Senators want ‘massive’ fines for data breaches at Equifax and other credit reporting firms

Two senators on Wednesday proposed “massive and mandatory” fines for data breaches at Equifax Inc. and other credit reporting companies, starting at $100 for each consumer whose sensitive information is compromised. The bill from Sens. Elizabeth Warren (D-Mass.) and Mark Warner (D-Va.) would add a $50 fine for each additional piece of compromised personally identifiable information for each consumer. The penalties would double in cases where the credit reporting firm did not comply with federal data security standards or failed to notify officials of the breach in a timely manner. If the legislation had been in place when Equifax had a data breach last year that exposed the Social Security numbers and birth dates of as many as 145.5 million Americans, Equifax would have faced a fine of at least $1.5 billion, the senators said. The bill, called the Data Breach and Compensation Act, would direct the Federal Trade Commission to funnel half of any fine to compensate affected consumers. The agency could levy fines of as much as 75% of the credit reporting company’s gross revenue from the prior year. “Our bill imposes massive and mandatory penalties for data breaches at companies like Equifax — and provides robust compensation for affected consumers — which will put money back into people’s pockets and help stop these kinds of breaches from happening again,” Warren said. An Equifax spokeswoman referred a request for comment to the Consumer Data Industry Assn., which represents credit reporting companies. Francis Creighton, the group’s president, said the companies “already comply with the same rigorous data protection standards as banks” and will work with Congress to find ways to protect consumers “without impeding their access to credit.” “We do not believe the Warren/Warner bill provides a balanced solution to an increasingly complex problem that affects every part of the economy, Continue Reading

State proposes stricter rules for credit reporting agencies after Equifax breach

ALBANY - In the wake of the Equifax security breach, the state on Monday proposed tougher regulations for credit reporting agencies. Under the proposed regulations, credit reporting agencies will be required to follow the same consumer protection standards the state already places on banks and insurance companies. When enacted, Equifax and other credit reporting companies like Experian and TransUnion will be required to register for the first time with the state Department of Financial Services by Feb. 1 and re-register on an annual basis. The state could deny a renewal if the company or those associated with it are deemed "not trustworthy and competent to act as or in connection with a consumer credit reporting agency,” according to the regulation. The firms will also be required to comply with the state’s cybersecurity standards. "The data breach at Equifax demonstrates the necessity of strong state regulation like New York's first-in-the-nation cybersecurity actions," said Financial Services Superintendent Maria Vullo. "This is one necessary action of several that DFS will take to protect New York's markets, consumers and sensitive information from criminals." Under the proposed regulation, consumer reporting agencies can be subjected to as many examinations by the state as the superintendent deems necessary. Equifax earlier this month revealed its system had been hacked between mid-May and July, putting at risk the private information of 143 million Americans, including potentially 8 million New Yorkers. "The Equifax breach was a wakeup call and with this action New York is raising the bar for consumer protections that we hope will be replicated across the nation," Gov. Cuomo said. Join the Conversation: Continue Reading

One in five consumers had an error in at least one of three credit reports: FTC study

Think you can sit back and ignore your credit report? Think again. In a major study, the Federal Trade Commission said one in five consumers -- as many as 40 million people -- had an error on at least one of their three credit reports. And those mistakes can cost you when you try to get a mortgage, secure an auto loan or even when you are looking for a job. But the FTC report also found that the percentage of people whose errors were so bad that they could have caused a material impact on their loan terms was relatively low: 5%. The Consumer Data Industry Association, which represents the credit bureaus, said the FTC study showed that its reports "are highly accurate." "The findings are troubling, but they don't suggest credit reporting Armageddon," John Ulzheimer, president of consumer education for, told the Daily News. Even so, the FTC report underscores the importance of checking your credit report. "These mistakes can have the effect of costing people money," Robert Schoshinski, assistant director of the FTC's division of privacy and identity protection, told the News. "You could get denied credit or get credit on less than favorable terms." Under the Fair Credit Reporting Act, you are entitled to a free credit report once a year from all three major credit reporting bureaus, Experian, Transunion and Equifax. Those free reports can be found at one place: But while these reports are for free, very few consumers actually ask for them. "The take rate for free credit reports is abysmal, about 20 million per year of the 600 million collective credit files in the systems of Equifax, Experian and TransUnion," Ulzheimer said. The info that goes into to your credit report comes from multiple sources including banks, credit card companies, creditors, mortgage companies and court records. If you find a mistake on yours, it pays to take action. Four out of five consumers who filed disputes Continue Reading

