Hybrid Hearing - A Biased, Broken System: Examining Proposals to Overhaul Credit... (EventID=112868)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Tuesday, June 29, 2021, at 10:00 a.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a hybrid hearing entitled, “A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity." - - - - - - - - Witnesses for this one-panel hearing will be: • Mr. Syed Ejaz, Financial Policy Analyst, Consumer Reports • Mr. Jeremie Greer, Co-Founder and Co-Executive Director, Liberation in a Generation • Ms. Amy Traub, Associate Director of Policy and Research, Demos • Ms. Chi Chi Wu, Staff Attorney, National Consumer Law Center (NCLC) • Mr. Dan Quan, Adjunct Scholar, Cato Institute’s Center for Monetary and Financial Alternatives Overview The U.S. credit reporting system is unique because it relies on consumer data for use and profit by private companies. In contrast, the consumer relies on a credit score and report for many aspects of life. Credit scores and credit reports are increasingly relied upon by creditors and employers, housing providers, insurers, and even law enforcement. Despite this, it has been nearly two decades since Congress enacted comprehensive reform of the consumer reporting system, and there are numerous shortcomings with the current system. In 2017, Equifax experienced a cybersecurity breach so massive that it affected approximately 148 million consumers. In addition to releasing the personally identifiable information of approximately half of all Americans, this breach also highlighted deficiencies in the credit reporting system, including the lack of an effective dispute process for consumers who find errors in their credit reports. Many have experienced financial and other forms of extreme distress due to incomplete or erroneous information on their consumer credit reports. While a few targeted, if not temporary, provisions relating to consumer reporting were enacted into law in 2018 and included in the CARES Act in 2020, many have argued for comprehensive reforms to make the system more equitable and more accountable to consumers. Other jurisdictions, like California and the European Union, have taken steps to empower consumers to have more control over their data. Background The Fair Credit Reporting Act (FCRA) provides the legal framework for the consumer credit reporting system. The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) share jurisdiction in implementing and enforcing FCRA. CRAs are also subject to the data protection requirements of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA), which mandate appropriate safeguards to maintain the security and confidentiality of consumer records and information. The FTC has the authority to enforce Section 501(b) for CRAs. While there are about 30 CRAs, Experian, Equifax, and TransUnion are considered the largest three nationwide CRAs because they collect a range of consumer data and compile credit reports for the majority of U.S. consumers. Other types of CRAs collect and sell consumers’ data, such as employment and tenant history, and are referred to as specialty CRAs. CRAs receive information voluntarily supplied by data furnishers. For the nationwide CRAs, these furnishers are generally creditors and debt collectors. The CRAs then compile and maintain this information on a person’s consumer report. A “credit score” is defined under FCRA as “a numerical value or categorization derived from a statistical tool or modeling system” used by a person who “makes or arranges” a loan to predict the likelihood of default on a payment. The numerical value is also sometimes referred to as a risk predictor or “risk score.” A “consumer report”11 at the three nationwide CRAs generally includes five types of information: (1) identifying information or header, such as a person’s name, social security number, birth date, current and previous addresses, and phone numbers; (2) trade lines that include account information, such as the type of credit obtained, the date the account was opened and closed, credit limits or loan amounts, the outstanding balances, the timeliness of payments, and whether the accounts are delinquent or in collections; (3) public record information; (4) collections that include information about third-party collection items that are reported by debt buyers or collections agencies on behalf of a creditor; and (5) inquiries that list businesses and entities that have accessed the person’s consumer file for the last two years for employment purposes and for at least one year for credit and other purposes. Information not explicitly contained in a credit report includes: (1)... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407957