Huge Data Breach At South Carolina Department of Revenue

As I learned today, the powers that be at the South Carolina Department of Revenue did not believe they needed all the security features to protect the information included with the tax returns sent when tax payers electronically filed  their returns.  As a result, the information of 3 million people and over 200,000 businesses was stolen by a data thief in Eastern Europe.

What's even worse than being exposed to identity theft by an Eastern European identity theft ring?  Having the state that did not care enough to protect your data "compensate" you for the risk it put you in by signing you up for a year's worth of credit monitoring from Experian.  Why is that so bad (other than the fact that credit monitoring does not help protect consumers much, if any)?  Because Experian requires anyone using their monitoring service to agree to binding arbitration.  So for the 3 million South Carolinians and 200,000 plus South Carolina businesses to receive the offered "protection" from the risk of identity theft caused by South Carolina's negligence, the consumers and businesses have to give up their right to a jury trial against Experian, which basically means they lose again if their identity is actually stolen.  

South Carolina, you should be ashamed of yourself for doing this to your own people.  My advice to those affected in South Carolina.  Don't use the monitoring service.  Instead, use annualcreditreport.com and stagger  your annual three free credit reports (one from each of the big three credit bureaus) to one every four months and thereby monitor your credit for free without giving up any of your rights.  Oh, and if your identity is stolen, hire the Kittell Law Firm to sue the credit bureaus and creditors who refuse to remove the fraud accounts that will show up on your credit reports.  

Identity theft insurance? Is it really worth it?

Is Identity Theft Insurance worth the money?  Not really.

In fact, is it even insurance?  Insurance is supposed to pay for things to be replaced or repaired in the event something bad happens.  Home insurance pays for repairs to your house after its damaged by a fire or a storm.  Flood insurance will pay to replace something damaged in a flood.  Car insurance will pay to repair your car after a wreck.  Life insurance replaces the income of a deceased family member.

Identity theft "insurance," on the other hand, does little to repair the damage caused by identity theft.  Sure, it will reimburse a victim for some out of pocket costs, such as certified mail costs and notary charges.  At a cost of $15.00 to $20.00 a month, identity theft insurance seems like its a good deal.  But its not.  It covers little.  

Identity theft insurance does nothing to fix the main thing damaged by identity theft - the victim's good name.  Identity theft insurance does nothing to correct the errors on the victim's credit reports caused by the appearance of the numerous fraud accounts opened in the victim's name.  It does not eliminate from the victim's criminal record any charges for crimes committed in the victim's name.  It does not reimburse the victim for the mental anguish and stress caused by dealing with uncaring credit bureaus, fraud credit grantors and relentless collection agencies.  Nor does identity theft insurance reimburse victims for the embarrassment they suffer when denied credit due to the unpaid fraud accounts appearing on their credit reports.

Instead of wasting money on identity theft insurance, consumers should save that money and instead be proactive about protecting their Social Security Number and disputing the fraudulent accounts if and when their identities are stolen.  Then, if the credit bureaus and the fraud credit grantors fail to fix the errors caused by the identity theft, the consumer should hire an experienced Fair Credit Reporting Act attorney (like me!) and sue the credit bureaus and credit grantors using the Fair Credit Reporting Act.  Not only does filing such a lawsuit not cost the consumer his or her hard earned money (like identity theft insurance does), if the consumer prevails at trial or settles with the credit bureau, the consumer receives compensation for all he or she has gone through.  

Do yourself a favor.  Don't pay for identity theft insurance and, if you feel like you must, simply add it as a rider to your existing homeowner's insurance.  That's a much cheaper option (usually $20 or $30 a year, rather than a month) and provides the same level of coverage.  And, if you end up being a victim of identity theft, don't just look to your identity theft insurance for reimbursement.  Hire an experienced consumer attorney who can get your credit report corrected and get you fair compensation for your damages.

Experian purchases Australian company Pacific Micromarketing

Expanding its Australian presence, consumer reporting agency Experian Information Solutions, Inc. purchased Pacific Micromarketing for $6.17 million dollars. Pacific Micromarketing was the analytics arm of Australian publisher PMP. Pacific Micromarketing surveys, records, classifies, segments and analyzes customer databases for commercial clients. The 15 year old company operated in Australia and New Zealand. All of its employees will transfer to Experian offices as part of the sale. PMP will continue to exist as its own company.

