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Released: November 18, 2014
Specialty reports: Detailed dossiers that may determine your financial future
Consumer Action releases Insider’s Guide to Specialty Consumer Reports
Consumer Action today released its Insider’s Guide to Specialty Consumer Reports in the Fall 2014 issue of the group's newsletter, Consumer Action News. These nearly invisible reports can seriously impact people’s financial lives. Specialty consumer reports can affect your ability to obtain insurance coverage, a bank account, a job, a cellphone or a place to live. You may be charged higher insurance premiums or denied a loan because of information in a database you didn’t know existed.
“Specialty consumer reports”—like credit reports—compile details about consumers to help companies predict a customer’s risk level to a business. But the existence of these “specialty” reports is not well known. Consumers are often shocked to learn that reports may exist detailing their prescription drug use, check-writing history, insurance claims and merchandise they’ve returned to stores.
Consumer Action staff researched 28 specialty reporting agencies, which produce everything from medical and banking reports to background and insurance dossiers, and requested specialty consumer reports from 10 of them. Many of the reports returned little to no information.
Accident and damage history for car owners and homeowners may show up in insurance specialty reports even if these consumers have never filed an insurance claim. If you’ve inquired about an actual loss but didn’t file a claim with your auto or homeowners insurance company, the inquiry nonetheless might be noted in a record called a CLUE (Comprehensive Loss Underwriting Exchange) report. This could result in higher premiums or even outright denial of coverage.
Medical information gleaned from a prescription drug report or dangerous hobbies (skydiving, smoking) coded in a medical history report could affect coverage eligibility and premiums for individual long-term care, disability and life insurance policies.
While in most cases consumers have the right to order free copies of specialty consumer reports, Consumer Action finds that outside of specific circumstances, it may not be worth the trouble. Our staff members found the amount of personal information one must divulge to request reports may not be worth the time and effort it takes, given that in many cases there is nothing on file. More concerning: Consumers add—and verify—more details about themselves in databases when they order these reports.
When to request certain reports
DO order a report if:
- You are applying for an individual insurance policy for life, disability or long-term care. In this case, consider ordering an MIB report and prescription drug report (Milliman IntelliScript or OptumInsight MedPoint).
- If you are a victim of ID theft. Consider ordering an MIB report, LexisNexis full file disclosure report, and ChexSystems and Early Warning bank account reports (and your three major credit reports through www.annualcreditreport.com).
- If you’ve been denied a bank account, insurance, a job or an apartment. The company is required to tell you which report(s) were used in its assessment. Order a free report within 60 days of the denial and check the data for accuracy.
DON’T bother to order a report if you’re:
- Applying for a job, because it is likely that no report will exist until after an employer requests that one be compiled. Before employers order background reports, they must have your permission to do so. If you grant permission, ask for the name of the reporting agency being used and request a copy of the report.
- Seeking to rent an apartment or open a checking account unless you know you have a history of missed rent, bounced checks or unpaid overdraft fees and you want to learn if this information would be available to potential landlords or financial institutions.
Consumer Action calls on regulators to better protect consumers from losses based on specialty reports by:
- Ensuring that consumers are aware of their legal rights to dispute inaccurate information and add their side of the story to a report;
- Requiring all specialty reporting agencies to provide dispute details (not a code) to anyone requesting a specialty report; and
- Requiring companies that review specialty reports to factor in dispute details when they use them to make financial decisions about consumers.
Free educational resources
Consumer Action’s at-a-glance Directory of Specialty Consumer Reporting Agencies details what information must be provided to get a free copy of a specialty report, to dispute an error or to place a security freeze on your file. The PDF directory can be downloaded here: bit.ly/specialty_report_directory.
A deeper dive is provided in Consumer Action’s new Insider’s Guide to Specialty Consumer Reports. The Insider’s Guide provides detailed information about a wide variety of specialty reports, why they exist, who buys them and what rights consumers have to access and limit the information in these reports. The PDF guide can be downloaded here: bit.ly/specialty_report_guide.
About Consumer Action
Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change.
By providing consumer education materials in multiple languages, a free national hotline, a comprehensive website (www.consumer-action.org) and annual surveys of financial and consumer services, Consumer Action helps consumers assert their rights in the marketplace and make financially savvy choices. Nearly 7,500 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support.
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