Regulating the credit reporters.States are aggressively regulating credit reporting agencies, but the federal government is threatening pre-emption PRE-EMPTION, intern. law. The right of preemption is the right of a nation to detain the merchandise of strangers passing through her territories or seas, in order to afford to her subjects the preference of purchase. 1 Chit. Com. Law, 103; 1 Bl. Com. 287.
Robert J. Corbey has a horror story horror story
Story intended to elicit a strong feeling of fear. Such tales are of ancient origin and form a substantial part of folk literature. They may feature supernatural elements such as ghosts, witches, or vampires or address more realistic psychological fears. . On June 8, 1991, Corbey signed a contract with a home improvement firm for installation of vinyl siding Wikipedia is not the place for advertisement or self-advertising. Vinyl siding, first introduced to the exterior cladding market in the late 1950s, is an alternative to aluminum siding, fiber cement siding, and timber siding. on his house. He paid $500 down and sought to finance the remainder of the $2,000 cost.
Corbey says that on June 12, 1991, a representative of Commercial Credit Corporation called and questioned him about an IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. lien filed at Fairfax City Courthouse in Virginia on property that he allegedly owned with his wife Ann. He was also questioned about a $1,000 monthly mortgage and his residence in two locations in Virginia.
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Corbey, "I have no wife since I've been a widower for over 17 years and never had an IRS lien anywhere, anytime. I have not had any mortgage payments since my house was paid in full years ago. I never lived anywhere in Virginia, but have lived for 34 years in one house in Rockville, Maryland Rockville is the county seat of Montgomery County, Maryland, United States. According to the 2006 census update, the city had a total population of 59,114, making it the second largest city in Maryland. ."
Despite his protests, Corbey's loan application was rejected, he says, because of an erroneous credit report furnished to the lender by Equifax, one of the big three credit reporting firms.
Corbey tried to correct the errors in his credit report. "Three months after my request I received a form memo (unsigned) including my credit report. It was replete with errors and 90 percent false. I contacted the creditors and organizations listed on 'my' report and determined that all information except for three items were not mine and belonged to someone else."
Corbey wrote Equifax, requesting that the errors be corrected. But according to Corbey, "Equifax prepared and sent me three more erroneous credit reports under my name, and each had a different social security number. One of the reports had my social security number correct but all three had someone else's credit history."
Corbey then wrote Jack Roberts Jack Roberts (September 27, 1910 - October 1981) was an American football running back in the NFL for the Boston Redskins, Staten Island Stapletons, Philadelphia Eagles, and the Pittsburgh Pirates. He played college football at the University of Georgia. , the president of Equifax, and talked by phone with Labat R. Yancey, vice president of consumer affairs. Yancey later wrote to say that Corbey's credit history had been corrected. Corbey confirmed that the credit history was now correct but his social security number was wrong. After five more reports, the social security number is still wrong. "They took almost a year to straighten out my credit record," says Corbey. "It was a horrible experience, extremely frustrating. I felt like I was fighting Goliath."
Robert Corbey's story is not unusual, says Michelle Meier of Consumers Union (CU). She regularly receives complaints from consumers who say they lost money, were denied credit or lost a job because of erroneous credit reports. In fact, credit report errors are the most frequent form of consumer complaint received by CU.
State legislatures and state attorneys general have responded rapidly to such reports. Twenty states now have laws that regulate credit reporting bureaus, according to CU. In 1992, CU reports, at least 30 states considered legislation related to credit reporting. Over the past two years, state attorneys general have settled major lawsuits against credit reporting agencies in return for consent decrees to ensure the accuracy and privacy of information in credit reports.
The federal Fair Credit Reporting Act The Fair Credit Reporting Act (FCRA) is legislation embodied in title VI of the Consumer Credit Protection Act (15 U.S.C.A. § 1681 et seq. ), which was enacted by Congress in 1970 to ensure that reporting activities relating to various consumer transactions are conducted in a (FCRA FCRA Fair Credit Reporting Act (US)
FCRA Foreign Contribution Regulation Act
FCRA Federal Credit Reform Act
FCRA Florida Civil Rights Act
FCRA Florida Court Reporters Association
FCRA Fabric Care Research Association ), passed in 1970, regulates credit reporting agencies. While it gives consumers the right to inquire about "the nature and substance" of information reported by an agency, FCRA also allows agencies to report credit information for legitimate business needs, such as a credit check or a background check by employers or insurance companies. Several legislatures have concluded that FCRA does not go far enough and have adopted stricter state standards.
