Citizen Action Joins Groups Calling for Action after Equifax

The Equifax data breach brought to light many concerns about financial security and consumer protection. As Congress digs deeper, Tennessee Citizen Action joined with consumer groups from around the nation to call for meaningful policy solutions. Here’s what we told lawmakers:

First, the Equifax scandal underscores the importance of the Consumer Financial Protection Bureau’s rule to protect a citizen’s right to sue financial companies. While Equifax appears to have finally dropped the applicability of its forced arbitration clauses for consumers taking advantage of any parts of its relief package, the company continues to include clauses in its fine print in other places that forbids a consumer from taking the company to court (see http://www.equifax.com/terms/). Further, this unjust limitation of consumer rights would still apply to other consumers of Equifax products. Its actions, and those of Wells Fargo, show the need for all consumers of all financial firms to have their day in court restored to make the marketplace work more fairly.

Second, Congress should enact free credit freeze legislation immediately. Consumers are not credit bureau customers, we are their product. The only way for us to secure our credit reports from being accessed by an identity thief applying for new credit in our names is to “freeze” our credit, then lift or “thaw” it temporarily whenever we plan to apply for credit. Yet, except in a few states, nearly all consumers, with a few exceptions for seniors and others, must pay a fee of up to $10 each time they freeze or thaw their own credit reports. While Equifax says that it will soon offer a similar “lock” product for free, consumers deserve to have a right to this control by law, and without cost. Furthermore, it must apply to all of the so-called “Big 3” credit bureaus, Equifax, Experian and TransUnion, because protecting your credit report at only one leaves two doors open.

Third, Congress should resist attempts from the financial and other industries to pass weak federal breach notice legislation that preempts stronger state laws, and to pass sweetheart laws that unjustly benefit the credit bureaus. Every time there is a major data breach, industry actors urge passage of federal legislation that limits when consumers are required to be notified, defines harms narrowly, and limits consumer and state legal rights. Furthermore, these industry actors seek bills that would broadly preempt any state activities, not just on breach notification, but data security and privacy as well. While we are very troubled that Equifax delayed notification, possibly in violation of state breach notification laws, we are confident that an ongoing bi-partisan state attorneys general investigation will hold the firm accountable for that. Congress should also permanently reject consideration of H.R 2359 (Loudermilk), which would eliminate punitive damages under the Fair Credit Reporting Act and cap class actions at $500,000 in damages, as well as the Credit Services Protection Act of 2017 (Royce), which would exempt the credit bureaus from important protections under the Credit Repair Organizations Act.

 

Fourth, Congress should consider the need to reform all the activities of the Big 3 credit bureaus, as well as specialized consumer reporting agencies. Consumer reporting agencies, including the Big 3 credit bureaus and other specialized agencies are regulated by the 1970 Fair Credit Reporting Act (FCRA). “Larger participant” consumer reporting agencies, including the Big 3, are under the supervisory and examination authority of the Consumer Financial Protection Bureau for their credit reporting businesses. The CFPB has begun in just a few years to rein in the worst practices of the Big 3 credit bureaus, such as deceptive marketing of subscription credit monitoring products and failure to comply with existing law’s requirements on conducting reasonable dispute reinvestigations. This is important, as the Big 3, in particular, are powerful gatekeepers to financial and employment opportunity, yet numerous studies have shown that their deficient procedures and industry favoring practices result in too many mistakes that harm consumers.

Several thoughtful proposals, such as comprehensive reforms from Rep. Maxine Waters and Sen. Brian Schatz, would update the FCRA in many ways and deserve strong consideration. But Congress should also understand that the bits and pieces of our financial DNA lost by Equifax remain under the jurisdiction of the Federal Trade Commission (see Dodd-Frank Section 1093, which excludes CFPB from the Gramm-Leach-Bliley Act’s data security provisions). FTC has limited to no authority to write regulations, conduct supervisory examinations, investigate violations, or impose penalties.

 

The letter’s signers included:

Americans for Financial Reform

Allied Progress

Center for Digital Democracy

Consumer Action

Consumer Federation of America

Consumer Watchdog

Massachusetts Communities Action Network (MCAN)

MHANY Management Inc.

Mobilization for Justice, Inc.

NAACP

National Association of Consumer Advocates

National Consumer Law Center (on behalf of its low-income clients)

Public Citizen

Tennessee Citizen Action

U.S. PIRG

Woodstock Institute

World Privacy Forum

For more on our work on consumer protection, follow @TNCitizenAction


 

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