Please join Troutman Pepper Partner Dave Gettings and his guest Eric Ellman of the Consumer Data Industry Association (CDIA) for a conversation on recent industry developments in credit reporting. Dave and Eric discuss the CDIA’s mission, the idea of a government-run credit bureau, and recent trends in FCRA litigation. At the CDIA, Eric leads the state government and federal regulatory affairs programs, runs the legal department, serves as liaison to the format teams for credit data reporting, and participates in the association’s management. With the CDIA since 1998, Eric’s work has been highlighted on the front page of the USA Today Money section (June 2007), where he was called a “warrior” who is “always well prepared for battle.”
Please join Troutman Pepper Partner Dave Gettings and his guest Eric Ellman of the Consumer Data Industry Association (CDIA) for a conversation on recent industry developments in credit reporting. Dave and Eric discuss the CDIA’s mission, the idea of a government-run credit bureau, and recent trends in FCRA litigation. At the CDIA, Eric leads the state government and federal regulatory affairs programs, runs the legal department, serves as liaison to the format teams for credit data reporting, and participates in the association’s management. With the CDIA since 1998, Eric’s work has been highlighted on the front page of the USA Today Money section (June 2007), where he was called a “warrior” who is “always well prepared for battle.”
PODCAST TRANSCRIPT
FCRA Focus
Episode 2. An Industry Perspective: A Conversation with Eric Ellman of the Consumer Data Industry Association
Recorded on: 06.03.2022
Guest: Eric Ellman
[ANNOUNCER]
Welcome to Troutman Pepper’s podcast, FCRA Focus. This podcast series is designed to educate, inform, and hopefully entertain you as well on all things related to the Fair Credit Reporting Act. To stay abreast of these issues, and to make sure you don’t miss an episode, please subscribe via iTunes, Stitcher, Google Play or wherever you download your podcast. And now, your host Dave Gettings.
[DAVE GETTINGS]
Alright, good morning, today on FCRA Focus podcast, we’ve got with us a great guest from the Consumer Data Industry Association, Eric Ellman. He’s the Senior Vice President for Public Policy & Legal Affairs. And Eric, at CDIA, leads the State Government and Federal Regulatory Affairs Program and also runs the legal department. And off mic a few minutes ago we were discussing the fact that he’s a native New Yorker. He’s a die-hard Mets, Giants and Rangers fan like me. He’s avoided the Jets which is always good for Mets fans and we’re going to try to have this podcast not devolve into discussion of New York sports entirely but no promise that we won’t have any references at all. So, with that lengthy and sort of off topic introduction, Eric, would you mind just introducing yourself?
[ERIC ELLMAN]
Sure. First, Dave thank you so much for having me. You forgot to mention the Knicks on that list, but we have to give a shout out to our Madison Square Garden friends on the hardwood floor. I, of course, am Eric Ellman, Senior Vice President for Public Policy & Legal Affairs, Dave, as you said on that kind introduction, at CDIA. And I have been at CDIA for coming up on 25 years.
[DAVE GETTINGS]
Wow, well we appreciate you taking the time to join us. I know you were wearing a bow tie when you got here and then you found out that it was only recorded by audio, but I will tell our listeners the bow tie was tied perfectly and when we get to Podcast 2.0 where we have video, we will make sure to invite you back. So, Eric, just give me a little introduction for our listeners of what exactly CDIA does and what is CDIA’s mission?
[ERIC ELLMAN]
Sure, of course, thank you, and again thanks for having me. CDIA, we are well over 100 years old. We spend a large portion of that time as a trade association just for credit bureaus and in the early 2000s we pivoted along with our members to recognize the fact that the consumer reporting industry, the consumer reporting ecosystem, is well beyond traditional credit bureaus and our members reflect that mission. We represent not just the nation’s credit bureaus but all manner of other consumer reporting agencies, tenant screening companies, employment screening companies. Our companies are involved in fraud prevention and analytics and identity management authentication verification. We have members that are resellers and do tri-merge credit reports. So, we are not just the association for the consumer reporting industry, we also tend to think of ourselves as the guardians of the consumer reporting ecosystem, which includes, of course, data furnishers and data users.
