Equifax tops Florida gripes. Knives are out for credit-freeze fee

Florida officials are pushing to eliminate a $10 fee to freeze a credit report after hacked credit reporting agency Equifax emerged as the most complained-about company in the state in 2017,  in beefs to the federal Consumer Financial Protection Bureau.

RELATED: Advice to freeze your own credit aims at hot problem in Florida

This fall Equifax acknowledged a data breach that exposed the personal data of more than 145 million U.S. consumers, including Social Security numbers, birth dates, addresses and more.

In the wake of that episode, state officials including Chief Financial Officer Jimmy Patronis are pushing legislation to eliminate the $10 fee to freeze credit reports. Such freezes can make it more difficult for fraudsters to establish new credit in a victim’s name.

Indiana, South Carolina, Maine and North Carolina “do not charge this fee and we want to add Florida to that list this year,” Patronis said last week.

Florida law allows credit reporting agencies to charge a fee of up to $10 to freeze credit reports, he noted, “and data breach victims are required to submit paperwork to prove their identity is in jeopardy to avoid paying the fee. No one should have to jump through hoops to get a fee waived.”

Bills including SB 1302 and HB 953 aim to make it so.

Equifax did not respond to a request for comment, but the head of an industry trade group raised concerns.

“We in general oppose the removal of all fees from credit freezes,”  said Francis Creighton, president and CEO of the Consumer Data Industry Association, which represents credit reporting agencies. “This is a process that costs the credit reporting agencies money. They have to have call centers and staff to do that.”

A security freeze placed on your credit file will block most lenders from seeing your credit history, as Consumer Reports has described it. That does not eliminate all fraud but makes it harder for a bad guy to get credit in your name, making a freeze “the single most effective way to protect against fraud,” the publication figured.

But it has drawbacks. Unless you are prepared to do a lot of unfreezing and refreezing on the fly, it also shuts out companies you may want to see your report to get a used car or a new smartphone, buy insurance or get approved as tenant.

Another option is a fraud alert, a notice placed on your credit report warning prospective lenders that you are a victim of or concerned about identity theft. That means they should take “reasonable extra steps to verify your identity,” according to Consumer Reports.

The terminology can get confusing, as there are also a variety of “credit monitoring” services companies offer, sometimes with monthly fees.

In any case, credit reporting and repair companies represented the top category of CFPB complaints from Florida, according to lendedu.com, which calls itself a marketplace for finance products including student loans, personal loans and credit cards. The next biggest categories were debt collection and mortgages.

Creighton said complaint numbers should be kept in perspective, because sometimes consumers are unhappy with other parties involved in the process, not necessarily or exclusively credit reporting  agencies like EquifaxExperian and TransUnion.  These can include lenders who deny credit or charge more. Or they can include outside “credit repair” firms that may offer to improve credit scores by challenging adverse information in a consumer’s report, not always with lasting success if the smudges have a legitimate basis.

Meanwhile the CFPB itself, created by financial reform laws enacted during the administration of former President Barack Obama, faces an uncertain future under President Donald Trump.

The bureau oversees rules for banks and other financial companies. It has produced $12 billion for 29 million consumers in refunds and canceled debts.

Big companies have complained the agency goes too far, has too much independent power and hurts the economy.  U.S. Rep. Jeb Hensarling, R-Texas, has called it “a rogue agency.” Trump has named his budget director Mick Mulvaney as its acting director. Uncertainty extends to the continued public availability of its complaint database.

“For quite possibly the last time ever (because of rumors of President Trump’s shutting it down), LendEDU has downloaded and analyzed every consumer complaint that was filed with the CFPB in 2017,” lendedu.com said.

