In March, the big three credit reporting bureaus entered into an agreement with the New York Attorney General that is a harbinger for regulation and reform outside of New York State. Because of the size of New York, many of the settlement provisions will be implemented nationally. Industry watchers also suspect that federal regulators may use the entire settlement structure as a template for national regulations.
Under the agreement Equifax Information Services LLC, Experian Information Solutions, Inc., and TransUnion, LLC (the Bureaus) agreed to take proactive actions to improve credit reporting. The changes fall into six broad categories:
- Improving Reporting Accuracy – Furnishers of credit information (Furnishers) will be required to replace old software platforms. The Bureaus have also agreed that they will not report on new accounts unless the Furnisher provides a date of birth for the authorized user. It is hoped that this step will reduce the number of “mixed files,” i.e. those involving confusion over people with similar names. The Bureaus will also require Furnishers to verify documentation indicating that a consumer is deceased.
- Improving Fairness and Efficacy of the Dispute Resolution System – The Bureaus agreed to employ specially trained teams of employees to review all supporting documentation submitted by consumers for any dispute involving fraud, identity theft, or “mixed files.” Moreover, an employee of the Bureaus with discretion to resolve the dispute must review supporting documentation before passing along the dispute to the Furnisher. Attachments supporting a consumer’s dispute must also be passed along to the Furnisher through the e-Oscar system. This requirement is likely to lead to increased staffing not only for the Bureaus, but also for the Furnishers.
- Medical Debts – While unpaid bills often result from consumer omissions, they can also result from insurance delays. The Bureaus will now wait 180 days before adding any medical-debt information to a consumer’s credit report. Moreover, when medical debts are paid by an insurance company, regardless of the time frame, the Bureaus must remove them from the credit report.
- Annualcreditreport.com – All three Bureaus will now include a link on their own websites to the independent site where consumers may obtain their free annual credit report. Consumers will also be entitled to additional free reports in instances where there is an active dispute about reporting accuracy.
- Collaboration among Bureaus to Identify Furnishers of Inaccurate Information – The Bureaus will develop metrics to analyze the number of disputes associated with a particular Furnisher, and the sufficiency of that Furnisher’s response to those disputes. This inter-Bureau collaboration is intended to identify bad-actors on the furnisher-side.
- Financial Literacy Media Campaign – The Bureaus will fund a three-year campaign focusing on consumers’ rights.
While it remains to be seen just how impactful the agreement will become, it seems certain that the agreement has significant ramifications not only for the Bureaus, but for the financial services industry as a whole.