Excellent article about protecting against identity theft via social networking sites

With the rapid proliferation of social networking sites such as FaceBook, MySpace and Twitter, the threat of identity thieves using these social networking sites to steal users' identities has greatly increased.  What with phishing, viruses and links that lead unsuspecting clickers to bad things, social networking sites are a treasure trove for identity thieves.  Employers need to be aware of the risk posed by social networking sites.

I read an excellent article today that provies 8 steps for employers to use to protect themselves and their employees.  The article can be found here - http://www.bloggernews.net/122397.

Report on recent FTC actions

National Mortgage Professional Magazine reported recently regarding the FTC's new leadership and the aggressive steps it is taking in the area of consumer protection.  Here's the article:

While Congress is debating the future of the proposed centralized federal enforcement agency for the financial services sector, one thing regarding enforcement has already been established: With or without the proposed Consumer Financial Protection Agency (CFPA), the Federal Trade Commission (FTC) is aggressively pursuing violations. The FTC’s new Director for the Bureau of Consumer Protection is David Vladeck, and in a little more than one month on the job, Vladeck’s actions have made some strong statements about consumer protection. In his first 45 days, there has been the creation of a task force to help repair consumer credit and prevent questionable lending practices, as well as multiple settlements and litigations filed, many in the financial services sector. This confirms his claim that the first priority at the agency will be dealing with the rise of consumer financial fraud as a result of the economic downturn.
On July 1, Director Vladeck used his first press conference as head of the Bureau of Consumer Protection to announce a nationwide, joint federal/state law enforcement initiative against scammers attempting to take advantage of consumers made vulnerable by the poor economy. Thus far, “Operation Short Change” includes 15 FTC cases, 44 law enforcement actions by the Department of Justice, and actions by at least 13 states and the District of Columbia. In its cases, the FTC alleged that defendants made false and unsubstantiated claims via the Internet, infomercials, telemarketing, robocalls or print advertisements to market get-rich-quick and other similar schemes. Several of these schemes targeted consumers with mortgage- and credit-related problems.
At the press conference, Director Vladeck noted that “thousands of people have been swindled out of millions of dollars by scammers who are exploiting the economic downturn.” The FTC also recently announced two major consumer protection enforcement actions: One involving a nationwide crackdown against scammers and the other resulting in a $3.7 million penalty.

In one of the actions, the FTC and Equifax subsidiary TALX Corporation, has agreed to settle charges that it violated federal law by failing to provide certain disclosures to users of their consumer reports and to entities that provide information for consumer reports. The proposed settlement requires TALX to pay the government a $350,000 civil penalty and bars future violations.
TALX sells income and employment history information about consumers to lenders, pre-employment screeners, and others for use in determining their eligibility for credit, employment or other purposes, which makes it a consumer reporting agency subject to the Fair Credit Reporting Act (FCRA), according to the FTC. The company allegedly violated the FCRA by not providing the “Notice to Users of Consumer Reports: Obligations of Users Under the FCRA,” which notifies users of consumer reports of their statutory obligations, including notifying individuals if the user takes adverse action against them based on their consumer report. The company also failed to provide the “Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA,” which notifies furnishers—entities that furnish information for consumer reports—of their obligations to provide accurate information, correct and update inaccurate information, and reinvestigate consumer disputes.
Also in July, the FTC and California Attorney General Jerry Brown, announced “Operation Loan Lies,” a coordinated national law enforcement effort to crack down on mortgage modification scams. The operation involves 189 actions by 25 federal and state agencies against defendants who deceptively marketed foreclosure rescue and mortgage modification services. The FTC actions, which affect consumers throughout the nation, were announced in southern California, where the scams originated.
“These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz stated in the release. “They promise to rescue homeowners in troubled financial waters, but after they take their money, they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company.”
The FTC announced four other lawsuits, bringing the number of mortgage foreclosure rescue and loan modification scam cases the Commission has brought to 14 since April. Twenty-three state attorneys general and other agencies are participating in the operation, taking action against 178 companies engaged in these types of deception.
To say Director Vladeck has hit the ground running is putting it lightly! The new director was named to the position after a handful of consumer watchdog groups called for FTC Chairman Leibowitz to appoint someone with “a track record as a genuine champion of consumer rights.” Prior to being named to the FTC post Vladeck was co-director of Georgetown Law Center's Institute for Public Representation, a program for civil liberties, open government and regulatory litigation. Prior to his time at Georgetown Law, he spent nearly 30 years with the Public Citizen Litigation Group, a national, non-profit consumer advocacy organization that represents consumer interests in Congress, the executive branch and the courts. Vladeck has argued a number of First Amendment and civil rights cases before the Supreme Court, and more than 60 cases before the Federal Courts of Appeal and State Courts of Last Resort.
Let these actions serve as notice to mortgage originators about being in compliance with Federal laws. If these early announcements are any indication, the FTC’s new Director of Consumer Protection Vladeck may be just what the consumer watchdogs were looking for.

