CDIA Regulatory Comments & Amici

 

2018

In December 2018, the FTC invited public comment on its Identity Theft Rules as part of the its systematic review of all current Commission regulations and guides.  These rules include the duties regarding the detection, prevention, and mitigation of identity theft (“Red Flags Rule”) and the duties of card issuers regarding changes of address (“Card Issuers Rule”).  The Identity Theft rules are found in the CFR as 16 C.F.R. § 681.1   Duties regarding the detection, prevention, and mitigation of identity theft, 16 C.F.R. § 681.2   Duties of card issuers regarding changes of address, and Appendix A to Part 681—Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation.  All the comments for this rulemaking were posted on the FTC website.

2016

The FTC undertook a routine review of its Safeguards Rule and its Disposal Rule. You can read CDIA’s comment here.

2014

In March 2014, the FTC held a forum on alternative scoring products. CDIA spoke on a panel at this forum. The agenda for and the transcript from this event are all available online.

2015

In January 2015, the FTC issued its sixth interim and final report to Congress under FACTA Sec. 319 concerning the accuracy of information in credit reports. The FTC press release called it a follow-up study of credit report accuracy that found most consumers who previously reported an unresolved error on one of their three major credit reports believe that at least one piece of disputed information on their report is still inaccurate.

2012

In December 2012, the FTC issued it fifth interim report to Congress under FACTA Sec. 319 concerning the accuracy of information in credit reports. The February 2013 FTC press release covering the report suggested a high degree of errors in credit reports, that is not based on the real-world uses of credit reports.

2011

In July 2011, the FTC issued a staff report, that compiles and updates the agency’s guidance on the FCR), the 1970 law designed to protect the privacy of credit report information and ensure that the information supplied by credit reporting agencies is as accurate as possible. The Commission also issued a Statement of General Policy or Interpretation; Commentary on the FCRA. FTC press release.

2010

In December 2010, the FTC issued its fourth interim report to Congress under FACTA Sec. 319 describing progress the agency has made on a national study examining the accuracy of credit reports. Congress directed the FTC to conduct a study of credit report accuracy and provide interim reports every two years, starting in 2004 and continuing through 2012, with a final report in 2014. FTC press release.

2008

In December 2008, the FTC issued a report to Congress on the credit report complaint referral program under the FCRA. The report was submitted in accordance with FCRA section 611(e) which was added to the FCRA by FACTA Sec. 313. Section 611(e) directs the FTC to transmit certain consumer complaints to the nationwide consumer reporting agencies that are the subject of the complaints; obtain information from the CRAs related to the resolution of those complaints; and, submit to Congress information gathered by the Commission pursuant to the subsection. FTC press release.

In December 2008, the FTC issued its third interim report to Congress under FACTA Sec. 319 concerning the accuracy of information in credit reports. The FTC also issued three attachments, Attachment 1: Privacy Policy for the Registration Web Site of the FTC Credit Report Accuracy Study, Attachment 2: Privacy Impact Assessment of the Registration Web Site for the FTC Credit Report Accuracy Study, and Attachment 3: Pilot Study 2 on Processes for Determining the Accuracy of Credit Bureau Information. FTC press release.

2007

In July 2007, as noted by an FTC press release, the FTC released a report presenting the results of a study concerning credit-based insurance scores and automobile insurance. The study found that these scores are effective predictors of the claims that consumers will file. It also determined that, as a group, African-Americans and Hispanics tend to have lower scores than non-Hispanic whites and Asians. Therefore, the use of scores likely leads to African-Americans and Hispanics paying relatively more for automobile insurance than non-Hispanic whites and Asians. The FTC also issued a Statement of Chairman Majoras, Commissioner Kovacic, and Commissioner Rosch; a Dissenting Statement of Commissioner Harbour and a Concurring Statement of Commissioner Leibowitz.

2006

In December 2006, the FTC issued its and a contractor’s report for an initial pilot study for Processes for Determining Accuracy of Credit Bureau Information.

In August 2006, the FTC and the Federal Reserve issued a Report to Congress on the FCRA Dispute Process.

2004

In December 2004, the FTC issued a report to Congress containing studies on credit report accuracy and completeness required by the FACTA. FACTA required the FTC to conduct an ongoing study of the accuracy and completeness of consumer credit reports and to report on four specific topics related to credit report accuracy: (1) the effects of requiring the nationwide CRAs to match more points of consumers’ personal identifying information (“mixed files”); (2) the effects of requiring that a consumer who has been denied credit based on information in his or her credit report receive a copy of the same credit report on which the creditor based the adverse action (“same report”); (3) the effects of requiring that consumers be notified when negative information has been added to their credit reports (“Negative Information Notice Proposal”); and (4) whether there are any common financial transactions not generally reported to the CRAs that would provide useful information in determining a consumer’s credit rating (“Common Unreported Transactions Study”).

In September 2004, the FTC issued a press release seeking public comment on a proposed regulation to improve notices of consumers’ right to opt out of prescreened solicitations for credit or insurance. The FTC also issued a document, The Effectiveness of “Opt-Out” Disclosures In Pre-Screened Credit Card Offers: A Report Submitted to the Commission by Manoj Hastak, Ph.D., and a Credit Card Offer Study: Prepared for the Commission by Synovate Public Sector Research Group.

2020

2020

  • On November 3 2020, CDIA joined a coalition of interested associations in sending a letter to SSA on its eCBSV system. The SSA responded to that letter on November 30.
  • In March 2020, CDIA joined several other organizations to write the Office of Management and Budget (OMB) to comment on SSA’s Draft User Agreement.
  • In February 2020, the SSA published meeting notes from a Hill briefing it held with House Ways and Means minority staff (House Ways and Means eCBSV Meeting Notes from 1-23-20). SSA and CDIA continue to disagree on SSA’s interpretation of EGRRCPA Sec 215, as well as ESIGN. In response to the release of new SSA information, CDIA, with its coalition partners, filed another letter to the SSA, which includes a request for a meeting with the OGC.
  • In February 2020, the SSA provided the 10 permitted entities participating in the initial rollout with a technical document. The document is a “draft” Electronic Consent Based Social Security Number Verification (eCBSV) Verification API Technical Information.
  • In January 2020, CDIA cosigned a letter with several other associations to the SSA to comment on an SSA Draft User Agreement (and related documents, like static website content and electronic signature requirements) for participants in the SSA’s electronic Consent Based Social Security Number Verification (“eCBSV”) Service, issued for notice and comment under the Paperwork Reduction Act. SSA continues to develop the system and implements Section 215 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. The comments in our letter are grounded in the following: Implementation of the Banking Bill must adhere to the plain text of that statute and the clear intent of Congress. The Banking Bill was not ambiguous in describing the full range and limits of the authority granted to the SSA. That authority comprises: (1) Building eCBSV and ensuring its proper use through audits and monitoring; (2) certifying compliance with the Gramm-Leach-Bliley Act (“GLBA”); (3) enabling consumer consent, including by use of an “electronic signature,” as that term is defined in the Electronic Signatures in Global Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”); and (4) recovering costs.

2019

In July 2019, CDIA signed on to a joint industry trades letter to the Social Security Administration in connection with its rollout of a new program under Sec. 215 of the EGRRCPA. This program allows businesses to access a new system to confirm the validity of SSNs to help prevent identity theft. The joint letter notes that “to ensure consumers receive the benefit of the eCBSV’s anti-fraud capabilities as quickly as possible, it is imperative that SSA not limit the number of firms selected for the initial rollout to a low number. We believe such a cap would be detrimental to the broad implementation of eCBSV.”

2017

The U.S. Department of Housing and Urban Development (HUD) issued a notice in the Federal Register on May 15, 2017 seeking public comment identifying existing regulations that may be outdated, ineffective, or excessively burdensome in order to consider whether they should be repealed, replaced, or modified per the instructions of Executive Order 13777. CDIA filed a comment that suggested that HUD review its April 4, 2016 Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions. CDIA asked HUD to review and modify that Guidance with respect to the type of criminal history information that a housing provider can consider in justifying an adverse housing action. In June 2018, HUD issued an advance notice of public rulemaking (ANPR) seeking comment on whether its 2013 Disparate Impact Rule (Rule) should be revised in light of the 2015 U.S. Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. CDIA filed a comment in connection with this process

In August 2019, HUD issued a proposed rule “to amend HUD’s interpretation of the Fair Housing Act’s disparate impact standard to better reflect the Supreme Court’s 2015 ruling in Inclusive Communities  [and] to provide clarification regarding the application of the standard to State laws governing the business of insurance.”  CDIA filed a comment in connection with that proposed rule. A final rule was issued in September 2020.

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CDIA filed a comment to the Centers for Medicare & Medicaid Services (CMS) within the U.S. Department of Health and Human Services to encourage CMS to require name-based, commercial criminal background checks for providers of home and community-based services (HCBS) provided to Medicaid beneficiaries. CDIA’s comment is in response to a request for information (RFI) from CMS to help improve the quality of HCBS provided to Medicaid beneficiaries. You may recall that CDIA filed a comment with CMS in the past, in connection with long-term care.

