Consumers worried about companies that track their lives in cryptic databases have an important new tool -- but apparently, most people don't realize it.
For years, companies have used such databases to make hiring decisions, reject personal checks, or set insurance rates -- but consumers generally had little notion what information was kept on them. Now, a new federal law gives Americans the right to see their own data for free once a year, giving them an opportunity to correct maddening, and potentially damaging, data mistakes.
The law will turn some people into digital sleuths, experts say -- an exercise worth the effort if your data contains errors that might lead to higher insurance rates or employment denials. That possibility, experts say, is magnified in an era of high identity theft rates.
Liz Weston, author of "Your Credit Score," and personal finance columnist for MSN.com, says consumers should not hesitate to use the new tools.
"The information in these other databases can be used to deny you a job, apartment, insurance or bank account, so you definitely want to see what they're saying about you and correct any errors," Weston says.
More than just credit reports
Last week, a Web site named AnnualCreditReport.com opened its doors, offering consumers a peek at their financial histories, as logged by the nation's credit reporting agencies.
But the federal law which permits that peek is actually far broader than financial credit reports. Consumers are now entitled to see records kept by a wide swath of so-called "specialty consumer reporting agencies." Some medical records, tenant histories, and employment backgrounds fall into the broadly-defined category, and are now open for an annual review by consumers.
The Fair and Accurate Credit Transaction Report mandates that any company which maintains permanent files on a consumer, and sells that file to other firms for business decision purposes, make the information available for inspection once a year.
While the nation's credit reporting agencies are generally giving consumers ability to scan the information on a Web site, most specialty reporting agencies require requests to come via a toll-free number. They'll mail the report after a request is filed.
But the good news is, free specialty consumer reports became available to consumers nationwide, starting Dec. 1. Free Credit reports are only available to residents in 13 western states at the moment -- the rest of the country gets its crack at credit reports next year.
Experts hope free annual reports will make consumers much more aware of the data that's kept on them.
While nearly every adult consumer in the United States has a record on file with the credit bureaus, not everyone has records with the specialty bureaus. The market is also more splintered, with many more firms offering background checks to corporations, meaning consumers will have to do extra legwork in their quest to do a full investigation of their own data.
"I don't think there is anyplace that has a (complete) list of these companies," said Peggy Twohig, assistant director in the Federal Trade Commission's division of financial practices. Such companies are not required to register with the FTC, and face no formal licensing procedure, she said, making it nearly impossible for any consumer to track them all down.
Previously, consumers could obtain the reports for free -- but only after they were denied insurance or faced some other "adverse action," as a result of a database record. The reports could be purchased too, but many consumers had no idea where to ask or what to ask for. Most don't learn the name of a reporting agency until it's too late, until they've received a notice of adverse action when denied insurance or employment, Twohig said.
The most comprehensive list is maintained by privacy advocacy group The Privacy Rights Clearinghouse.
The place to start
Still, as in credit reports, there are major players in the arena, and they offer consumers a good starting point.
The first stop should be ChoiceTrust.com, the consumer arm of ChoicePoint Inc. The firm maintains a series of databases consumers can check in on: a list of recent insurance claims, pre-employment screening information, and tenant history.
"The most pertinent advice is it doesn't hurt to check to see what information is available in the public realm," said ChoicePoint spokesman Chuck Jones.
Starting Dec. 1, the firm included on its Web site instructions for obtaining a variety of background records. Surprisingly, Jones said, traffic to the site has been light.
"Volume is less than we expected," he said.
ChoicePoint's C.L.U.E. database -- the acronym stands for Comprehensive Loss Underwriting Exchange report -- includes a list of claims against auto and homeowners insurance. Entries in the database can cause higher premiums, or even rejection for insurance.
"I can't say how many consumers are in there, but if someone hasn't made a claim in the past five years, they won't be," Jones said.
ChoicePoint's pre-employment screening data includes attempts to verify education, employment history and criminal background checks. Consumers will only have a record on file with ChoicePoint if a prospective employer used ChoicePoint to perform a screening. Many firms offer similar services. The best way to find out which one to ask is to talk with the employer, and ask which firm it uses for background checks. Employers, however, are not required by federal law to answer the question.
Consumers can also order a tenant history report from ChoicePoint.
Medical history available
Another critical database for consumers to check is maintained by the MIB Group Inc. Also known as the Medical Information Bureau, the firm's database includes a list of consumers' medical conditions that may affect their life or longevity, said MIB general counsel Jim Corbett. Entries in the database could cause a consumer to be rejected for life or health insurance.
"Only if a person applied for insurance and have been found to have a condition," are they in the database, Corbett said.
Corbett said 16 million consumers have a file in MIB's database. Information on how to check those records can be found at the firm's Web site.
Consumers can also see if there record of bounced checks or other banking troubles kept in files by companies who advise retailers whether to accept or reject a personal check for payment. ChexSystems, the largest player in the space, offers simple instructions on its Web site for checking the data. Other firms have been slower to enumerate consumer FACT act rights, according to the Privacy Rights Clearinghouse.
Weston says consumers might be confused by all the paperwork they need to file to get their various records -- and by the fact that not all specialty reporting agencies have records on all consumers. Still, at least some are already enjoying the new right.
"It's still a lot of checking around to do," she said. "Still, (people) seem to eat it up; everybody wants to know what someone else is saying about them."
Consumers who find errors must dispute them one at a time with individual companies, in writing. Firms which receive disputes, under the provisions of the Fair Credit Reporting Act and its recent amendment, have up to 45 days to reinvestigate the incident and report back to the consumer. But if the firm that supplied the negative data stands by it, consumers have little recourse outside suing the firms involved.
Bob Sullivan is author of Your Evil Twin: Behind the Identity Theft Epidemic