Red Flag Rules to go into effect November 1

The Red Flag Rules are "scheduled" to go into effect on November 1.  However, the effective date has been postponed three or four times.  But those of you who are affected by the Red Flag Rules need to assume that it will go into effect this time.

A partial list of types of businesses that need to comply with the Red Flag Rules are the following:
• Doctors, dentists, and other health care providers;

• Accountants and lawyers;
• Utilities;
• Telecommunications companies;
• Debt collectors;
• Retailers; and
• Employee benefit plans sponsoring flexible spending account arrangements when the arrangement utilizes a debit card.

A good primer on what you need to do to comply can be found at http://wistechnology.com/articles/6563/. 

American Banking News has a good article with tips about how small businesses can better protect themselves from becoming victimized by identity theft.  The full article is at www.americanbankingnews.com/2009/09/26/identity-theft-protection-tips-for-the-digital-age/

1. Be Careful What You Throw Away
Identity thieves are skilled dumpster divers. If you or your employees throw away papers that include bank account numbers, social security numbers, and other information that can be used to perpetuate fraud, there’s a good chance that the data could end up in the hands of unscrupulous characters. Make it a firm policy to shred all waste paper that has any information that could possibly be used by people who might be looking to steal someone else’s identity.
If you only have a small quantity of this type of documentation, it will probably be feasible to handle shredding in-house, with shredders placed in strategic locations around your place of business. If your business generates a large quantity of documentation that contains protected information, it may be better for you to hire a document shredding company to take care of destroying throw away documents that may contain sensitive information.
2. Take Steps to Protect Data Stored on Company Computers
Verify that the virus protection and firewall software installed on your computer system remains current at all times. Make sure that you are using a quality virus protection program and set it up to run daily scans so that you can be as safe from computer viruses as possible. It’s also important to check for updates to your virus software and install them as soon as they become available.
It’s also a good idea to set up every desktop computer and laptop so that a password is required for login. This can help protect stored data in the event that the equipment is lost or stolen and ends up in the wrong hands. This is not a foolproof protection, of course, because skilled hackers can find their way around password protection in many cases. However, it’s certainly better than leaving computer equipment unprotected.
When your company upgrades computer equipment, it’s essential to dispose of your old equipment responsibly. Simply deleting files from your old hard drive is not sufficient to keep identity thieves from stealing your confidential data if the equipment is not properly disposed of. The only truly safe way to get rid of data from your old computer is to shred the hard drives. The same companies that provide document shredding services typically also offer hard drive recycling.

Grand jury indicts bank manager for identity theft

A federal grand jury has indicted Anita Fincher, a now former bank manager from Mobile, Alabama, for aggravated identity theft, bank fraud and theft by a bank employee. Fincher was able to steal more than $800,000 from her customers using a complex scheme of transactions, using transfers from all types of customers' accounts, including CDs, checking, saving, credit lines and money market accounts. Fincher transferred the funds to other people's accounts, even some held by her family members, before eventually accessing the funds. She apparently hoped to hide her crime using the convoluted transfers.

But it didn't work. She now faces a maximum sentence of 30 years behind bars.

Insurance claims clerk guilty of identity theft

Shanell Bowser of Baltimore, Maryland, a claims clerk for a medical insurance adjuster, has been sentenced to five years in prison for identity theft.  She was also ordered to pay more than $200,000 in restitution to her many victims. 

Bowser used her job to gain access to the names, Social Security numbers and other personal identifiers of her victims.  Bowser used this information to open over 125 fraudulent accounts and victimize at least 89 people over a three year period.  Bowser purchased clothes and electronics, withdrew cash from ATMs and even used the stolen identities to obtain phone service.

I personally think employers that collect the personal identifiers of their customers should be held to higher standard in protecting that information.  That includes stricter standards governing their hiring practices.  Whether that would have protected the 89 people victimized by Bowser, I don't know.  But I would think she could have been stopped sooner than the three years that she was able to perpetuate her crime.

There should also be more severe criminal penalties for employees that steal, use or sell personal identifying information collected through their employment.

Oregon Mortgage Broker Charged with Identity Theft

Recently, I have reported on identity thieves from all walks of life - elderly care workers, radio personalities, pharmacists, bank officers, etc.  Today's criminal is a mortgage broker.

