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No relief for credit consumers

A new law will make it even more vital for credit bureaus to ensure the information they keep on consumers is correct, but could be as toothless as a current law in requiring them to verify data.
The Protection of Personal Information Act will place a double onus on credit bureaus to make sure the information they keep on their databases is accurate. It will also shift the burden of proving the accuracy onto the bureaus and away from consumers.
Verification of information is already a requirement of the National Credit Act (NCA). The two laws will overlap when it comes to making sure consumers' credit information is accurate. However, the accuracy of data currently held by the bureaus is questionable, as they rely on third parties for data.
According to the most recent National Credit Regulator report, there were 22 569 disputes logged with the regulator in the three quarters to September last year.
The report, Credit Bureau Monitor, says this was a 69.7% increase quarter-on-quarter, and a 117.1% increase year-on-year. Of the disputes lodged, 14 400, or 63.8%, were resolved in favour of the complainant.
The Protection of Personal Information Act, which is making its way through the Parliamentary process, will add to the burden bureaus carry to make sure data is accurate. It will also require consent before this information is given out, or a valid legal requirement.
Currently, the onus is on consumers to take advantage of the annual free report to check their information and contest it with the bureaus if it is wrong. This means consumers must provide the bureaus with the relevant information through their dispute resolution process.

Inaccuracies abound
TransUnion says credit providers work “very hard to ensure that the information supplied is accurate and up to date”.

Experian adds the sector is highly regulated by legislation, industry regulation and internal policy. “All data supplied by credit providers goes through extensive data quality assessment rules, prior to being loaded to the base.”
However, despite these internal systems, Andre Naude, MD of Inoxico Credit Bureau, concedes “there are a lot of discrepancies out there”. He says errors creep in when data has not been accurately collected by the third parties, such as banks and retailers.
Inoxico collects its information from the courts, deed registration offices and other sources, including credit providers, explains Naude. He says data can sometimes be inaccurate and “incorrect adverse information is still sent to the credit information bureaus”.
Under the NCA, credit providers must make sure data is correct, but can only be held liable if this information is published, or results in legal action against the consumer, says Naude.
The ultimate responsibility for making sure information is accurate lies with the bureaus, says Naude. Currently, the bureaus need to verify and validate all information before publishing it. “The crux is, whoever publishes the consumer data is responsible for the integrity of the data,” comments Naude.
When the new law comes in, it will place a bigger burden on credit bureaus, because two pieces of legislation will now force bureaus to check the validity of their information, he points out.
Naude says the company will comply with the Protection of Personal Information Act, as it already complies with the NCA, and has spent millions on complicated algorithms to cross-reference and check information.

Toothless
Steven Ambrose, MD of WWW Strategy, points out that even though the law will become stricter, it is unlikely to make any difference, unless consumers have a problem getting credit.
Ambrose says the new law will shift the burden of proving whether data is accurate or not from the consumer to the bureaus. However, in practice, nothing will really change, he says, because bureaus will go back to the consumer with the information it has, and they will again have to argue the point.
The new law, says Ambrose, “will only have teeth if someone with deep pockets decides to get down and dirty with them”. He says the amount of incorrect information can affect people's ability to get credit, and they could lose out on opportunities to buy items such as property.
“In effect, it makes no difference to the average consumer,” says Ambrose of the new legislation.

 

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