2017

In October 2016, the Federal Reserve, the OCC, and the FDIC released a joint Advance Notice of Proposed Rulemaking (ANPR) requesting public comment on enhanced cybersecurity standards that would apply to certain large, interconnected financial entities (“covered entities”) as well as the third parties that provide services (“covered services”) to such entities. The press release covering the ANPR is online. In January 2017, CDIA filed a comment on this ANPR.

2018

In September 2018, the National Telecommunications and Information Administration (NTIA) issued a Request for Comments on Developing the Administration’s Approach to Consumer Privacy. In response to that request, CDIA filed a comment and also signed on to a broader industry letter. The NTIA received over 100 comments in connection with its request.

2019

In November 2019, the five federal financial regulatory agencies issued a joint statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms. As noted in the press release,

The statement from the Federal Reserve Board (Federal Reserve), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA) notes the benefits that using alternative data may provide to consumers, such as expanding access to credit and enabling consumers to obtain additional products and more favorable pricing and terms. The statement explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.

Alternative data include information not typically found in consumers’ credit reports or customarily provided by consumers when applying for credit. Alternative data include cash flow data derived from consumers’ bank account records. The agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system.

2020

On July 7, 2020, the CFPB put out an Innovation Spotlight blog, Providing adverse action notices when using AI/ML models.  The posting notes that one area of innovation the CFPB is “monitoring is artificial intelligence (AI), and particularly a subset of AI, machine learning (ML). For example, in 2017, the Bureau issued a Request for Information Regarding Use of Alternative Data and Modeling Techniques in the Credit Process (RFI). We also issued a No-Action Letter to Upstart Network, Inc., a company that uses ML in making credit decisions, and later shared key highlights from information provided by Upstart.”  While “AI has the potential to expand credit access by enabling lenders to evaluate the creditworthiness of some of the millions of consumers who are unscorable using traditional underwriting techniques[,] it may create or amplify risks, including risks of unlawful discrimination, lack of transparency, and privacy concerns. Bias in the source data or model construction can also lead to inaccurate predictions. In considering AI or other technologies, the Bureau is committed to helping spur innovation consistent with consumer protections.”

The CFPB released its latest fair lending report, Protecting consumers and encouraging innovation: 2019 Fair Lending Report to Congress with a covering blog posting.  Of note is a section, Innovations in access to credit with a subsection on “providing adverse action notices when using artificial intelligence and machine learning models.”  In this section, the Bureau wrote that “artificial intelligence (AI), and more specifically, machine learning (ML), a subset of AI…”, will be an area of where the Bureau will be monitoring for fair lending and credit access. A good summary of the AI section is found in a BallardSpahr blog.  There is regulatory flexibility to handle questions of AI and machine learning, according to the Bureau.  This was the message CDIA provided in a comment to the OMB earlier this year in connection with a January 2020 Request for Comments on a Draft Memorandum to the Heads of Executive Departments and Agencies, Guidance for Regulation of Artificial Intelligence Applications.

In April 2020, Andrew Smith the Director of the FTC’s Bureau of Consumer Protection released a blog posting on businesses’ use of AI and algorithms that offers insights in to how the Bureau will look at AI through its consumer protection mission.  Smith said that “the use of AI tools should be transparent, explainable, fair, and empirically sound, while fostering accountability. We believe that our experience, as well as existing laws, can offer important lessons about how companies can manage the consumer protection risks of AI and algorithms.”   Smith’s blog advised businesses to: be transparent, explain their decisions to consumers, ensure that their decisions are fair, ensure that their data and models are robust and empirically sound, and to hold themselves accountable for compliance, ethics, fairness and nondiscrimination.  The blog noted the FTC’s thinking on AI has been influenced in part by its 2016 report, Big Data: A Tool for Inclusion or Exclusion?, which advised companies using big data analytics and machine learning to reduce the opportunity for bias. Most recently, we held a hearing in November 2018 to explore AI, algorithms, and predictive analytics.

In January 2020, the Office of Management and Budget (OMB) issued a Request for Comments on a Draft Memorandum to the Heads of Executive Departments and Agencies, Guidance for Regulation of Artificial Intelligence Applications.  The January 2020 request follows a February 2019 Executive Order on Maintaining American Leadership in Artificial Intelligence.  CDIA filed a comment in connection with the OMB request.

2019

In 2019, the  Casualty Actuarial and Statistical Task Force of the National Association of Insurance Commissioners (NAIC) issued a Best Practices for Regulatory Review of Predictive Analytics White Paper. CDIA filed a comment on that paper.

2008

In Oct. 2008, CDIA filed a comment in connection with draft paper on credit-based insurance scores issued from the NAIC.

CDIA filed a comment with the VA in response to its Jan. 3, 2014 proposed rule concerning the appointment of fiduciaries. Our comment encouraged the VA to (1) go beyond the ten-year look-back period to determine who can serve as a fiduciary for a veteran; and (2) not just limit disqualifying offenses to those noted below, but perhaps include other crimes of dishonesty and deception. A final rule was issued in July 2018.

2020

  • In March 2020, CDIA filed an amicus brief Sustrik v. Equifax on the question of whether the FCRA requires proof of an inaccuracy to bring a claim under section 611 (15 U.S.C. § 1681i).  The plaintiff/appellant filed a reply to CDIA’s amicus brief in April.
  • In January 2020, CDIA filed an amicus brief in Patel v. Facebook in support of Facebook’s petition for cert before the U.S. Supreme Court. There is a significant Constitutional question at stake about when a plaintiff can establish sufficient harm to obtain standing under Article III to successfully sue for a violation of law. A three-judge panel of the 9th Circuit permits a class action plaintiff to establish Article III standing and seek billions of dollars in damages simply by alleging a statutory violation relating to privacy—even if the plaintiff concedes that no actual harm occurred. With limited regulatory guidance in interpreting the federal Fair Credit Reporting Act, consumer reporting agencies often face private litigation based on novel theories of liability. Expansive interpretation of Article III standing heightens CRAs’ litigation risk, and that risk is compounded by the potential for unlimited statutory damages that successful plaintiffs may recover in class action lawsuits under the FCRA.

In Patel, the 9th Circuit held that the plaintiffs had satisfied Article III standing simply by alleging a state statutory violation, namely the Illinois Biometric Information Privacy Act (“BIPA”). The plaintiffs claimed that Facebook’s “Tag Suggestions” feature—which uses facial-recognition software to suggest that users tag their friends in photographs they upload to the service—violated BIPA. Judge Donato (N.D. Cal.) certified a class. Two of the named plaintiffs testified that they were unaware of any harm that they suffered because of Tag Suggestions; indeed, one called it a “nice feature” that he continues to use. Plaintiffs’ lawyer admitted in open court that “[w]e haven’t found” that “any consequential harm resulted” from the alleged BIPA violation.

In September 2019, CDIA filed an amicus in connection with Facebook’s petition for a rehearing en banc from the 9th Circuit, which was denied.

In late-2019, Facebook filed cert petition to the U.S. Supreme Court asking it to take the case, but cert was denied by the Court in January 2020.

2019

  • In 2019, CDIA filed an amicus brief in Denan v. TransUnion before the U.S. Court of Appeals for the Seventh Circuit. The plaintiffs would like credit bureaus to not report legitimately owed debts by consumers if the loans were invalid under state law. CRAs have developed procedures regarding the intake, maintenance, and publication of the data they hold on consumers. Data furnishers are charged with reporting such information with “accuracy” and “integrity” in that the information provided to CRAs must accurately reflect the liability of each consumer with respect to the account reported. Under the FCRA, CRAs cannot and should not be forced to judge the validity of loans.

Also filing an amicus in this case is a joint brief filed by the National Consumer Law Center and the National Association of Consumer Advocates.

2017

In November 2017, CDIA filed an amicus brief in Yim v. Seattle, a case in federal court challenging Seattle’s limitation on the use of criminal background checks for residential screening. CDIA’s brief, jointly filed with NAPBS, was filed in support of the plaintiff’s motion for summary judgement. CDIA and NAPBS filed a response to the city’s objections to the joint amicus brief. Amici briefs in support of the plaintiffs were filed by the National Apartment Association, and the National Consumer Reporting Association. Briefs in support of Seattle were filed by the Sargent Shriver National Center on Poverty Law (“Shriver Center”), and the National Housing Law Project (“NHLP”), which filed a joint brief; the Pioneer Human Services, and the Tenants Union of Washington, which filed a joint brief; and the Fred T. Korematsu Center for Law and Equality (“Korematsu Center”), and the ACLU, filing a joint brief. The city filed its opposition to the motions for leave to file amici briefs submitted by CDIA/NAPBS, and NCRA. The city also filed a combined Opposition to Plaintiffs’ Motion for S.J. and Cross Motion for S.J.

