My small role in John Oliver’s credit report piece, and the rest of the story (including help!)

About a month ago, I was excited to hear from a John Oliver / Last Week Tonight producer looking for help understanding specialty credit reports. Oliver’s show provides fantastic, entertaining TV stories about the serious (and admittedly) dry topics I’ve covered for years: payday loans, student loans, etc. So I was happy that specialty credit reports might get the Last Week Tonight treatment.

The piece aired last night, and as to be expected, it does a great job of illuminating the quagmire of the credit report industry.  Pulling together video footage that was at times 25 years old, it showed that credit reports and errors remain a stubborn problem, and promises from the industry to improve things should be faced with deep skepticism. It also lamented the industry’s claims that 95 percent of consumers are unaffected by credit report errors, pointing out that’s like bragging, “great news everyone…we only f&!#d up a group equivalent to the entire population of Sweden.”

The story also took on use of credit reports in hiring decisions, showing a Trans Union executive admitting that there is no evidence of a correlation between credit report dings and poor job performance. (I asked Trans Union for comment; no reply yet UPDATE: A note to me from CDIA, the credit bureau industry group, details research it claims does show a correlation.  “At the time of his testimony Mr. Rosenberg wasn’t aware of the various studies … (One shows) a job applicant with a troubled financial history was almost twice as likely to engage in theft as an applicant who lacked any financial history issues,” says the note.  I’ll paste more of CDIA’s response below).

In usual John Oliver dose-of-your-own-medicine style, the piece ends with the show saying it had created sound-alike companies meant to mimic the names Trans Union, Equifax, and Experian, with websites explaining those new firms do horrible things like read Mein Kampf into baby’s ears or sell Orca meat.  Wouldn’t it be “terrible,” the show joked, if people confused these firms with the real thing?

Oliver rightly urged viewers to visit in order to get a free look at their credit report every year. But take note: I was at a law school event last week — I won’t say where — and with dozens of students and professors in the room, not a single one could name (Many could name sites where folks wrongly have to pay for the report.)

Sadly, Last Week Tonight never mentions the “data broker” industry, which causes most of the problems in the criminal background check arena.  You can only do so much in 18 minutes. (NOTE: This paragraph has been updated after a closer look at the piece.)

So, to review: there are three categories here: Credit reports, specialty credit reports, and data brokers. Here’s some of what I shared with the Last Week Tonight folks.

Corporations collecting and selling data exist on a strange continuum and it’s hard to talk about one group without the other.  Sounds like you already know this, but just to lay the groundwork: Most folks know they have “a” credit report which lists their various loans and their payment successes and failures; most folks don’t know there are hundreds of other dossiers on their lives maintained by for-profit corporations also called credit reports (sometimes called ‘specialty credit reports’).  In addition, there are other kinds of dossiers that don’t fit the legal definition of credit reports, maintained by companies generically called data brokers.  When data brokers sell data and it’s used for things that sound or smell like the things credit reports are used for – to make lending, employment, or insurance decisions – the data they sell *may* end up being treated like credit reports (or specialty credit reports). Or it may not. Often, a court has to decide.

As an example of a specialty credit report: A few years ago I did a long piece on The Work Number, a credit report service from Equifax which logs paystub-level detail on most Americans’ salary and benefits, and sells the data to debt collectors and such.  Most folks consent to this when they take a job and have no idea. After I wrote the piece, two New York state legislators introduced a bill that would have made much of what The Work Number does illegal, but it died in committee. Here’s a link to the story.

But at least with The Work Number, consumers have rights to see the data collected on them, because Equifax is a credit bureau and the data is covered by the Fair Credit Reporting Act.  Data Brokers, on the other hand, operate in a murky netherworld, twisting and gyrating to make sure they cannot be defined as credit bureaus and they escape FCRA rules.  These are the kinds of find-your-ex-girlfriend companies you see advertised all over the Internet. There’s growing concern about (and legal action against) them, but it’s a real morass.  Here’s a bit of an overview from an FTC report that got no attention when it came out.

There’s actually incredibly important Supreme Court case right now that is about to doom us all to being data error victims for life with no recourse.

Why does all this stuff matter?  Because ‘Big Data’ lending is going to rule our lives (and probably be a digital justification for the kinds of things we made illegal in real life long ago, like not lending to people of a certain kind).  Meanwhile, doesn’t borrowing from your employer seem like a really bad idea, in a company town kind of way?

Consumers are getting little glimpses of what data these companies collect, but it is very much through a glass darkly.  Still, people should know all they can. Here is a 30,000-foot overview I did as a cover story recently for a NYT supplement called SuperLawyer.

If you’ve watched the John Oliver piece, you know that you often can’t find out what data brokers know about you, and that’s really the biggest problem American consumers face — and the one lawmakers need to address as soon as possible. The second-biggest problem is existence of specialty credit reports, like The Work Number, that no one has heard of. While consumers have a right to access the data, and correct errors, how could they? If a credit report lies about you in a forest and you don’t know about it, does it really exist?

Fortunately, consumer lawyer and friend Joel Winston has a website where he compiles lists of specialty reports and instructions on how to obtain them.  You can get started here, but I’ll warn you: It’s quite a hunt.

*As promised, here is more of CDIA’s response:  A 2008 study by Edward Oppler, et al., showed a correlation between using a credit report for employment purposes and what Oppler described as “counterproductive work behavior,” defined as theft and related behaviors. In short, Oppler concluded that employees with financial history concerns were significantly more likely to engage in counterproductive work behavior than those without financial concerns. In fact, a job applicant with a troubled financial history was almost twice as likely to engage in theft as an applicant who lacked any financial history issues. 

Additionally, an Eastern Kentucky University study conducted by Jerry Palmer and Laura Koppes stated that there are reasons why a credit report could be useful as part of an employment check, especially when considering potential losses due to theft or concerns about negligent hiring liability. Palmer has noted, “These all seem like good reasons to include a credit check when considering a candidate for employment.”

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About Bob Sullivan 1648 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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