One year after a company falsely labeled thousands of Vermont residents tax deadbeats, the state has enacted the most pro-consumer credit reporting law in the nation.
But Vermont and other states' efforts to crack down on widespread errors in people's credit reports could be superseded by weaker federal legislation."It's the toughest law in the country," Gov. Howard Dean said after signing Vermont's measure into law this week. "The bad side is there's legislation pending in Congress to kill it."
Vermont has been in the forefront of the debate over consumer privacy and control of personal financial information.
The debate flared last summer when a subcontractor for TRW Inc., one of the big three national credit reporting firms, falsely recorded tax bills for an estimated 3,000 property owners in several Vermont towns as property tax liens.
The errors occurred about the same time that 19 states sued TRW, accusing the company of damaging people's credit histories, often by confusing similar names. The lawsuit was settled in December after TRW promised improve-ments.
Julie Brill, an assistant Vermont attorney general, said about 20 states have laws governing the gathering and transmission of credit information by companies such as TRW, Equifax and TransUnion Corp. Several states have bills in the works.
But Brill, who heads a National Association of Attorneys General working group on credit reporting, said Vermont's law is the only one that:
- Allows a consumer one free copy per year of his or her credit report. Currently, said Jenny Carter of the Vermont Public Interest Research Group, "consumers often don't learn about errors in their credit reports until they're turned down for a loan or a credit card."
- Requires credit reporting companies to get the consumer's permission before releasing the report. This does not apply to "pre-screening," in which credit reporting companies supply to lending agencies lists of consumers deemed good credit risks.