The Oregon Attorney General Mortgage Fraud Task Force has indicted Julian JamesRuiz, III, a Salem, Oregon mortgage broker, on charges of identity theft, forgery, mortgage fraud and aggravated theft.  Ruiz is the owner and manager of American Home Modifications, a company that modifies loans.  Unfortunately, his current customers won't be able to get their loans modified and are urged to contact a HUD approved counselor to avoid foreclosure or defaulting on their loans.  To do so, consumers can call 800-SAFENET or go www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=OR

Ruiz faces a total of 17 counts of first degree aggravated theft, mortgage fraud, identity theft, aggravated identity theft, forgery in the first degree and criminal possession of a forged instrument in the first degree.

Facebook users beware!

Another identity theft scam has emerged that involves Facebook.  Last Thursday, a Madison, Wisconsin woman reported to the Madison police that someone had stolen her identity by hacking into her computer, accessing her financial records, changing her e-mail and even logging into her Facebook page. 

While the thief was apparently not able to directly access the victim's bank accounts, he or she did send a message to the victim's Facebook friends, claiming that the victim had been mugged in London and needed cash.  The message even gave an address and phone number to accomodate the transfer of funds. 

So, Facebook users, beware of this scam.

Congress may speed up effective date of credit card act

Its about time.  Wallet Pop is reporting that certain members of Congress have woken up and realized what I and many others have been reporting on for a while ... namely that the credit card companies are taking advantage of the gap in time from the passage of the credit card act to the date that such act becomes effective to up interest rates, lower credit limits and take other actions adverse to consumers while they can do it with impunity.

Now, according to Wallet Pop, some members of Congress may introduce a bill to accelerate the effective date of the credit card act from February 22, 2010 to the first of December 2009.  This would save consumers three months of additional hardship at the hands of the credit card companies.  If such a bill gets proposed (and assuming I know about it), I will keep you apprised so y'all can contact your congressman and urge his or her support for the bill.

Here's the link to the full article on Wallet Pop - http://www.walletpop.com/blog/2009/09/25/congress-may-accelerate-start-date-for-credit-card-act/.

Recent identity theft survey reveals interesting opinions by consumers at large

Approximately 8.4 million Americans reported being a victim of ID theft in 2007. In 2008, the number of reported identity theft victims increased to 10 million, an increase of 19 percent.

Nearly half the people interviewed in a recent National Foundation for Credit Counseling (NFCC) survey conducted by Harris Interactive felt more at risk for identity theft when making a purchase with a credit card when the credit card temporarily left their sight, for example, at a restaurant.


By contrast, the same study revealed that consumers are least fearful of falling victim to identity theft when their credit card does not leave their sight, for instance at a store. Only 21 percent of U.S. adults listed this as a concern, suggesting that consumers are comfortable as long as they can keep an eye on their card.

What the survey did not reveal is that a stolen credit card number and potential identity theft can happen when the credit card doesn't even leave your hand, much less your sight.  This can happen if there is a device attached to an ATM or other card reader that steals the information off the card when swiped.  These devices can be very small and hardly noticeable unless the consumer is paying close attention. 

So the survey, while probably accurate for what consumers think, reveals that consumer fears are likely misplaced.

Identity theft by suspected illegal immigrant

An Illinois man suspected of living in the United States illegally is also charged with identity theft.  Vincente Zaragoza is accused of using the Social Security number of another person to obtain employment at an Illinois business and also used the stolen identity to collect unemployment. 

Thanks to the stolen Social Security number, Zarazoga collected over $119,000 in four years of working.  The person whose SSN Zarazoga was using was denied public aid because it showed she was working when it was actually Zarazoga working. 

Zaratoga faces up to 15 years in prison, a $25,000 fine and possible deportation.

Identity thief ordered to pay $3.2 million in restitution

A New York identity thief was ordered to pay $3.2 million in restitution.  Yomi Jagunna will also serve 141 months in federal prison after pleading guilty to one count of conspiracy to commit identity theft.

Why so much for one mere count of identity theft, you might ask?  Because Jagunna had an account with a commercial database in the name of a collection agency that he then used to sell Social Security numbers to co-conspirators for $30 a piece.  Yep, just $30.  His co-conspirators then used the SSNs to make fraudulent withdrawals from the victims' bank accounts, netting no telling how much thanks to Jagunna.

Jagunna is one of eight charged in the identity theft conspiracy.  Six others have also pled guilty.  The last is awaiting trial.

Pharmacist pleads guilty to identity theft

Recently I have reported on a person who cared for the elderly but also stole their identities.  I have also reported on a employee who stole the identities of her employer and her employer's daughter.  I even reported on a radio personality who got caught stealing identities (among other things). 

The latest you ask - a pharmacist.

