Information Technology Reference
In-Depth Information
Credit bureaus and other consumer reporting agencies maintain information on your
bill-paying record, whether you've been sued or arrested, and if you've filed for bank-
ruptcy. They sell reports to other organizations that are trying to determine the credit-
worthiness of consumers who are applying for credit, applying for a job, or trying to
rent an apartment. The Fair Credit Reporting Act, passed in 1970 and revised in 1996,
was designed to promote the accuracy and privacy of information used by credit bureaus
and other consumer reporting agencies to produce consumer reports. It also ensures that
negative information does not haunt a consumer for a lifetime.
The three major credit bureaus are Equifax, Experian, and TransUnion. According
to the Fair Credit Reporting Act, these credit bureaus may keep negative information
about a consumer for a maximum of seven years. There are several exceptions to this
rule. The two most important are that information about criminal convictions may be
kept indefinitely, and bankruptcy information may be held for 10 years.
The Fair and Accurate Credit Transactions Act of 2004 requires the three major credit
bureaus to provide consumers a free copy of their credit report every 12 months. Con-
sumers can use this opportunity to detect and correct errors in their credit reports. The
bureaus do not issue the reports automatically; consumers must take the initiative and
request them from AnnualCreditReport.com.
The law also has provisions to reduce identity theft. It requires the truncation of
account numbers on credit card receipts, and it establishes the National Fraud Alert
System. Victims of identity theft may put a fraud alert on their credit files, warning credit
card issuers that they must take “reasonable steps” to verify the requester's identity before
granting credit.
The Financial Services Modernization Act (also called the Gramm-Leach-Bliley Act of
1999) contains dozens of provisions related to how financial institutions do business.
One of the major provisions of the law allows the creation of “financial supermarkets”
offering banking, insurance, and brokerage services.
The law also contains some privacy-related provisions. It requires financial institu-
tions to disclose their privacy policies to their customers. When a customer establishes
an account, and at least once per year thereafter, the institution must let the customer
know the kinds of information it collects and how it uses that information. These no-
tices must contain an opt-out clause that explains to customers how they can request
that their confidential information not be revealed to other companies. The law requires
financial institutions to develop policies that prevent unauthorized access of their cus-
tomers' confidential information [67].
