New Deal for the Harassed

For eight years a Pharmaceuticals salesman in New York City endured a Kafkaesque nightmare, applying for work to many firms and always being turned down, sometimes after he had been told that he was accepted. Reason: Atlanta's Retail Credit Co., one of the largest firms in the business of gathering and selling financial information about individual consumers, had been reporting erroneously that the salesman was dishonorably discharged from the Army. This was just one of many examples of damaging irresponsibility in the credit-investigation field uncovered in recent hearings before the Senate Subcommittee on Banking and Currency.

The thousands of computerized, credit-checking bureaus across the country constitute an awesome but lightly regulated intelligence network. The information they supply to stores, banks, insurance companies and employers intimately affects the borrowing potential, earning power and reputations of millions of Americans. Yet many are oblivious to the existence, much less the extent or accuracy, of the data that credit bureaus disseminate about them.

To give consumers protection against abuses, Congress passed the Fair Credit Reporting Act, which took effect last week. The measure was adopted after testimony revealed that information on consumers is sometimes hastily collected for the credit-reporting bureaus by recent high school graduates, who get their information by checking newspaper reports of arrests and by secretly interviewing neighbors of the people under investigation. Prodded by supervisors trying to justify the service, some investigators aim for a 10% to 15% rejection rate in their reports.

Under the new law, however, if an applicant is rejected for a loan, a job or an insurance policy because of an unfavorable credit report, he must be told so by the person turning him down. He then has the right to examine the bureau's files; if he can prove that an item is inaccurate, it must be struck out. Bureaus must also be certain that their clients have a bona fide interest in the individual's background. Finance companies are acceptable; lawyers looking for ammunition in a divorce case are not. The FBI, the Internal Revenue Service and other Government agencies, which had easy access to data banks, must now have a court order to peek at an individual's dossier (except for checks on prospective employees). Credit-bureau officials who knowingly supply data to unauthorized clients risk a year in jail and a $5,000 fine. Says Senator William Proxmire, Wisconsin Democrat, who husbanded the bill through Congress: "At some point the individual's right to privacy must take precedence over the creditor's right to obtain information."

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