May 09, 2023

Van Hollen, Reed Offer Consumer Credit Control Act to Put Consumers in Charge of Credit Report Sharing & Shoot Down Unwanted “Trigger Leads”

In an effort to empower consumers and put Americans in control of their personal information and credit reports, U.S. Senators Chris Van Hollen (D-Md.) and Jack Reed (D-R.I.) introduced the Consumer Credit Control Act (S. 1327). This bill would amend the Fair Credit Reporting Act to give consumers control over when and how their consumer reports are shared by credit bureaus. It would also help cut down on so-called “trigger leads,” where the credit reporting bureaus sell the fact that a consumer is shopping for a mortgage to other lenders, leading to borrowers receiving unwanted solicitations after they start the application process to buy or refinance a home.  

Under current law, the existing consumer reporting system is backwards: Credit bureaus collect, analyze, and organize massive amounts of personal information on consumers -- often without our knowledge -- in order to compile consumer reports.  The personal information collected in these reports is then sold to financial institutions, insurance companies, or employers who use it to make critical credit or employment decisions.  Credit information about consumers may also be sold to companies for marketing purposes.

Following Equifax’s failure several years ago to secure valuable personally identifiable information it collected on approximately 147 million Americans, it remains clear that this system needs to change. Indeed, the National Consumer Law Center’s Chi Chi Wu stated in testimony before the House Financial Services Committee that the Equifax breach “means half of the US population and nearly three-quarters of the consumers with active credit reports are now at risk of identity theft due to one of the worst – if not the worst – breaches of consumer data in American history.  These Americans are at risk of having false new credit accounts, phony tax returns, and even spurious medical bills incurred in their good names.” To make matters worse, the risks of identity fraud may only increase with time. As Ed Mierzwinski, U.S. PIRG’s federal Consumer Program Director, explains “unlike credit card numbers, your Social Security Number and Date of Birth don’t change and may even grow more valuable over time, like gold in a bank vault. Much worse, they are the keys to ‘new account identity theft.’”

The Consumer Credit Control Act aims to address these concerns and fix the current ‘upside down’ system.

At no cost to the consumer, the Reed-Van Hollen bill would offer Americans greater control over when and how their consumer reports are released when applying for new credit, a loan, or insurance. The bill would also require consumer reporting agencies to verify a consumer’s identity and secure the consumer’s permission before releasing consumer reports in instances that are particularly susceptible to identity theft and fraud. Additionally, the legislation would require every consumer reporting agency to take appropriate steps to prevent unauthorized access to the consumer reports and personal information they maintain.

These changes are intended to make it tougher for criminals to open new fraudulent credit or insurance accounts in other people’s names. 

“For too long the major credit bureaus have been allowed to play fast and loose with selling consumers’ sensitive financial information to boost their profits – putting Americans’ privacy and economic security at risk. This legislation ensures consumers have a say over who gets access to their financial reports and when,” said Senator Van Hollen, a member of the Banking Committee.

“The big credit bureaus are collecting your personal information and selling it to other companies for their own financial gain, often without your permission and without adequately protecting your privacy.  This data is incredibly valuable, and it impacts every American directly.  Congress should pass this legislation to protect people’s sensitive information and their access to credit,” said Senator Reed, a senior member of the Banking Committee.  “Our legislation, at no cost to the consumer, gives Americans greater control over when and how their consumer reports are released when applying for new credit, a loan, or insurance.  Under this bill, consumer reporting agencies are required to verify a consumer’s identity and secure the consumer’s permission before releasing consumer reports in instances that are particularly vulnerable to identity theft and fraud.”

Last year, the Consumer Financial Protection Bureau received nearly 979,000 complaints from Americans about credit or consumer reporting. Approximately 89 percent of those complaints were made about the three largest credit reporting agencies: Equifax, Experian, and TransUnion.  And 35 percent of those consumer complaints expressed problems with improper use of their report.

The Consumer Credit Control Credit Act is backed by a number of key consumer rights advocates, including: the National Consumer Law Center, U.S. PIRG, the Center for Digital Democracy, Consumer Action, the Consumer Federation of America, Consumer Reports, the National Association of Consumer Advocates, Public Citizen, and the Woodstock Institute.