Freezing your credit report has long been considered one of the best steps you can take to ensure that identity thieves cannot obtain loans or credit cards in your name.
And consumer advocates continue to recommend freezes despite recent revelations that TransUnion, one of the three major credit bureaus, thwarted “tens of thousands” of freeze requests over a period of years.
“Freezing your credit is still a good idea,” said Mike Litt, director of consumer campaigns at PIRG, a network of public interest advocacy groups.
The Consumer Financial Protection Bureau earlier this month ordered TransUnion to pay $8 million for misleading consumers who believed they were protected from the freezes but were not because the company’s computer systems intercepted requests. were overwhelmed and failed to activate them, according to an administrative agreement Between the Bureau and TransUnion and two subsidiaries. The total includes a $5 million fine and $3 million to compensate customers.
Some freezes went unprocessed for only a few days, the bureau said, but in other cases, thousands of people remained languishing for months or years. “These consumers were not aware of this failure,” the settlement states, “and some were told their requests were honored even though they did not know.”
Consumer Bureau, A statementdescribed TransUnion as “lying” to consumers about the status of their freeze as well as their requests to temporarily lift the freeze when they applied for credit.
According to a settlement, TransUnion neither admitted nor denied wrongdoing. document, In an emailed statement, the company said it had fixed “related system issues” in 2020. “TransUnion is committed to helping consumers manage their credit information, and we have implemented enhancements to ensure the timely placement and removal of security freezes and locks,” the statement said. , (Credit “lock” is similar to a freeze but is usually part of a bundle of services offered to customers, sometimes for a fee.)
The consumer bureau declined to comment on whether the freeze problem also occurred at the other two credit bureaus, Equifax and Experian, or whether it was looking into their practices. Equifax and Experian did not respond to requests for comment.
A credit freeze, also called a security freeze, restricts access to your credit report. Those reports detail your borrowing and payment history and are used by lenders to determine whether you qualify for credit and what interest rate you will pay. They are also used for other purposes, such as background checks by potential employers and landlords. Consumers need to submit their reports to each of the three major credit bureaus. If you want to apply for new credit, you can temporarily “thaw” or lift the hold by phone, online or by mail.
Starting in 2018, the federal government required the major credit bureaus to offer no-fee freezes. (Earlier, the bureau used to charge a fee except in a few states, where it was mandatory to provide a freeze). Credit bureaus were also given strict timelines to implement the requested freeze or lift: one day for freeze requests and one hour for lift requests made online or by phone, and three business days if made by mail. (Until then, timing requirements for freeze requests were set by states and varied, the bureau said.)
The Consumer Bureau said TransUnion’s database has struggled to process “timely” requests for consumer freezes and lifts since at least 2003, forcing the company to handle some requests manually. . Then, after a major data breach at Equifax in 2017, demand for credit freezes increased due to consumer concerns about identity theft. The bureau said that in July and August of 2017, just before the breach was announced, TransUnion had received approximately 33,000 freeze requests. In the following two months, September and October 2017, it received more than two million. As a result, the Consumer Bureau found that TransUnion’s backlog of unprocessed freezes “continued to accumulate and remain unresolved for years”. The backlog reached approximately 30,000 by the end of 2019.
The absence of a freeze left some consumers potentially vulnerable to fraud, although a bureau spokesperson said it was unclear whether anyone was financially victimized because of the delayed freeze. And many people who thought they had the hold removed did not find out there was no hold on their TransUnion report until they were applying for credit, the bureau said. People complained that they were denied, or were at risk of being denied, credit, the bureau said.
TransUnion began fixing its system problems after it was notified in early 2020 that the bureau would begin investigating the company’s freeze practices, the bureau said.
Separately, the Consumer Bureau and the Federal Trade Commission reached out together agreement A civil complaint filed this month in federal district court in Colorado against TransUnion and its tenant-screening unit for failing to ensure that background checks conducted for landlords were accurate. Tenant-background screening typically includes a traditional credit report as well as a search of public records for evictions and criminal convictions.
In some cases, agencies said, screening reports presented multiple stages of a single expulsion process as separate expulsions, making the record appear worse than before. In other cases, the report failed to indicate whether the eviction case had been dismissed.
TransUnion agreed to pay $11 million to consumers and a $4 million fine as well as ensure that it properly reports eviction data. TransUnion again denied any wrongdoing, and said it had worked with the FTC and the Consumer Bureau to “enhance” its rental screening practices, including changes to the way it reports eviction records. “We believe these changes will soon become industry standard,” it said in an emailed statement.
Here are some questions and answers about credit freezes and tenant screening:
How do I freeze my credit report?
You should contact each of the three big credit bureaus individually to put a stop to the action. You can do this by creating an online account, calling or mailing. The federal government provides links to each bureau usa.gov, Even if you have a freeze, it’s still a good idea to continue checking your credit report regularly to make sure nothing is amiss, said Chi Chi Wu, a senior attorney at the National Consumer Law Center. You can view your reports weekly at no charge www.annualcreditreport.com,
Should I check my tenant screening report before applying for housing?
There are many tenant screening companies, and most won’t have information about you ahead of time, the Consumer Bureau said. But if you apply for rental housing and are rejected because of information in the screening report – or if the landlord imposes special conditions, such as paying a higher deposit or using a co-signer – then the house The owner must notify you and provide the name of the screening company used. You can contact the screener to check your information and dispute any errors. However, you should check your credit report before applying, the bureau said, because companies typically run a credit check as part of the tenant screening process. The Bureau maintains a list of screening companies on your website and gives advice how to check A screening report.
Where can I complain if I have a problem with a credit freeze or tenant screening?
You can complain to the consumer bureau https://www.consumerfinance.gov/complaint/,