[Congressional Record Volume 140, Number 76 (Thursday, June 16, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[Congressional Record: June 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     CONSUMER REPORTING REFORM ACT

                       HON. JOSEPH P. KENNEDY II

                            of massachusetts

                    in the house of representatives

                        Thursday, June 16, 1994

  Mr. KENNEDY. Mr. Speaker, I am pleased to bring before the House what 
may be the most important piece of consumer legislation we consider in 
this Congress. I want to thank Chairman Gonzalez, Mr. Leach, and Mr. 
McCandless for working with me to fashion an excellent piece of 
bipartisan legislation.
  This bill reforms the credit reporting industry--an industry that 
affects the lives of virtually every working American. Credit bureaus--
especially TRW, Equifax, and Transunion, the ``big 3''--have 450 
million files on individual consumers. They process over 2 billion 
pieces of data each month, and do so at practically the speed of light. 
The credit reports they compile determine whether a consumer will 
obtain a mortgage, a car or business loan, a job, and even an 
apartment.
  If these reports are not accurate, or if they are distributed without 
a legitimate purpose, then our whole society suffers. Consumers may be 
unfairly deprived of credit, employment, and their privacy. And 
businesses may lose out on the opportunity to gain new customers.
  Unfortunately, today the consumer reporting industry is riddled with 
problems. The Federal Trade Commission receives 9,000 complaints each 
year about credit bureaus--more than it receives about any other 
businesses, including auto dealers and debt collectors. One recent 
study shows why: 48 percent of all credit reports--half--contain at 
least one error, and 20 percent of all reports contain errors serious 
enough that they could cost consumers a mortgage, a loan, or a job.
  Credit bureaus have shown little interest in correcting these 
mistakes on their own. Even after being contacted by consumers about 
possible mistakes, the bureaus failed to respond 26 percent of the time 
to inquiries. As a result, consumers must often wait months, even 
years, to clean up error-riddled consumer reports.
  Equally disturbing is the growing distribution of credit reports 
without a consumer's knowledge or consent. These reports contain very 
personal information about a consumer's life. When that information is 
sent far and wide without consent, then the consumer suffers an 
invasion of privacy that can be personally embarrassing and financially 
damaging. Several years ago, someone wrongfully obtained a copy of 
former Vice President Quayle's consumer report, and distributed it 
widely. These practices must stop. The right to privacy is sacred to 
all Americans, and we should not tolerate its erosion.
  The legislation we bring to the floor today takes a number of steps 
to improve both the accuracy and privacy of consumer reports:
  It requires credit bureaus to investigate consumer complaints within 
30 days, and delete any information they can't verify. That way, 
consumers won't be plagued by months or years by someone else's bad 
debts.
  It caps the cost of a credit report at $3, and allows consumers to 
obtain free copies of their credit reports after a reinvestigation or 
adverse action, or if they are unemployed, on public assistance, or 
believe they are victims of fraud. By making credit reports more 
affordable, this provision will help consumers detect and correct 
errors before they do damage.
  The bill also requires those firms--such as banks and department 
stores--who furnish information to credit bureaus to do so accurately, 
and to correct mistakes promptly. By requiring these furnishers of 
information to be more careful, we will improve the quality of 
information that is put into a credit report to begin with, and 
hopefully avoid many of the problems we now see taking place.
  The bill improves privacy protections by requiring employers to 
obtain a consumer's written consent before obtaining the consumer's 
credit report. It also allows a consumer to learn who has seen his or 
her report, and why, to help prevent unauthorized uses of that report.

  Lastly, this bill regulates, for the first time, so called credit 
repair organizations. These firms frequently promise to clear up a 
consumer's bad credit, but in fact either fail to follow through, or do 
so only by misleading credit bureaus. H.R. 1015 bars credit repair 
firms from making untrue or misleading statements to credit bureaus. In 
addition, it allows these firms to collect payment from a consumer only 
after they have fully performed their services. These provisions will 
help weed out the corrupt actors in this growing industry.
  This legislation does not only benefit consumers. It also benefits 
credit bureaus and credit grantors. In the areas of rescreening and 
information-sharing among affiliates, it extends new liberties to 
industry. Hopefully, those liberties will result in new credit 
opportunities for consumers. The bill also carefully ensures that 
grantors will not be the subject of frivolous lawsuits.
  In addition, H.R. 1015 gives industry an 8-year Federal preemption of 
State laws. This compromise provision is the product of a careful 
effort to balance industry's desire for nationwide uniformity with 
States' vital interest in protecting their citizens. As many of my 
colleagues are aware, this has been a contentious issue for quite some 
time, and has impeded the progress of this bill in the past. I would 
have preferred that there be no Federal preemption in this bill. 
Federal law usually sets a floor, not a ceiling, for consumer 
protection--allowing States to adopt added measures to protect their 
citizens. I see no reason to depart from this precedent. Nevertheless, 
the 8-year preemption mandated by this bill will test the viability of 
a uniform national standard. If after 8 years the Federal law is not 
adequately protecting consumers, then I would expect States to step in 
once again and do the job.
  In closing, Mr. Speaker, I'd like to reiterate that this is landmark 
legislation. It gives consumers protections that they desperately need. 
And it provides industry with benefits that will enable more efficient 
operations. I believe that it merits the support of the entire House, 
and I urge its adoption.
  I would like to acknowledge the efforts of several staff members who 
did a tremendous job on this very technical and complex piece of 
legislation. Franci Livingston and Katie Ryan of my staff, Amy Friend 
of the full committee, and Sean Cassidy, Margo Tank, and Joe Siedel of 
minority staff deserve to be acknowledged and thanked for all their 
hard work. Without their efforts, we would not be here today.