The Federal Trade Commission testified before a U.S. Senate Commerce subcommittee on a recent FTC study examining the accuracy of consumer credit reports, as well as the agency’s efforts to improve credit report accuracy through enforcement and education.
Maneesha Mithal, the FTC's associate director, Division of Privacy and Identity Protection, told the Subcommittee on Consumer Protection, Product Safety and Insurance that errors in credit reports can cause consumers to be denied credit or other benefits or pay a higher price for them. It also may lead credit issuers to make inaccurate decisions that cause them to deny credit to a potentially valuable customer or issue credit to a riskier customer than intended.
“The Commission recognizes the importance of accurate and complete credit reports, both to businesses that use them to make decisions and to the consumers who are affected by those decisions,” the testimony states.
The FTC's December 2012 study to Congress on credit reporting accuracy focused on identifying potential errors that could have a material effect on a person’s credit standing. Any participant who identified a potentially material error on their report was encouraged to dispute the erroneous information.
The study found that 26% of consumers reported a potential material error on one or more of their three reports and filed a dispute with at least one credit reporting agency and half of these consumers experienced a change in their credit score. For 5% of consumers, the error on their credit report could lead to them paying more for products such as auto loans and insurance.
Vigorous enforcement of the Fair Credit Reporting Act is a high priority for the FTC, the testimony states. In the past decade, the FTC has brought more tahn 30 actions to enforce the FCRA.