On Nov. 14, the Washington Supreme Court answered the three questions certified to them by the U.S. District Court.  The supreme court was asked (1) What is the proper standard to analyze a substantive due process claim under the Washington Constitution? (2) Is the same standard applied to substantive due process claims involving land use regulations? and (3) What standard should be applied to Seattle Municipal Code [chapter] 14.09 (“Fair Chance Housing Ordinance”)?  The court said that “[u]nless and until this court adopts heightened protections as a matter of independent state law, state substantive due process claims are subject to the same standards as federal substantive due process Yim etal. v. City of Seattle, No. 96817-9 claims. The same is true of state substantive due process claims involving land use regulations and other laws regulating the use of property. Therefore, the standard applicable to the plaintiffs’ state substantive due process challenge to the Fair Chance Housing Ordinance is rational basis review.”

2016

In February 2016, CDIA filed an amicus brief with the New York Court of Appeals in Griffin v. Sirva, Inc. In short, CDIA urges the Court to agree that the state Human Rights Law applies to “employers” only, and not to third parties, like background check companies.

CDIA filed an amicus in Pedro v. Equifax, a case pending in the 11th Circuit. CDIA argues that (1) a consumer report practice supported by case law and regulatory guidance cannot be a “willful” violation of the FCRA; and (2) an accurate report of authorized user information is not “inaccurate” under the FCRA.

CDIA asked the 9th Circuit to allow CDIA to file an amicus brief in Polo v. Innoventions Int’l, but the court denied that motion without explanation. In this post-Spokeo case, the court is encouraging federal questions about nationwide credit reporting to be decided by state courts when they cannot be heard in federal courts. CDIA argues the cases cannot be heard in any court.

2013

In 2013, CDIA joined with others to file an amicus brief before the U.S. Supreme Court in McBurney v. Young, a case that challenged the constitutionality of Virginia’s Freedom of Information Act which grants Virginia citizens access to all public records, but grants no such right to non-Virginians. Unfortunately, the court ruled 9-0 that the statute, as reported by scotusblog, “does not violate the Privileges and Immunities Clause, which protects only those privileges and immunities that are ‘fundamental.’ The Act also does not violate the dormant Commerce Clause: it neither prohibits access to an interstate market nor imposes burdensome regulation on that market; and in any event, a state does not violate the Clause when, having created a market through a state program, it ‘limits benefits generated by [that] state program to those who fund the state treasury and whom the State was created to serve.’”

2020

On January 16, 2020, several members of the U.S. House Financial Services Committee sent a letter to the GAO “requesting information about the benefits and drawbacks of alternative data in mortgage lending and the role of the federal government in overseeing the use of alternative data by credit reporting agencies (CRAs) and lenders.”  The letter was issued by Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, Congressman Al Green (D-TX), Chair of the Subcommittee on Oversight and Investigations, Congressman Bill Foster (D-IL), Chair of the Task Force on Artificial IntelligenceCongressman Stephen Lynch (D-MA), Chair of the Task Force on Financial Technology, and Congressman Josh Gottheimer (D-NJ).  The letter was also the subject of a press release from Chair Waters.

 

In February 2000, Rep. Haley Stevens (D-MI) asked the GAO to review so-called “secret scores.”  Rep. Stevens issued a press release noting a November 2018, Wall Street Journal story that, according to the release, “companies are using hundreds of data points to generate a ‘Customer Lifetime Value’ score that determines how a customer is treated, from the prices they pay for a product to the quality of customer service they receive. While traditional credit scores are transparent and regulated by the federal government to protect consumers, these scores are secret and not currently subject to any regulation.”

2019

In July 2019, the GAO released a new report, Consumer Reporting Agencies: CFPB Should Define Its Supervisory Expectations (GAO 19-459). The report was required under Sec. 308 of the EGRRCPA. As noted in the transmittal letter, the report “(1) describes the current oversight framework for CRAs, (2) examines how the Consumer Financial Protection Bureau (CFPB) has overseen CRAs and entities that furnish consumer data, (3) examines how other federal agencies, including the Federal Trade Commission (FTC) and the prudential regulators, have overseen CRAs and entities that furnish consumer data, and (4) identifies what is known about the causes of inaccuracies in consumer reports and the processes that are in place to help ensure accuracy.”

The GAO issued a report in May 2019, Private Student Loans: Clarification from CFPB Could Help Ensure More Consistent Opportunities and Treatment for Borrowers. The study was required by Sec. 602 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The Act required the GAO to review the implementation and effects of private student loan rehabilitation programs. The GAO report examines (1) the factors affecting financial institutions’ participation in these programs, (2) the risks that these programs may pose to financial institutions, and (3) the effects that these programs may have on student loan borrowers’ access to future credit.

GAO report, Range of Consumer Risks Highlights Limitations of Identity Theft Services (GAO-19-230, March 27, 2019), and also released a podcast.

GAO report, Actions Needed to Strengthen Oversight of Consumer Reporting Agencies (GAO-19-196, Feb. 21, 2019). In connection with the release of this report, the GAO also issued congressional testimony delivered before the Subcommittee on Economic and Consumer Policy, of the U.S. House Committee on Oversight and Reform.

GAO report, Process Improvements Needed in Recouping Overpayments to Service Members (GAO-19-61, Feb. 15, 2019)

GAO report, Additional Federal Authority Could Enhance Consumer Protection and Provide Flexibility (GAO-19-52, Jan. 15, 2019). In connection with the release of this report, the GAO also issued congressional testimony delivered before the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Homeland Security and Governmental Affairs.

2018

GAO report, Actions Taken by Equifax and Federal Agencies in Response to the 2017 Breach, (GAO-18-559, Aug. 30, 2018)

2017

GAO report, Identity Theft Services; Services Offer Some Benefits but Are Limited in Preventing Fraud (GAO-17-254, March 30, 2017), and also released a podcast.

2013

In Sept. 2013, the GAO issued a report, Consumer Privacy Framework Needs to Reflect Changes in Technology and the Marketplace (GAO 13-663). “This report addresses (1) privacy laws applicable to consumer information held by resellers, (2) gaps in the law that may exist, and (3) views on approaches for improving consumer data privacy.”

2003

In 2003, the GAO released a report, Limited Information Exists On Extent of Credit Report Errors and Their Implications for Consumers. This report is a Statement for the Record Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate.

2020

  • In August 2020, the National Association of Insurance Commissioners heard from a panel at its annual meeting on Race & Insurance.  The panel discussion included CBIS.  Connected to this panel were several documents:
    • An August 2020, NAIC document, Milestones in Racial Discrimination within the Insurance Sector, that summarizes, among other things, a history of CBIS and offers a partial resource list at the end of the document.
    • The Center for Economic Justice (“CEJ”) issued a  Call to Insurers and Insurance Regulators to Address Societal Systemic Bias and Inherent Racism in Insurance By Explicit Recognition of Disparate Impact as Unfair Discrimination in Insurance.  This document is critical not just of CBIS, but the criminal history information that may be included in such scores.
    • A January 2003 submission from Birny Birnbaum to the Ohio Civil Rights Commission, Insurers’ Use of Credit Scoring for Homeowners Insurance In Ohio.
    • March 4, 2020 testimony of Sonja Larkin-Thorne, Consumer Advocate & Retired Insurance Executive, before the Subcommittee on Housing, Community Development and Insurance U.S. House Committee on Financial Services regarding Drivers of Discrimination: An Examination of Unfair Premiums, Practices, and Policies in the Auto Insurance Industry.
  • On March 4, 2020, the Subcommittee on Housing, Community Development, and Insurance of the U.S. House Financial Services Committee held a hearing, Drivers of Discrimination: An Examination of Unfair Premiums, Practices, and Policies in the Auto Insurance Industry.  This hearing discussed, among other things, H.R. 1756, the “Preventing Credit Score Discrimination in Auto Insurance Act”, and H.R.____, the “FAIR Study Act.”  The subcommittee heard from Douglas Heller, Insurance Expert, Consumer Federation of America; Elizabeth Kelleher Dwyer, Superintendent of Insurance, the State of Rhode Island, on behalf of the National Association of Insurance Commissioners; Eric Poe, CPA and Chief Operating Office, CURE Auto Insurance; Sonja Larkin-Thorne, Consumer Advocate (retired); and Erin Collins, Vice President- State Affairs, National Association of Mutual Insurance Companies.

