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This
page considers considers consumer access to credit rating,
tenancy and personal reference reports and data.
It covers -
introduction
Theorists such as David Brin have sometimes argued that
a primary concern regarding privacy is information inequity:
the watched are not in a position to watch the watchers,
thereby identifying and potentially addressing abuses.
Others have less ambitiously - and in our view more practically
- highlighted concerns about restrictions on an individual's
access to data that has been collected about that person.
Questions of access to credit, tenancy and personal reference
reports and data are likely to become more important -
or merely more contested - as consumer consciousness increases,
governments seek to address poor practice in much of the
private sector and 'predictive' analysis becomes more
widespread. Sporadic calls for substantial restrictions
on data collection activity, on how that data is used
and who accesses it will become more meaningful as data
collectors are required to give timely access to information
and become responsible for inadequate data.
issues
Unsurprisingly, the accuracy and use of credit/tenancy
databases and referencing services is contentious.
A 2004 study
by US group PIRG for example claimed that -
- 25%
of its sampled credit reports contained errors serious
enough to result in denial of credit
- 79%
of the reports contained mistakes of some kind
-
54% contained personal demographic identifying information
that was "misspelled, long-outdated, belonged to
a stranger, or was otherwise incorrect"
-
30% of the reports contained credit accounts that had
been closed by the consumer but incorrectly remained
listed as open
In
practice those figures are less alarming than the difficulty
of achieving corrections, recognised by legislation such
as the US federal Fair & Accurate Credit Transactions
Act 2003 (FACT Act), which identifies a right to
a free annual credit report on request.
There have not been any comprehensive independent studies
of accuracy in Australia. Industry insiders have derided
the Australian Consumers Association and Consumer Credit
Legal Centre figures, noted earlier
in this profile, that have been interpreted as signalling
that much of the information in Australian credit databases
is incorrect.
The Consumers Federation of Australia commented
that "the current credit reporting system is manifestly
unfair" because
- it
allows a wide range of businesses to access a credit
database and not, as one would expect, only traditional
credit providers such as banks and finance companies
...
- there
is no minimum listing amount. Default listings for as
little as $50 are made by some credit providers. A database
listing however is enought to deny a consumer the abiltiy
to get a loan for a house;
-
the onus of proving the accuracy or otherwise of a credit
database listing is placed quite unfairly on the consumer.
Errors in listing frequenlty occur, but as records are
not necessarily available, it can be very difficult
for an individual consumer to dispute;
-
consumers are not notified of an adverse listing. Many
only find out when they are refused credit. This may
be some time after the adverse listing occurred, making
it difficult to dispute as records may not have been
kept by the consumer.
The New Zealand Privacy Commissioner commented
in 2004
Credit
reporters amass and sell personal information. While
credit reporters provide a valuable service, they do
not collect their information directly from the subjects
of that information. Some of the financial information
is highly sensitive and comes from institutions such
as banks that would normally have a duty to maintain
the confidentiality of the information. Any mishandling
or inaccuracy in the information has the potential to
cause real harm to particular individuals.
Individuals have no direct relationship with the credit
reporter and have no choice about which credit reporter
records their details. They cannot remove themselves
from these private databases even if they are dissatisfied
with the way in which their personal information is
handled. There is a concern at the databases being open
to access by businesses who are not involved in granting
credit.
It
continued that
Credit
reports reflect on an individual's financial reputation
and reporting inaccurate information may cause considerable
embarrassment as well as adverse credit decisions. Even
if credit is not refused, inaccuracies may affect the
rate of interest and other terms. Credit reporters also
have an interest in ensuring that the reports provided
to their clients are as accurate as possible.
The nature of credit reporting raises special risks
of inaccuracy. Credit reporters are not parties to any
actual credit transactions and do not collect their
information directly from the subject. They are very
dependent on the quality of information supplied by
others. If inaccurate or disputed information is supplied
by credit providers (perhaps through carelessness or
as leverage to force payment of disputed debts) it will
simply be added to the database. Most default information
is not checked for accuracy by the credit reporter and
has not been tested in court. Credit providers often
fail to update default information as debts are paid
off.
If internal mis-matching of information occurs, the
information may be listed about the wrong individual
or multiple individuals. Sometimes one individual may
be represented on multiple files on a database, or information
about more than one individual may be listed together
in a file.
When an individual challenges a default listing on a
credit report, credit reporters are normally unwilling
to change the listing without the agreement of the credit
provider. It can be a drawn out, and daunting process
for some consumers, especially in relation to older
matters where the credit provider who originally listed
the information does not cooperate in verifying the
information they have supplied. ...
experience of complaint to the Privacy Commissioner
suggests that some complainants can be frustrated at
the credit reporter's complaint handling procedures.
Consumers sometimes feel that neither the credit reporter
nor the credit provider seems willing to take responsibility
for investigating or correcting inaccuracies. Disputed
information may continue to be listed for long periods
without resolution. Mismatched information may be corrected,
only to be mismatched again when new information is
listed.
Overseas
the Electronic Privacy Information Center (EPIC)
and US Public Interest Reference Group (PIRG)
have taken a particular interest in suboptimal performance
by Equifax and other rating bodies under the 1971 Fair
Credit Reporting Act.
responses
Responses have essentially taken three forms -
- legislation
providing mandatory rights of access to reports, often
with some scope for correction or notation of incorrect/disputed
data
- legislation
obligating data custodians to alert consumers if the
integrity of data collections has been compromised,
for example through loss
of a computer tape during shipment for archiving or
processing
- the
emergence of business enterprises that - for a fee -
will monitor reports on behalf of consumers
The
Consumers Federation of Australia argued
that "a fair credit reporting system" must confine
access to the credit reporting system to traditional credit
providers, rather than to any entity with the capacity
to buy information about the consumer. The system must
-
- have
a minimum threshhold for listing a default of $100;
-
make credit reporting agencies responsible for ensuring
the accuracy of credit information files;
- provide
that consumers are notified of an adverse listing. This
notification should occur immediately after an adverse
listing is made
In
the US the federal Fair Credit Reporting Act (FCRA) requires
each of the three nationwide consumer reporting companies
to provide consumers with a free copy of the individual's
credit report, on request, once every 12 months. The requirement
is enforced by the Federal Trade Commission (FTC). It
does not cover all credit reporting.
Uptake by consumers has been uneven, with substantial
interest in some areas (particularly California) and lower
awareness in other regions, reflecting both publicity
and the onus on consumers to formally request the information.
The major reporting companies have vigorously promoted
a range of commercial services to consumers, for example
offering to alert them on a monthly or quarterly basis
if there is 'unusual' activity involving credit cards
and bank accounts.
Those services have been criticised as nice money spinners.
A more serious criticism is that they have mislead some
consumers into a false sense of security, as it is clear
that identity crime often is not detected by the companies
or not detected and communicated quickly.
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