One state that passed a strong law in 1992 was Vermont, in part as a response to a particularly egregious incident. TRW TRW The Real World (TV reality show)
TRW The Right Way
TRW Tactical Reconnaissance Wing
TRW The Retriever Weekly (University of Maryland, Baltimore, MD)
TRW Thompson Ramo Wooldridge Inc , another of the three major credit reporting firms, reported 1,500 residents of the small Vermont town of Norwich as delinquent in paying their taxes. TRW had mixed up a list of the town's residents with a list of those residents who had tax liens against them.
The new Vermont law provides basic privacy protections. Consumers now have a right in Vermont to a free copy of their credit report each year. The law generally prohibits a person from looking at a consumer's credit report unless the consumer has consented to the disclosure. And a consumer can recover damages from a credit bureau or creditor who violates the law.
Representative Ruth Joseph says that her state of Maine passed a "strong consumer law" in response to constituent complaints about incorrect credit reports.
Ed Mierzwinski of the U.S. Public Interest Research Group says many other states also have tough laws. Maryland, like Vermont, guarantees consumers the right to see a free copy of their credit report. Under California law California Law consists of 29 codes, covering various subject areas, the State Constitution and Statutes. See also
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of requires that paid judgments must be removed from a consumer's report within five years, bars reports of information derived from polygraphs and bars reports of arrests, unless the case is pending or there is a conviction. New York also prohibits reports on a consumer's race, religion, color or ethnic origin.
Barry Connelly, executive vice president of the Associated Credit Bureaus, worries that well-intentioned state legislation could backfire on consumers. "Credit information," he says, "is indeed the fuel that keeps the credit system going. It translates into jobs because it helps to sell goods. Consumers have the expectation of an instant line of credit. Thirty thousand autos are purchased every day. Decisions are made on the spot. Somebody walks out of the showroom with a car."
According to Connelly, 1.5 million credit reports are issued every day, and 2 billion pieces of information are processed into the credit system every month. Some mistakes will occur, he concedes, despite an industry policy of "zero tolerance The policy of applying laws or penalties to even minor infringements of a code in order to reinforce its overall importance and enhance deterrence.
Since the 1980s the phrase zero tolerance has signified a philosophy toward illegal conduct that favors strict imposition of of errors." The need for accuracy, he concludes, must be balanced against the need for accessible credit information.
State attorneys general, by contrast, do not appear as worried about overregulation. They have been aggressive in enforcing state and federal law. On July 8, 1991, Texas Attorney General Dan Morales Daniel C. "Dan" Morales (born 1956) served as Texas attorney general from 1991 through 1999, during the administrations of Governors Dorothy Ann Willis Richards and George W. Bush. As attorney general, Morales reached a $17 billion settlement with big tobacco companies. and 10 other state AGs filed a suit in Texas state court against TRW. According to the National Association of Attorneys General The National Association of Attorneys General (NAAG) is an organization in the United States of U.S. state Attorneys General which, according to the organization itself, " , the Texas suit alleged that "TRW failed to correct numerous errors in consumer credit reports, and damaged the credit standing and invaded the privacy of thousands of consumers across the country." Morales reported that he had received over a two-year period more than 700 complaints regarding TRW's practices.
On the same day the Texas suit was filed, New York Attorney General Bob Abrams sued TRW in New York court for violating the state's credit reporting law. Abrams claimed that one out of three TRW credit reports were inaccurate and one out of six contained serious errors.
TRW, in turn, sued Morales, alleging that state laws were pre-empted by the federal Fair Credit Reporting Act. TRW further alleged that state law enforcement constituted an unconstitutional burden on interstate commerce interstate commerce
In the U.S., any commercial transaction or traffic that crosses state boundaries or that involves more than one state. Government regulation of interstate commerce is founded on the commerce clause of the Constitution (Article I, section 8), which , and violated TRW's rights of free speech and equal protection of the laws Noun 1. equal protection of the laws - a right guaranteed by the Fourteenth Amendment to the US Constitution and by the due-process clause of the Fifth Amendment .