[DAVE GETTINGS]
Obviously, you represent a lot of companies in the space. What does CDIA do on a day-to-day or week-to-week basis to represent those entities?
[ERIC ELLMAN]
CDIA, we really have four core services that we provide to our members which also and yours benefit to the consumer reporting ecosystem like I mentioned. Government affairs, we work very hard at the federal, state, local and even the international level to promote, support and defend the interests of the consumer reporting ecosystem at all levels of government, administrative and legislative.
A second core area of service for us is education and training and we provide a lot of certification, education, and training to our members, to data users, to data furnishers and others.
A third core service that we’ll probably get into a little bit here is legal affairs and we support and defend our members in the courts. Again, primarily federal courts but in state court as well - preserving, and protecting, and promoting, and defending their interests before the judicial system.
And then last, but also certainly not least, is communications and public relations. And we have a very active cadence with bloggers, and reporters, and journalists across the country to again spread the good message of the value and benefit of the American consumer reporting system.
[DAVE GETTINGS]
So, you talk about the ecosystem a little bit. What does the split look like in terms of CDIA’s engagement with federal regulators vs. state regulators? And have you seen that pick up recently? Just in our practice and our experience, we’ve seen a lot of state regulators getting really aggressive in the last few years and I wonder if that sort of matched your experience.
[ERIC ELLMAN]
Yeah, we have a very active practice before the state government affairs system and we monitor several thousand state legislative bills a year in all 50 states that would attempt to regulate or overregulate our members in various fashions on a variety of issues like privacy, and data security, and fair credit reporting, and tenant screening, employment screening, all manner of those things. So, a lot of our work is in state government affairs as you well know, as we all know, Congress has a hard time passing legislation, they have a hard time agreeing on anything. So, for many years now and it’s not just in the consumer reporting space, it’s a lot of industries where state governments are attempting to legislate or regulate in places where they feel like the Feds are failing, and that applies also at the regulatory level as well. We have an active cadence with gubernatorial offices and attorneys general and other regulators, banking commissioners, and others, because as a lot of activity at the federal level has subsided, although not necessarily in the last 18 months or so, there’s a lot of activity going on at the state level - executive, administrative, legislative.
[DAVE GETTINGS]
Now, you mentioned in the last 18 months, did you see, under the Trump administration did you see more active state level regulation because of the perceived inactivity of the federal regulators, and have you seen states step back in the last 18 months or has that not occurred?
[ERIC ELLMAN]
During the Trump administration I think there was this misperception at the state level, primarily in the blue states, that as the cadence goes, “Washington has fallen down on the job.” And that’s not been true at all, in fact, as we saw from a number of the statistics that came out during, for example, the CFPB during the Trump administration, they had a fairly active practice of enforcement and supervision, etc. A lot of states particularly state attorneys general, particularly Democratic attorneys general had attempted to fill what they thought was a perceived void. Fast forward to the Biden administration in which we are in right now obviously and have been for a year and a half or so, it is clear that this new CFPB is very active, very insistent on change, and is making some, I think, incorrect and incendiary comments, and I think is also pushing the outer bounds of the authority that has been given to them. And these are criticisms not just of the consumer reporting industry from consumer reporting agencies but it’s a criticism that transcends our industry and a lot of other industries have been making similar concerns.
[DAVE GETTINGS]
Yeah, interesting. So, let’s talk about one area of state regulation specifically that I know CDIA’s been a little bit involved in and given the fact that this is FCRA Focus, one of the issues that our consumer reporting agency clients deal with is the lack of personal identifiers available in public records and what that often leads to in litigation is you have mismatches or nonmatches in a consumer report and then a consumer reporting agency gets a 1681e(B) claim for an allegedly inaccurate record and you have this push and pull of landlords wanting at least in a tenant screening space, for example, landlords wanting as many records or as broad a spectrum of records as possible to potentially catch individuals with a criminal background while at the same time you’ve got states that are limiting the identifiers and making it more difficult to match, and you’ve got this inherent tension there. What has CDIA done, or what have you seen in terms of state laws restricting personal identifiers and how has that sort of changed the landscape for consumer reporting agencies?