Patrick Slifka, a pharmacist at a Cresco, Iowa's Medicap Pharmacy, has pled guilty to aggravated identity theft as well as wire fraud. 

Basically, Slifka assumed the identity of a physician by using the physician's name and DEA number to submit fraudulent claims to Wellmark Blue Cross/Blue Shield for medications.  Slifka now faces a minimum of 2 years in prison, a maximum of 20 years, $250,000 in fines and up to three years of supervised probation.

Hope those meds were worth it

Could it be? Equifax allegedly stops selling credit reports for employee screening

According to John Ulzheimer at http://www.credit.com/, Equifax has chosen to cease selling credit reports to employers for pre-employment screening.  Apparently, the profit from selling this type of credit report was not worth the risk to Equifax.  There has been a lot of reporting about the trap that potential employees find themselves that starts with them becoming unemployed, leading to them getting behind on their bills, which hurt their credit scores and then, when they finally get an interview, they don't get the job because their potential employer doesn't like the looks of their credit report, which leads to further unemployment and further damage to the credit report. 

Here's John Ulzheimer's reporting on the subject -

Atlanta-based Equifax is no longer selling credit reports to employers for the purposes of pre-employment screening, according to Tim Klein, a company spokesperson who revealed the information in an interview with the Dallas Morning News. The credit reports sold by Equifax into the employment market, formerly known as "Persona", were used to determine employment eligibility. And while this is still perfectly legal under the Fair Credit Reporting Act, the company seems to have proactively decided that selling reports to employers wasn’t worth the trouble.


Long a public relations loser, the use of credit reports by employers has become even more controversial given the current economy and the added difficulty that poor credit causes a job seeker who is already having trouble finding a job. Employers who are filling positions where access to money and sensitive information are commonplace have traditionally reviewed credit reports as part of their pre-employment screening processes. The practice is important, as the number of internal data breaches has increased over the past decade. Weeding out an applicant with troubled credit is a responsible act by any such employer.

The trouble with the practice is that it can be unfair to some consumers who have found themselves thrown into credit difficulty through no fault of their own. Layoffs, divorce, uncovered medical expenses, business failures, and death in the earning family can all cause a consumer’s credit reports to become littered with negative information despite no lack of credit management responsibility. And some argue that using credit reports as a screening tool can be unfair to minorities, a claim that lacks any scientific support at this time.

Credit scores, a risk prediction tool used by most lenders and insurance companies, are not provided to employers by either of the two companies that are still selling credit reports for employment purposes, TransUnion and Experian. Credit scores are not designed to predict employee quality or employee performance, so their use for employment screening would be inappropriate. The topic of credit scores and employment continues to be confusing given the amount of incorrect coverage of the issue.

So the next time you’re looking for a job and the job entails you standing in front of a cash drawer, you can still assume that your credit report will be pulled as part of the screening process. It just won’t come from Equifax. And it still won’t have your credit score.

 One down, two to go.

I guess no one is safe from identity theft

Who's the next victim of identity theft ... President Obama?  As most of you probably know by now, Ben Bernanke, the Federal Reserve Chairman, has become a victim of identity theft.  The latest is that the identity thief responsible has pled guilty. 

Leonardo Darnell Zanders of Dolton, Illinois, entered a guilty plea after several witnesses had already testified in his trial, including his co-defendant Darrell Earl Price, who testified that Zanders had given him checks in the name of Anna and Ben Bernanke, which he then used as part of the overall identity theft scheme.

The Virginia Federal Court is scheduled to sentence Zanders on December 18.

Better watch who you hire ... it just might be an ID thief

A Narrows, Virginia woman has been sentenced to one year and one day in jail for the theft of her employer's identity and that of his daughter.  Jill Abel Dunford admitted to opening credit cards using the identities of her employer and her employer's daughter, in the process racking up over $26,000 in charges.

Dunford's employment, which was not disclosed, allowed her access to the name, social security number and other personal identifiers of her employer and her employer's daughter.  With this information, it was relatively easy for Dunford to repeatedly open fraudulent credit cards, using them to make department store purchases and ATM withdrawals. 

Dunford was ordered to pay $26,377 in restitution and a special assessment of $300.  I hope Dunford's victims get every cent of that.

Pretty good summary of FCRA's seven year reporting rule

Here's a pretty good summary of the seven year reporting rule I found at - http://www.live-pr.com/en/fcra-seven-year-credit-reporting-period-r1048325078.htm.  Beware of the information in the last paragraph, which is pretty much completely wrong.  I'll explain after the quote:

A good credit report increases your financial credibility and makes you eligible for loan approvals. But at times there are some mistakes in the credit report which hampers your financial status in a big way.

