This past Sunday 60 Minutes aired a report about the enormous amount of mistakes made by credit reporting agencies. (http://www.cbsnews.com/8301-18560_162-57567957/40-million-mistakes-is-your-credit-report-accurate/).
In the report Steve Kroft cites to a newly released 8-year long study conducted by the FTC into the big 3 credit reporting agencies (Experian, TransUnion, and Equifax) saying that 40 million Americans have an error on their credit reports and 20 million have a mistake significant enough to lower their credit score. This translates to one in every five adults with an error, which the Ohio attorney general has called “unconscionable.”
The segment explains the harms faced by individuals with mistakes on their credit records. The show concentrates on one woman who had a six year battle with the big three companies. She was denied credit and couldn’t refinance her mortgage or undersign a loan for her children. When she ordered her credit reports there was nothing alarming. She only found out what the problem was by peaking at her file at a bank when nobody was looking. She learned that the credit reports that banks get are different from what the consumer can get. In her case the large debts of a woman with the same first name, but a completely different last name from a different state somehow got added to her file. While it seems like this would be easy to fix, it turns out that it was impossible. The companies refuse to undergo the reasonable investigations required by the FCRA. 60 Minutes interviewed former employees of Experian who said that they did not have the power to do even the most basic investigation and were instructed to always take the word of the creditor to be true. The only way that she was able to finally prevail was by filing a lawsuit. The show says that the credit reporting companies are not interested in improving their policies. They reason that it is cheaper to every so often pay $ 1 million in punitive damages than it would be to implement a system that is in line with the basic fair information practice principles.
60 Minutes explained this story as “a horror story worthy of Hitchcock or Kafka.” While these analogies aren’t bad, what is more apt is the movie Brazil, where a fly gets jammed in a typewriter causing a slight change in a name printed on a government document, which sets into place a very unfortunate series of events. Rather than give spoilers, you should watch the movie (http://www.imdb.com/title/tt0088846/). In any event, now that there is some press about the practices of the credit reporting agencies, perhaps changes will be made and we can avoid the path that is currently set towards Terry Gilliam’s dystopian bureaucratic vision captured in Brazil.