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A new study from the Federal Trade Commission found that one in five Americans had errors in their credit histories from at least one of the three major credit reporting agencies. The FTC’s look at the U.S. credit reporting industry, released to the public February 11, also determined that 5 percent of all consumers had an error on a major credit report "that could lead to them paying more for products such as auto loans and insurance." CBS featured the study on 60 Minutes on Sunday evening, reporting that its own investigation shows it can be "nearly impossible" to remove mistakes from your credit history with reporting companies, including the major three: Equifax, TransUnion and Experian. The television news magazine concluded that "it’s extremely unlikely that anyone with the authority to resolve your dispute will ever actually see it," and found several examples of consumers who tried to fix bogus, life-altering mistakes on their credit reports. The credit industry has challenged the study’s finding. But consumer advocates said the story is nothing new. Ira Rheingold, executive director of The National Association of Consumer Advocates in Washington, said anti-consumer practices at credit reporting groups have been going on for more than a decade, and that the credit bureaus have decided facing possible litigation from consumers is just the cost of doing business. The laws regarding credit reporting agencies are "pretty clear"—and so is the need is for enforcement, Rheingold said, either from the FTC or the Consumer Financial Protection Bureau. "They’re not going to change their ways unless they’re forced to change their ways," Rheingold said. "The question is: Can we make them comply with the law? Clearly, private litigation hasn’t worked sufficiently." Len Bennett of Consumer Litigation Associates in Alexandria, Va., said the report itself won’t change demand for that lawsuits to obtain substantive changes to a credit report. Bennett, who has testified before Congress about the increase in credit reporting litigation in recent years, was featured in the 60 Minutes story. "I think the real question is does it cause regulatory or legislative change," Bennett said. The Consumer Data Industry Association, a Washington trade group that represents credit reporting companies, responded to the 60 Minutes story by saying the news program misrepresented the results of the FTC study. "It’s easy to selectively hype snippets from the FTC study to sensationalize the issue, as ‘60 Minutes‘ has done, but the number important to consumers is the one they ignored—that only 2.2% of credit reports contain [material] errors," said Stuart Pratt, the CDIA president and chief executive officer. "The shared goal of our members and lenders who report data about consumers is to get it right every time. We will continue our efforts to push down the material error rate even further in credit reports," Pratt said. Congressional records show that the big three credit reporting agencies have vigorous lobbying shops working for them on Capitol Hill. Experian spent $1.8 million lobbying in 2012, including $640,000 to Alston & Bird, DLA Piper and Venable. And Equifax spent $1 million lobbying in 2012, mainly through its own in-house group. The CFPB has already taken steps to more closely scrutinize the larger consumer reporting agencies (more than $7 million in annual receipts) much like it does banks. In September, the bureau started requiring that those credit reporting agencies be subject to review of compliance systems, including on-site examinations. The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the new rule. Previously, consumer reporting was subject only to law enforcement authority at the federal level, according to the CFPB. And authority to write rules under the federal law governing this system was shared among several agencies, which meant no single agency could see the entire big picture. “We welcome the FTC’s report highlighting this important issue of accuracy in the consumer reporting market,” a CFPB spokesperson said in a statement. “Credit reports play a critical role in consumers’ lives and it is important that we understand the full extent of problems in the market and address them effectively.” Contact Todd Ruger at truger@alm.com.

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