Sometimes you can become a victim for the misleading information in your credit report. In such cases there is a stipulated time for the reporting period, which is generally seven years. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place. But there are a few exceptions to this rule too.

Any delinquent account placed for collection both internally or by reference to a third-party debt collector, whichever is earlier-charged to profit and loss or subjected to any similar action. The seven-year period is calculated from the date of the delinquency that occurred immediately before the collection activity. For example, assume that your payments on a loan were late in January, but that you caught up in February. You were late again in May, but caught up in July. You were again late in September, but did not catch up before the account was turned over to a collection agency in December. You made no more payments on the account and it is charged to profit and loss in July of the following year.

Under the FCRA, each of the January and May late payments can be reported for seven years. The collection activity and the charge to profit and loss can be reported for seven years from the date of the September payment, which was the delinquency that occurred immediately before those activities.

However there are exceptions to this seven years reporting act. There is no time limit in cases of bankruptcy, criminal conviction, student loan, information on a lawsuit or unpaid judgment and in case of credit information in response to a job application.

As I said above, the information in the last paragraph is pretty much completely wrong.  There is a time limit for bankruptcies.  They can stay on a credit report for 10 years from the date of entry of the order for relief or the date of adjudication.  See 15 U.S.C. 1681c(a)(1). 

The author was correct that criminal convictions have no time limit on their inclusion on a credit report (see 15 U.S.C. 1681c(a)(5)), but civil suits (i.e. lawsuits), civil judgments and records of arrests (i.e. arrests with no conviction) can only stay on your report for the longer of seven years or until the governing statute of limitations expires.  See 15 U.S.C. 1681c(a)(2). 

Student loans are given no special treatment under the FCRA and thus fall under the usual 7 year limitiation on reporting found in 15 U.S.C. 1681c(a)(5).  There may be other laws that I am not aware of that lengthen their reporting period since that's typically money owed to the government and the government tends to have special rules that the rest of us don't get to benefit from. 

Finally, credit reports used in job applications are only exempted from the reporting time limits IF the job being applied for has an annual salary that either exceeds, or is reasonably expected to exceed, $75,000.  See 15 U.S.C. 1681c(b)(3).

Not sure why the author got the first part right but totally flubbed the last paragraph.  I hope I set the record straight.

Illegal practices do pay - LifeLock wins award for fast growth

Earlier this week, LifeLock won an "ACE" award for being the fastest growing Arizona company.  "ACE" stands for Arizona Corporate Excellence.  LifeLock was selected based upon its actual dollar revenue growth as well as percentage revenue growth.  The revenue growth for the past two years was used to justify awarding LifeLock with the ACE Award.

Guess there are a a lot of duped consumers in Arizona!

Credit Reports, not Credit Scores, Affect Employment Chances

As I have reported previously, potential employers have a permissible purpose to obtain your credit report with consumer consent.  According to Pamela Yip with the Dallas Morning News, the credit bureaus do not get your credit score with a credit report obtained for employment purposes.  Pamela reports the following as the positions of each of the credit bureaus:

• "The key point to consider here is that credit scores are not predictive of employment performance," said Steven R. Katz, director of consumer brand at TransUnion. "They are designed to predict the likelihood of such things as an individual defaulting on a loan or filing for bankruptcy."

• "We don't provide credit scores with an employment report because they're not extending you a loan," said Michele Boddavice, president of product management and development at Experian Credit Services. "There's no relevancy there to your credit score and an employment decision."

• Equifax doesn't "provide credit scores or files [credit reports] for pre-employment screenings," said spokesman Tim Klein.

Caregiver for Elderly Guilty of Identity Theft

Karen Priscilla Jones, a Lynchburg, Virginia woman, has been sentenced to 34 months in prison after pleading guilty to stealing the identities of the eldery persons for which she cared.  In fact, she pled guilty to eight counts of identity theft.

According to prosecutors, Jones used the identities of nine people she took care of to open credit card accounts and department store accounts and to obtain cell phones and cable TV.  Jones was also ordered to pay nearly $10,000 in restitution.

Fake accountant, true identity thief, sentenced to ten years

A man who faked being an accountant to steal his "customers" identities has been sentenced to ten years.  Denver, Colorado's Terry Paul Dorman pled guilty to theft, identity theft, tax evasion and securities fraud.

Dorman faked being an accountant and his clients' personal information off their own tax returns to obtain fraudulently opened lines of credit and enter into a leasing agreement.  He also convinced some of his clients as well as others to invest in a bogus restaurant.