Florida 2017 complaints to Consumer Financial Protection Bureau

Total Complaints: 21,905
Top Company: Equifax Inc. (2,716 complaints)
By Category
Credit Reporting/Repair Services: 8,701
Debt Collection: 4,819
Mortgage: 2,600
Credit Card/Prepaid Card: 1,850
Bank Deposit or Checking/Savings Account: 1,790
Student Loans: 1,074
Source: lendedu.com

Trump moves on financial rules rile consumer groups, please firms

President Trump’s expected order Friday to ditch requirements that folks selling financial products have to act in the best interests of the client and not necessarily push what gives them the highest commissions hurts his own Regular Joe and Jane voters, consumer groups say, but many financial institutions applaud it.

Donald Trump
Donald Trump

“President Trump continues his streak of throwing middle class Americans under the bus – the very people he promised to protect on the campaign trail,” groups including the Consumer Federation of America said in a statement. “Today he plans to issue an executive order that threatens to strip working families and retirees of protections they desperately need when they turn to financial advisors for help with their retirement savings. Rolling back conflict of interest protections for retirement savings will take tens of billions of dollars a year out of the pockets of hard-working Americans in order to enrich powerful Wall Street interests.”

But the American Council of Life Insurers, for example, argued the “fiduciary rule” unnecessarily meddled in the marketplace and created bad effects, such as “effectively eliminating commission-based advice” for products such as annuities.

The regulation, as announced by the U.S Labor Department last spring, would have imposed by next January the requirement that all financial advisers involved in giving retirement advice to act in their customers best interests.

Don’t they have to do that already? Ordinary people often assume so, but no. Many advisers are bound only by the “suitability” standard, which allows them to recommend products that pay the highest sales commissions as long as the investments are broadly suitable based on, say, age and risk tolerance

Another order is expected to begin a review of the Dodd-Frank law that consumer advocacy groups say threatens vital safeguards to protect consumers and keep the financial system from melting down as it did a decade ago. One of the law’s creations is in the crosshairs: the Consumer Financial Protection Bureau, which fined Wells Fargo a record $100 million for creating ghost accounts to generate fees.

“Today’s actions by the White House are an ominous sign that amnesia has set in,” said Rohit Chopra, senior fellow at the Consumer Federation of America.

That’s not how American Bankers Association President Rob Nichols saw it.

“While banks have continued to meet the needs of their customers, clients and communities to the best of their ability, they have faced tremendous headwinds that came with a sharp increase in highly prescriptive government regulation and the sheer weight of more than 24,000 pages of proposed and final Dodd-Frank rules,” he said in a statement. “We appreciate the administration’s support for pro-growth policies so banks can go even further in helping communities and our economy thrive. Reducing the strong regulatory headwinds banks face is critical to increasing lending that drives job creation across America.”

The ABA president’s statement went on to say,  “A sensible and careful review of Dodd-Frank and other financial regulations can and should strengthen those goals while unleashing the power of the banking industry — from small towns and communities to our nation’s financial centers — to fuel the increase in economic prosperity that we all seek. We look forward to working in a bipartisan manner with the administration, Congress and bank regulators on policy changes that will keep banks strong and focused on providing the capital that is so essential to rebuilding our economy.”

But dismantling Dodd-Frank is a huge mistake, argued Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.

“In 2008, reckless and under-regulated Wall Street practices led to the second largest economic collapse in our nation’s history,” he said. “Millions lost homes, millions more lost jobs and millions more lost trillions of dollars in retirement savings. Now, under the direction of Gary Cohn, a Wall Street general from Goldman Sachs installed in the White House National Economic Council, the President is expected to sign executive orders today that will begin the re-rigging of the system for special interests. These orders will begin the dismantling of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that protects consumers, taxpayers, depositors, fair-dealing companies and the economy from more reckless practices. One order will also attempt to delay the Department of Labor’s recent “best-interest” rule protecting retirement savers from having their pockets picked by Wall Street banks and insurance companies.

“We will fight to protect Wall Street reform and the highly-successful Consumer Financial Protection Bureau, the agency at the front lines of consumer protection that has been targeted by big Wall Street banks, debt collectors and even payday lenders because it works for consumers, not them. We will also defend the CFPB’s extraordinary director, Richard Cordray. We cannot let Wall Street convince the President and Congress to re-rig the system so they win and everyone else loses.”