What the Smurf?! Dr. Smurf guilty of identity theft!

A Lithuanian hacker who used the screen name "Dr. Smurf" has been convicted of identity theft and sentenced to five years in prison.  Tadas Petrauskus, 23, of Brick, New Jersey, sold passwords to an unidentified western Pennsylvania person that could have potentially given the buyer access to the financial accounts of approximately 10,000 people.  

Petrauskus was caught at John F. Kennedy International Airport after flying in from Belgium in the possession of a laptop containing many credit card numbers in its memory.  Dr. Smurf was sentenced by U.S. District Judge Nora Barry Fischer.  Hopefully his five year sentence will seem like a Smurfing long time!

Tax Refunds for Identity Theft Victims Likely to be Delayed

Are you an identity theft victim?  Well, you are likely to be more victimized this tax season.

Last year, identity theft victims were told to expect to wait 180 days (or approximately 6 months) for their tax returns to be processed.  According to Taxpayer Advocate Service, an IRS watchdog group, the delay this year could be similar or even longer than last year's wait.

The IRS waits to give tax refunds until it completes a load of internal paperwork, even if the IRS has already determined that the identity theft victim is entitled to a refund.

When the Taxpayer Advocate Service reported to Congress recently, it recommended faster refund access and setting up a single point of contact for victims.  However, the IRS contends that its current system is effective and that it has improved procedures for stopping identity theft.  Let's hope so, because tax return identity theft has been rampant the last few years.

10,000 Active Identity Theft Rings in the U.S.?!

According to an article written by Bob Sullivan for nbcnews.com, there are 10,000 identity theft rings active in the United States, primarily in the Southeast, including a hot spot right down the road from me in Greenville, Mississippi.  Very interesting read.  I have reposted Mr. Sullivan's article below and here is a link to his article - http://redtape.nbcnews.com/_news/2012/11/14/15144350-10000-id-fraud-gangs-active-in-us-especially-the-southeast-study-finds?lite

"There are 10,000 active identity theft crime rings across the United States, with the greatest concentration in a "ring of fraud" that stretches across the Southeast from Virginia to Mississippi, according to a new report by fraud-fighting firm ID Analytics.

A majority of these rings are what the firm calls "Friends & Family" groups, not professional criminal organizations, the report concludes. The rings are most highly concentrated in Washington D.C.; Detroit; Tampa, Fla.; Greenville, Miss., Macon, Georgia; and Montgomery, Ala., the report found.

ID Analytics compiled the results by examining its massive database of credit applications and other identity “risk events,” which now includes 1.7 billion entries.  The firm cross references credit applications from major banks, auto dealers, wireless firms and other credit grantors looking for evidence of systematic identity fraud. Previously, ID Analytics has used its data to help identify tens of thousands of registered sex offenders who are living digital double lives, and millions of U.S. residents who are"sharing" their Social Security number with someone else.

The crime ring project is a first, says head researcher Stephen Coggeshall.

"This is first time we raised it up a level and looked at how these people are connected," he said. "I am surprised at how many rings there are."

A "crime ring" was defined by ID Analytics as two or more individuals working in concert, repeatedly submitting fraudulent applications in an attempt to commit fraud. Collusion was determined by noting when multiple members of the rings used similar personal identifying information, such as Social Security numbers, in fraud attempts.

Not every fraudulent credit application is successful; many are detected and denied by lenders' fraud-fighting tools.  Still, the attempts indicate an active fraudster at work.

Examples of fraud rings published in the report read like short mystery novels.

One four-person group in the Indianapolis-area --  made up of two members in their 70s and two 48-year-old women -- has submitted 345 fraudulent credit card applications.  The individuals’ names were not provided by ID Analytics because they have not been charged with any crime.

Another six-member ring is run by a 52-year-old woman and her sister and operates out of an apartment complex in Washington, D.C., the report said.  

"Together this team has used 10 SSNs and multiple first names, last names and  birthdates to commit fraud," the report says. "In addition to identity manipulation, this group is also applying for accounts using stolen identities (identity theft). They have completed more than 69 credit card applications and defrauded four victims, including two deceased persons."

Near McCallum, Texas, two families appear to have teamed up and specialized, with one member targeting wireless providers and two others focusing on retail and bank credit cards, the report said.  Together they have submitted 142 fraudulent applications.

"It appears that the children in the group are stealing their own parents’ identities," it added.

