About a week and a half ago I promised to share with you
some facts about the Fair Credit Reporting Act which most
people do not know and that included me before I had a
very eye opening experience when I applied for credit at
a location of a major national retail store.
On December 26, 2008 I went into a retail location of a
nationally known very large retail chain because they
always have a really big sale right after Christmas and
I needed a new sport jacket and some shirts. I found
exactly what I wanted and went to the cashier station
to pay with my debit card.
The “sales associate” asked me if I would like to open
a charge account because I would get an instant $5.00
off for applying and another $15.00 off upon being approved.
I really did not need a department store charge account
because I do not believe in having such accounts. A regular
Visa or MasterCard or my debit card are just fine. But to
save another $20.00 I figured why not?
I gave the person my driver’s license and social security
number. She entered the information and what came
back appeared to be a decline. I was borderline amazed
since I knew what my FICO score was plus the fact that
I had no negatives on any of my 3 credit reports. She told
me that I could call a specific 800 number on the printout
to find out why I was declined or that I would receive a letter
in about 10 days. Now follow me carefully right here. At that
moment she gave me the hard copy of the credit
application,you know the paper with all the small
or fine print.
Don’t lose the timeline about when I was given the fine
print because it will be crucial later on in this saga.
Upon arriving home I called the 800 number
and pushed the obligatory buttons: you know
English or Spanish yada yada yada yada.
I was told that the reason why my application for
a charge was denied was because I had “an unsatisfactory
payment history on an existing account”.
There was and is huge problem with that
disclosure, I do not have an existing account
with anyone which has an unsatisfactory payment
history. The phonebot or computerbot or whatever
you call it further stated that the source of this information
was Equifax and that if needed to write or communicate
further I should contact Equifax and write to the
Federal Reserve member national bank which was and
is handling the credit and collection operations for this
very well known retail chain.
Well first I called Equifax and simultaneously pulled
my credit report down from the net. You are entitled
to free credit reports whenever you are denied credit.
Equifax told me that they had no such record which
contained information that I had any account with an
unsatisfactory payment history existing or otherwise.
Armed with this information which was no surprise
I called the bank involved. A courteous representative
in their “adverse action department” commiserated
with me. I told her that it was impossible that an
account existed with an unsatisfactory payment
history and that I just concluded a phone call with
Equifax.
She asked me if I had ever had a post office box.
I replied yes but it was at least 15 years ago.
I had filed for bankruptcy in August, 1993 and
was discharged in December, 1993. At that time
I had an account with this particular department
store.
I then asked her what 15 years ago has to do with
now since the time line on the reporting of negative
information under the FCRA is 7 years plus 180 days
after the date of last activity. I have written extensively
about DLA’s in prior blog posts. You are welcome to
go and read them.
I also mentioned the Federal Trade Commission’s
definition of “Time Barred Debts”. I was informed
that this retail chain would customarily go back
as much as 30 years and look at its internal records
when considering whether to grant credit to an
applicant. I was told that they were allowed to use
their internal records to make evaluations of
credit worthiness and that this was not subject to
the restrictions of the Fair Credit Reporting Act.
Okay lets recap what has happened here. I applied
for a credit card assuming that the credit grantor would
look at one or more of my credit reports from either
Equifax, TransUnion or Experian. WRONG!!
WRONG!! WRONG!! I also was not shown the credit
agreement (the small print) until after I was
declined which also would have been the case
had I been approved.
What is wrong with this picture I have just painted?
First lets go the material misstatements of fact made
by the Adverse Action Department of this very well
known nationally chartered bank. Their computerbot
told me that their information came from Equifax-
fabrication and misstatement #1. The human beings
swore up and down to me that I had an “existing
account” with an unsatisfactory payment history-
fabrication and misstatement #2. It was not until I got
angry and started pressing the people in the AA
Department that they fessed up and disclosed to
me that they were using records in my case that
were 15 years old
They emphatically stated that is was their prerogative
to do so. I countered with , “Yes it is your legal
right to use your records however old they may
be, but it is also incumbent upon you to disclose
that fact that it is one your practices and procedures to do
so before applicant accedes to making the application.”
Subsequent to my phone conversations with
this bank, I called the Federal Trade Commission.
They told me that jurisdiction for the situation
discussed herein comes under the Comptroller
of the Currency.
What is sort of hilarious about all of this is that
I am a client of the bank whose AA Department
denied me the credit card with this department
store. However, within the last 12 months this
same bank granted me a rather generous credit
line on my checking account. Is there something
wrong here?
I drafted a letter of complaint to the President of
credit card operations for this bank with copies to
the Comptroller of the Currency (they gave me a
complaint number), the attorney general’s office
for my state, and the banking commissioner for
my state.
As of today, the Attorney General’s office has
acknowledged my complaint and the President’s
Office at this bank actually called me at 8:30 PM
one night last week asking to discuss my letter.
I refused them and told them that everything was
to be in writing.
Here’s my take from all that I have just told you:
1. Consumers need to be forewarned of what the
consequences are when they apply for credit
and to know exactly what information the
credit grantor is using. Otherwise what happened
in my situation which is not only my situation
might be construed as fraud in the inducement!
2. The credit grantor must make such disclosure
prior to the moment that he or she signs the
application physically or electronically.
3. The Fair Credit Reporting Act needs to
be amended mandate that businesses granting
credit must disclose specifically what financial
information sources on which they are relying
to grant credit and not state ambiguities such as
“other information” or “other sources”.
Tell me what you think by posting comments.
I’ll let you know what the final outcome of this
imbroglio is when I know. Have a great week!