[ERIC ELLMAN]
This is a significant problem that we’ve noticed. There is a growing trend towards states trying to regulate the access to and use of public records in general. We’ve seen that in Texas with attempts to limit access to all public records, generally speaking, and motor vehicle records, in particular. We’ve seen that proposal similar in Washington State and in Colorado. Some of the bigger threats that we’ve got going on at the moment or have had going on are in Michigan and in California. And, in Michigan it’s taken us a lot of work to get to a place that I think is generally a happy medium although still more work still needs to be done. But about a year ago or so the Michigan court system issued some proclamations I suppose or orders, rules, that would take identifiers out of the Michigan court record system and that is big problem to try to line up one consumer to another and to line up a public record with the right consumer. As you know we have not just an obligation to get it right, but we also have a legal obligation to be right and part of that includes making sure that we are providing the right information about the right people and it’s a lot harder to do if we don’t have access to identifiers. So, in Michigan I think we are finally coming to a better place.
California, I feel like we are making good progress here. I don’t want to get too deep into the weeds, but last summer, last May, there was an intermediate appellate court decision out of the state California court system in the fourth appellate division in Riverside that essentially takes identifiers like DLNs and DOBs out of superior court records. And for companies, in particular, that are trying to conduct criminal background checks missing those identifiers makes it much more difficult to do the matching. As I understand it, in many cases background checks are a month at least being delayed and, in some cases, not being completed at all, and it’s a big problem, in particular, for companies that are required to do these background checks that are required by law, federal, or state or local, to conduct these background checks. The lack of identifiers falls particularly harsh on communities of color where there are in the particularly in the Latino community but also the African American and Asian communities where surnames, last names, have a much higher rate of commonality and typicality and it makes it harder to tell consumers apart in general and more particularly when there’s are a lot of commonality in various racial or ethnic groups like Latino, African American, and Asian, to make that matching. We want to get people into jobs and apartments as quickly as possible. Employers want to do the same. And the problems that we’ve got in California have prevented that from happening.
There’s a solution on the way. We, CDIA, we are supporting legislation along with some other colleagues - Senate Bill 1262, which thankfully passed a Senate committee a couple of weeks ago unanimously, earlier this week it passed the Senate unanimously 37-0 with three senators not voting, and now the bill goes to the Assembly. I think our work on the Assembly side will be a lot harder. We welcome all of the support that we can get from the nonprofit, the religious, the employment, the landlord communities because, I think, we have a bit of a rockier road ahead, but we are on the side of the good here; we are on the side of getting people into jobs quickly, getting people into apartments quickly, and if this bill passes I think we can make that happen.
[DAVE GETTINGS]
So, when you have conversations with regulators or legislatures, is the reaction of people that want to eliminate personal identifiers and records, is it just a reflexive that personal identifiers that the more you have the more dangerous it is in terms of privacy rights, in terms of data breaches? What’s the main rationale for those that are pushing to eliminate personal identifiers?
[ERIC ELLMAN]
It comes from a couple of different places. There are some that want to take out identifiers like a DLN or a DOB out of public records because they feel like these are sources of identity theft even though there’s been no evidence promoted that shows that public records are a source of identity theft at all. And then for others who are connected particularly in California with let’s call it the “second chances movement” or those kinds of places on the political spectrum they feel like shutting down access to DLNs or DOBs would help consumers get into jobs more quickly because you can’t run criminal background checks. What we’re seeing is the exact opposite in that people who are opposing Senate Bill 1262 in California they’re pointing out that they are trying to help communities of color reintegrate into society when what’s actually happening is the opposite in that like I mentioned before because of the typicality/commonality of surnames in some racial and ethnic groups that the exact opposite is happening. That the fact that we can’t get access to these identifiers, it’s having a disproportionately negative impact on communities of color.
