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Lawmakers take on credit industry, odds

When state Rep. Paul Hawkes held town meetings with his constituents last year, he was surprised to hear one complaint over and over:

"How do I get somebody to fix the mistakes on my credit report?"

Then Hawkes, a Crystal River lawyer, found out that a client who was turned down for credit discovered a foreclosure on his credit report _ but he had never filed for foreclosure.

"Nobody cared except my client," the Republican legislator said. "Nobody was responsive."

Hawkes thought there ought to be a law against creditors and credit bureaus snubbing consumers who discover credit-report errors that can be lethal to their finances. So he filed a bill.

Hawkes' bill wound up being one of five filed this session aimed at making creditors and credit bureaus more responsive to consumers.

But because of strong opposition from the credit industry, even the legislation's champions say it may not live long enough to help consumers.

That may not seem fair, but it's the way things usually work in the Legislature. Consumers don't have lobbyists to bend legislators' ears. But industries, particularly wealthy ones, have loads of them.

Little wonder that Hawkes is nervous.

The proposals

Credit reports are the No. 1 consumer complaint at the Federal Trade Commission, which regulates the billion-dollar-a-year credit reporting industry.

A Consumer Reports study last year found that 19 percent of all credit reports include errors serious enough to damage credit.

Even though the state has little formal role in regulating the industry, about 100 Floridians registered complaints last year with the state Division of Consumer Services about errors on their reports. Countless more complained to legislators.

Attorney General Bob Butterworth heard of so many complaints that he joined 17 other states in a lawsuit against TRW, one of the big three credit reporting companies. That lawsuit recently was settled out of court.

The bills filed in the Legislature this year all try to get bureaus and creditors to be more responsive to consumers who think they've been wronged.

One of the House proposals has been folded into another bill that in turn has been watered down to nothing more than a plan to study the problem.

One of the Senate bills hasn't even come up for a vote. The other Senate bill (SB 1372) was approved enthusiastically in committee two weeks ago. Sen. Quillian S. Yancey, D-Lakeland, a former sheriff and state attorney, even scolded the credit lobbyists at the meeting, asking them when their industry was going to get its act together.

But that bill addresses only credit bureaus, not the creditors that supply information to the bureaus.

The bill with the most substance is Hawkes' HB 493. It would:

Require creditors to tell consumers when adverse information is about to be placed on their credit report.

Give consumers one free report a year, with subsequent reports costing $2.50. The cost now ranges from $15 to $20, except for TRW, whose reports are $7.50 as a result of the legal settlement. The company will offer one free report a year starting April 30.

Allow consumers who dispute an item on their report to explain their side in up to 100 words. That statement must appear on the report until the dispute is settled.

Prohibit the sale of consumer lists compiled from credit files for direct marketers.

Establish penalties for creditors who knowingly supply incorrect information or fail to correct it.

The bill may have plenty of substance, but it has no Senate companion. Unless a bill is introduced on both sides of theLegislature and passes, it can't make it to the governor's desk to become law.

Hawkes is working with Rep. Carlos Valdes, R-Miami Springs, who is the sponsor of a credit bill that does have a Senate companion, to save portions of his bill and get them tied onto the Senate bill. That's about its only hope.

After seeing how another credit bill was watered down a few weeks ago in committee, Hawkes asked for more time to raise support for his bill before it comes up for a vote.

His bill is scheduled for a hearing Thursday morning before the House Commerce Committee.

"This is a closed society'

In an election year when a lean budget makes it virtually impossible for legislators to bring much home to their constituents, who could be against a bill that consumers seem to need so much?

"I think it's a matter of unfortunate truth that consumer issues are very difficult in the context of the Legislature," said Rep. Art Simon, D-Miami, chairman of the House Commerce Committee.

Simon, after inquiries last year from several legislators, had his staff look into the problem of inaccurate credit reports and draft a bill to address the situation. That bill was the one that was watered down, but its tougher provisions were added to Hawkes' bill to keep them alive.

"This is a closed society," Simon said of the Legislature. "Members are hearing almost daily from lobbyists or special interest groups opposed to this, and they're not hearing anything from the consumer side.

"When you're beat on daily by lobbyists telling you how bad a bill is, and you're not hearing anything to counterbalance it, all too often you cave in."

Simon is not exaggerating about the lobbyists. The credit industry, which has taken a considerable public drubbing over the past year, is not fond of Hawkes' legislation or any other effort to get the state involved in regulating them. Industry representatives say they would prefer that the Legislature study the matter for a year. That's the plan in the watered-down bill.

This year, Congress is expected to consider updating the Fair Credit Report-ing Act, which the industry says should address consumer concerns.

Letting states get into regulating the credit industry would lead to a big mess, the industry says, because so many consumers' financial dealings cross state lines.

"There are a lot of different industries involved _ credit reporting, financial institutions, direct mailers, credit card companies," said Jim Talley, a lobbyist for Associated Credit Bureaus of Florida.

He also represents the Merchants Association of Florida, which is affiliated with Equifax, one of the nation's three major credit reporting companies.

"What's happened is that all these people acknowledge there could be a problem. But there's been no empirical study showing how deep the problem is, except that somebody that knows somebody has had a problem," he said.

The industry has rejected the Consumer Reports study as unscientific, although the major companies did take steps to become more consumer-friendly after the study appeared.

"We just don't know what all the answers are. That's why we need an in-depth study of this," Talley said.

Anyway, he said, for Florida to enact new laws while Congress is considering updating the Fair Credit Reporting Act makes no sense.

"I think that's an argument by the industry to keep anything from happening," Hawkes said.

"I think we need to go ahead and protect Florida consumers rather than waiting to see what the federal government will do."

Hawkes said he realizes that he needs to compromise on his bill if he hopes for it to go anywhere. Opposition to banning the sale of mailing lists is so intense, he said he'll take that out of the bill.

And he's agreed that creditors can notify consumers on their regular monthly statements, instead of in a separate mailing, of information that's about to go onto a credit report.

Some members of the industry have told him they could live with some of his bill, Hawkes said.

Still, he isn't counting on getting much through the Legislature.

"Truthfully, I'm not overly optimistic this year," he said. "But if we make enough noise, we may be able to push it through next year."