Sen. Chuck Schumer (D-N.Y.) criticizes credit reporting agencies for withholding information from consumers

Sen. Chuck Schumer cried foul Sunday against a credit reporting agency that scores people on how likely they are to correctly take their prescription drugs and sells the scores to insurance companies. To make matters worse, the agency refuses to reveal the scores to consumers — which has Schumer (D-N.Y.) railing against credit bureas. “They’re back to their old tricks — and they need to be reined in,” he told reporters in his midtown office. He called on Federal Trade Commission Chairman Jon Leibowitz to investigate new types of ratings the credit bureaus have devised, which go way beyond consumer credit scores, their best-known product. The agency that created the Medication Adherence Score, Fair Isaac Corp., uses data from pharmacy benefits managers with info about consumers such as how long they’ve lived at an address and held the same job, whether they live alone and how old they are to formulate the scores. It sells consumers’ scores to insurance companies, which use the info to decide what premiums to charge, Schumer said. Another agency, Experian, sells an “Income Insight Score” - which predicts consumers’ personal incomes - to mortgage lenders and credit card companies. Schumer wants the trade commission to determine whether withholding these scores from consumers violates the Fair Credit Reporting Act — a law he was instrumental in passing several years ago. It requires rating agencies to make the credit scores that banks and credit card companies see available to consumers. Also, it compels businesses to tell consumers when using their credit reports to make decisions about them. Fair Isaac and Experian argue the new types of scores are not covered by the Fair Credit Reporting Act. Schumer said that if the FTC agrees with that assessment, he’ll craft new legislation to put consumers back into the loop - so they can dispute inaccurate data. “These new consumer scores are just the Continue Reading

Should your credit report cost you a job?

This sounds like a cycle of pure misery: First, you get laid off. Then, you're one of the 4.4 million Americans who in June saw their job searches stretch out six months or more. The bills keep rolling in--car payment, house payment, medical bills--and your credit card balance is ballooning. You interview for a job and you're one of the top candidates, but a late-stage credit check has the employer going with another hire. The bottom line: You need a job to improve your financial situation, but your finances are now hurting your ability to get a job.A House bill introduced earlier this month aims to prevent such a situation. The Equal Employment for All Act would prohibit employers from using the details of a consumer credit report in making hiring decisions, with exceptions for financial firms and government agencies, as well as jobs requiring certain security clearances. The legislation follows efforts by some states to sharply limit employers' ability to consider a person's creditworthiness in hiring.While credit checks historically were used to screen applicants for financial and government jobs, the practice has spread. More than 40 percent of employers run credit checks on job candidates, according to some research. Rep. Steve Cohen, who introduced the bill, points to a report that a third of workers making less than $45,000 a year have poor credit scores linked to bankruptcies, loan delinquencies, divorce, medical problems, or unemployment. The bill would give "some of our most vulnerable, 'credit challenged' citizens--students, recent college graduates, low-income families, senior citizens, and minorities--the opportunity to begin rebuilding their credit history by obtaining a job," Cohen says. Read more from U.S. News & World Report here.Most employers who run credit checks do not receive details like account numbers--and they do not see the individual's credit score. They also tend to look for specific red flags--for example, trouble paying maxed-out Continue Reading