I should point out, by the way, that we strongly support second chances. We often probably support second, and third, and fourth chances as well, and there are ways to handle that and we have supported Ban the Box legislation and things like that, but there’s a right way and a wrong way to reintegrate consumers into society to reintegrate people into society, this is the wrong way. We are willing to work with others to find the right way forward.
[DAVE GETTINGS]
Thanks, Eric. You mentioned a little bit about fair chance laws, and we’ll switch gears a little bit. I know CDIA recently, I believe, had a role in arguing a case in front of the Ninth Circuit in the Yim vs. City of Seattle case, which is a Fair Chance case. Can you tell me a little bit about what that case is about and what was CDIA’s role?
[ERIC ELLMAN]
Sure, Yim v. Seattle. Several years ago, the City of Seattle passed what amounts to really a ban on the use of criminal history information by landlords to do tenant screening. And the results of that ordinance haven been pretty dramatic. There’s been really compelling amicus brief that was filed by a landlord in downtown Seattle, GRE Downtowner is the brief and they show that after the passage of this fair chance ordinance that prohibits landlords’ ability to look at criminal history, there’s been a significant spike of crime in that building. Data showing increase calls to 911 from the building, additional security that they’ve had to hire, additional criminal activity in the building itself. So, that’s, I think, one of the direct results of that. The landlords have sued, among other things, claiming that this is a takings, that there’s due process violations as well, and CDIA has been supportive in amici at the district court level and at the Ninth Circuit level because we believe in part that this ordinance is preempted by the FCRA. We are strong and fierce advocates of and will defend at every turn legislation that we feel is preempted by the FCRA, so, we’ve got a brief on that as well before the Ninth Circuit. Oral argument was had about a week or two ago and it’s hard to say where the case goes, of course, but it’s clear that the three judge panel of the Ninth Circuit was grappling with the fact that this was a flat ban on all criminal history and there was no reasonable relationship available to landlords to look for things like crimes of arson or assault or things that would more directly or more reasonably relate to property damage or personal damage in an apartment building.
[DAVE GETTINGS]
Thanks, Eric. So, how common is Seattle’s ordinance across the country? Are you seeing more and more laws and regulations passed in cities and states restricting what landlords can and cannot use in tenant applications?
[ERIC ELLMAN]
Yeah, I think Seattle is probably more extreme than others in that it’s a flat ban on all criminal history, but we are seeing other cities like both of the Twin Cities, Minneapolis and St. Paul, that have put in limitations, significant limitations on the use of criminal history. The city of Ann Harbor, we’ve seen some other cities across California as well so I would say that this is a growing trend, but I also believe that the inability of a landlord to control who or who cannot live in his or her property that can pose a risk to the building or the people that live in the building that’s a problem. If you’re a landlord, you probably want to know if somebody has a history of arson or burglary but there are cities that are taking away that ability for a landlord to know that information. And there’s you can probably spend a whole podcast, Dave, on the litigation going on in the Twin Cities, but you’ve got two very different results from cities that are twin cities. You have the city of St. Paul where their ordinance was struck down and you have the city of Minneapolis just across the Mississippi River, of course, where that litigation is alive and well and that the landlords have lost a couple of procedural battles along the way even though their ordinances are both similar to each other and even though they’re obviously right across the river from each other and all in the same district and in the same circuit.
[DAVE GETTINGS]
Seems to us that over the next year or two a lot of tenant screeners are going to be seeing a real focus on fair chance lawsuits, fair housing lawsuits, we’ve already seen a few over the last couple years. It seems to be a really, really, hot issue for both plaintiff’s counsel and maybe more traditional consumer focused organizations. It seems like it’s a real focus of the plaintiff’s bar. Have you seen that from your members as well?