Informative article about the problems with credit scores

I often tell people that ask (and even some that don't ask) that nobody can explain how a credit score is calculated, not even the people that work for the credit bureaus.  So many things affect your score - your payment history, how much you pay, your debt to income ratio, your debt to credit limit ratio, etc.  So many factors affect your score that it is virtually impossible to determine what exactly causes your score to be what it is.

Dale Quinn with the Arizona Daily Star delved into the calculation of credit scores.  Here's what he found:

Credit scores. Three-digit numbers that can cost consumers thousands of dollars every year.


The score influences interest rates for mortgages and car loans. It affects insurance premiums. Employers and landlords can even use the numbers to decide whether a person will land a job or secure housing.

And, consumer advocates say, the reports are often loaded with errors and arbitrary penalties that cost people money.

Kenneth Benner, a consumer advocate and retired broadcaster living in Marana, said the problem can be aggravated for those who are victims of identity theft, who can spend years trying to repair their credit scores. In the meantime, they pay the penalty with higher interest and insurance rates.

Benner has received grant money and is working on a research project examining how credit scores are determined. He is also a board member of the Arizona Consumer Council.

The difficulty of getting mistakes on credit reports fixed and the seemingly arbitrary method of reducing scores puts consumers at a disadvantage, he said.

Also, the scores from the three main credit bureaus — Equifax, TransUnion and Experian — can vary with little explanation to the consumer as to why. And that can make a difference depending on which score a lender looks at, Benner said.

For their part, the credit bureaus urge consumers to keep track of what's on their credit reports.

"We encourage consumers to review their credit reports regularly and to contact us if they see anything that doesn't look right," said Steven Katz, a spokesman for TransUnion. "Consumers are entitled to one free credit-report disclosure every 12 months from each of the three national credit-reporting companies and we encourage them to obtain these."

The problem with that, said Ed Mierzwinski, a consumer program director with the U.S. Public Interest Research Group, is that the credit report a consumer sees is not as detailed as one viewed by a lender.

Those reports can include information from individuals with similar names, and that can drive down a consumer's credit score, he said.

There's also a lack of transparency in how the scores are calculated, Mierzwinski said. While the system reduces human bias, it also lacks discretion a person would exhibit when examining the report.

"Credit scoring is based on credit reports, and credit reports are often full of mistakes," Mierzwinski said.

A January report by the National Consumer Law Center said as many one in four credit reports have serious errors.

And Mierzwinski said that number could be even higher.

He said the use of credit scores by employers and landlords should be banned. If someone defaults on a credit card, it doesn't necessarily mean he's going to crash his car, Mierzwinski said.

Melissa Stoloff, a spokeswoman in Arizona for the Allstate insurance company, said the company does use the scores to determine its customers' premiums and that research has shown individuals with high credit scores are a lower risk to insure.

"In rating and underwriting insurance we use several factors with credit being one of them," she said. "It's something that allows us to reward customers that are less likely to incur a loss with lower premiums."

Conversely, consumers with low credit scores will pay higher premiums, she said. Allstate has a contract with TransUnion and gets its credit scores from that bureau, she said.

Benner also pointed out that a consumer who is shopping for a good loan would be punished with a lower credit score because applying for credit reduces the number.

Essentially, Benner said, bureaus can see that as an increasing risk factor. The assertion was backed up by the Web site MyFico.com. But it did say searching for a good rate won't have too much impact on a credit score.

"Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student-loan lenders within a short period of time," the Web site says.

Still, Benner said, even small drops in credit scores can mean hundreds of dollars in extra payments.

The full article can be found here - http://www.azstarnet.com/business/309735.

Link to U.S. PIRG report

In case you didn't see it in the comment she left yesterday, Jane Regan, Communications Director of U.S. Pirg, provided the link to the report that I reference in the top left corner of the blog.

The report is entitled "Mistakes Do Happen: A Look at Errors in Consumer Credit Reports".  Here's the link to the report - www.bit.ly/BDhee

Happy reading.

New FCRA case - McDonald v. Equifax

It is quite difficult to lose an FCRA case via summary judgment.  As long as you can show an inaccuracy appeared on your credit report, you should be able to survive summary judgment since, once an inaccuracy is shown, the question becomes whether or not the credit bureau's procedures and/or actions were reasonable, which is almost always a jury question.  Thus, as long as there is an inaccuracy, losing via summary judgment is difficult to do.  But this pro se plaintiff was able to lose via summary judgment not once but three times.  This is yet another example of why consumers need to hire attorneys experienced in FCRA litigation to represent them and never, ever, should consumers represent themselves.