Getting rid of pesky credit card offers

Karen Smith jumped at the chance to reduce the amount of catalogues she receives. Now she wonders, "How do I stop receiving all those pesky credit card offers?" Under the Fair Credit Reporting Act, consumer credit reporting agencies can share your name with companies in connection with firm offers for credit or insurance. In other words, they can create mailing lists of consumers who fit certain criteria for credit or insurance and sell those lists to companies that want to offer those products or services to select consumers. As a result, most consumers end up with a steady stream of unsolicited offers for credit and insurance. Fortunately, the same law that allows credit-reporting agencies to put the names of consumers on those mailing lists gives consumers the right to take them off. By opting out, consumers can remove their names from those prescreened mailing lists. A few years ago, the four largest credit-reporting agencies created OptOutPrescreen. The service makes it possible to opt out simultaneously from offers generated by Experian, Innovis, TransUnion and Equifax. All you have to do is call (888) 5-OPTOUT - (888) 567-8688 - or click to OptOutPrescreen at Be careful: Several Web sites use the words "opt out" in their Web address, but only OptOutPrescreen is operated by the four major credit-reporting agencies. Whether you call or go online, you have to provide your name, home telephone number, address and Social Security number. Many consumers are justifiably uncomfortable providing their Social Security number. However, the founders of OptOutPrescreen claim they need it to verify a consumer's identity. I can tell you this: The site does what it promises and has basic security to protect your information. I'm sure there is a better option than asking for Social Security numbers. But for now, it's the only option. To opt out - and protect your privacy - you have to give out some personal information. Asa Aarons is an Emmy Continue Reading

Be wary of that ‘free lunch,’ and free credit report offers

Sometimes you can bend the rules. Other times, you just have to follow them to get what you want. Remember that when you go online to get those free credit reports you're entitled to every 12 months. There's only one place to get them - no matter what you may think you read on other Web sites. Natalie Meyer, for instance, thought she was getting a free credit report when she logged on to a site called "They advertised the report was free, but charged me $9.95 for it," she complained., one of many providers of online credit reports and credit monitoring services, boldly offers to provide "free credit reports" in seconds. You have to read the fine print at the bottom of the Web page to discover that free is not what it seems. When you order a free credit report from the site, you're automatically enrolled in a 30-day trial of credit monitoring. "You will be billed $9.95 for each month that you continue your membership if you do not cancel your membership within the 30 day trial period," the site states. If you mistakenly try to access your free credit reports through a site like this, cancel any membership services as soon as possible. In the past 36 months, nearly 400 consumers have filed complaints about with the Better Business Bureau, many over billing disputes. Under the Fair and Accurate Credit Transactions Act, you're entitled to a copy of your credit report once every 12 months, from each consumer credit reporting company , including the big three - Equifax, Experian and TransUnion. The law required the three major credit-reporting agencies to establish a central source for distribution of the free credit reports. To order yours, click or call (877) FACT-ACT. You cannot request free credit reports through the Web sites of the individual credit reporting agencies or from any other Web site other than Asa Aarons is a consumer reporter who Continue Reading

Here’s score on employer’s access to your credit report

Be careful - very careful - where you get your facts, even when the source is something as solid as a major financial corporation.VISA USA recently announced only 20% of Americans know prospective employers can legally screen job applicants based on their credit scores. The survey claimed 52% mistakenly believe it is illegal for employers to use credit scores as hiring criteria."A bad credit score can send an otherwise well-qualified job applicant straight to the unemployment line," said Jason Alderman, director of financial education for Visa USA.So can bad information. Contrary to what VISA USA suggests, prospective employers generally do not have access to an applicant's credit score. None of the big three credit reporting agencies provides scores as part of employment credit checks. Neither does ChoicePoint, one of the largest third-party providers of identification and credential verification services."But they could," Alderman said. "Just because they don't now doesn't mean they won't in the future."Under the federal Fair Credit Reporting Act, potential and current employers can order consumer reports for employment purposes such as hiring and promoting. But the employer is required to obtain written consent from the applicant or employee before accessing the file and must follow specific rules if the applicant is rejected because of information in the report.For preemployment credit reports, the three major credit bureaus use a special reporting format that suppresses credit scores and credit card account information that is considered irrelevant to hiring decisions. Most data providers also leave out the applicant's year of birth and any references to a spouse, such as joint credit accounts, to keep the potential employer from inadvertently violating equal employment opportunity laws.Employers are allowed to run credit checks on job applicants in most states, including New York and New Jersey. But those state laws, like federal law, require written consent Continue Reading

