TRIGGER LEADS:

ANTI-TRUST VIOLATIONS

and THE BIG 3

Oh No!

Know the Story and Fight Back

Here’s breaking news you need to know … and you need to let all your family and friends know right away as well.

This definitely is not an article comparing the Credit Bureaus with the Wizard of Oz, but some of you will agree that this story has three witches while the Loan Officer plays the part of the Oompa Loompa. This article is a discussion on whether or not The Big Three Credit Bureaus are guilty of violating Anti-Trust Laws by selling Trigger Leads. I also briefly mention some of the other practices of the big three that may or may not violate these laws but the main focus of the article deals with Trigger Leads.

Having credit checked is an important and necessary step in the home buying process. But very few people realize that each time their credit is checked, the “inquiry data” that the Credit Bureaus (Equifax, TransUnion, Innovis or Experian) have on file have now become a commodity. This information is being sold by the Credit Bureaus to other lenders…and also to companies that sell and resell the same names and personal information. And unfortunately, these unsolicited marketing tactics are a nuisance and intrusive, but are they legal?

Your information …a hot commodity

That’s right – the Credit Bureaus have found a way to increase their revenues at your expense….and without your permission.

For those of you that don’t know, a Trigger Lead is a lead that the Credit Bureaus sell since you are using their service to pull the Credit Report to Mortgage companies, every time your Credit Report is pulled.

These “inquiry leads” include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing personal, confidential information to competing creditors…and making millions. Your privacy is being sold, not just once, but over and over again.

And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure Clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously “passed on” the information to them, because they knew that they’d be able to offer much better interest rates and terms. Ouch!

The Credit Bureaus make your information available 24 hours after your Credit Report is pulled. The mortgage companies that purchase these leads can get access to your information the very next day. In addition to the Federal Government, most States have Antitrust Laws too. There are three major Federal Antitrust Laws: the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act. I am not going to discuss whether the big three violate any State Laws in this article.

The Sherman Antitrust Act makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct.

The Clayton Act prohibits mergers or acquisitions that are likely to lessen competition. Under this Act, the government challenges those mergers that careful economic analysis shows are likely to increase prices to consumers.

All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission. The Act also prohibits other business practices that may harm competition under certain circumstances.

The Federal Trade Commission Act prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties. It also created the Federal Trade Commission to police violations of the Act.

Are the Credit Bureaus in violation of the Sherman Act by selling trigger leads?

Well, the Sherman Act is meant to eliminate price fixing, bid rigging and also outlaw anti-competitive activity. Since selling trigger leads actually increases competition, a lawsuit against the Credit Bureaus would probably fail under the Sherman Act if it were brought primarily to prevent the selling of trigger leads.

But what about the new developments the Credit Bureaus are up to where they are going to charge for every re-pull on the Credit Report as the report goes from lender to lender. This kind of behavior satisfies the element of collusion and price fixing and would probably pass muster in the eyes of the Court as being in violation of the Sherman Act.

Are the Credit Bureaus in violation of the Clayton Act by selling trigger leads?

Same as the Sherman Act, probably not, but what about the new joint venture between the Credit Bureaus in forming Vantage Scoring Solutions LLC? In my opinion, the Credit Bureaus want to put Fair Isaac & Co. out of business with their new Vantage Score. Although they are not currently in violation of the Clayton Act because Fair Isaac still holds the biggest market share, one day that may not be the case. If Fair Isaac were to go out of business in the mortgage credit scoring market and Vantage were to take over, there would be a huge risk of them monopolizing the market by bundling there credit reports with the Vantage Score at a price Fair Isaac or nobody could compete against. This is how the Credit Bureaus are taking their first step towards forming a single monopoly.

First, the Vantage Score, next, charge per re-pull and raise the prices. If this isn’t a wake-up call then I don’t know what is.

Are the Credit Bureaus in violation of the Federal Trade Commission Act by selling trigger leads?

In my opinion, YES. The Federal Trade Commission Act prohibits unfair methods of competition in Interstate Commerce.

Isn’t it unfair for them to steal business information and profit from it? YOU BETCHA!

The Loan Officer has no choice but to use the Credit Bureaus to get the Credit Report, which the Bureaus unfairly use to their advantage to make an extra buck. The practice of them doing this to profit is unfair and they are using this to get a competitive edge.

The Credit Bureaus also benefit by selling more Credit Reports as a result of selling these leads since the loan officer buying the leads will need to run their own Credit Report to fatten the Credit Bureaus pockets even more. Bottom line, they are in violation of the Federal Trade Commission Act for the reasons stated above.

One could argue that my analysis has a weak link due to the fact that I am comparing loan officers to the Credit Bureaus and that the two are not in competition, but whether you are comparing apples and apples OR apples and oranges, doesn’t it make sense that if the law were designed to prevent a rotten apple from existing, then why would it matter if it were another apple or an orange sitting next to the rotten apple?

Either way, the apple stinks and the main purpose of any anti-trust law is to prevent oppression. The Credit Bureaus are abusing their position they have with the loan officer by profiting at their expense, especially after they patronized the Credit Bureaus bottom line by buying a Credit Report from them. That’s the equivalent of having someone punch you in the face for buying their product, right?

Just Say “No”

The good news is by opting-out you can make it stop right away and protect yourself from “Pre-approved Credit Offers” arriving via mail, which is one of the leading causes of Identity Theft in the US.

The Consumer Credit Reporting Industry has provided a way to “Opt Out” and remove your name from these lists.

You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form.

If a credit report needs to be run prior to the 48 hour waiting period – at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.

Take Your Privacy Back

You certainly have the right to shop for the best professional to meet your lending needs – but this should be done when and how YOU choose, not being done without your consent or permission. In fact, we even provide a “Shopping Around” guide on our website (www.HomeLoanConsultant.NET) and in hard copy as well, so that you know how to make educated, informed choices when selecting your lender. Call us if you’d like a copy sent to you right away. But looking around should be on your terms, not being done as a sneak attack, because they think you won’t know better.

Take your privacy back. Take five minutes right now – opt out, and pass it on. Refuse to be a part of this system.