According to a recent article from Ed Mierzwinski, the federal Consumer Program Director and Senior Fellow for consumer rights advocacy group U.S. PIRG, the Federal Trade Commission has concluded that up to one in four credit reports contain serious mistakes and that 5% of all reports contain mistakes that could lead to paying more for credit or to a denial of credit.
That’s remarkable, particularly when you recall that millions of Americans rely on their credit scores and reports in order to do everything from secure employment to purchase a car. Remember, too, that consumers face a very limited choice when it comes to credit bureaus, making them, as CFPB Director Richard Cordray explains, “dead-end markets” that are worthy of greater scrutiny and oversight.
So who is holding their feet to the fire on behalf of the little guy? As Mierzwinski explains, in order “to improve credit report accuracy, compensate the victims of credit bureau malfeasance and also to bring some credit repair doctors to heel,” it took “a combination of strong consumer laws, a strong CFPB, tough state attorneys general working on a bi-partisan basis and, finally, consumer attorneys engaged in private enforcement of the laws as another line of defense.”
And there truly are some important actions being taken against this “dead-end” market for the benefit of consumers. Mierzwinski highlights a few:
- After a dedicated effort by 31 state Attorneys-General, the three major credit bureaus will be dropping certain negative public records, including tax liens and court judgments, from credit reports, meaning that “12 million consumers will see their credit scores increase by up to 20 points; 700,000 of them will see increases of as much as 40 points”
- As another result of that 31-state action, “as of September 1 only medical debt older than 6 months can be reported,” since “much medical debt is wrongly blamed on the consumer, but is the result of slow-pay insurance companies or billing errors,” as Mierzwinski explains
- The CFPB has announced penalties of $2 million against four California-based credit repair doctors that “charged illegal fees and misled consumers about their ability to fix their credit,” falsely promising that they could “repair” a client’s credit by removing accurate, negative information.
That victory from the CFPB, or the Consumer Financial Protection Bureau, is another win after a long string of efforts intended to “rein in the credit bureaus over the last few years.”
If nothing else, Mierzwinski’s piece is an important reminder that it takes time, dedication, and cooperation among many players to help a “dead-end market” work. It’s an important reminder that the financial system we have in place is stacked against the little guy in many ways, and that the best way forward for all involves stronger and more active consumer protection laws and enforcement agencies.
We’ll let the author have the last word:
“Do consumers really deserve a world where they have no recourse when gatekeepers mix them up with terrorists? Where gatekeepers can make, then ignore, mistakes that lower their chances of getting credit or a job? Where bottom-feeder credit repair doctors can seek to take their last dollar because that gatekeeper didn’t do its job? Of course not.
The idea of the CFPB needs no defense, only more defenders. So do the concepts of protecting strong consumer laws, strong state enforcement and, finally, the rights of consumers and their consumer attorneys to take on corporate wrongdoers either individually or banded together in class actions, without unfair restrictions that tilt the playing field in favor of the wrongdoer.”
For more, we encourage you to read Mierzwinski’s full piece here. We previously discussed the upcoming changes to FICO scores in more depth on our blog; that article is available here.
Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.