To her credit, a consumer learned why we must pay

Remember Innovis, the so-called fourth credit-reporting agency? Unlike the Big Three credit reporting agencies - Experian, Equifax and TransUnion - Innovis is not required to provide consumers with a copy of their credit report free of charge every 12 months. That's a source of consumer frustration. "I don't get it," Renee Stein of New York City writes. "It seems to be doing the same thing as the other credit reporting agencies, yet it doesn't have to comply with the federal law. What's the deal?" Innovis Data Solutions is a privately held consumer credit reporting agency based in Columbus, Ohio. It collects consumer credit data from credit grantors throughout the U.S. and sells credit grantors the information it collects "to assist in marketing, verification, authentication and fraud prevention." Innovis says that it is "not currently involved in providing services that can result in the denial of applications for credit, insurance or employment," and, therefore, exempt from certain federal credit regulations, including the requirement to provide consumers free copies of their credit files. But several consumers, including Stein, weren't satisfied with the company's response. Rebecca Kuehn, assistant director of the Division of Privacy and Identity Protection at the Federal Trade Commission, reviewed the company's policies and operations. To qualify as a nationwide credit-reporting agency under the Fair and Accurate Credit Transactions Act, she explained, a consumer-reporting agency has to do two things on a national basis: compile both credit account information and public record information. Innovis only does one of those two things, Kuehn said. "It does not appear that Innovis compiles public record information at this time," she explained. Until it does, it will not have to provide free credit reports per federal law. Instead, it follows state laws. New York State residents will have to pay $10 for credit reports. They're $5 if you live in Continue Reading

Tired of preapproved credit card offers, she Opted Out

Jennifer Kreuter was tired of receiving preapproved offers for credit and insurance. But when she went to a Web site that promised to reduce it, she found more than a way to opt out of the unsolicited offers. "There seems to be a fourth nationwide credit reporting agency I've never heard of," she said. When consumers call (888)-5OPTOUT or click to, they can stop prescreened solicitations that are based on lists from the major consumer reporting companies. is a joint venture of the big three credit agencies - Equifax, Experian and TransUnion - and a fourth, Innovis Data Solutions. Innovis is a privately held consumer credit reporting agency that manages to operate just below the radar screens of both consumers and government regulators. Relatively few consumers can name the nation's fourth largest credit agency. The company seems just as much a mystery to federal regulators, who have only a vague grasp of its operations. They can't explain why the firm is exempt from some of the most basic provisions of the Fair and Accurate Credit Transactions Act, including a provision to provide each consumer a free copy of his consumer file once every 12 months. "I can't order my credit report from Innovis free of charge," Kreuter said. "Is this company somehow exempt from the requirement to provide one annually?" Yes, according to the Federal Trade Commission. The unresolved question, however, is "Why?" Unlike the big three, Innovis claims it doesn't sell consumer credit histories to lenders, insurers and potential employers. Instead, it sells information to creditors for use in compiling mailing lists. As Innovis explained, it "collects consumer credit data from credit grantors" nationwide and sells the information to credit grantors "to assist in marketing, verification, authentication and fraud prevention." Tomorrow: More to Know About Innovis. Asa Aarons is a consumer reporter on at 5:30 p.m. weekdays on Continue Reading