The paying clients of the credit reporting industry are not consumers, but the creditors who both furnish and use the information contained in the credit bureaus’ databases. For example, discovery in recent lawsuits has uncovered the fact that TransUnion had received over $6 million per year from MBNA (Maryland Bank of North America) alone.
Litigation discovery has also shown that the credit bureaus have made it their business to drive down the cost of disputes to such a low point that processing these disputes has become a substantial source of revenue stream for the credit bureaus.
And also according to Automated Injustice, outsourcing of disputing has become a highly profitable business for the credit bureaus. Before 2004, when Equifax still handled some disputes in-house, its average cost per dispute was $4.67.
Toward the end of 2004, Equifax began using an outsource vendor called ACS in Montego Bay, Jamaica. ACS investigations cost Equifax only $1.08 each. An almost 80% cost reduction was apparently not enough, though. As it stands today, DDC, an agency in the Philippines, has enabled Equifax to reduce the cost to $0.57 per dispute, despite the number of accounts that are disputed.
Many consumers look at their report and find multiple inaccuracies. The consumer then files one dispute to cover all five errors. The credit bureau forwards the dispute to the outsourcing agency overseas and pays them $0.57 to process all five errors.
The credit bureaus charge a fee to data furnishers for providing incorrect data. Each dispute on a report is assessed a $0.25 fee per bureau; therefore, if five items are disputed each credit reporting agency charges $1.25 to the lending institution that reported the information incorrectly (five errors @ $0.25 each). The bottom line is a $0.68 profit on a $0.57 investment.
While this information is public record, based on Congressional testimony, it has not been widely reported on any media outlet, including the Internet.
Considering the number of people who are injured by the credit bureaus need to turn a profit from everything they do, one would assume that the report would have made national headlines. However, due to the credit reporting agencies considerable investment in propaganda campaigns, advertising and lobbying, negative information about them is rarely publicized.
But now you know how the bureaus really get paid, so pass this on to your affiliates and clients.
