Regulators let you challenge merchants — after a seven-year wait

popeBeginning in July, consumers burned by a merchant erroneously reporting something to a credit reporting agency can take their case directly to that company as well as to the credit bureaus. has a story summarizing the news (we've also written in more detail about how to dispute an error on your credit report and shared stories of fellow Americans who've gone through this).

In a nutshell, if a mistake shows up on your credit report -- say a department store card reports you as making a late payment when you actually paid on time -- you can take your complaint to that card issuer as well as to the three credit bureaus to get the matter resolved.

The real story, though, is that the law giving customers this right was written seven years ago. It's called the Fair and Accurate Credit Transaction Act of 2003. That's right; it's taken an astonishing seven years for that law to actually protect you. The Federal Trade Commission issued a release last July announcing the guidelines but said they wouldn't go into effect until July 2010.

What on earth took them so long? Well, the FTC didn't issue those rules on its own; it had to collaborate with the Federal Reserve's Board of Governors, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Therein lies the problem, says Gail Hillebrand, financial services campaign manager for watchdog group Consumers Union.

"The delay shows that the inter-agency process doesn't protect consumers and their money," Hillebrand said. This is why it's crucial, she adds, that financial reform legislation being worked on by Congress include a designated Consumer Finance Protection Agency.

"We need a streamlined process and one agency so laws won't have to go through several agencies in a kind of mother-may-I situation," she said.

In other words, if you don't want laws that protect you to take the better part of a decade to make it onto the books, contact your local Congressperson and let them know in no uncertain terms that you support the creation of an agency dedicated solely to protecting consumers and their money.

Hillebrand also has some advice about using your newfound power to dispute credit report errors with a merchant wisely. Since merchants can dismiss your claim as "frivolous" and ignore it if you don't provide the proper documentation, make sure you have all the necessary paperwork before filing your claim.

Also, don't bypass the credit bureaus entirely. Contact any bureaus that have the erroneous information on your report as well as the lender who sent the incorrect information to them. Covering all your bases increases the chance that the mistake that's dragging down your credit score will be resolved quickly.
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