Dispatch investigation | Credit scars

The Columbus Dispatch


Ohio Attorney General DeWine likens the credit-reporting industry to Oz’s mysterious wizard behind the curtain, because few outside the agencies truly know how their systems work.

Much of what is known has been learned through lawsuits consumers filed against the agencies.

The law itself is partly to blame for the mystery because it fails to define accuracy or reinvestigation, the official term used to describe the highly automated process by which credit-reporting agencies determine the validity of a consumer’s dispute.

The Fair Credit Reporting Act “operates under a 1960s conception of a credit report. You literally had a file — a card paper file,” said Chris Hoofnagle, who is a lecturer at the University of California-Berkeley School of Law and an industry critic who calls the credit-reporting agencies necessary evils. “The law has not kept up with the technology.”

Today, all information flows in and out of a credit-reporting agency by computer. When a consumer reports an error, the nature of the mistake is converted to a numeric code, mostly by contract employees overseas, and sent electronically to the creditor.

Except in rare cases, no human investigates the consumer’s evidence, which typically is not shared with creditors, either.