Thursday, July 1, 2010

1: Can Credit Consumers Survive the Credit Reporting Industry? Blog 1

(This is the first part of a series of blogs on credit and credit reporting in the United States.
The monthlynotesstaff intends to publish this series as a book. Book publishers, agents, and investors are encouraged to contact us to help secure funding for this project. Consider this to be material under copyright.)

Since 1899, Retail Credit Co. of Atlanta, GA has compiled credit files on consumers, and later background investigations of insurance applicants. After a 1973 Federal Trade Commission Anti-monopoly lawsuit and complaints about inaccuracies and insurance background checks, Retail Credit Co. became the familiar Equifax.

In the 1980s Equifax surpassed TRW, now part of Experian, as the largest database of consumer informtion on 100 million Americans. Later, Equifax acquired collections firms in southern states.

Equifax also is involved in credit card processing in the United States (US) and the United Kingdom(UK). It spun off its U.S. check processing Centegy unit in 2001. In 2005 Equifax acquired APPRO systems, an automated credit risk management and financial technologies system.

Equifax is a huge anonymous computer-linked network which not only collects financial, job, and insurance data, about which it has settled lawsuits for inaccuracies and intrusiveness. The company not only collects data but also bill collects, and uses consumer data to assess presumed risk of credit applicants, which it sells to lenders. The potential for creating vicious cycles wreaking havoc on the average credit customer is actual and actuarial.

To say this diversified credit complex is a setup for conflicts of interest is an understatement. It is hard to imagine consumer-fair transactions with a credit data clearinghouse which collects negative credit data, bill collects on this data, thus generating more negative credit data, then purports to develop financial analysis tools to assess negative risk based on this data. Simultaneously the complex seeks to profit from selling negative consumer information to other bill collectors, affiliated credit card processors, and credit card sales companies who sell higher finance charge credit cards and loans to the credit consumer on file.

Here is a simple scenario. A bill collector seeks to profit by demanding money from a credit consumer on the basis of a previous negative credit report entry. The consumer knows there is no such account, no "bad debt", no basis for the negative credit report entry. The credit consumer calls, then sends a protest or dispute form. What prevents the bill collector from throwing the regular or certified mail credit report protest or dispute form into the trash to punish the consumer for not paying on that virtual account the bill collector created to dunn the consumer with real billings and computerized negative reports? Then the bill collector restarts the vicious cycle by selling the consumer file to the bill collector in the next cubicle or next computer link, harming or ruining the credit consumer's financial reputation yet again.

See for the next blog in the series "Can Credit Consumers Survive the Credit Reporting Industry?" Contact or for an email or to comment.