In late 1991, however, TRW and the state attorneys general reached a settlement. A consent decree filed in federal district court in Dallas requires TRW to adopt new procedures to ensure the accuracy of credit reports and to pay costs to the states. Among other provisions, the decree requires TRW to establish a toll-free telephone line for consumer complaints, to furnish consumers with copies of their credit report within four days of a request and to complete reinvestigation of alleged errors within 30 days.
In July of 1992, Equifax, another of the big three credit reporting agencies, also settled a suit brought by state attorneys general by agreeing to similar terms. Still outstanding is a Federal Trade Commission action alleging that credit reporting bureaus provide names and information about consumers to direct marketing firms, such as catalog sellers, in violation of the federal law.
Now Congress is getting into the picture. In 1992, California Congressman Esteban Torres introduced a bill, H.R. 3596, to strengthen the federal Fair Credit Reporting Act. Similar legislation was introduced in the Senate by Senators Kit Bond (Mo.) and Richard Bryan Richard Hudson Bryan (born July 16, 1937) was Governor of the U.S. state of Nevada and a United States Senator from Nevada. He is a member of the Democratic Party.
Bryan was born in Washington, D.C. (Nev.).
As originally drafted, the Torres bill would require credit bureaus to give a consumer at least one free copy of his credit report each year. It would require the big three credit bureaus to provide a toll free "800" number for consumer complaints. It would set strict verification rules for bureaus to follow when consumers allege that information is inaccurate. It would prohibit banks from reporting information that they know or should know to be incorrect. Businesses would be required to get a consumer's permission before looking at a credit report for employment purposes. And a mechanism would be created to allow consumers to opt out of so-called prescreening and similar forms of direct marketing. (Prescreening is a computer run on credit reports made by a credit bureau to identify consumers who are good risks for targeted "pre-approved" credit offers--usually by credit card companies. Despite an FTC FTC
See Federal Trade Commission (FTC). prohibition, prescreening also is said to be used by direct marketers of retail catalogs, vacation packages and so forth.)
H.R. 3596, however, was substantially watered down in committee mark-up in response to complaints from banks and credit reporting firms. Particularly damaging to states was language inserted over the sponsors' objections that would broadly pre-empt pre·empt or pre-empt
v. pre·empt·ed, pre·empt·ing, pre·empts
1. To appropriate, seize, or take for oneself before others. See Synonyms at appropriate.
a. state authority to regulate credit bureaus for purposes of protecting an individual's privacy and reputation.
According to Congressman Torres and consumer groups, the inclusion of language pre-empting state laws in combination with the weakening of its standards turned a pro-consumer bill into an anti-consumer bill. Congressmen Joe Kennedy Joe Kennedy might refer to:
The tactic of seeking federal regulation as a means of pre-empting state laws has been picked up by "special interests," says Representative Joseph. In an area such as credit reporting where the states have taken the lead in protecting consumers by passing protection measures or initiating lawsuits, it may make sense for the affected industry to actually seek out federal regulation, in return for federal pre-emption or nullification nullification, in U.S. history, a doctrine expounded by the advocates of extreme states' rights. It held that states have the right to declare null and void any federal law that they deem unconstitutional. of state law. This bargain is logical for the regulated industry if federal standards are relatively weak and federal resources for law enforcement are limited. Weak federal regulation supersedes effective state action.
Representative Jeff Teitz of Rhode Island Rhode Island, island, United States
Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. says the classic example of this tactic is the repeated attempt in Congress to pass a bill providing for federal pre-emption of state product liability law. And there are many other examples in the bank and insurance areas, says Representative Joseph.
