Is the Fair Credit Reporting Act Strong Enough?
Time to update the FCRA?
Nobody in their right mind would argue that the Fair Credit Reporting Act (FCRA) is a bad thing. It is one of a very few laws passed in the past 10 years that actually work in favor of ordinary people even at some expense to big business.
Make no mistake -- consumer reporting as practiced by the Big Three credit rating agencies is big business. Experian's annual report shows revenue of $3.8 billion in 2009, of which nearly a billion was profit. They didn't make that money by giving away free credit reports as required by the Fair Credit Reporting Act, the passage of which they fought tooth-and-nail.
In a fast-moving world like ours, though, one has to wonder if it is enough to require the reporting agencies to provide only one free report annually. A year is a long time for errors to go unchecked. If someone steals your identity, a year is plenty of time for them to ruin your credit.
Additionally, the process for getting the report is a bit of a hassle. Only the most responsible consumers are likely to go to the trouble of calling all three credit bureaus to order their free annual reports.
Is it time for an update to this law? Perhaps language could be included to make it automatic for a report to be sent each and every year to those consumers who request it once. Better than that, the requirement could be made more stringent -- make the free reports available quarterly or at least semi-annually.
The advantages of adding such langauge:
- stronger protection for consumers
- help fight the growing problem of identity theft
- make reporting more systematic, automating the process of sending out reports
The disadvantages:
- It would cost the agencies some money to implement the changes (but they have the money as evidenced by Experian's profits).
- It might put a dent in the credit monitoring industry's profits.
Giving the law more teeth might not be the best thing for the credit monitoring services, but it would definitely be in the best interest of citizens. Congress should consider updating the law.