[ERIC ELLMAN]
Yeah, I think that particularly during the course of the pandemic, tenant screening companies have taken a lot of hits unfairly mostly in the media, in the courts, and other places. Our tenant screening members are providing a lawfully protected service to landlords to property managers that are intended to keep their building safe and to keep the people and the property in those buildings safe and secure, to try to keep rents as reasonable as possible recognizing that as we’ve seen across the board rent, like everything else is going up rather dramatically. So, the service that our members are providing are legally required to be accurate as you know, they are legally compliant, they’re very heavily regulated but yet there are a lot of people that have concerns about our tenant screening members, but our members are doing the best they can to provide the best service that they can to keep people safe as possible and doing so in a heavily regulated, legally protected, and legally compliant way.
[DAVE GETTINGS]
Moving away from tenant screeners and another one of the issues we’ve seen in maybe over the last year or so is the idea of a government-run credit bureau. Where did that idea come from and has CDIA been involved in that at all?
[ERIC ELLMAN]
It’s hard to say exactly where the well spring of this idea came from, but it’s certainly been pushed by a number of consumer groups over the last few years. The Biden campaign before Biden became President, it was one of their planks in their platform and it remains, I guess, still an issue, although it’s not really much an issue that a lot of people are talking about anymore and I think that’s positive. But why are there some people advocating for a government-run credit bureau? It’s hard for me exactly to say but if you read some of the arguments that the other side has been promoting there are criticisms that credit reports are inaccurate which is, of course, not true because we’ve shown statistically that credit reports are 95% to 98% accurate. There are concerns about the dispute resolution process which is, I think, unfounded as well because the dispute resolution process works very fast, very efficiently, and operates correctly to the benefit of consumers. So, I think accuracy and dispute criticisms which are ultimately, I think, empirically unfounded are some of the reasons that are driving a government-run credit bureau. And I think that there’s plenty of consumers who don’t necessarily want the government to have access to all of their financial information and their whole history of payment history. I’m not sure the consumers are really onboard with that whole government-run credit bureau idea. I mean look at all the consumers who hate the IRS, can you even imagine what consumers would feel like if the government now actually knew your payment history across the spectrum.
[DAVE GETTINGS]
Yeah, but think about it, if the government had a credit bureau and it became a member of CDIA, your budget would go up ridiculously. You’d have a billion-dollar contribution every year, right?
[ERIC ELLMAN]
You know, I would love that, Dave, but probably my wallet and my kid’s orthodontist would probably love that but it’s really not right for the country, it’s not right for consumers. And one other point as well is the privately run credit system that we have now, obviously we have three nationwide credit bureaus, we are required to comply with the FCRA. If the government had its own credit bureau, the FCRA would not apply to them. So, all of the consumer protections that consumers enjoy now go right out the window with a government-run credit bureau.
[DAVE GETTINGS]
You think a government-run credit bureau could turn disputes around in 30 days?
[ERIC ELLMAN]
You know, I’m not even sure they could turn disputes around in 30 years.
[DAVE GETTINGS]
Yeah, fair point. All right, so last question. How many wins do the Mets get this year, Eric?
[ERIC ELLMAN]
Oh my gosh. Well, I’m hoping for over 100 although they could still win the division without 100 but I’m hoping for the big 1-0-0.
[DAVE GETTINGS]
They just have to survive until they get back and then hopefully they’ll take off, right?
[ERIC ELLMAN]
That’s exactly right. Listen, you got to believe.
[DAVE GETTINGS]
Exactly.
[ERIC ELLMAN]
You got to believe.
[DAVE GETTINGS]
Eric, well we appreciate you taking the time today. We appreciate you coming and talking about CDIA and what you all see going on in the industry, obviously we’d love to have you back again in the future.
[ERIC ELLMAN]
Yes, you tell me the time and the place, and I’ll be there.
[DAVE GETTINGS]
Thanks, Eric.
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