Janlori Goldman, an attorney with the American Civil Liberties Union American Civil Liberties Union (ACLU), nonpartisan organization devoted to the preservation and extension of the basic rights set forth in the U.S. Constitution. , deplores the tactic. She says the pre-emption provision being pushed by the credit reporting industry is unprecedented. "Without exception, there is no federal privacy law that pre-empts state law. Congress has continually affirmed the ability of state legislatures to act above federally created floors in all areas of privacy. Congress has continually emphasized the rights of states to extend the protection afforded to citizens." Goldman also notes that the great majority of national consumer protection laws consumer protection laws n. almost all states and the federal government have enacted laws and set up agencies to protect the consumer (the retail purchasers of goods and services) from inferior, adulterated, hazardous and deceptively advertised products, and passed in the last 25 years similarly eschew es·chew
tr.v. es·chewed, es·chew·ing, es·chews
To avoid; shun. See Synonyms at escape.
[Middle English escheuen, from Old French eschivir, of Germanic origin pre-emption and explicitly or implicitly contemplate an active state role.
"Traditionally and today," says Goldman, "the long-standing principle is that states serve as the 'laboratories of change' and a breeding ground for effective social policies, particularly in the area of individual rights."
Phillip S. Corwin, director of retail banking for the American Bankers Association The American Bankers Association (ABA) is comprised of banks and other financial institutions. It seeks to promote the strength and profitability of the banking industry by Lobbying federal and state governments, building industry consensus on key issues, and providing products and , has a different viewpoint. The banking industry, he says, will not negotiate with sponsors of federal credit reporting legislation until they agree as a "precondition" to accept federal pre-emption of state laws.
"If there is to be federal legislation, then there must be pre-emption," he says. "We see no point in negotiating a provision in federal law and then have the states gut it. Multistate standards are impossible. There is a nationwide credit reporting system."
Barry Connelly concurs that pre-emption of state law is necessary if Congress tightens FCRA. "We are a mobile society. Consumers should know that they can expect the same level of service in Montana and New York. Credit information is transmitted across state lines. To have differing standards for the collection or reinvestigation of information is simply not good for consumers."
Connelly is concerned not only about the multiple state standards but also about overzealous o·ver·zeal·ous
Excessively enthusiastic: overzealous movie fans; an overzealous manager.
o regulation by a few states. Consumers could be denied credit cards, he says, absent adequate reports of credit history. "We don't think it's good for business."
Jeri Benner, a victim of credit reporting errors from Frederick, Md., disagrees. She says both the states and the federal government have responsibilities, and has lobbied Congress to pass FCRA legislation without pre-emption.
Her activism springs from a personal experience. Ms. Benner applied for a mortgage in February 1992 and her credit report came up clean. Then she switched lenders. The day before her settlement, Citicorp called her and inquired about four loans totalling over $100,000. The credit report of these debts was in error, but correcting the errors resulted in a delayed settlement delayed settlement
The transfer of a security or cash at a date beyond the usual settlement date. A seller may prefer delayed settlement in order to be listed on a firm's books on the record date for a dividend. . Benner had to pay an extra point when she bought her house because of the delay. It cost her several thousand dollars.
"I recommend," says Benner, "that Congress and state legislatures make credit bureaus adhere to adhere to
verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful
2. stricter standards. You can lose jobs, mortgages and homes because of erroneous credit reports. I hope legislators will hold them accountable."
Representative Ruth Joseph has a similar view and takes exception to the idea that pre-emption of state law is an appropriate "precondition" for the passage of new federal legislation. She says that the Maine law any law prohibiting the manufacture and sale of intoxicating beverages, esp. one resembling that enacted in the State of Maine. At present, the state of Maine sells such beverages in its own stores.
See also: Maine was crafted with a great deal of thought and for the federal government to supersede To obliterate, replace, make void, or useless.
Supersede means to take the place of, as by reason of superior worth or right. A recently enacted statute that repeals an older law is said to supersede the prior legislation. it would not be well received in Augusta. Maryland Delegate Ken Montague Jr. says that the traditional pattern of concurrent state and federal regulation of individual privacy and consumer credit issues should be preserved.
Federal and state governments share responsibility for protecting consumers of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. , he says. "State legislatures should not be barred by a special interest provision in federal legislation from acting to protect the good reputation of our citizens." Representative Joseph says simply, "We have to do what is best for the people of our state."
William T. Waren is federal affairs counsel for NCSL NCSL National Conference of State Legislatures
NCSL National College for School Leadership
NCSL National Conference of Standards Laboratories
NCSL National Council of State Legislators
NCSL National Computer Systems Laboratory (NIST) .