While traditional organized crime and drug crime rings also form ID fraud rings, Coggeshall said the most surprising result of his research was the prevalence of what he called "Friends and Family" fraud rings.  More than half of the rings include multiple family members.

"This is a strong indication that more than half are not what we’d think of as professional groups," he said. "(It’s) a family or an innocuous neighbor committing fraud.”  

"The family dynamics is a big surprise," he said. "Rather than seeing a lot of what I would say are unrelated people collaborating, we see a lot of families doing this, sharing information. Siblings and parents toggling SSNs systematically, sharing dates of birth and committing identity theft."

Coggeshall said he excluded those family groups who might be sharing identities to simply avoid bad credit histories -- a brother and sister living together, and the brother allowing the sister to use his Social Security number to obtain cell service, for example.

"Every one of the (10,000) is committing fraud with the intent to not pay," he said, and doing it at least 10 times or more.

Another surprise in the report: Numerous studies have shown that the rate of identity theft is higher in urban areas, but the number of crime rings is much higher in rural areas, Coggeshall said.

"The map is a surprise, the systematic collusion in the South," he said.

One potential explanation:  Identity theft and methamphetamine crime rings often go hand in hand, with meth addicts trading stolen mail and credit card applications for drugs.  Meth addiction rates are also higher in rural areas. 

But that doesn't completely explain the ID fraud rings to Coggeshall.

"These rural areas must make it easier for people to collude, for some reason," he said.

ID Analytics, which was acquired last year by identity theft monitoring service LifeLock Inc., has indicated a willingness to share the crime ring data with law enforcement, but Coggeshall said he was unaware of any arrests that have resulted from the research.

That level of information sharing is in its early stages, he said.

"It's not our business to (encourage law enforcement to act). I would say law enforcement is very busy and has to pick priorities. ... We do this for our commercial clients. We are having conversations with law enforcement agencies, but they are not too far along. I would say law enforcement is cautiously interested."

New FCRA Lawsuit Against Equifax

The Kittell Law Firm filed a new Fair Credit Reporting Act lawsuit today against Equifax for mixing the credit file of our client with that of his father.  As a result, three of the father's tax liens were reported by Equifax on our client's credit report.  What's even worse than that?  Equifax failed to remove the father's tax liens from the son's credit report, even after the son provided documentation that the tax liens belonged to the father.  Equifax continued reporting the father's tax liens on the son's credit report, causing the son to be denied credit on at least three occasions. 

Its bad enough to mix up two people with different names, different Social Security numbers, different addresses and different dates of birth.  What's worse is that Equifax still could not get it right even after being told to fix the obvious error.  Good thing the Fair Credit Reporting Act exists to provide consumers with the opportunity to obtain justice for the aggravation and other damages caused by the credit bureaus' callous disrespect for the accuracy of the credit reports they generate.

Equifax buys CSC

Credit bureau Equifax recently purchased CSC Credit Services, Inc. for the price of $1 Billion.  CSC was one of the last (if not THE last) of the affiliate bureaus to the big three credit bureaus.  Back when I started suing credit bureaus using the Fair Credit Reporting Act, there were several affiliate bureaus to the credit bureaus, including CSC and one right up the road from here called Memphis Consumer Credit Bureau.  

The affiliate bureaus basically "owned" the credit files of consumers living in certain geographical areas, even though the data comprising the credit files were stored on one of the big three bureaus' computer systems.  CSC owned consumers' Equifax credit files from Texas to Indiana (I know because I have sued them in both states and many in between).  

This led to a lot of confusion for consumers, who would buy their Equifax credit reports, find an error, then dispute the error to Equifax.  At first, Equifax would just write the consumer back and say that Equifax did not own their file and they would have to contact CSC to dispute the error.  They stopped this practice eventually, probably because lawyers (myself included) kept arguing that Equifax, when it receives a dispute, has to investigate it, particularly when the disputed data is housed on Equifax's computer system.  Equifax never did agree, but started forwarding the disputes themselves to CSC to "investigate", instead of relying on the consumer to re-send the dispute.

The Equifax/CSC relationship made for trickier lawsuits, since Equifax retained the duty to "follow reasonable procedures to assure maximum possible accuracy" of the credit reports it generated, but shifted the responsibility for performing reasonable procedures to CSC since they owned the data that Equifax was publishing for the consumers located in CSC's ownership area.  So, in some cases you would need to sue both Equifax and CSC but in some (those involving only botched investigations) you could sue just CSC.

