Those were the dark ages–back in 1986. Collins is still battling the agencies, but now some of them are starting to listen. The three giants–TRW, Equifax and the privately held Trans Union–defend their services, but two have recently announced big consumer initiatives. Last week TRW said it would give credit reports to consumers for free; other companies charge roughly $20 for the privilege of peeking at your own data. Equifax is overhauling its consumer-relations group and is designing more readable credit forms. The companies’ motives are unclear. Equifax says happy consumers might give it an edge in the $1 billion market for credit data. The companies are also looking to pre-empt Congress, which is considering legislation that would more tightly control the agencies. Janlori Goldman, who heads the American Civil Liberties Union Privacy Project, says the companies are “trying to put a good public face on a very tarnished industry.”
Until recently, the credit-reporting agencies didn’t see much reason to improve their image. After all, the consumer wasn’t the customer; so long as the bureaus kept retailers and banks happy, the consumer was relatively unimportant. But credit reports have become “the No. 1 area of consumer complaints” to the Federal Trade Commission , says Kathleen Buffon, assistant director for credit practices in the FTC’s Bureau of Consumer Protection. The average consumer has already complained to credit-reporting agencies five times before even contacting the FTC, says the consumer-advocacy organization U.S. Public Interest Research Group. Fourteen states are suing TRW over allegedly inaccurate reports, and Vermont’s Attorney General Jeffrey Amestoy says he will probably file suit this week over the massive credit reporting mix-up in Norwich, Vt. (box), Sensing a hot issue, Washington lawmakers have scheduled hearings in both houses this week-and legislation is being readied that would force the first major changes to the credit-reporting laws since 1970.
Consumers who have had run-ins with the agencies say change is long overdue. Credit-report horror stories have become bread-and-butter coverage for TV consumer reporters and daily newspapers, and each Kafkaesque tale is more compelling than the last. Consider Mark Guimond, a Washington lobbyist who says that his debt had been overstated by $25,000 by one bureau. Lately, he says, even his requests to see his credit records have been turned down. According to Guimond, the company told him it would only send reports to the address listed in his file-and the company didn’t have his correct address.
TRW and Equifax are trying to take different roads to the consumer’s heart. Equifax’s changes stem from a broad privacy initiative that began two years ago. It mounted a $10 million project to take hassles out of correcting mistakes, and hired an executive from the service-oriented Days Inns hotel chain, Rob Hogan, to run a new consumer-information center. Equifax has also abandoned the controversial industry practice called “secondary use,” or reselling personal financial data to direct marketers. Such sales brought in $12 million annually but angered consumers and privacy advocates. Equifax is also likely to drop the price of its reports to consumers-though executives don’t expect to match TRW’s giveaway. For their part, TRW spokesman John McGee says his company hasn’t been standing still. “I don’t think Equifax holds a candle to changes TRW has done in the last two years.” The company has announced a toll-free line for consumers whose credit applications have been denied and will spend $18 million this year on its own revamped consumer-assistance department. Giving away the reports, boasts McGee, “is the single best thing we can do to show the consumer how accurate their file is.”
Consumer advocates applaud the recent moves but want much more. After all, good gestures by industry giants aren’t likely to change the practices of hundreds of smaller, less-scrutinized agencies. And some criticize industry-led reforms as half measures. Proposals include mandating free reports, quick service and making it easier to sue credit bureaus that retain incorrect data. New laws might toughen the enforcement powers of the FTC and bring the companies that give information to the bureaus–such as retailers and banks–within the scope of the law. While consumers might welcome such moves, industry analysts warn against going too far. “Congress could make it difficult to make a living in this business,” says Robert Bolen, an analyst with J.C. Bradford & Co.
Whether the credit-bureau giants are changing out of the goodness of their hearts or because their feet are being held to the fire, consumers stand to benefit. The industry could be a winner, too. Equifax senior vice president John Baker sees better consumer relations as a competitive advantage. “The consumer, while not technically our customer, is the customer’s customer.” If consumers like Equifax’s policies, Baker says, some day they might even be able to pressure retailers to use the company for their records. More important, says the ACLU’s Goldman, “[Equifax is] going to save a lot of money in the long run by having a more accurate database. They’re going to avoid a lot of lawsuits…. I only see that this is going to have a happy ending.” Perhaps, but it may be a long time before victims of bum credit reports see things that way.
In a world where so many people trumpet their every achievement, real heroes usually can’t understand what all the fuss is about. Take Karen Porter. The town clerk of Norwich, Vt., uncovered the mistake that had TRW identifying all 1,500 local taxpayers as tax evaders. Porter took on TRW and got the records changed. Porter, now on her way to becoming a national celebrity, simply says, “I did my job.”
Porter’s credit odyssey began last July with a call from a local banker, who needed to know if a Norwich doctor had paid his tax debt before granting a car loan. But the doctor had no debt. After two similar calls that day, Porter called TRW. In the next week she made six calls but says no TRW supervisor called back. After she planted a story in the local paper, TRW officials contacted her and started to set the records straight.
TRW now says a contractor, National Data Retrieval of Norcross, Ga., posted Norwich’s list of taxpayers as tax owers. (An NDR spokesman claims Porter gave their agent the wrong book, but Porter denies it.) TRW says no permanent damage was done, and only three people applied for credit before the records were fixed, But several Norwich residents have reported problems, and citizens in Woodstock, Vt., and other towns appear to have been affected, too. TRW has now purged tax-lien data in Vermont, New Hampshire, Rhode Island and Maine.
After living in Arizona and California, Porter came to the leafy Vermont town in 1970 to visit friends-and decided to stay. Norwich’s 3,093 citizens elected Porter town clerk last year; her duties include everything from keeping tax records to issuing dog licenses. Since The Wall Street Journal first took the story national last month, Porter has been interviewed on network TV, and this week she’s scheduled to testify in Washington. But then she’ll come back home. “After this experience with the national media,” she says, “I don’t want to go anywhere else.” After all, this year’s tax bills are due.
