access to credit reports and scores.

• On identity theft, the bill would require credit bureaus to place fraud alerts on the accounts of identity theft victims, instruct federal agencies to direct credit bureaus to identify and prevent identity theft, and, in many cases, prohibit the sale or transfer of debt associated with identity theft. It would also allow consumer to block the reporting of credit lines associated with identity theft.
• Mortgage lenders would also have to provide credit scores to consumers applying for mortgage loans.
• Some credit bureaus would have to make free credit reports available to consumers once a year upon request.
• To improve credit report accuracy, federal agencies would have to issue regulations requiring credit bureaus to maintain accurate and complete credit reports, to conduct audits of report accuracy and to track accuracy complaints.
• The bill ensures that all consumers who receive offers of credit on less than favorable terms receive a notice informing them of this fact, allowing them to immediately get a free copy of their credit report to check for errors.
• Credit bureaus and creditors would also have to comply with a number of medical privacy restrictions that ban the sharing of medical information.
• The Federal Trade Commission would have to conduct a study of the potential disparate impact of credit and insurance scores on minorities.

Needed Improvements to the Senate Bill

• On financial privacy, the bill should allow consumers to control the sharing of financial information between corporate affiliates. The Feinstein-Boxer amendment would allow consumers to chose to “opt out” of the sharing of information between corporate affiliates, such as a bank and an insurance company. Right now, the bill does nothing to allow consumers to review or dispute affiliate-shared information, or to even know that if this information was used to deny them credit. Even worse, the bill’s extremely weak provision on affiliate information could be used to strike down or stop enactment of more protective state laws.
• On accuracy of credit reports, the bill should confront a fundamental problem that causes inaccuracy and contributes to identity theft – namely, the weak duties on creditors to report information accurately and to be accountable if they fail to do so. FCRA legislation passed by the House would require that creditors meet a higher standard of accuracy when submitting credit reporting information.
• On identity theft, the bill should mandate that creditors cooperate with identity theft victims and direct credit bureaus to forward a fraud alert on an account when only a credit score is requested by a creditor. Without this fraud alert requirement, a department store deciding whether to offer “instant credit” might not learn that they are about to offer credit to an identity thief.
• Several serious loopholes on the distribution of free credit reports are also in the bill. The bill specifically bans consumers from using the single most convenient method to request a credit report: the telephone. Instead, consumers must use the Internet or mail a request. The bill only requires the three largest national credit reporting agencies to provide free reports to consumers, exempting a range of credit bureaus that collect credit information for insurance, tenant screening and medical purposes.

CFA is a federation of some 300 pro-consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.