At least the purchase of CSC will possibly do away with some of the confusion, both for consumers and lawyers suing Equifax.  

Funny side note - I got word of the purchase of CSC by Equifax a couple of weeks ago (I'm slow to blog about it thanks to the holidays and a busy work schedule).  After hearing the news, I received a call from an Equifax attorney on the other side of one of my FCRA cases.  I told him about it and he had not even heard yet.  Then, a week or so later, he calls and leaves me a message to "let me know" that Equifax had purchased CSC.  Funny, I thought I had let him know, not the other way around.  Guess even Equifax's attorneys do not follow reasonable procedures to assure maximum possible accuracy.

Fifth Circuit affirms FCRA verdict

The United States Court of Appeals for the Fifth Circuit recently affirmed a verdict in a Fair Credit Reporting Act case from the United States District Court for the Western District of Texas against consumer finance company Santander Consumer USA.  In the lawsuit, the plaintiff alleged that Santander failed to properly investigate his disputes of its erroneous publications to the credit bureaus.  The jury agreed and found that Santander had negligently failed to properly investigate the plaintiff's disputes.  Santander did not dispute the jury's finding of liability on appeal but did dispute the sufficiency of the plaintiff's proof of the damages he suffered.  However, the Fifth Circuit found the plaintiff's proof to be sufficient to affirm the verdict.

Santander contended on appeal that the proof of the plaintiff's damages resulting from the inclusion of the erroneous listing of the Santander account on his credit report was not sufficient to support the verdit in the consumer's favor.  The consumer's damages included a lowered credit limit, increased interest rate on a refinanced mortgage, the deferment of personal expenditures due to the uncertainty of his credit situation and mental pain and anguish, embarrassment, and difficulties caused to family and business relationships.  While the Fifth Circuit found that a diminution of his credit line alone is not sufficient to support the damage award, the Court found the rest of the plaintiff's proof sufficient to support the $20,437.50 verdict in his favor.  The consumer's attorney should also be entitled to his attorneys' fees to be paid by Santander, an amount which, given the time spent trying the case and then having to defend an appeal, should dwarf the verdict.

It is good to see the Fifth Circuit affirm a verdict like this.  It even cited one of my old cases, Cousin v. Trans Union Corp., as support for the plaintiff's damage claim.  

CFPB to release report on CRAs soon

It looks like the Consumer Financial Protection Bureau is now moving past its initial first steps and moving on to the type of topics it was created to address.  Below are the prepared remarks from its director Richard Cordray which I received ahead of the press call later today.  I can't wait to read the actual report!

Prepared Remarks by Richard Cordray

Director of the Consumer Financial Protection Bureau

Credit Reporting White Paper Press Call

December 12, 2012

The Consumer Financial Protection Bureau is releasing a report on the big three credit reporting companies – Equifax, Experian, and TransUnion – and how they manage consumer data.

The report highlights the basic systems the credit reporting companies use to collect, organize, and maintain consumer credit information.  It is based on information submitted by the three largest credit bureaus and other sources, and is one of the most comprehensive looks at the credit reporting industry to date.  And, importantly, it brings us one big step forward in understanding this industry and making it more transparent for consumers.

As you know, credit reporting plays a critical role in consumers’ financial lives.  Credit reports on a consumer’s financial history and behavior can determine eligibility for credit cards, car loans, and home mortgage loans – and they often affect how much a consumer is going to pay for that loan.  The industry is critical in our economy.  Without credit reporting, many consumers would likely be unable to get credit.

Almost every adult in America has a credit file.  Estimates are that Experian, TransUnion and Equifax each maintain files on about 200 million Americans gleaned from approximately 10,000 providers of information.  The amount of data collected and exchanged is astounding.  Each year, approximately 36 billion updates are made to consumer credit files.  There are more than 1.3 billion trade lines actively reported.  Trade lines are individual consumer credit accounts, so one person will likely have multiple trade lines, such as her car loan, bank account, and home mortgage, as well as different trade lines for each credit card she holds.

Today’s report found that credit card history makes up more than half of the information on an average credit report.  It also found that most of the information provided to the credit reporting companies comes from a few large companies, such as big banks.  This means credit cards are given great weight in credit profiles – a lesson that consumers could end up learning the hard way.  Especially around this holiday season, consumers may take out a retail credit card in order to save 20 percent off their purchases on a given day.  If they are not responsible with that one card, it could end up costing them a lot more down the line when they go to take out a mortgage and that credit card is a black mark on their credit report.

