The US government and some consumer credit watchdog agencies are keeping an eye on abusive practices of credit bureaus and collection agencies. In 2012, the Consumer Financial Protection Bureau made a landmark move to put consumer reporting agencies under its non bank supervision program. As a result, consumer credit reporting agencies could be under Federal supervision for the first time. 

Credit Bureaus maintain massive databases that contain detailed personal information of most of the adult population. Getting a job, opening a bank account, buying a smart phone on contract, renting a property, starting a business, and a host of other important consumer business transactions are possible only with a good credit rating. Abusive practices like failing to remove false derogatory information, or failing to protect personal information can be devastating to an individual.

According to Skim That,

 “…credit reporting agencies with over $7 million in annual receipts would be subject to supervision. This would cover 30 consumer reporting agencies.”

CFPB Director Richard Cordray says that credit bureaus are often shadowy and poorly understood by the average consumer, yet they are an important influence on people’s lives. Experian, Equifax and TransUnion are the largest credit bureaus. 

While the collection agencies that garner the most consumer complaints about abusive practices, credit bureaus are an unknown quantity. Putting them under supervision will help to determine where abusive practices are going on and how those practices can be halted.

Ripoff Report has some illustrative forum reports and complaints by consumers who have had trouble with credit bureaus like Equifax, TransUnion and Experian. While these claims of abusive credit bureau practices have not been tested in court or confirmed to be true, they help to describe common and potential problems.

Consumers already have the right to see and to correct their credit reporting files, but there are other important rules and requirements that credit bureaus have not always managed well, leading to abusive practices.

False statements on a credit report. EHow has a discussion of what to do when a company or individual puts false information on the credit bureau file.  

Failure to maintain reasonable procedures to ensure the maximum possible accuracy. 

Failure to follow the procedures mandated by the Fair Credit Reporting Act.

Failure to protect consumer’s personal information. In 2009, a consumer reporting agency failed to properly screen it’s prospective customers. As a result, the credit agency sold at least 318 credit reports to identity thieves. Here is the related FTC Case summary.

Monitoring “Free” credit report schemes that actually cost money. This FTC page outlines the rules and procedures for clearly notifying customers when credit reports cost money. 

When people are fired or denied a job because of a credit report, the employers must provide a copy of the report, identify the credit reporting agency that provided it, notify the affected individual that the credit reporting agency did not make the adverse action decision, and informing the individuals that they have the right to obtain a free copy of the report from the credit reporting agency. Affected individuals also must be told that they can dispute the report’s accuracy. In 2009, Quality Terminal Services, LLC and Rail Terminal Services are two firms that had to pay civil fines for violating parts of this rule. Here is the related FTC case summary.

In summary, credit bureau abusive practices offer a hidden danger that can catch the consumer unaware. The abusive practices can make major life activities, like getting a job or renting a home, impossible to carry out. Finally, the abuse can cause real damage from identity theft or deliberately filed false reports that are not corrected. The best defense is to check on the credit ratings for all three major bureaus and to be aggressive about correcting the record when it is wrong.