The nation’s three largest credit-reporting agencies (Equifax, Experian, and Trans Union) will soon exclude tax liens and some civil judgments from their reports. The new rules will take effect July 1, 2017 as part of the credit bureaus’ effort to update their reporting and avoid credit errors. The bureaus will remove certain tax liens and civil judgments if reports on those debts fail to include the consumer’s name, address, Social Security number and/or date of birth. Many liens and judgments do not include this information on consumer credit reports because courts require such information to be redacted. In addition to the new reporting requirements, creditors must update the public records every 90 days with the appropriate court.
These changes likely resulted in part through settlements with 30 states attorneys general, including Nevada, which focused on the credit bureaus’ failure to update consumer’s credit profiles properly. Despite these settlements and efforts by private attorneys on behalf of consumers, the Consumer Financial Protection Bureau received almost 200,000 complaints over the past 5 years regarding credit-reporting errors and failure to investigate disputes. Consumers throughout the nation hope these new rules will lessen the harmful impact of inaccurate credit reporting related to liens and judgments.
According to a recent study, identity theft hit a record high in the United States in 2016 with over 15.4 million U.S. victims and over $16 billion in losses. The study found that, despite efforts by U.S. businesses and federal watchdog agencies, identity thieves stole nearly $1 billion more in 2016 than in 2015 and affected 2 billion more consumers. There has also been a resurgence of existing card fraud, which has increased by approximately 40%.
With the continued rise in identity theft, it is more important than ever for Nevada consumers to take steps to protect their identity. Make sure to check your national credit reports for fraudulent accounts and/or charges on at least a yearly basis through www.annualcreditreport.com. If you discover fraudulent activity, you must obtain a police report and an FTC Identity Theft Victim's Complaint and Affidavit, which you should submit to the national credit bureaus along with personal identifying documents. You should also request a fraud alert to prevent future illegal access to your credit profiles.
The Nevada Attorney General's office also recommends taking the following precautionary actions to protect your identity:
The Fair Credit Reporting Act (FCRA) is a federal law that governs the collection and use of information about consumers, including consumer credit reports. The FCRA provides a method for victims of identity theft and/or illegal credit reporting to fix the errors and hire an attorney at no charge if the errors are not corrected within 30 days of a written dispute. Below is a list of some of the most important rights you have under the FCRA:
On March 23, 2017, the Consumer Financial Protection Bureau (CFPB) announced a consent order with Experian, the nation’s largest consumer reporting agency. According to the CFPB, over the span of two years, Experian advertised that its credit score was the same score lenders relied on in making credit decisions. In fact, the score marketed to consumers was different than the scores provided to lenders.
Under the consent order, Experian agrees to pay a $3 million civil penalty, inform consumers about the nature and usefulness of their credit scores, and institute a compliance plan to ensure its employees follow the consent order.
You can access and review the consent order here.
On February 28, 2017, the Consumer Financial Protection Bureau (“CFPB”) released its monthly consumer complaint report. The CFPB is a US government agency responsible for consumer protection in the financial sector.
According to the report, 76% of credit-related complaints concern the accuracy of the information in consumers’ credit reports. The CFPB emphasizes banks and creditors' (known as “furnishers” under the law) obligation to implement policies and procedures for proper record keeping to ensure accurate credit reporting. The report further discusses the importance of a thorough dispute resolution process to allow consumers to have efficient review and correction of legitimate disputes.
Regarding credit bureaus and other reporting agencies, the report highlights the importance of their review of data from the furnishers, including better quality control programs to ensure the accuracy of credit reporting. The CFPB expects that the bureaus will adhere to the thirty-day timeline for investigating and correcting errors as provided under the Fair Credit Reporting Act (the federal law governing consumer credit reports, among other things).
Despite the CFPB’s continued oversight, furnishers and credit bureaus continue to report inaccurate consumer information at an alarming rate. According to a 2013 FTC study, one in five consumers has an error on at least one of their three credit reports (Equifax, Experian, and Trans Union). To prevent future inaccuracies, consumers should pull and review their credit reports at least once every 12 months through www.annualcreditreport.com.
A link to the CFPB’s report is included here.
The Fair Debt Collection Practices Act (“FDCPA”) protects consumers against harassing, threatening, or deceptive debt collection tactics. This federal law applies almost exclusively to third-party debt collectors, meaning those companies who purchase or receive debts after the debts are in default with the original creditor. The FDCPA applies only to consumer debts (e.g. medical bills, credit cards, payday loans) and does not regulate the collection of business debts or certain municipal fines.
If a collector violates the FDCPA, the company will be liable for the consumer's attorney's fees and costs, plus up to $1,000 in statutory damages. The consumer may also recover actual damages (e.g. emotional distress damages, compensation for loan denials, or return of illegally garnished wages).
Below is a list of 10 common debt collection tactics that violate the FDCPA:
In May of 2015, Nevada Attorney General Adam Laxalt announced a $6 million settlement with Equifax, Experian, and Trans Union for ongoing credit reporting violations. As part of the settlement, the bureaus agree to implement changes in their information gathering techniques, update their investigation procedures for disputed items, and initiate consumer education efforts. Laxalt, the grandson of former Nevada Governor and U.S. Senator Paul Laxalt, announced the settlement as part of Nevada's efforts to protect consumers by ensuring stricter guidelines for credit reporting agencies.
Despite this landmark settlement, credit reporting agencies continue to report false information on Nevadan's profiles at an alarming rate. Below is a list of common credit reporting errors:
The only way you can ensure these reporting errors are corrected is to pull a copy of your 3-bureau credit report, review each account for accuracy, and send a written dispute to the bureaus listing all incorrect account information. The bureaus have 30 days to investigate and update the report. If they fail to properly investigate and update your account(s), you have a claim under the Fair Credit Reporting Act, which permits damages of up to $1,000 (or actual credit damages, if proven) along with payment of your attorney's fees and costs.
One of the most common issues I resolve for clients concerns identity theft. In 2014, approximately 17.4 million consumers in the U.S. were victims of identity theft. The following tips can help you reduce your risk of becoming a victim:
1. Protect your Social Security number - With your name and social security number, an identity thief can open new credit and bank accounts, rent an apartment, or even get a job. Do not carry your social security card in your wallet. Keep your card in a safe place, along with any other cards that may list your social security number. Only share your number when absolutely necessary.
2. Avoid scammers and "phishing" attempts - Many scammers pretend to be banks, stores, or government agencies to gain access to your private information - a practice known as "phishing." Do not respond to requests to "verify your account number or password." Legitimate businesses do not request consumer information this way.
3. Check your credit report annually - You are entitled to a free credit report annually from all three credit bureaus through annualcreditreport.com. Review these reports to ensure there are no fraudulent accounts.
4. Review your statements - Open and review all credit card bills and bank statements. Check carefully for any unauthorized charges or withdrawals. If your bills don’t arrive on time, this may mean that someone changed your contact information to hide fraudulent charges. Report any suspicious activity to the bank or credit card company immediately.
5. Update your passwords - Use different passwords for each of your online accounts. Make sure your passwords contain a mix of letters, numbers, and symbols to increase their effectiveness. It is also important to avoid a password that includes your username, real name, or company name.
Sources: https://oag.ca.gov/idtheft/facts/top-ten; https://www.irs.gov/uac/Newsroom/Tips-for-Taxpayers,-Victims-about-Identity-Theft-and-Tax-Returns-2014 .