In the case styled Michael L. McDonald v. Equifax, Experian and Trans Union pending in the United States District Court for the Northern District of Texas, Dallas Division, McDonald filed claims against all three national credit bureaus for violations of unspecified sections of the Fair Credit Reporting Act.  While he did not identify the statutes in his Complaint, his case appeared to claim garden variety 1681e(b) claims for failing to follow reasonable procedures to assure the maximum possible accuracy of the credit reports regarding McDonald and 1681i for failing to conduct reasonable investigations of the disputed information.

According to the opinion penned by U.S. District Judge Jane J. Boyle, McDonald learned of various inaccuracies on his Equifax credit report when he was denied a loan.  He then obtained copies of his credit reports from Experian and Trans Union and learned of additional errors appearing on his credit reports published by those companies.  He lodged several disputes regarding the inaccurate credit information with all three credit bureaus.  However, the CRAs failed to correct the errors.  McDonald then filed litigation against Equifax, Experian and Trans Union.

Apparently, McDonald failed to correctly serve Experian with the Complaint.  The opinion does not indicate how McDonald messed up service of process, as Experian had already been dismissed from the case prior to the motions before the Court.  Trans Union and Equifax both filed motions for summary judgment, arguing that McDonald failed to present any evidence of any inaccuracies on his credit report.

All McDonald had to do was come up with some type of sworn testimony or documentation that his credit reports contained inaccuracies.  It could have been as simple as an affidavit from McDonald himself swearing that the reports contained inaccurate information.  Or he could have produced some type of documentation that demonstrated the inaccurate nature of the information.  Any competent attorney could have easily beaten the credit bureaus' motion for summary judgment in this case.  However, lawyerless McDonald failed to provide any documentation or any sworn testimony.  As a result, Judge Boyle was correct in dismissing McDonald's claims.

One Man Wrecking Crew Arrested

An investment advisor described by a federal agent as a "one man wrecking crew" was arrested for identity theft and fraud.  Here's the full story from WFAA.com:

FBI agents in North Texas Friday arrested a man who they say was not only duping investors out of their life savings — he was tapping their bank accounts as well.

Cliff Robertson was the subject of a News 8 investigation last spring. One federal agent called him a one-man wrecking crew.

His alleged victims describe him in much less flattering terms.

News 8 first exposed Robertson's questionable activities in story last April. Federal officials then dug deeper and now he is behind bars.

Robertson's regular Saturday investment talk show attracted hundreds of trusting clients from all over North Texas. He billed himself as a Congressional Businessman of the Year, inviting his listeners into a world of financial freedom.

William Hunt of Lake Whitney is one of Robertson's alleged victims. "We took Cliff's word for it and trusted this guy," he said.

But Robertson destroyed that trust by allegedly duping Hunt out of his life savings on real estate deals; by stealing his credit cards; and by running up huge debts on personal expenses.

Others who say they were deceived by Robertson formed a support group meeting regularly to commiserate.

"We've lost our life savings," said Christy Vickery. "He took everything; he took everything we had — every cent, every penny."

"My life has been ruined because of this — totally destroyed," said former investor Ken Eakin.
At first, Robertson told News 8 he was eager to tell his side of the story. After weeks of putting us off, we caught up with him.

"There's a lot more to it," Robertson said. But he declined to answer questions about whether he took out lines of credit in the names of his investors and abused their credit for his personal gain.

Robertson, 43, was arrested Friday morning and has been charged with bank fraud and identity theft.

If convicted, he could serve up to 32 years in federal prison.

 Amazing what people will do to their fellow man for their own petty gain.

Identity theft guilty plea in New York Federal Court

Georgia F. Bowen, a native of Jamaica who has lived in both Buffalo and Kenmore, NY, pled guilty to aggravated identity theft after stealing another person's identity and using it and the victim's Social Security number to obtain Medicaid and utility services during over a ten year period from 1998 to 2009.

Bowen faces a two year mandatory sentence.  The hearing on her sentence is scheduled for January 13, 2010 before U.S. District Judge William M. Skretny.

Identity theft not limited to the United States

According to a recent study conducted by research firm YouGov, identity theft affects one in eight adults in the United Kingdom.  Bloody hell (said in my best English accent).

Specifically, one in eight adults in the U.K. have been a victim of online fraud or identity theft.  I know that I have purportedly won the U.K. lottery dozens of times (at least that's what my inbox tells me just about every morning) so think how much worse it must be if you are actually from the U.K.?!

YouGov's poll included approximately 2100 adults in the U.K.   Most of the losses were credited to increasingly sophisticated attack methods combined with continued ignorance of consumers in their online habits.  According to researchers, many online users remain in the dark on how to spot fraudulent sites or protect their data from online theft.