 

  • On June 26, 2020, U.S. Reps. Jackie Speier (D-CA) and Michael McCaul (R-TX), issued a press release announcing a letter they sent to Experian “requesting the company ensure…that unintentional, duplicative inquiries for an individual’s Economic Injury Disaster Loan (EIDL) application do not unduly affect their credit scores. EIDL is administered through the Small Business Administration (SBA), which uses Experian for its credit reporting purposes. The program has been a lifeline for struggling businesses during the coronavirus. However, numerous small business owners have noticed a drop in their credit scores after applying for the EIDL program multiple times because they were unsure if their initial application had registered. This bipartisan letter was signed by an additional 13 Members of Congress.”  Other signatories are Reps. Brian Fitzpatrick (R-PA), Jamie Raskin (D-MD), James P. McGovern (D-MA), André Carson (D-IN), Jimmy Panetta (D-CA), Marc Veasey (D-TX), James R. Langevin (D-RI), Jahana Hayes (D-CT), Max Rose (D-NY), Derek Kilmer (D-WA), Angie Craig (D-MN), Ami Bera, M.D. (D-CA), and Jerrold Nadler (D-NY)
  • In June 2020, U.S. Rep. Patrick McHenry (R-SC), the ranking member of the House Financial Services Committee, entered in the the Congressional Record his opposition to H.R. 5332, a bill by U.S Rep. Josh Gottheimer (D-NJ) that would, among other things, suppress the reporting of accurate information to consumer reporting agencies.  Rep. McHenry also entered in to the Congressional Record, letters against suppression from CDIA, Credit Union National Association, the U.S. Chamber of Commerce, the American Bankers Association, the National Taxpayers Union, and the Consumer Bankers Association.  On June 29, 2020, the White House issued a Statement of Administration Policy opposing H.R. 5332.
  • CDIA sent a letter in June 2020 to Speaker Nancy Pelosi and Minority Leader Kevin McCarthy in opposition to H.R. 5332, the Protecting Your Credit Score Act of 2019.
  • In June 2020, CDIA joined with other trade associations in a letter supporting S. 3990, the Financial Product Safety Commission Act of 2020. This legislation would ensure the Consumer Financial Protection Bureau’s (CFPB) political independence by replacing the single-director structure with a five-person, bipartisan commission, as originally intended by the U.S. House of Representatives when it first passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.
  • On May 22, 2020, U.S. Sen. Tim Scott (R-SC) led a letter signed by several members of the Senate Banking Committee, including Chairman Mike Crapo (R-ID) in a letter to Treasury Secretary Mnuchin, FHFA Director Calabria and CFPB Director Kathleen Kraninger thanking them for their work to help consumers through the financial strain of COVID-19 and to oppose proposals that call for the suppression of credit reporting from furnishers to credit bureaus. In June, the Treasury Department and FHFA responded to Sen. Scott, as did the CFPB.
  • In May, a “diverse coalition of taxpayer, consumer, and free-market advocates” wrote to Congress “to express our strong objection to the inclusion of provisions that threaten the accuracy and predictability of credit reporting in the next COVID-19 relief package.”  The groups signing the letter were National Taxpayers Union, American Consumer Institute, Americans for Prosperity, Americans for Tax, Reform Campaign for Liberty, Center for a Free Less Government, and R Street Institute.
  • On April 1, 2020, the CFPB issued a Policy Statement that outlines the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic.  In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.  On April 7, several U.S. senators sent a letter to the CFPB that both criticized the Bureau’s Policy Statement and offered additional suggestions on credit reporting.  The senators on the letter are U.S. Sens. Sherrod Brown (D-OH), the ranking member on Senate Banking; and Brian Schatz (D-HI), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Jack Reed (D-RI).  On April 13, 23 state attorneys general sent a letter to the CFPB criticizing its April 1 Policy Statement. In September 2020, an NCLC-led coalition of 21 consumer, faith, and advocacy groups sent a letter to the CFPB asking it to revoke its April 1, 2020 Policy Statement that outlines the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic.
  • On January 29, 2020, the Comprehensive CREDIT Act H.R. 3621 passed the House 221 to 189. All republicans and two Democrats voted against the bill. This bill would have made substantial and dangerous changes to the American consumer reporting ecosystem that would negatively impact millions of consumers and businesses trying to serve those consumers. This bill stands little to no chance being brought up in the Senate and the White House has affirmed that it will veto the bill if by the remote chance it comes to the President’s desk for signature.
  • In January 2018, the Congressional Research Service (CRS) issued a report, “Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues”, which explores questions regarding accuracy, how long adverse information should remain on a credit file, medical debt, credit reports and employment decisions, alternative data, and security issues. CRS issued a follow up report in April 2020 and another one in June 2020.
  • On January 24, 2020, CDIA sent a letter of opposition to the House Committee on Financial Services on the Comprehensive CREDIT Act of 2020. A bill that encapsulates six bills that did not have any hearings.

2019

  • In December 2019, the House Committee on Financial Services held a full committee markup. The Committee passed the below legislation on partisan votes in the Committee’s last markup for the 2019 year:
      • H.R. 5332, the Protecting Your Credit Score Act of 2019. Rep. Gottheimer
          • Establishes One Online Portal for consumers to freeze their credit score, file a dispute, and retrieve their credit and consumer report
          • Establishes an FTC Ombudsman to assist with disputes
          • Matches all nine digits of a Social Security Number
      • H.R. 5330, the Consumer Protections for Medical Debt Collections Act. Rep. Tlaib
          • Extends NCAP six-month no-reporting to one year
          • Prohibits reporting of any medically necessary debt
  • In November 2019, the House Financial Services Committee released a  committee report on H.R. 3618, the Free Credit Scores for Consumers Act of 2019. Also in November, the committee issued a report on H.R. 3614, the Restricting Credit Checks for Employment Decisions Act.
  • On Nov. 21, 2019, the House Financial Services Committee held a hearing, Banking on Your Data: the Role of Big Data in Financial Services.  In advance of the hearing, the majority staff produced a memorandum.  The bills connected to the hearing are H.R. 4008, the No Biometric Barriers to Housing Act of 2019; H.R. ____, Safeguarding Non-bank Consumer Information Act; and H.R. ____, Financial Information Data Modernization Act.  Appearing at the hearing as witnesses were Ms. Lauren Saunders, Associate Director, National Consumer Law Center; Dr. Seny Kamara, PhD., Associate Professor of Computer Science, Brown University and Chief Scientist, Aroki Systems; Dr. Christopher Gillard, PhD., Professor of English, Macomb Community College and Digital Pedagogy Lab Advisor; Mr. Don Cardinal, Managing Director, Financial Data Exchange (“FDX”); and Mr. Duane Pozza,Partner, Wiley Rein.
  • In Oct. 2019, CRS issued an updated report, Financial Inclusion and Credit Access Policy Issues.
  • In October 2019, the House Committee on Financial Services held a hearing titled, LGBTQ+ Community: A Review of Discrimination in Lending and Housing. CDIA was asked to attend and was represented by President & CEO Francis Creighton. Creighton emphasized the credit reporting industry is making efforts to include alternative data to help the underbanked, credit invisible and those with thin credit files enter the economic market. Most importantly, he was able to shed a little light on what data the credit reporting industry does collect on individuals under the perimeters of FCRA.
  • In 2019, the U.S. Senate Permanent Subcommittee On Investigations of the Committee on Homeland Security and Governmental Affairs released a staff report, How Equifax Neglected Cybersecurity and Suffered a Devastating Data Breach.
  • In connection with a markup of a number of bills on July 11, 2019, CDIA submitted a letter to the U.S. House Financial Services Committee. On July 16, the committee also marked up the Accurate Access to Credit Information Act of 2019 (AACIA), legislation the Committee on Financial Services expects to mark-up on July 16, 2019. CDIA submitted a letter to the committee in connection with that bill.
  • In June 2019, the U.S. Senate Committee on Banking, Housing, and Urban Affairs met to conduct a hearing on: “Data Brokers and the Impact on Financial Data Privacy, Credit, Insurance, Employment and Housing.” The witnesses were Dr. Alicia P. Cackley, Director, Financial Markets and Community Investment, Government Accountability Office; and Ms. Pam Dixon, Executive Director, World Privacy Forum.
  • In March 2019, the Congressional Research Service issued a report, Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues.
  • On March 26, the Subcommittee on Economic and Consumer Policy, of the U.S. House Committee on Oversight and Reform held a hearing, Improving Data Security at Consumer Reporting Agencies. The hearing examined: (1) the options available to the Federal Trade Commission and the Consumer Financial Protection Bureau to promote the improvement of cybersecurity at consumer reporting agencies; and (2) the Government Accountability Office’s recommendations for improving those options. Testifying at this hearing were Michael Clements, Director, Financial Markets and Community Investment, Government Accountability Office; Mike Litt Consumer Campaigns Director, U.S. PIRG; Andrew Smith, Director, Bureau of Consumer Protection, Federal Trade Commission; and Jennifer Huddleston, Research Fellow, Mercatus Center at George Mason University. In advance of the hearing the committee issued a committee memo and following the hearing the majority issued a hearing recap.
  • In March 2019, CDIA filed a letter with the U.S. Senate Committee on Banking, Housing, and Urban Affairs in response to its February 2019 request seeking “feedback…on the collection, use and protection of sensitive information by financial regulators and private companies.” Approximately 55 submissions were filed, including CDIA’s submission. The full list of submissions is available at the committee’s website and all submissions are noted and linked below.
  • In March 2019, CDIA filed a letter with the U.S. House Committee on Financial Services in follow up to its February 2019 hearing, Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System.
  • On March 7, 2019, the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing, Examining Private Sector Data Breaches. In connection with this hearing, the committee issued a bipartisan staff report, How Equifax Neglected Cybersecurity and Suffered a Devastating Breach: Staff Report. There were five witnesses on two panels. Panel one had two witnesses, Mark W. Begor, Chief Executive Officer, Equifax; and Arne M. Sorenson, President and Chief Executive Officer, Marriott International, Inc. There were three witnesses on panel two: Alicia Puente Cackley, Director, Financial Markets and Community Investment, U.S. Government Accountability Office; Andrew Smith, Director, Bureau of Consumer Protection, U.S. Federal Trade Commission; and John M. Gilligan, President and Chief Executive Officer, Center for Internet Security.
  • On Feb. 27, 2019, the House Committee on Financial Services held a hearing, Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System. The webcast of the hearing is online. There were two panels at the hearing. The first panel was made up of the CEOs of the three nationwide credit reporting agencies: Mark Begor, CEO, Equifax; James M. Peck, President and CEO, TransUnion; and Craig Boundy, CEO, Experian North America. The second panel was mostly consumer special interest groups, but also one financial services attorney. The second panel was made up of Lisa Rice, President and CEO, National Fair Housing Alliance (NFHA); Chi Chi Wu, Staff Attorney, National Consumer Law Center (NCLC); Jennifer Brown, Associate Director, Economic Policy, UnidosUS; Edmund Mierzwinski, Consumer Program Director, U.S. Public Interest Research Group (PIRG); and Thomas P. Brown, Partner, Paul Hastings. In advance of the hearing, the committee issued its Committee Memorandum, H.R.____, “Comprehensive Consumer Credit Reporting Reform Act of 2019” [DRAFT], and H.R.____, “Protecting Innocent Consumers Affected by a Shutdown Act” [DRAFT].

