Section 319 of the Fair and Accurate Credit Transactions Act of 2003 #00002

Submission Number:
Robert Ellis Smith
Privacy Journal
Initiative Name:
Section 319 of the Fair and Accurate Credit Transactions Act of 2003

I write to urge the FTC (1) to use its accuracy study to establish a baseline of accuracy by which FCRA entities may be evaluated in the future and (2) to urge the FTC to revise its currently myopic and naïve definition of “small inaccuracy” and “material error that is likely to affect a credit score.” Baseline In its obligation to assure that FCRA entities achieve “maximum possible accuracy,” the FTC has authority in current law to require FCRA entities to make periodic reports on their accuracy rates. (“FCRA entities” are credit bureaus, information brokers, consumer reporting agencies, and any other entities covered by the FCRA.) The FTC has authority in current law to publish periodically its newly developed baseline and the FCRA entities’ submitted information so that consumers may compare the progress of the entities, especially the big three national credit bureaus, towards achieving “maximum possible accuracy” over future years. The prototype for this proposal is data on airlines’ on-time performance published by the Bureau of Transportation Statistics in the Department of Transportation. The FTC should consult with the BTS to determine whether publishing this data has been useful to consumers of airline services and whether the methodology could be improved. Definition of Inaccuracy Much of the language in the Federal Register notice of October 16, 2006, sounds like an unpleasant hangover from language used by the FTC staff in the 1970s. That was an era when the FTC consumer division, to an alarming degree, parroted the jargon and perspectives of the industry it regulates. Consumers in 2009 have been led to believe that those days are over. (It is revealing that in its October 16 notice and throughout this process the FTC has not concerned itself with errors that adversely affect the interests of credit grantors, as distinguished from consumers, nor with inaccuracies in ‘investigative consumer reports,” as distinguished from “credit reports.”) In the 1980s, in the vacuum created by the credit bureaus’ refusal to publish data on inaccuracies, consumer groups (including Privacy Journal) created their own primitive measures to evaluate the accuracy of credit reports. This challenged the industry to insist on defining “accuracy” in its quaint way, i.e., a misstatement of information that significantly affects a credit report. In its October 16 notice, the FTC staff has adopted that definition. It fact, it has narrowed it further by seeking to measure in its forthcoming study “a material error that is likely to affect a credit score.” Many, many uses of credit reports, according to my understanding, do not involve uses of credit scores at all. Credit reports are used for employment, housing decisions, and insurance underwriting (not to mention illicit uses of credit reports by lawyers, journalists, investigators and others). The FTC must recognize these other uses of the data in credit reports. This means that a seemingly “small inaccuracy” can result in loss of employment, housing, favorable insurance rates, or insurance coverage itself. It may result in an arrest or an inaccurate news report. For example, an employer with legitimate access to a credit report can take a name with an erroneous middle name, Google it, and stumble across all sorts of personal data, perhaps simply news reports, referring to individual different than the one under consideration. A landlord may make adverse assumptions on a residential address with a street number one or two digits off, or on an erroneous Zip code (especially). Imagine an inaccurate entry in a credit report that a customer has an account with a retailer that the landlord happens to abhor. Even if the entry involving the retailer is highly favorable so that it does not affect a credit score adversely, the inaccuracy will adversely affect a housing decision. (Continued in separate submission)