PBSA

PBSA Journal PAGE 4 JULY/AUG 2021 Except where otherwise indicated, articles are copyright © by PBSA 2021. All rights reserved. FCRA Reform: House Democrats Consider Bill to Reform the Fair Credit Reporting Act, Including a New Bill That Would Establish a Federal Consumer Reporting Agency S ince taking leadership in 2019, reforming the credit reporting system and the Fair Credit Reporting Act (FCRA) has been a priority for Chair Maxine Waters (D-CA-43) and Democrats on the U.S. House Committee on Financial Services (HCFS). In 2020, the Committee produced two bills, the Comprehensive CREDIT Act (H.R. 3621) and the Protecting Your Credit Score Act of 2020 (H.R. 5332) that passed the House of Representatives but were not considered in the Republican controlled Senate. Despite their titles, the bills reach extended beyond credit reporting and had serious consequences for consumer reporting more broadly, as discussed in greater detail below. With the Democrats now controlling the Senate, the House Financial Services Committee is again focused on reforming the FCRA. Already in 2021, the Committee has held two hearings regarding the credit reporting system, with witnesses from the consumer reporting industry and consumer advocacy organizations. On May 26, the HCFS Subcommittee on Oversight and Investigations brought representatives from the three national consumer reporting agencies (NCRA), Equifax, Experian, and TransUnion, in to testify at a hearing entitled "Consumer Credit Reporting: Assessing Accuracy and Compliance." And most recently, on June 29, the full Committee held a hearing entitled "A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity." Committee Democrats have made it clear they perceive the current consumer reporting system to be broken in light of the COVID-19 pandemic as well as an increased number of NCRA-related complaints to the Consumer Protection Financial Bureau (CFPB) in 2020. Chair Waters stated in the first hearing that "consumer credit reporting complaints to the CFPB more than doubled from 2019 to 2020, suggesting a surge in more credit reporting errors during the pandemic. We must learn what is behind these trends and what the credit bureaus must do to protect our consumers." In the following hearing, she stated that "we need big, bold legislative solutions to transform this broken system. I encourage my colleagues to join me in reevaluating how we determine creditworthiness and learning how we can harness new technologies to build a fairer and equitable credit system." Suggested reforms to the system from committee Democrats have included the establishment of a public credit reporting agency (PCR), an elimination of risk-based pricing, mandating more stringent consumer dispute, accuracy, and accountability standards, and addressing racial disparities/inequalities in credit reporting and access. While Committee Republicans admitted the current system needs reform during the two hearings, they have voiced strong opposition to a broad industry-wide overhaul, specifically with regards to the PCR and the prohibition of negative information in credit scoring. As Ranking Member Patrick McHenry (R-NC-10) said in the most recent hearing: "We can all agree that the credit reporting industry is in need of reform. We should be working together to eliminate barriers to entry in this industry. But instead of creating more competition in the private sector, my colleagues on the left go to the same playbook, a government-run bureau based on anecdotal evidence, faulty data, including slanted surveys." In the first hearing, Subcommittee Ranking Member Andy Barr (R-KY-6) noted the increased number of NCRA-related complaints and the disproportionate impact of credit invisibility. However, he raised concerns over the "growing chorus of my colleagues on the other Legislative Update Already in 2021, the Committee has held two hearings regarding the credit reporting system, with witnesses from the consumer reporting industry and consumer advocacy organizations. Continued on page 5

• Cover