2018

  • On July 12, 2018, the U.S. Senate Committee on Banking, Housing & Urban Affairs held a hearing, An Overview of the Credit Bureaus and the Fair Credit Reporting Act. The two witnesses were Maneesha Mithal, the Associate Director for the Division of Privacy and Identity Protection at the Federal Trade Commission and Peggy Twohig, and I am the Assistant Director for Supervision Policy at the Consumer Financial Protection Bureau. Available online is the committee’s hearing record.
  • In July 2018, CDIA filed a letter with the U.S. Senate Committee on Banking, Housing & Urban Affairs. The letter was submitted for the record following a hearing on July 12, 2018, An Overview of the Credit Bureaus and the Fair Credit Reporting Act.
  • In April 2018, CDIA sent a letter to Jeb Hensarling, the chairman of the Committee on Financial Services, and to Maxine Waters, the Ranking Member on that same committee. CDIA asked for three things in connection with the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA): (1) that CRAs be permitted to perform “data hygiene” with the Social Security Administration (SSA) to further reduce identity theft; (2) that the Committee should remove the credit monitoring obligations of CRAs in the senate version of the bill; and (3) that the Committee include administrative enforcement for the veterans’ credit obligations in the bill.
  • In March 2018, the U.S. House Committee on Financial Services conducted a two hearing, Legislative Proposals to Reform the Current Data Security and Breach Notification Regulatory Regime. CDIA testified at that hearing.

2017

  • On November 1, 2017, the Subcommittee on Digital Commerce and Consumer Protection of the U.S. House Committee on Energy & Commerce held a hearing, Securing Consumers’ Credit Data in the Age of Digital Commerce. The witnesses were Francis Creighton, President and CEO of the Consumer Data Industry Association; Anne P. Fortney, Esq., Partner Emeritus at Hudson Cook; James Norton, Founder and President of Play-Action Strategies LLC; and Bruce Schneier, an Adjunct Lecturer in Public Policy at the Harvard Kennedy School. Available online is the hearing record.
  • On October 17, 2017, the U.S. Senate Committee on Banking, Housing & Urban Affairs held a hearing, Consumer Data Security and the Credit Bureaus. The witnesses were Andrew Smith of Covington & Burling on behalf of the Consumer Data Industry Association; Marc Rotenberg, president of the Electronic Privacy Information Center; and Chris Jaikaran, an analyst in cybersecurity policy for the Congressional Research Service. Available online is the hearing record.
  • In Oct. 2017, CDIA testified at a hearing of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Consumer Data Security and the Credit Bureaus. The committee hearing record includes CDIA’s testimony.
  • On October 4, 2017, the U.S. Senate Committee on Banking, Housing & Urban Affairs held a hearing, An Examination of the Equifax Cybersecurity Breach. The witness was Richard (Rick) Smith, the Chairman and Chief Executive Officer of Equifax, Inc. Available online is the hearing record.
  • On October 3, 2017, the Subcommittee on Digital Commerce and Consumer Protection of the U.S. House Committee on Energy & Commerce held a hearing, Oversight of the Equifax Data Breach: Answers for Consumers. The witness was Richard (Rick) Smith, the Chairman and Chief Executive Officer of Equifax, Inc. Available online is the hearing record.
  • In April 2017, CDIA submitted a letter to the U.S. Senate Committee on Banking, Housing and Urban Affairs in response to its joint request of March 2017 for proposals to foster economic growth. CDIA’s letter offered three suggestions: harmonizing the FCRA class action liability cap with other financial consumer protection laws, reforming the Credit Repair Organizations Act (CROA), and fostering credit score competition through Fannie Mae and Freddie Mac.

2016

  • On September 23, 2016, the Subcommittee on Financial Institutions and Consumer Credit of the U.S. House Committee on Financial Services held a hearing, Examining Legislative Proposals to Address Consumers Access to Mainstream Banking Services. The webcast of the hearing is available online. Testifying at the hearing were Dr. Michael Turner, President and Chief Executive Officer, Policy and Economic Research Council; Mr. Ronald D. Paul, Chairman and Chief Executive Officer, Eagle Bank, on behalf of the Independent Community Bankers of America; and Dr. Norbert J. Michel, Research Fellow in Financial Regulations, Heritage Foundation. For the hearing, the committee referenced six bills, H.R. 347, the Facilitating Access to Credit Act of 2015; H.R. 4116, to amend the Federal Deposit Insurance Act to ensure that the reciprocal deposits of an insured depository institution are not considered to be funds obtained by or through a deposit broker, and for other purposes; H.R. 4172, the The Credit Access and Inclusion Act of 2015; H.R. 4211, the Credit Score Competition Act of 2015; H.R. 5660, the Retail Checking Account Protection Act of 2016; and H.R. ____, the Protect Prepaid Accounts Act of 2016. Available online is the hearing record.
  • In June 2016, CDIA submitted a written comment for the record to the Over-Criminalization Task Force of the House Judiciary Committee in connection with the Task Force’s June 26, 2014 Hearing on Collateral Consequences. The hearing transcript is available online and includes CDIA’s letter.

2014

Oregon

  • In August 2020, CDIA joined with other associations urging Oregon Gov. Kate Brown to not extend the “emergency period” applicable to recently enacted legislation (HB4204 and HB4213) beyond the current sunset date of September 30, 2020.  As noted in the letter, “the new law undermines ongoing efforts to assist homeowners and renters because it creates duplicative – and sometimes contradictory – requirements to those already mandated by the federal CARES Act and the policies of the federal government’s affordable housing programs. It also imposes unwarranted burdens on already struggling rental property owners and will likely increase pandemic-related losses for lenders.”

District of Columbia

  • On June 16, 2020, following the council’s passage of several legislative vehicles to regulate consumer reporting in the District of Columbia, CDIA sent a letter to Attorney General Karl Racine.  While CDIA did not receive a written response to this letter, several mortgage banker associations received a reply to a letter they sent on a similar subject.

Colorado

  • In May 2020, CDIA wrote a comment to the Colorado Division of Insurance expressing concern for a DRAFT Bulletin No. B-5.4X, which would limit the consideration of adverse credit information in credit-based insurance scores.

Maryland

  • In March 2020, CDIA filled a comment with the Maryland Commissioner of Financial Regulation in connection with rulemaking for COMAR 09.03.07.

California

  • In October 2020, the Department of Justice issued its Third Set of Proposed Modifications to CCPA Regulations and set a comment date of Oct. 28. The Department also issued a comparison between the proposed Third Set of Proposed Modifications and the rules adopted on Aug. 12.  CDIA filed a comment in connection to the Third Set of Proposed Modifications.
  • The Newsom Administration issued a revised trailer bill in mid-2020 for its proposal to create the California Consumer Financial Protection Law, which would broadly regulate financial services in the state through the Department of Financial Protection and Innovation.  CDIA wrote a letter to the Assembly Budget Committee and the Senate Banking Committee, which held a joint informational hearing on Aug. 5, 2020, CDIA followed up that hearing with a letter to DBO.
  • In October 2019, the California Department of Justice (DOJ), which is what the office of the attorney general is called, issued a Proposed Regulations under the CCPA. The Department also issued a Notice of Proposed Rulemaking and an Initial Statement of Reasons for the rulemaking.
  • CDIA filed a comment in March 2019 in connection with the California attorney general’s pre-rule making on the California Consumer Privacy Act (CCPA). An overview of the rulemaking process is available online from the OAG. The OAG’s public forums were part of its “preliminary activities” before a proposed rule. In October 2019, the OAG issued proposed rules and CDIA filed a comment in connection with that rulemaking process. The OAG has a webpage dedicated to CCPA resources.