We also learned that more than a third of consumer disputes have to do with collection items.  Now, some of that may have to do with a consumer’s incentive to wipe out any negative information on their report.  But whatever the incentive, we found the information provided by the collections or debt buying industry is more likely to be questioned by a consumer than, say, the data from their mortgage lender.  In fact, the information provided by the collections industry is five times more likely to be disputed than mortgage information.

We also found that only about 44 million consumers – just one in five people with a credit history – check their report in a given year.  This is a shame because the most effective way for consumers to identify errors in their reports is to obtain copies of them and review them.  This is also a shame because – while we do not know for sure how common these errors are – we know that people do find errors.  And if consumers are not checking their reports, these errors can persist and pop up when a consumer can least afford them, blocking them for borrowing money for a larger purchase or causing them to pay a higher rate of interest than they should.

We also found that the credit reporting companies resolve an average of 15 percent of consumer disputed items internally, without getting the data furnishers involved.  The remaining 85 percent are passed on to the furnishers.  Today’s report found that the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate and report back to the credit reporting company.

As a data-driven agency we believe in informational reports like this.  We believe in doing deep dives into the markets we regulate, because we think the best and most effective way to oversee an industry or market is to understand it thoroughly.  And our markets teams, such as those that authored this report, are key to this function of our mission.

I also consider today’s report a significant addition to the Consumer Bureau’s oversight of credit reporting.  You will recall that in July, we adopted a rule to begin supervising the larger credit reporting companies.  These companies had never been supervised at the federal level.  Then, in October, we began taking individual complaints about credit reporting companies.  If a consumer files a complaint with a credit reporting company and is dissatisfied with the resolution, the CFPB is available to assist.

Today’s report establishes a baseline knowledge about the industry as we embark on our regulatory and supervisory mission.  Given our supervisory role over many of the providers and distributors of credit report information, we can play a positive role in resolving accuracy issues and other risks to consumers within the system.  And given our enforcement authorities, we can make sure that consumer financial laws are being followed.  Overall, we are very interested in finding better ways to measure and improve accuracy within this system.

What consumers can do is to be smart about how they manage their own credit.  They need to know how to build up their creditworthiness, so they can take control over their credit history in a positive way.  They also need to be aware that federal law gives them the right to a free credit report once a year from each of the nationwide credit reporting companies, which they can obtain at www.annualcreditreport.com.  It is critical for each of us to exercise that right.

Keep in mind that nobody else has as much incentive to protect you as you have to protect yourself.  Checking your credit report can reveal odd entries you do not recognize, which may be signs of identity theft.  It also can uncover errors that will hurt your creditworthiness unless you dispute them and get them fixed.  I urge every consumer to perform this self-check at least once every year.  Consumers can learn more about how to check their credit reports, and fix any errors that they may find, at www.consumerfinance.gov.

Today’s study helps bring clarity to the confusing world of credit reports.  It will help educate regulators and consumers about how this important industry works.  If consumers know how these companies handle their credit histories, they can make better decisions on how to manage their financial lives.  And, as I said earlier, credit reporting is a critical market at the heart of our lending systems.  Given its enormity, given its influence over people’s lives, and given its wide impact on our overall economy, you can see that there is much at stake in ensuring that it is working properly for consumers.

###

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.

Article about new website

A very nice and almost embarrassingly flattering article written by Einstein Law about the launch of the Kittell Law Firm's new website.  Check it out here - http://www.einsteinlaw.com/2012/11/21/kittell-law-firm-announces-the-release-of-its-new-website/

Soon, I will start blogging about more than just FCRA topics on the Kittell Law Firm's website's blog but will keep on posting here as well regarding FCRA matters (and any future embarrassingly flattering articles about yours truly!).

New firm's website

Last week, the Kittell Law Firm launched its new website.  Please visit it here - www.kittell-law.com - to read about my most recent Fair Credit Reporting Act and identity theft cases, as well as my personal injury cases.

Terrible acts by American Express lead to them having to pay a settlement with FDIC and CFPB

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:

• Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
• Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
• Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.

In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

See, I told you so - the scores the credit bureaus sell you may not accurately reflect the score they provide to your potential lenders!

