“It Pays to Check Your Credit Report” Says FTC’s Bureau of Consumer Protection

You should really check your credit reports at least once a year. If you’re still not convinced, you should review the results of the Federal Trade Commission’s (FTC) latest study, which shows just how error-prone and inaccurate the credit report files from Experian, Equifax, and TransUnion can be.

The FTC looked at credit reports for 1,001 U.S. consumers and found that one-in-four (26%) people identified at least one material error among their credit reports from the three bureaus. These errors were not minor, but “material” in that the FTC says these alleged errors are in regard to information used to generate credit scores, including the number of collections accounts, the number of inquiries on a credit file, the number late or missed payments, among others. In other words, errors that will only cost you more money for the use of credit.

The FTC report is the first major study that looks at all the primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and the national credit reporting agencies (CRAs).

Overall, the study found that around 5% of consumers saw corrections to their credit reports that resulted in a credit score swing of at least 25 points, putting them into a better credit risk tier and making them more attractive to lenders.

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Do a Total Background Check on Yourself – Annual Consumer Reporting Agencies

The Federal laws FCRA and FACTA, which govern the credit bureaus Experian, Equifax, and TransUnion, also regulate a whole universe of other corporations known as “nationwide specialty consumer reporting agencies” and include hundreds of companies, such as: the Medical Information Bureau Inc. (MIB), OPTUMInsight (formerly Ingenix Inc.), Milliman Inc., LexisNexis C.L.U.E. Insurance Reports, the Insurance Services Office (ISO – A Plus Property Reports), ChexSystems Inc. (FIS), CoreLogic, Inc., CBC Innovis, Early Warning Services, TeleCheck, and Equifax Workforce Solutions – The Work Number (TALX).

In fact, just as financial companies rely on “credit reports” to establish credit for customers, others companies also utilize credit report files to assess consumers and charge higher prices in the markets of personal insurance (life, health, disability, and long-term care), residential housing and rentals, employment and income history, banking and checking account history, and property insurance (home, rental, other property, automobile, motorcycle, boating). There are an estimated 400 nationwide specialty consumer reporting agencies collecting and selling personal data on 350 million Americans.

For example, health and life insurance corporations rely on some of these nationwide consumer specialty reporting agencies to provide powerful technologies for evaluating and pricing individual insurance applicants: personal “medical report” files.  The Washington Post says that “medical reports” are “like credit reports for your health records” and have been created on more than 200 million Americans.

The Top 25 Most Requested Annual Credit Reports

Here is a comprehensive list of websites, telephone numbers, and mailing addresses for the top 25 most frequently requested annual consumer reports available to you from the nationwide consumer reporting agencies under the Fair Credit Reporting Act (FCRA). Through these reports, these consumer reporting agencies extensively monitor your personal medical, insurance, employment, rental, and banking history.

Federal law entitles all consumers to check and verify each report, once every year because these reports significantly impact your options and costs of credit. Use the information below to do a total background check on your credit reporting agency files. As The Consumerist advises, “Be sure to check them out and correct any errors, before a crisis hits.”
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Nobody Knows the Medical Information Bureau (MIB) (Secrecy and Privacy)

The Medical Information Bureau Inc. (MIB Inc.) (a/k/a, MIB Group, Inc., a/k/a, MIB, Inc., a/k/a, MIB Solutions, Inc.) has been the subject of ongoing controversy since the 1970′s, when its existence first became generally known. Even today, the Medical Information is an unknown entity; most consumers, doctors, and even politicians, remain unaware of its existence.

The Medical Information Bureau has a penchant for secrecy. For many years, insurance agencies consulted MIB without telling applicants about the files. MIB even had an unlisted phone number. Today, the secret continues, if to a lesser extent: MIB won’t publish its list of corporate members or release the list of codes it uses. More importantly, the MIB refuses to provide a centralized, secure, online source for consumers to request, review, and dispute their medical report files.

The following article, “Nobody Knows the MIB” by, Simson Garfinkel is excerpted from Database Nation: The Death of Privacy in the 21st Century (2000):

“… As part of his Ph.D. thesis at Harvard Business School on privacy policies in corporate America, Jeff Smith surveyed more than a thousand people on a variety of privacy issues, and conducted in-depth interviews with several dozen. One of the key questions he asked was whether people had ever heard of a company called the Medical Information Bureau (MIB). What he found wasn’t terribly surprising: they hadn’t… I asked my wife if she knew what the Medical Information Bureau was. She said she didn’t. (more…)

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FTC Complaint against Milliman, Inc. (2008) (Fair Credit Reporting Act)

In 2008, the Federal Trade Commission filed a complaint against Milliman, Inc. (In the Matter of MILLIMAN, INC., A CORPORATION. DOCKET NO. C-4213).