Texas

  • In response to a Request for Information from the Texas Privacy Protection Advisory Committee, CDIA submitted a comment to that committee in August 2020.  The committee was created by HB 4390 (2019) by Rep. Giovanni Capriglione (R-Southlake). The committee released its report in September 2020.
  • In April 2018, CDIA submitted a comment to the Texas DMV on proposed changes to motor vehicle record access in the Texas Register, 43 Tex. Reg. 1621 (March 16, 2018). The final rule was published online in the Texas Register in July 2018.

Nevada

  • In August 2020, CDIA filed a comment with the  Nevada Commissioner of Insurance  to express concern with proposed LCB File No. R087-20 recently issued by the commissioner’s office.

New York 

2020

In May 2015, then Ohio Attorney General Mike DeWine (R) and a bipartisan group of 30 other state attorneys general announced that they had settled a matter with Equifax, Experian, and TransUnion.  The settlement led to the nationwide credit bureaus’ creation of the National Consumer Assistance Plan (“NCAP”).  As noted by the AGs’ announcement, key features of the settlement include “higher standards for data furnishers,” “limits to direct-to-consumer marketing,” “added protections for consumers who dispute credit reporting information,” Limits to certain information that can be added to a consumer’s credit report,” and “additional consumer education.”  The multistate agreement led by Ohio followed a March 2015 agreement that was announced between the nationwide credit bureaus and the New York Attorney General, Eric Schneiderman (D).

 

On April 1, 2020, the CFPB issued a Policy Statement that outlines the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic.  In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.  On April 7, several U.S. senators sent a letter to the CFPB that both criticized the Bureau’s Policy Statement and offered additional suggestions on credit reporting.  The senators on the letter are U.S. Sens. Sherrod Brown (D-OH), the ranking member on Senate Banking; and Brian Schatz (D-HI), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Jack Reed (D-RI).  On April 13, 23 state attorneys general sent a letter to the CFPB criticizing its April 1 Policy Statement. In September 2020, an NCLC-led coalition of 21 consumer, faith, and advocacy groups sent a letter to the CFPB asking it to revoke its April 1, 2020 Policy Statement that outlines the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic.

2019

In late-2019, the Uniform Law Commission launched a drafting committee on the Collection and Use of Personally Identifiable Data Committee.  CDIA is an official observer to the Committee.  The Committee released a draft model bill in February 2020, followed by a draft model bill in April 2020.  CDIA submitted a comment on April 14. A revised draft was issued in advance of the Committee’s April 24 meeting.  CDIA submitted a supplemental comment on that draft.

2019

In 2019, the Council of State Government’s (CSG) Suggested State Legislation Committee (SSL) proposed to include Vermont’s data broker law on it’s list of suggested state laws for other states to follow. CDIA objected to this proposal and submitted a letter opposing inclusion of the Vermont law on the SSL list.

  • In August 2020, CDIA filed a comment with the  Nevada Commissioner of Insurance  to express concern with proposed LCB File No. R087-20 recently issued by the commissioner’s office.
  • An August 2020, NAIC document, Milestones in Racial Discrimination within the Insurance Sector, that summarizes, among other things, a history of CBIS and offers a partial resource list at the end of the document.
  • The Center for Economic Justice (“CEJ”) issued a  Call to Insurers and Insurance Regulators to Address Societal Systemic Bias and Inherent Racism in Insurance By Explicit Recognition of Disparate Impact as Unfair Discrimination in Insurance.  This document is critical not just of CBIS, but the criminal history information that may be included in such scores.
  • A January 2003 submission from Birny Birnbaum to the Ohio Civil Rights Commission, Insurers’ Use of Credit Scoring for Homeowners Insurance In Ohio.
  • March 4, 2020 testimony of Sonja Larkin-Thorne, Consumer Advocate & Retired Insurance Executive, before the Subcommittee on Housing, Community Development and Insurance U.S. House Committee on Financial Services regarding Drivers of Discrimination: An Examination of Unfair Premiums, Practices, and Policies in the Auto Insurance Industry.In August 2020, the National Association of Insurance Commissioners heard from a panel at its annual meeting on Race & Insurance.  The panel discussion included CBIS.  Connected to this panel were several documents:
  • On March 4, 2020, the Subcommittee on Housing, Community Development, and Insurance of the U.S. House Financial Services Committee held a hearing, Drivers of Discrimination: An Examination of Unfair Premiums, Practices, and Policies in the Auto Insurance Industry.  This hearing discussed, among other things, H.R. 1756, the “Preventing Credit Score Discrimination in Auto Insurance Act”, and H.R.____, the “FAIR Study Act.”  The subcommittee heard from Douglas Heller, Insurance Expert, Consumer Federation of America; Elizabeth Kelleher Dwyer, Superintendent of Insurance, the State of Rhode Island, on behalf of the National Association of Insurance Commissioners; Eric Poe, CPA and Chief Operating Office, CURE Auto Insurance; Sonja Larkin-Thorne, Consumer Advocate (retired); and Erin Collins, Vice President- State Affairs, National Association of Mutual Insurance Companies.
  • On July 14, 2020, Washington Insurance Commissioner, Mark Kreidler, sent a letter to insurance executives asking for their support in his “legislative effort in Washington state to eliminate the use of credit scoring to determine what someone pays for insurance.”  Kreidler said that his “reasoning is straightforward: The use of credit scoring is unfair and has a disproportionate economic impact on low-income individuals and communities of color here and throughout the rest of our nation.” The commissioner’s office has a webpage devoted to the proposed insurance scoring ban.  The insurance industry responded with a joint letter from the American Property Casualty Insurance Association (APCIA), the National Association of Mutual Insurers (NAMIC) and the Northwest Insurance Council (NWIC).  There were also induvial responses from APCIA, NWIC, ACLI, and NAMIC. A July 2020 Insurance Journal story summarized the “Credit Scoring Battle [that is] Brewing Between Washington Commissioner and Insurer Groups.”  In October 2020, APCIA, NAMIC, and NWIC sent a letter to Commissioner Kreidler in support of the use of credit for insurance decisions.
  • In May 2020, CDIA filed a comment with the West Virginia Offices of the Insurance Commissioner on its OIC Bulletin 20-12 – Insurance Scoring for Personal Lines, which includes limitations on the use of certain collections in credit-based insurance scores.  CDIA also filed a comment to the Colorado Division of Insurance expressing concern for a DRAFT Bulletin No. B-5.4X, which would limit the consideration of adverse credit information in credit-based insurance scores.

Law Review Articles

Third-Party and Industry Data and Reports

State insurance commissioner reports

  • In March 2013, the NAIC provided a list of Studies, Reports and Surveys Examining the Use of Credit Scoring, Occupation or Education in Insurance

Federal Government Studies

  • Federal Reserve Board, Does Credit Scoring Produce a Disparate Impact? 2010-58.  The report said that there is “no evidence of disparate impact [for credit-based insurance scores] by race (or ethnicity) or gender.” (2010).
  • Federal Trade Commission, Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance, Report to Congress, (July 2007).  The FTC reported to Congress that insurance scores correlate with both the number of filed claims and the total cost of the filed claims, leading the FTC to conclude that insurance scores allow for more accurate underwriting and risk pricing.

Congressional Hearings

Insurance scores correlate with claims experience. The reason for such widespread adoption of insurance scores for underwriting and rating is that most studies have found a strong relationship between insurance scores and losses.

For example, an actuarial study published in 1996 by Tillinghast, an actuarial consultant firm, showed a “highly statistically significant” correlation between insurance scores and loss ratio—the cost of claims filed relative to the premium dollars collected. In other words, people who have low insurance scores, as a group, account for a high proportion of the dollars paid out in claims. A subsequent study published in 2003 in the Casualty Actuarial Society Forum came to similar conclusions: “From a statistical and actuarial point of view, it seems to us that the matter is settled: credit does bear a real relationship to insurance losses.”

Insurance regulators have also found similar results. A 2004 study commissioned by the Texas Department of Insurance found a strong relationship between credit scores and claims experience for both personal auto and homeowners insurance. The study also found that the use of insurance scores significantly improves pricing accuracy in predicting risk when combined with other rating variables such geographical area and age of driver.

A 2005 supplemental report found the same relationship between insurance scores and claim experience: “For both personal auto liability and homeowners, credit score was related to claim experience even after considering other commonly used rating variables. This means that credit score provides insurers with additional predictive information distinct from other rating variables.”

A summary of the Report’s Findings and the Commissioner’s Analysis:

  • There is a strong relationship between credit history and claims experience.
  • The use of credit history by insurance companies is not unfairly discriminatory. Credit history is not based on race, nor is it a precise indicator of one’s race.
  • For automobile insurance, credit history is comparable in value as a predictor of claims to where the policyholder lives and his/her driving record.
  • For both personal auto liability and homeowners, credit history is related to claim experience even after considering other commonly used rating factors such as age. By using credit history, insurers can better classify and rate risks based on differences in claim experience.

