Who Is Policing The Credit Bureaus?

The Consumer Financial Protection Bureau (CFPB) has been given the authority to police the three major credit bureaus to make sure that consumers are getting the protection they need. For debtors exiting bankruptcy, an accurate credit report can mean the difference between effectively rebuilding their credit rating and languishing in disputes with creditors.  Right now, credit bureaus police themselves with a little oversight by the Federal Trade Commission. When debtors have disputes they submit a letter with evidence to the credit bureau who then contacts the creditor. However, the credit bureaus have been known to NOT forward the debtor’s disputes with evidence to creditors; but instead simply tell the creditor that there has been a dispute.

Consider the case of Carmen Dixon-Rollins, a Philadelphia police officer who settled a dispute with a landlord in 2004 by paying $530, but couldn’t get TransUnion, one of the Big Three reporting agencies, to remove the debt from her credit report. The erroneous data came back to bite her when she applied for a mortgage and was given a higher rate.

Dixon-Rollins filed disputes and provided evidence, but all TransUnion did was forward a routine error form to a collection agency – the original source of the inaccurate report – and take the agency’s word that the debt was still owed.

In fact, a TransUnion “team leader” testified at Dixon-Rollins’ trial that “as a matter of policy,” TransUnion “never forwards material submitted by consumers to the original source.” Last September, a federal judge upheld the jury’s verdict against TransUnion, ruling that the company “negligently and willfully failed to reinvestigate” the officer’s claim and allowed an award of $270,000 in punitive damages. The judge underscored a 1997 ruling by a higher court, which warned that reporting bureaus are responsible “for more than merely parroting information received from other sources.”

But how many bankruptcy debtors have the energy or money to legally pursue creditors and credit bureaus when an error is not removed? Not many or not enough. What they really need is someone, an agency like the CFPB, to use their resources to protect their rights as debtors. Too much is riding on the accuracy of these credit reports for there to be unchecked errors or the correction of these errors to be the sole responsibility of debtors.

(source: USAtoday.com )