Senators Rip Credit-Reporting Model in Wake of Equifax
By AnnaMaria Andriotis
Senators questioning Equifax Inc.'s former chief Wednesday attacked the business model of the credit-reporting industry, asking why consumers shouldn't have power over the data that the companies collect on them.
The hearing, one of a series this week, was as much about the control consumers have over their personal data as it was about the Equifax hack. Senators questioning former Equifax Chief Executive Richard Smith asked whether a large overhaul is needed for both private sector and government activities.
"Massive data collection is being undertaken across this country," Banking Committee Chairman Sen. Michael Crapo (R., Id.) said during Wednesday's hearing before his panel. He added that Congress needs to take action with personal identification being collected by government, the private sector and others.
In terms of the big credit-reporting companies -- which along with Equifax include Experian PLC and TransUnion -- a key point senators repeatedly raised was: Consumers don't choose to share their data with these firms, but much of their financial lives, including whether they can get approved for loans or rent an apartment, depends on the data the companies have and then sell to lenders and other companies.
Although Equifax has been the main focus of attention since disclosing its massive breach in early September, the credit-reporting industry has feared the breach will lead to more regulatory oversight and changes to the underpinnings of the consumer-finance economy.
Several senators called for just that. Sen. Sherrod Brown (D., Ohio) said consumers have more control over their personal medical data and questioned why similar standards shouldn't be applied to financial information.
Such comments raised questions about how the industry could be changed, and whether doing so would make it more difficult or more cumbersome for consumers to obtain credit. Consumers who don't have credit reports often can't get approved for loans.
At the same time, consumers don't give their permission to have their personal financial information collected, nor do they receive any compensation for it. Rather, the credit-reporting companies gather it and then sell it on to lenders.