Federal Report:

Furthermore, in July 2007 the U.S. Federal Trade Commission (FTC) released a report to Congress that examined how insurance scores impacted the “availability and affordability” of auto insurance. The study found, in part, that insurance scores correlate with both the number of filed claims and the total cost of the filed claims, leading the FTC to conclude that insurance scores allow for more accurate underwriting and risk pricing.

The reason for the predictive power of insurance scores is up for debate. But why are insurance scores so predictive? One possible answer is behavioral.

People who manage their finances well tend to also manage other important aspects of their lives responsibly, such as driving a car. People who manage money carefully may be more likely to have their car serviced at appropriate times and may also more effectively manage the most important financial asset most Americans own—their house—making routine repairs before they become major insurance losses.

Many customers see lower premiums when carriers use insurance scores. Just as insurance scores help insurance companies assess and price risks, so too can these scores help insurance customers – particularly if they are considered good risks. Depending on the company and state, roughly 50 percent of policyholders can pay lower premiums because of good credit, insurers say.

For example, a 2017 report from the Arkansas insurance department shows the impact of insurance scoring on calculations of the final premium in 2016 for some 3.4 million personal lines policies. In 54.5% of those policies, the use of credit information resulted in a decrease in the final premium. In 19.8% of cases, it resulted in an increase. Credit scoring was a neutral factor—meaning it did not affect the outcome—in the remaining 25.7 percent of policies. Policies for which credit information decreased the premium outnumbered policies for which it increased the premium by 2.76 to 1.

When analyzed by type of insurance policy, the data showed that the use of credit scoring lowered premiums for homeowners policies (56.6 percent) and auto insurance policies (57.4%) roughly the same amount. More auto policies experienced premium increases (23.4%) than did homeowners policies (16.5%).

The Arkansas department study shows that of all personal lines policies written or renewed in 2016, 80 percent of consumers whose premium involved a credit component either received a lower premium or their premium was unaffected. Overall 54.5 percent of consumers received some decrease in their premium as opposed to only 19.8 percent who received some increase in their premium.

Policies decreasing in premium due to insurance scoring outnumbered policies increasing in premium by nearly 3 to 1. These numbers are consistent with what has been found over the 12 years this report has been compiled.

Does the use of insurance scores unfairly discriminate? Even though carriers do not use income or race/ethnicity when calculating insurance scores, some have suggested that the use of insurance scores might unfairly discriminate against certain demographic or economically-disadvantaged groups.

Most analyses dispute these claims.

For example, the 2007 FTC report noted that African Americans and Hispanics are “substantially overrepresented” among lower scores. As a result, the report found that using insurance scores without controlling for race or ethnicity would increase the average predicted risk for African Americans and Hispanics by 10 percent and 4.2 percent, respectively. But nonetheless, after controlling for race, ethnicity, and income, and after examining other variables, the FTC concluded that credit scores cannot easily be used as a proxy for race and ethnic origin. In other words, credit scoring predicted risk for members of minority groups in much the same way that it predicted risk for members of nonminority groups.

An earlier, 2004 Missouri department of insurance study did find evidence that low-income households and minorities are adversely affected by insurance scoring. However, it has been argued that the department’s findings were based on flawed methodologies. For example, the study aggregates ZIP code credit score data for everyone in a ZIP code area, whether they own cars or homes and therefore purchase auto or homeowners insurance or not.

Credit score education

The Iowa Insurance Division conducted a survey in 2009.  Use of Credit Scores by the Insurance Industry: Iowa Consumers’ Perspective (Dec. 2009). This is a survey of Iowans’ knowledge and attitudes regarding credit-based insurance scores conducted on behalf of Iowa’s Consumer Advocate. The report finds that consumers’ attitudes about insurance scoring do not comport with reality that insurance scoring is an effective predictor of risk. The authors recommend blocks of insurance education at the high school level on both insurance and the impact of credit scores in general.

Court cases

Ojo, et al. v. Farmers Group, Inc., et al. Tex. Sup. Ct., 356 S.W.3d 421, 2011 Tex. LEXIS 392,  54 Tex. Sup. J. 1068.  In this case, the Appellant, an African-American resident of Texas, sued appellees alleging that their credit-scoring systems employed several undisclosed factors which resulted in disparate impacts for minorities and violated the federal Fair Housing Act (“FHA”), 42 U.S.C. 3601, 3619. At issue, in a certified question, was whether Texas law permitted an insurance company to price insurance by using a credit-score factor that had a racially disparate impact that, were it not for the McCarran-Ferguson Act, 15 U.S.C. 1012(b), would violate the FHA, absent a legally sufficient nondiscriminatory reason, or would using such a credit-score factor violate Texas Insurance Code sections 544.002(a), 559.051, 559.052, or some other provision of Texas law. The court answered the certified question by holding that Texas law did not prohibit an insurer from using race-neutral factors in credit-scoring to price insurance, even if doing so created a racially disparate impact.

In May 2020, Joe Biden, then-candidate for President, called for the creation of a government-run credit bureau that, according to Reuters, “that could compete with Equifax, Experian, and TransUnion and, according to the campaign, minimize racial disparities in lending.”  Biden said that “[t]oday’s credit reports, which are issued by just three large private companies, are rife with problems: they often contain errors, they leave many ‘credit invisible’ due to the sources used to generate a credit score, and they contribute to racial disparities, widening the African American homeownership gap.”

There are many appropriate criticisms of a public credit registry, including an opinion piece that appeared in MartketWatch where Dan Quan of CATO wrote that To Fix Problems with Credit Reporting, We Need a Better Government Watchdog, Not Biden’s Idea of New Public Credit Bureau.

During the TransUnion (TRU) Q3 2020 earnings call, TransUnion’s President and Chief Executive Officer, Christopher A. Cartwright was asked about a proposal from Democratic presidential candidate, Joe Biden, that would create a national, public credit bureau.

Dr. Michael Turner published an op-ed, Credit Reporting & COVID-19 – It’s Not a Sophie’s Choice, that appeared in Inside Sources.  Turner returned to an ongoing theme about the dangers of suppression of credit reporting.  When companies stop reporting accurate information to credit bureaus, credit reports will become less reliable and financial institutions will be making riskier loans and credit extensions.  “Balancing consumer protections with concerns over systemic safety and soundness involves difficult choices. One senior regulator said, “It’s like juggling steak knives while wearing a blindfold.”  Turner added that “[w]ith less accurate data, banks will make more lending mistakes. Consequently, lenders will respond to degraded credit data by raising minimum credit score requirements, decreasing the amount of credit available, and raising the price of credit to reflect a higher risk premium.”

In urging opposition to credit reporting suppression, some of the largest organizations representing the financial services community sent a letter to U.S. Sens. Mike Crapo (R-ID) and Sherrod Brown (D-OH), the chair and ranking member, respectively, of the Senate Banking Committee.  The August 2020 letter noted that “[p]ending legislative proposals to prohibit the reporting of credit information during the COVID-19 crisis would revers[e] policymakers’ historical commitment to the reporting of accurate credit information.”  The letter added that “[s]uch a change would harm consumers – especially low and moderate-income consumers. Positive consumer credit decisions, with responsible payment suspension followed by repayment arrangements or approved payment deferrals, would be removed from the reports altogether. The removal of multiple records simultaneously could disrupt the ability to generate any report or scores at all, to the detriment of the consumer. With no credit score, credit analysis by lenders is more difficult, increasing the risk of inconsistency in credit decisions. Insufficient conservative credit decisions, which would result in fewer loans, reducing overall access to credit nationwide.”  The letter was signed by the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, and the U.S. Chamber of Commerce.

World Bank

Global financial authorities also encourage full reporting, and not suppression.  Early in the global pandemic, the World Bank, through its International Committee on Credit Reporting (ICCR), issued a policy statement.  To help “safeguard…the integrity of credit reporting systems,” regulators should “[p]romote continued full (file) sharing of credit information including reporting of missed payment data arising due to the crisis, with the necessary safeguards that ensure that there is minimal or no effect on the data subjects’ credit history and score.”  To “safeguard…borrowers,” regulators should make sure there are “different technical reporting solutions e.g. special credit reporting codes, identifiers or conventions (such as freeze payment status) for reporting facilities that are under an agreed forbearance or deferred payment status window.”   Treatment of Credit Data in Credit Information Systems in the context of the COVID-19 pandemic, International Committee on Credit Reporting (ICCR), April 6, 2020.

