FTC under fire as credit bureaus sell consumers' data

SEATTLE -- Federal Trade Commission Chairman Deborah Platt Majoras says her agency has done a credible job regulating the Big Three credit bureaus.

But the boom -- and now bust -- of subprime mortgages is fueling criticism that the FTC under Platt Majoras has given Experian, Equifax and TransUnion too much latitude to profit from the sale of credit data to lenders and consumers.

"Federal agencies that are supposed to be looking out for the consumer are really protecting the companies that do bad things the agencies were set up to prevent," says political commentator Robert Kuttner, author of The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity.

In February, the National Association of Mortgage Brokers lambasted the FTC for giving the credit bureaus tacit approval to keep selling listings -- called "trigger lists" -- containing personal and financial data of prospective borrowers. Some unscrupulous lenders used trigger lists to contact people who recently filled out a loan application, and then pitched them subprime mortgages, higher-priced loans aimed at people with spotty credit histories but also marketed to borrowers with good credit.

Most applicants never knew the bureaus were placing them on trigger lists and were surprised to be deluged by phone calls and e-mails for subprime loans. These too-good-to-be-true offers came from brokers who skirted rules requiring traditional lenders to make firm offers only in writing. See more

...A USA TODAY story last month revealed how a marketing free-for-all awaits anyone who ventures online to buy credit data.

"Credit scores are vital in determining if you can even afford to refinance your problem loan, yet there's tremendous confusion out there," says privacy advocate Evan Hendricks, author of Credit Scores and Credit Reports: How the System Really Works, What You Can Do.

Platt Majoras left her partnership at law firm Jones Day in 2004 to head the FTC. Experian, the largest of the Big Three bureaus, is one of Jones Day's corporate clients. Its annual revenue tops $3 billion.
'Scrupulous' about ethics

Platt Majoras rebuts consumer advocates and other critics who say she has been soft on Experian, Equifax and TransUnion during a period when the bureaus helped lenders flush out prospects for subprime loans and moved aggressively into selling credit data to consumers over the Internet.

"We've been tough on the industry and strong in standing up for consumers," she says.

Platt Majoras says she is "intensely scrupulous" about ethics. continue