One of my colleagues, David Eddy, recently told me about his experience with credit reporting agencies (CRAs) in which he discovered "preventable" information quality problems. One problem included a ZIP code that was correct in one place and incorrect in another (in one report). One CRA did not have updated ZIP codes that had changed in the greater Boston area from 021XX to 024XX.
Only days later, I found myself denied credit. Likewise, it was a preventable quality problem due to a credit reporting agency's information about me. I went to a new cellular phone company to switch my cell phone service. Approval for a regular plan required a credit check.
Nonquality Information Can Harm Consumers
Enter the data quality problem. In my past, someone attempted "identity theft" by illegally getting my information from the CRA. I have had my credit files marked to notify me of any request for credit information disclosure so that I can insure that requests are valid. While I moved nearly two years ago, the credit agency, Trans Union, was not able to contact me because they had my old address and telephone number; and, as a result, they were not able to give the cellular company a credit report. Without the credit report, the company could not approve me for their regular plan. So they sent me a letter to my correct address stating why they could not offer me the $0.09 a minute plan but would accept me for a prepaid plan that "offers an attractive rate of $0.35 a minute." Really attractive, isn't it! Their letter also stated, "The information you provided for your application did not score a sufficient number of points for approval of our [regular] plans. Our decision was based on the following reason(s): "The consumer reporting agency named below provided us with information that influenced our decision. The reporting agency played no part in our decision other than to provide us with credit information about you ...."
First of all, this statement is inaccurate. The CRA did not provide negative credit information about me. They provided no information at all. But more importantly, the consequences of this caused the report receiving company to have an inaccurate picture of their potential customer. It was this kind of problem that led to the creation of the Fair Credit Reporting Act. This is a kind of problem that all companies not just credit reporting agencies must diligently avoid. Information quality problems like this are in the same category as libel (a written or oral defamatory statement or representation that conveys an unjustly unfavorable impression) or slander (an utterance of false charges or misrepresentations which defame and damage another's reputation). The fact that this incident happened on April Fool's day (April 1) was no joke. Information quality problems that lead to harm to the consumer border on unethical and possibly illegal behavior whether intentional or not.
The Costs of Nonquality Information
There are two sets of costs here: those to the business (the cellular company) and those to the consumer (me).
Business costs to the cellular company included direct costs in the time the salesperson spent with us, the letter they sent and the time they had to spend on the phone with my business manager in trying to deal with the problem. The lost opportunity costs included the lost revenue from the time I would have made the purchase. But they may have lost a customer because I was alienated by their offer letter.
Organizations must understand the costs to the consumer caused by nonquality information. My business manager spent nearly one hour of her time after the initial denial of service just attempting to figure out the problem. She spent four hours finding and contacting Trans Union and the other two CRAs (if one had inaccurate information, all might), requesting credit reports, reviewing and correcting inaccurate information (in all three). Out-of-pocket expenses included $8.00 or $8.50 to request each report. (Since we had not been denied credit, there was a charge for the reports). There will be additional time required to try to get the $8.50 due us since credit has now been denied. The total costs to the consumer are now over $150 (and still rising), not including the lost value work that could have been accomplished in the five hours expended on this.
Who is Accountable?
This problem was absolutely preventable. We had notified the U.S. Postal Service of our change of address along with our creditors, customers, business suppliers and partners.
Should the burden be on the consumer to notify the CRAs when they move? This information is available through the national change of address (NCOA) program of the Postal Service.
The credit report we received from Trans Union had a heading of "former addresses reported." Under it was listed the fraudulent address that someone used in trying to commit identity fraud against us. Why was it possible for a criminal to be able to change our address with the CRA, but the NCOA that identifies post office reported address is not noted?
How to Prevent this Type of Problem
This problem illustrates why consumer information organizations (any organization that maintains customer or consumer information) must be customer focused; that is, they must have a customer care value. Customer care must drive how they maintain and use information about consumers. Customer-focused organizations will:
- Stay current with all legal and regulatory requirements that affect the collection, maintenance and use of personal or consumer information.
- Establish information policies that address guidelines for the capture, maintenance and use of customer or consumer information.
- Establish processes and process controls that assure the highest quality of information based on the consequences of nonquality information.
- Provide training to all staff who create, maintain and use personal or consumer information on information quality and consumer regulatory requirements.
- Develop a procedure for anyone who discovers inaccurate information to update it or to communicate it to the person authorized to update it.
- Establish a process improvement process and provide training so that when harmful information quality problems occur, teams can be quickly pulled together to analyze and identify the root cause, identify and define a process improvement, implement the improvement, verify the improvement and make it permanent. This is called plan-do-check-act (PDCA). It is a required process for organizations that wish to survive and thrive in the realized information age.
As a consumer, you can avoid problems of this type if you keep a list of all sources where address and other personal information are used for notification purposes. Also, check periodically with organizations that keep information about you, such as credit reporting agencies or the social security administration regarding your contributions.
Here is contact information on some of the biggest information suppliers:
Equifax, P.O. Box 105496, Atlanta, GA 30348-5496, (800) 997-2493, www.equifax.com.
Trans Union LLC Consumer Disclosure Center, P.O. Box 1000, Chester, PA 19022, (800) 916-8800, www. transunion.com.
Experian National Consumer Assistance Center, P.O. Box 2104, Allen, TX 75013-2104, (888) 397-3742, www.experian.com.
Know your rights as a consumer, whether in credit, airline travel, financial terms disclosure regarding loans, leases, etc. If you encounter information quality problems, ask for the name of the information quality officer. Ask him or her how to correct the problem and how they plan to improve the process to prevent recurrence. Ask to see the organization's information policies. Do they have policies that describe how the organization protects consumers from the impact of information quality problems? If you encounter information quality problems, complain proactively in a way to influence change. Be calm. Always focus on the problem, not the person who is involved. Ask to speak to a supervisor if you get no satisfaction. Write a letter to the chief executive of the organization in which you ask for a specific recompense.
If organizations do not proactively get their information quality act together, there may come a consumer revolt, spurring costly consumer rights regulations that come from consumer advocacy regulatory bodies.
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