The World Bank wrote that “[a]ccess to reliable credit information supports lending decisions, data-driven policy formulation, and compliance with Basel and other financial sector standards. Inaccurate and untimely data may result in creditors losing trust in credit information, which could slow the recovery from the crisis.”  The World Bank also noted that “[g]iven the connection between fiscal, monetary, and prudential policies, governments should take a coordinated and holistic approach to policy formulation and implementation in a manner that preserves the integrity of credit information sharing systems.”  Why credit reporting matters in formulating policy during COVID-19 response and recovery, Pratibha Chhabra, Shalini Sankaranarayanan, Collen Masunda, World Bank, June 3, 2020

European Commission

Deeper in the pandemic, in July 2020, the European Commission largely adopted the how financial institutions and credit bureaus should treat consumers in financial peril as a result of the COVID-19 pandemic.  The Commission encouraged full reporting and against credit data suppression. The Commission stated that “[b]anks, non-bank lenders and credit [bureaus] are encouraged to process the information related to the granting of the moratoria in a way that it does not negatively impact credit files nor has an automatic impact on the credit rating (or equivalent measure of risk) of consumers”.   Best Practices in Relation to Relief Measures Offered to Consumers and Businesses in the Context of the COVID-19 Crisis, European Comm., July 14, 2020.

United Kingdom

The U.K. Financial Conduct Authority (FCA) issued a statement in July 2020 that reversed a temporary suspension of credit reporting.  The FCRA said that “normal credit reporting should resume” to ensure that the “longer-term integrity and value of credit information is maintained.”  The FCA added that “[a]ccurate credit reporting is essential to responsible lending and preventing individual overindebtedness.”  In a stable financial system, lenders “need to have confidence in the integrity of the credit reporting system to have the confidence to extend credit in [the] future.” Call for input: Ongoing support for consumers affected by coronavirus: mortgages and consumer credit, Financial Conduct Authority (U.K.), July 31, 2020

  • CDIA sponsored a webinar with Michael A. Turner, Ph.D., founder, president, and CEO of PERC; and Patrick Walker, M.A., director of research of PERC.  PERC is the Policy & Economic Research Council (PERC).  The webinar discussed PERC’s research critical of data suppression.  In July 2020, the Policy & Economic Research Council (PERC) issued a new report and press release in July 2020.  The report found that “that data suppression/deletion measures put forward in some proposed legislation addressing the economic fallout of COVID-19 was more likely to harm borrowers than to help them. This report, titled Addition is Better than Subtraction: The Risks from Data Suppression and Benefits of Adding More Positive Data in Credit Reporting reviewed previous research that looked at data deletion and found that lower-income and minority borrowers would be most harmed. The report also recommended “adding positive (on-time) payment data of telecoms, cable and satellite TV, and broadband companies into the credit reporting system, rather than deleting negative (late) payment data.”
  • On June 20, the House Financial Services Committee held a hearing, Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.  During the hearing, at 1:51:54, there was an exchange between U.S. Rep. Scott Tipton (R-CO) and Treasury Secretary Steve Mnuchin. Secretary Mnuchin said it is “very important” for lenders to have a full look at a consumer’s accurate credit report.
  • In June 2020, U.S. Rep. Patrick McHenry (R-SC), the ranking member of the House Financial Services Committee, entered in the the Congressional Record his opposition to H.R. 5332, a bill by U.S Rep. Josh Gottheimer (D-NJ) that would, among other things, suppress the reporting of accurate information to consumer reporting agencies.  Rep. McHenry also entered in to the Congressional Record, letters against suppression from CDIA, Credit Union National Association, the U.S. Chamber of Commerce, the American Bankers Association, the National Taxpayers Union, and the Consumer Bankers Association.  On June 29, 2020, the White House issued a Statement of Administration Policy opposing H.R. 5332.
  • A paper was released in June 2020 by Clifford V. Rossi, Ph.D. of Chesapeake Risk Advisors, LLC.  The paper, Economic Impacts of a Moratorium on Consumer Credit Reporting, was also summarized in a posting.  In summary, Economic theory suggests that in the absence of viable mechanisms to effectively distinguish between high and low risk borrowers, lenders will ration credit. Under a credit reporting moratorium, the reliability of credit scores to distinguish between borrower risks would come into question. Lenders would respond to the proposed credit reporting moratorium by raising minimum credit score requirements and/or raising borrowing rates as a credit uncertainty premium to offset the risk they face from the moratorium. During the 2008 financial crisis, lenders raised credit score minimums on FHA loans, for example, beyond those set by the agency as a response to uncertainty over indemnification provisions that posed significant costs to lenders. And today, during the coronavirus, a number of Ginnie Mae originators have raised credit scores to blunt some of the risk they face due to requirements to pass-through mortgage payments to investors, including those in default or subject to forbearance.  A credit reporting moratorium would severely restrict credit to millions of consumers, with potentially disproportionate impacts on lower-income, minority, and first-time homebuyer borrowers while significantly delaying the timing, speed and trajectory of economic recovery.
  • On May 22, 2020, U.S. Sen. Tim Scott (R-SC) led a letter signed by several members of the Senate Banking Committee, including Chairman Mike Crapo (R-ID) in a letter to Treasury Secretary Mnuchin, FHFA Director Calabria and CFPB Director Kathleen Kraninger thanking them for their work to help consumers through the financial strain of COVID-19 and to oppose proposals that call for the suppression of credit reporting from furnishers to credit bureaus. In June, the Treasury Department and FHFA responded to Sen. Scott, as did the CFPB.
  • In April 2020, the Policy & Economic Research Council (PERC) issued a blog posting, COVID-19 and Credit Reporting: Suppression is Not the Solution.  This posting sets forth a short but important point, data suppression in the wake of COVID-19 is more harmful for consumers and credit economies than not reporting accurately with consumers in accommodation programs.  In July 2020, the Policy & Economic Research Council (PERC) followed up it’s April 2020 blog post with a new report and press release. The July 2020  reportfound that “that data suppression/deletion measures put forward in some proposed legislation addressing the economic fallout of COVID-19 was more likely to harm borrowers than to help them. This report, titled Addition is Better than Subtraction: The Risks from Data Suppression and Benefits of Adding More Positive Data in Credit Reporting reviewed previous research that looked at data deletion and found that lower-income and minority borrowers would be most harmed. The report also recommended “adding positive (on-time) payment data of telecoms, cable and satellite TV, and broadband companies into the credit reporting system, rather than deleting negative (late) payment data.”

In July 2020, the Federal Reserve issued a report, Mitigating Synthetic Identity Fraud in the U.S. Payment System.  The paper was authored by Jim Cunha, Payments Security Strategy Leader and Fintech Division Head Senior Vice President at the Federal Reserve Bank of Boston.  The report has key highlights: (1) Organizations that leverage a multi-layered approach that employs both manual and technological data analysis have the best chance to identify and mitigate fraud caused by synthetics, according to industry experts; As payments stakeholders share more information about trends, behaviors, threats and best practices, they can improve the industry’s collective synthetic identity fraud detection and mitigation practices; and (3) The regulatory environment is evolving to provide additional protections for consumers and mechanisms for financial institutions to fight fraud. Industry experts urge organizations to remain aware that fraudsters may still find opportunities to exploit these for their own benefit.  The July 2020 report follows a FRB report from the prior year.  In July 2019, the Federal Reserve issued its first report on synthetic identity fraud, Synthetic Identity Fraud in the U.S. Payment System: A Review of Causes and Contributing Factors.  The paper was authored by Ken Montgomery, Payments Security Strategy Leader, Federal Reserve System First Vice President and Chief Operating Officer at the Federal Reserve Bank of Boston.

In May 2011, the Policy and Economic Research Council (PERC), a non-profit think tank focused on issues pertaining to financial inclusion and credit information, released the most comprehensive, independent review of credit report accuracy.  The report, U.S. Consumer Credit Reports: Measuring Accuracy and Dispute Impacts (May 2011) preceded an FTC report, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003 (Dec. 2012).  PERC then followed-up its 2011 work with a new report, Comparing FTC and PERC Studies on Measuring the Accuracy of U.S. Consumer Credit Reports (April 2013).

In October 2016, CDIA sent a letter to the IRS.

In February 2018, a coalition of mortgage-related interests, including CDIA, sent a joint letter to the IRS on IVES access.

In June 2018, CDIA sent a letter to the IRS on IVES.

In October 2018, CDIA sent a letter to U.S. Rep. Lynn Jenkins (R-KS), the Chair of the House Ways & Means, Subcommittee on Oversight, and to U.S. Rep. John Lewis (D-GA), the Ranking Member of the subcommittee.  The letter concerned a September 2018 subcommittee hearing, IRS Taxpayer Authentication: Strengthening Security While Ensuring Access.

CDIA sent a letters to the IRS in March and April 2020 on the implementation of Section 2201 of the Taxpayer First Act (TFA) of 2019 (Pub. L. 116-25), and the TFA’s requirement to modernize the Income Verification Express Services (IVES) program. The IRS replied in November 2020.

In May 2020, the American Association of Motor Vehicle Administrators (AAMVA) issued an Interim Report, Managing Data Privacy and External Access.  This report was issued under the auspices of AMVA’s Managing Data Privacy and External Access Working Group. To address demands for privacy protection and records management, the Working Group is “examining the issues and will identify best practices for jurisdictions to protect driver and vehicle records, provide access, authorize usage consistent with law, and apply effective and efficient approaches to internal and external audit practices.”  A final best practices document is expected by early 2021.