CREDIT REPORTING AGENCIES SELLING INFO ON CONSUMERS' PERSONAL INCOME AND EVEN MEDICINE USE, BUT WILL NOT PROVIDE SAME INFO TO THE PEOPLE THEY ARE COLLECTING IT ON
Schumer Urges FTC to Investigate Practice and Require That Any Information a Credit Reporting Agency Sells to a Business Also Be Made Available to the Consumer
Federal Law Mandates Consumers Have a Right to See The Same Credit Score that Private Companies Do, But New Scores Provided to Companies on Medication Use and Income Are Not Being Disclosed
Schumer: If a Business or an Employer Can See It, So Should the Consumer
On Monday, United States Senator Charles E. Schumer called on the Federal Trade Commission to investigate the proliferation of new types of scores being compiled by credit bureaus and sold to third parties that estimate personal information like an individual's medication use and personal income, and examine the decision of credit agencies to keep the information from consumers and not disclose it in the same fashion they are required to with consumer credit scores. Current law requires consumer credit scores used by banks, credit card companies, and other lenders, must be made available to consumers upon request, and requires businesses to tell a consumer when they are using information from that person's credit report for business decisions. However, these new categories of scores provide consumer-related information on a wide range of issues including, for example, a score about use of prescription drugs called a "Medication Adherence Score," which is being sold to insurance companies and can be used to determine what premiums consumers will be charged.
"Consumers have a right to know exactly what personal information is being collected on them, attached to them, and sold to third parties, particularly when it can impact the price they pay for services, insurance or ability to borrow," said Schumer. "Medication use and personal income are highly sensitive pieces of personal information, and if companies are out there collecting this information and attaching predictive scores to consumers in these areas, then consumers have a right to know about it and see the information themselves."
The Fair Credit Reporting Act regulates the use of credit scores and requires businesses to tell consumers when credit rating agencies are using information from a consumer's credit report, either for determining consumer credit worthiness or in hiring decisions. The law also requires companies to let consumers see their credit report both for transparency purposes and to allow consumers to dispute information they deem inaccurate.
"It's abundantly clear that the intent of the Fair Credit Reporting Act was to provide transparency and allow consumers to know what personal information was being used about them by third parties to make important business and financial decisions. The decision not to release information on other so-called scores, like medication use, clearly runs counter to the intent of this law."
Credit reporting companies have now begun collecting information on consumers far beyond credit history and have developed a series of so-called scores that they are selling to outside businesses for use by those businesses in a wide range of marketing and business decisions with respect to individual consumers. Fair Isaac Co, (FICO) now collects information from consumers on, among other things, their pattern of claimed prescription use, and then sells a "Medication Adherence Score" calculated and assigned to individuals to health insurance companies for marketing purposes and decisions on insurance premiums.
Additionally, Experian now markets, among other types of scores, a so-called "Income Insight Score" that provides an estimate of income on individual consumers and sells that information to outside vendors and credit card companies.
In both cases, the consumer reporting agencies argue that the information they collect and sell to third parties is not covered by the Fair Credit Reporting Act, and therefore they do not have to notify consumers when the information is purchased; nor do they have to disclose it to consumers if requested. They cite the fact that the scores don't use credit information and therefore their disclosure is not covered under current credit reporting laws.
In his letter to the Federal Trade Commission, Schumer requested the agency open an investigation into the use of these scores to determine whether their use and the failure to disclose the information is in violation of the Fair Credit Reporting Act. Schumer also wants the FTC to determine exactly how these scores are being used and whether the information is accurate.
Schumer also stated that if the FTC determines these new consumer scores, based on personal information, are not covered under current law, he would work with the FTC to craft legislation to ensure they are.
"The bottom line is that consumers must have the ability to see any and all information about them that credit agencies use--especially these troubling new scores dealing with prescription drug use and personal income. And consumers must have the ability to challenge that data if they believe it is not accurate," Schumer continued. "If a credit agency is selling a so-called 'medical adherence score' about me that alleges to document or predict my prescription drug use, then on the one hand, that is very disturbing, and on the other, you better believe I want to see it."
A copy of Schumer's letter to the FTC can be found below.
The Honorable Jon Leibowitz
Chairman, Federal Trade Commission
600 Pennsylvania Avenue, NW Washington, DC 20580 Dear Chairman Leibowitz, I write today to urge the Federal Trade Commission to investigate the proliferation of new types of scores being marketed by consumer reporting agencies. Recent news reports suggest that the development and use of these new scores, like "Medication Adherence Scores" and "Income Insight Scores," is not regulated under current law. Consumer reporting agencies should not be allowed to do an end run around hard-fought rules designed to ensure the accuracy of information and protection of consumers. For years, creditors have been using credit scoring systems to determine if consumers are a good risk for credit cards, car loans, and mortgages. But these days, many more types of businesses are using many more types of scores to make a wider range of consumer-related decisions. Current law protects consumers by ensuring the transparency of and consumers' access to their credit scores. I am concerned that current law does not provide similar protections with respect to new types of scores. Mr. Chairman, the FTC has played an important role in increasing transparency of credit scores and ensuring consumers have access to, and understand what factors are considered in calculating their credit scores. I respectfully request that the FTC turn its attention to the new types of scores. In particular, are these new types of scores equally transparent? Do consumers equally have access to these scores and are they able to dispute errors in the underlying data? How are these new scores being used? What are the benefits, if any, to consumers? And how do the various types of businesses furnishing information to the consumer reporting agencies ensure the accuracy and privacy of that information? With the proliferation of new types of scores and new types of businesses using those scores, it is important that consumers understand what information is being conveyed in the new scores and how such information is being used. I respectfully urge the FTC to investigate the development and use of the new types of scores being marketed by consumer reporting agencies. If current law does not adequately protect consumers, I look forward to working with you to craft legislation to ensure consumers are protected. Thank you for your prompt attention to this important issue. I look forward to hearing from you. Sincerely, Charles E. Schumer