From the Consumer Financial Protection Bureau:

CONSUMER FINANCIAL PROTECTION BUREAU STUDY FINDS CREDIT SCORES USED BY CONSUMERS AND LENDERS CAN DIFFER

One out of Five Consumers Likely to Receive Meaningfully Different Score than Creditor

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released a study comparing credit scores sold to creditors and those sold to consumers.  The study found that about one out of five consumers would likely receive a meaningfully different score than would a lender.

“This study highlights the complexities consumers face in the credit scoring market,” said CFPB Director Richard Cordray. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”

The complete Analysis of Differences between Consumer and Creditor-Purchased Credit Scores is available at: http://files.consumerfinance.gov/f/201209_Analysis_Differences_Consumer_Credit.pdf

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to compare credit scores sold to creditors and those sold to consumers by nationwide credit bureaus and to determine whether differences between those scores harm consumers. Today’s study analyzes credit scores from 200,000 credit files from each of the following credit bureaus: TransUnion, Equifax, and Experian.  It is a follow up to a study the Bureau released in July 2011 that described the credit scoring industry, the types of credit scores, and the potential problems for consumers that could result from differences between the scores they purchase and the scores creditors use.

The study released today determined:

·        One out of five consumers would likely receive a meaningfully different score than would a creditor: When consumers purchase their score from a credit bureau, the score they receive may be meaningfully different from the score that a lender would consult in making a decision. A meaningful difference means that the consumer would be likely to qualify for different credit offers – either better or worse – than they would expect to get based on the score they purchased. 

·        Score discrepancies may generate consumer harm:  When discrepancies exist between the scores consumers purchase and the scores used for decision-making by lenders in the marketplace, consumers may take action that does not benefit them.  For example, consumers who have reviewed their own score may expect a certain price from a lender, may waste time and effort applying for loans they are not qualified for, or may accept offers that are worse than they could get.

·        Consumers unlikely to know about score discrepancies:  There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision.  As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.

The Bureau recommends that consumers consider the following in evaluating the credit score they receive:

·        Shop around for credit.  Consumers benefit by shopping for credit.  Regardless of the scores different lenders use, they may offer different loan terms because they operate different risk models or face different competitive pressures.   Consumers should not rule out of seeking lower priced credit because of assumptions they make about their credit score.  While some consumers are reluctant to shop for credit out of fear that they will harm their credit score, that negative impact may be overblown.  Inquiries generally do not result in a large reduction in a consumer credit score. 

·        Check the credit report for accuracy and dispute errors.  Credit scores are calculated based on information in a consumer’s credit file.  Inaccurate information may be the difference between a consumer being approved or denied a loan.  Before shopping for major credit items, the Bureau recommends that consumers review their credit files for inaccuracies.   Each of the nationwide credit bureaus is required by law to provide credit reports for free to consumers who request them once every 12 months. 

The Bureau will begin supervising consumer reporting agencies as of September 30, 2012.  The CFPB’s supervisory authority will cover an estimated 30 companies that account for about 94 percent of the market’s annual receipts.  The Bureau’s examiners will be looking to verify that consumer reporting companies are complying with federal consumer financial law, including that the companies are using and providing accurate information, handling consumer disputes, making disclosures available, and preventing fraud and identity theft.

BIG news!!!

Big happenings going on in my household right now, which explains at least partially my silence of late.  Two major events are occurring as I type this.  First, the wife and I are moving the family from Clarksdale, Mississippi to Hernando, Mississippi.  Hernando is about an hour northeast of Clarksdale, so not really a long distance move but still a major event.

Even bigger than that is the other news.  Not only are we moving, but the wife and I are starting the Kittell Law Firm.  That's right, I have made the huge step of going out completely on my own.  No more law partners.  Just me and my wonderful and beautiful wife, who is going to be the firm's paralegal and office manager.

We are close to being completely open.  The office needed some renovations, which were completed first.  Then came office furniture.  Now, today, our computers are being installed as well as our phones and Internet.  Since leaving the old firm, I have been referred to by my wife as the "Lincoln Lawyer" since, much like Matthew McConaughey in the movie of that name, I have been practicing out of our vehicles, usually with one or more kids in the backseat.

So life is very exciting right now.  And, for the first time in a long time, the practice of law is both enjoyable and fulfilling once again.  So watch out credit bureaus, collection agencies and credit card companies, the FCRA lawyer is back ... and soon to be out of his Tahoe and back in an actual office.