CONSUMERS should be aware that one of Milliman, Inc.’s information exchange products, IntelliScript, is a

“data aggregation service that provides individual medical profiles, including, but not limited to, prescription drug purchase histories of insurance applicants, to health and life insurance companies. The medical profile generated by IntelliScript includes, but is not limited to: all prescription drugs, including dosage and number of refills filled by the insurance applicant for the previous five years. It also includes, for each drug, the name and address of the dispensing pharmacy, as well as the name and address of the prescribing doctor, including medical specialty. The medical profile generated by IntelliScript analyzes the individual’s prescription drug history and provides a “map” of the risk levels associated with each drug, based on information provided by the insurer.” (Source, FTC complaint)

The Federal Trade Commission avers that Milliman, Inc.’s product, IntelliScript, is purchased and used by, “insurance companies or underwriting or claims review purposes,” and by, “Pharmacy Benefit Managers (“PBMs), which maintain records of individuals’ prescription drug histories.”

The public FTC complaint is reprinted below, in full:

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Ingenix Inc. & Milliman Inc. Agree to Comply with Fair Credit Reporting Act

On September 17, 2007, two providers of consumers’ medical profiles used in determining eligibility for life and health insurance agreed to settle Federal Trade Commission charges that, as consumer reporting agencies (CRAs), they failed to provide insurance companies with the Notice to Users of Consumer Reports required by the Fair Credit Reporting Act (FCRA).

“Consumer reporting companies sell information that can play a critical role in the price consumers pay for a variety of products and services – or even whether they’re eligible for them,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “These cases make clear that all consumer reporting companies must comply with the laws that protect consumers’ rights.”

The proposed respondents, Ingenix, Inc. and Milliman, Inc., provide individual medical profiles, including prescription drug purchase histories of insurance policy applicants, to insurance companies that use them in making underwriting decisions. With applicants’ consent, Ingenix and Milliman obtain five-year prescription drug histories from Pharmacy Benefit Mangers and create prescription medical profiles. Based on their analysis of the information, they report potential medical conditions that may be present.

According to the Commission, the medical profiles are consumer reports because they include information that bears on an individual’s personal characteristics and are used to determine their eligibility for insurance. Ingenix and Milliman are CRAs because they assemble and evaluate consumer report information for the purpose of furnishing it to third parties.

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Consumer Reporting Agency TALX Corp. Agrees to Settle FTC Charges

On July 9, 2009, the TALX Corporation, a subsidiary of Equifax Inc., agreed to settle Federal Trade Commission charges that it violated federal law by failing to provide certain disclosures to users of their consumer reports and to entities that provide information for consumer reports. The proposed settlement requires TALX to pay a $350,000 civil penalty and bars future violations.

The proposed settlement requires TALX to provide the required notices to users and furnishers. If TALX provides the notices electronically, it must follow certain specifications to make the notices “clear and prominent.” Specifically, the notices must be unavoidable, of a size and shade and on the screen for a duration sufficient for an ordinary consumer to read and comprehend them, easily printable, and presented on the principal screen or landing page where the disclosure is relevant. These requirements are designed to ensure that the notices will be effective in communicating the information online.

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Short History of FTC Credit Report Enforcement Actions

A short history of FTC credit report actions from 2000, 2003, and 2004 against Equifax, Experian, TransUnion, Sprint, and AT&T:

Nation’s Big Three Consumer Reporting Agencies Agree To Pay $2.5 Million To Settle FTC Charges of Violating Fair Credit Reporting Act

On January 13, 2000 the three national consumer reporting agencies, Equifax Credit Information Services, Inc., (Equifax), Trans Union LLC (Trans Union), and Experian Information Solutions, Inc. (Experian), have agreed to a total of $2.5 million in payments as part of settlements negotiated by the Federal Trade Commission to resolve charges that they each violated provisions of the Fair Credit Reporting Act (FCRA) by failing to maintain a toll-free telephone number at which personnel are accessible to consumers during normal business hours. According to the FTC’s complaints, Equifax, Trans Union and Experian (collectively, consumer reporting agencies or CRAs) blocked millions of calls from consumers who wanted to discuss the contents and possible errors in their credit reports and kept some of those consumers on hold for unreasonably long periods of time. The proposed settlements with each CRA also would require that it meet specific performance standards to ensure that CRA personnel are accessible to consumers.

The FCRA is designed to promote accuracy, fairness and privacy of information in the files of every consumer reporting agency. To provide consumers the ability to more easily resolve inaccuracies in their credit reports quickly, Congress amended the FCRA — effective Sept. 30, 1997 — to require Experian, Equifax and Trans Union to provide consumers who receive a copy of their credit report with a toll-free telephone number at which personnel are accessible to consumers during normal business hours.

“The reality is that consumers never got the access to the consumer reporting agencies that the law guarantees,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “These cases demonstrate in no uncertain terms that it’s time for Equifax, Experian and Trans Union to pick up the phone and meet their obligations to consumers.” (more…)

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