A Senate Banking Committee hearing on Tuesday showcased how Senators are considering major reforms to a credit reporting industry dealing with data breaches.
The proceedings were the latest in a series following the stunning hack of Equifax earlier this year, which exposed the social security numbers and sensitive information of 143 million Americans.
“The credit reporting industry is a threat to each of us personally, but it is also a threat to our national security,” Sen. Elizabeth Warren (D-Mass.) said during the hearing.
The lawmaker’s remarks were preceded by testimony from Marc Rotenberg, the President of the Electronic Privacy Information Center, who noted that the data caches in the possession of credit reporting firms are now the targets of “foreign adversaries.”
Warren highlighted legislation she introduced with Sen. Brian Schatz (D-Hawaii), which would give consumers more access over how their credit information is used and shared. The bill would require firms to allow individuals to place–without charge–a freeze on their credit data, preventing companies from disclosing it to third parties.
Rotenberg advocated for an even stronger approach, prohibiting credit agencies from sharing data unless the consumer has explicitly opted in.
“No one is objecting to the provision of credit to American consumers,” Rotenberg said. “But it’s the consumer who is initiating the commercial transaction. It’s the consumer who is seeking the mortgage or the loan. The consumer should decide when to release that credit record information to others,” he added.
Sen. Thom Tillis (R-N.C.) claimed, however, that allowing consumers to shield personal credit data could be an “overreaction” from Congress, which could leave financial institutions lacking critical information about creditworthiness.
Also appearing before the committee was Andrew Smith, a partner at Covington & Burling, which represents the Consumer Data Industry Association, a trade group of credit reporting agencies. Smith, too, alleged that granting consumers more control over how their data is shared could threaten the credit system.
Rotenberg countered, saying, “the absence of a background of information could well be a factor in the credit determination.”
“But,” he added, “that’s not a reason not to give the consumer an opportunity to delete the data if the consumer chooses to do so.”
The Equifax breach has placed more scrutiny on a credit reporting industry that already had a reputation. The Consumer Financial Protection Bureau (CFPB) revealed in February that it had received more than 185,000 complaints about credit agency companies since June 2012.
“Consumers submit a high number of complaints about inaccurate personal information on their reports,” the CFPB stated. It added that consumers also reported they experience difficulties when submitting disputes to credit reporting companies.
Credit reporting agencies ranked second only to debt collection firms for most complaints fielded by the CFPB.
“We are not their customers, we just their products,” Sen. Warren said on Tuesday.
