WASHINGTON, D.C. — As the agency decided to extends deadline
for comments on proposed modifications to its Used Car Rule, the Federal Trade
Commission said its annual study of the U.S. credit reporting industry found that
5 percent of consumers had errors on one of their three major credit reports
that could lead to them paying more for products such as auto loans and
insurance.

Overall, the congressionally mandated study on credit report
accuracy found that one in five consumers had an error on at least one of their
three credit reports.

"These are eye-opening numbers for American consumers," said
Howard Shelanski, director of the FTC's Bureau of Economics. "The results of
this first-of-its-kind study make it clear that consumers should check their
credit reports regularly. If they don't, they are potentially putting their
pocketbooks at risk."

The study, in which participants were encouraged to use the
Fair Credit Reporting Act (FCRA) process to resolve any potential credit report
errors, also found that:

—One in four consumers identified errors on their credit
reports that might affect their credit scores.

—One in five consumers had an error that was corrected by a
credit reporting agency (CRA) after it was disputed on at least one of their
three credit reports.

—Four out of five consumers who filed disputes experienced
some modification to their credit report.   

—Slightly more than one in 10 consumers saw a change in
their credit score after the CRAs modified errors on their credit report.

—Approximately one in 20 consumers had a maximum score
change of more than 25 points and only one in 250 consumers had a maximum score
change of more than 100 points.          

"Your credit report has information about your finances and
your bill-paying history, so it's important to make sure it's accurate," said
Charles Harwood, acting director of the FTC's Bureau of Consumer Protection. "The
good news for consumers is that credit reports are free through
annualcreditreport.com, and if you find an error, you can work with the credit
reporting company to fix it."

The FTC report is the first major study that looks at all
the primary groups that participate in the credit reporting and scoring
process: consumers, lenders/data furnishers (which include creditors, lenders,
debt collection agencies, and the court system), the Fair Isaac Corporation, which
develops FICO credit scores, and the national credit reporting agencies. It is
based on work with 1,001 participants who reviewed 2,968 credit reports with a
study associate who helped them identify and correct possible errors on their
credit reports.

Consumers in the study were selected to match the
demographic and credit score information of the general public, and
participants were encouraged to dispute errors that could affect their credit
standing. 

Credit reports with potential errors identified by study
participants were sent to Fair Isaac (FICO) for rescoring.

After completing the FCRA dispute process, study
participants were provided with new credit reports and credit scores. The
original reports were then compared with the new reports. 

If any modifications were made as a result of the disputes,
the impact of errors on the consumer's credit score was determined.

Congress directed the FTC to conduct a study of credit
report accuracy and provide interim reports every two years, starting in 2004
and continuing through 2012, with a final report in 2014. 

The reports are being produced under Section 319 of the Fair
and Accurate Credit Transactions Act, or FACT Act.

FTC Extends Deadline for Comments on Proposed Modifications
to Used Car Rule

In response to requests from stakeholders, the FTC extended
the deadline for the public to submit comments on potential revisions to the
Used Car Buyers Guide required by the agency's Used Car Rule. 

The deadline to submit comments was extended until March 13.

The Buyers Guide is required under the Used Car Rule, which
goes by the formal name of the Used Motor Vehicle Trade Regulation Rule.

Under this rule — which has been effective since 1985 —
dealers put have to put a window sticker (i.e. a Buyers Guide) on their lots'
used vehicles.

"The Buyers Guide discloses whether the dealer offers a
warranty and, if so, its terms and conditions, including the duration of the
coverage, the percentage of total repair costs the dealer will pay, and which
vehicle systems the warranty covers," the FTC explained in a press release. "In
states that do not permit sales of used cars ‘as is,' or without warranties,
dealers must display an alternative version of the Buyers Guide."

After reviewing public comments it generated on the Used Car
Rule, the FTC has found "that the Rule continues to benefit consumers and will
be retained."

So now, the commission wants public input on changes to the
rule that it contends "would empower consumers without adding burdens to
businesses."

Among the proposed are the following, as listed by the FTC:

—Adding a statement to the Buyers Guide encouraging
consumers to seek vehicle history information and directing consumers to an FTC
website for more information about vehicle histories

—Adding a statement in Spanish to the Buyers Guide directing
Spanish-speaking consumers to ask for a copy in Spanish, if they desire

—Adding catalytic converters and airbags to the List of
Systems on the back of the Buyers Guide; and placing boxes on the back of the
Buyers Guide where dealers will have the option to indicate whether (1) the
manufacturer's warranty still applies; (2) the manufacturer's used vehicle warranty,
such as a manufacturer's certified used car warranty, applies; or (3) some
other used vehicle warranty applies

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