Rep. Maxine Waters, D-Calif., hasn’t forgotten that CEOs of the three major U.S. credit bureaus snubbed minority Democrats’ 2017 request to testify when a massive hack of Equifax exposed more than half of all Americans to heightened risk of identity theft.
Two years later, it’s a different story. With the party newly in control of the House and proposing tighter regulation of the firms and a ban on use of credit histories in most hiring decisions, all three showed up for an often biting hearing of the House Financial Services Committee that Waters now chairs.
“This hearing with testimony from CEOs of the major credit bureaus is long overdue,” she told the executives, citing a list of data breaches dating to 2013 and pointing out that consumers have little control over how their identification information and payment histories are recorded, shared and protected by Experian, Equifax, and TransUnion.
The companies make money from selling that information to lenders evaluating applications for everything from credit cards to home mortgages and auto loans. Borrowers have frequently complained that the records are outdated and incorrect, and the 2017 theft from Equifax ignited a firestorm of criticism from lawmakers, including Republican Sen. Kennedy of Louisiana, over how it’s protected.
“Credit bureaus collect reams of information on millions of Americans,” Waters said. “Consumers didn’t choose to entrust these companies with their personal information and do not have the option today of choosing a different company,” she added, arguing that such “commodification of consumers is a core reason why our nation’s consumer credit reporting system is broken.”
One of the bills intended to reform it, from Waters herself, would increase consumers’ ability to appeal credit report disputes and assist those struggling with medical debt and predatory loans, along with limiting use of credit reports by employers.
A second measure would protect the credit histories of government employees affected by a recent monthlong shutdown from damage related to their inability to make payments while not receiving their salaries.
“Credit-reporting agencies behave like de facto utilities but are not subject to oversight or regulation comparable to that of utilities,” said Rep. Gregory Meeks, D-N.Y., who leads a subcommittee on consumer protection and financial institutions. “Consumers are the data, the source of conflict, but not the clients. The entire industry is built on capturing, analyzing and quantifying consumers’ personal information, yet consumers don’t even own their own data and have very limited access to it.”
Despite harsh questions from both Democrats and Republicans on the panel, however, Equifax CEO Mark Begor and his peers maintained that their industry not only serves a vital purpose for the $20 trillion U.S. economy but is constantly working to better protect data.
Equifax alone shared 2.3 billion consumer credit files with lenders last year, an average of 6 million a day, he noted. During Tuesday’s hearing alone, it would probably handle half a million such transactions, he added.
While Begor said consumers own their data, he deflected a question about how consumers who wanted to opt out of data collection might otherwise be able to obtain loans or other products, like auto insurance, that are linked to credit histories.
“The credit bureau system we have in the U.S. is the envy of many countries around the world,” said Begor, who joined in Equifax in 2018, following the departure of Richard Smith in the aftermath of the 2017 hack.
The system, however, has no shortage of flaws, said Rep. Al Green, D-Texas, who quizzed the executives generally about their liability for incorrect information on consumers and Equifax, specifically, on its conduct after the 2017 hack.
“Why would I assume, given that you’ve been naughty – you haven’t been nice – why would I assume that you’re now going to repent, that you’ve seen the error of your ways,” he asked. “I see no reason to do it. I support the legislation.”