Story about an almost successful identity theft

Joseph P. Kahn, a writer for the Boston Globe, tells his tale about his near miss with a potentially disastrous theft of his identity.  The whole article is an entertaining and informative read.  Check it out here - http://www.boston.com/business/personalfinance/articles/2009/09/19/identity_theft_hits_home/

My favorite quote from his article is:

Our branch bank swears it would never authorize an address change without a photo ID and signature. I hope not. It takes a photo ID for me to board a commercial airliner. Apparently my bank accounts can fly across the country on a pseudonymous phone call made from an unlisted number. Who knew?

Joseph, if the theft of your identity ends up coming to fruition despite your best efforts to stop it, please feel free to contact me for advice or help.  But if you do become a Dodgers fan, I'm afraid even I won't be able to help you.

More identity theft arrests

Here's an article from http://www.morganhilltimes.com/ about 3 perps arrested for identity theft.  Pretty funny how the third one got caught.

While police booked two people on suspicion of identity theft, a third man associated with the suspects showed up at the police station with drugs in his possession and driving a fraudulently rented vehicle, police said.

The investigation began with a call for a possible DUI, when Morgan Hill Cpl. Ray Ramos was dispatched to the area of Home Depot on East Dunne Avenue about 1:45 p.m. Monday. The suspected impaired driver was last seen entering U.S. 101 off East Dunne, going south on the freeway in a Chevrolet Camaro, according to Detective Ken Howard.

Ramos entered the freeway to look for the suspect, and caught up with the Camaro at U.S. 101 and Leavesley Road in Gilroy, where he made a traffic stop.

The driver, Charles Allen, 24 of Richmond, did not have a driver's license, police said. The passenger, Arena Adanandus, 21 of San Pablo, had a suspended license and neither occupant had documentation of ownership of the Camaro.

Arrested on suspicion of driving on a suspended license was Allen, and Ramos brought both subjects back to the Morgan Hill police station on Vineyard Boulevard.

While impounding the Camaro, police discovered new merchandise from Home Depot inside the car, with no receipts accompanying the merchandise, Howard said. Ramos called Home Depot to determine if there had been a recent theft, and a store employee reported that Adanandus had purchased the items, which included two $400 gift cards, using a customer's account number out of Colorado.

Further investigation revealed that Adanandus had fraudulently added her name as a second account holder on the Colorado customer's account, without the customer's knowledge, police said. She is suspected of charging a total of about $3,400 worth of merchandise to the account.

Plus, the Camaro in which the pair were traveling had been rented with a stolen credit card from a rental company at the Oakland Airport Sept. 5, according to Howard. The rental was made using credit card information stolen from a New York resident.

Adanandus was then arrested on suspicion of identity theft and other charges, and police found that she was on probation for a prior theft and charges including burglary, identity theft, unauthorized use of a credit card, unlawfully acquiring credit card information, and possession of stolen property.

Meanwhile, a third party, Aaron Fields, 22 of Richmond, came to the police station to meet Allen and Adanandus while they were being booked. While talking with police, Fields was found to be in possession of a controlled substance, and he had driven to the station in a Ford Fusion he had rented with credit card information stolen from a third unsuspecting victim, Howard said.

All three suspects were arrested and booked into Santa Clara County Jail on suspicion of identity theft, fraud, fraudulent use of credit cards, fraudulent rental of a vehicle, and conspiracy to commit theft. Fields was also booked on suspicion of possession of a controlled substance.

Closed credit cards - a sign of identity theft?

The following was posted on http://www.creditfyi.com/, which has some connection to http://www.freescore.com/.  I personally don't think its correct and I'll tell you why below the quote.

There can be any number of reasons why a credit card company closes a person's account.

With pending credit card reform likely to affect their bottom lines in 2010, card companies are trying to reduce risk and maintain their profit margins by closing accounts, among other things. However, if consumers see their accounts being closed even though they've paid off their debts, it could be a sign of identity theft.

In a recent blog post, personal finance columnist Liz Pulliam Weston noted that sudden closures of credit card accounts may indicate that a person has been the victim of identity theft. If faced with this situation, Pulliam Weston suggested consumers make a quick check of their credit report.

"If you discover credit accounts or collections that aren't yours, you'll need to file a police report and dispute the errors with the credit bureaus," she said.

After doing so, consumers should put a fraud alert on their credit reports and should also consider placing a credit freeze on their card accounts.

According to the Federal Trade Commission's 2006 Identity Theft Survey Report, 3.7 percent of respondents indicated they were the victim of identity theft, which translates to roughly 8.3 million American adults.

I do not believe that closed accounts are any real indication of identity theft.  First, the use of your existing accounts to make fraudulent charges is not identity theft, its account takeover which is similar, but very different. 

Identity theft occurs when a criminal uses a victim's name, SSN or other personal identifiers to open a new account in the victim's name.  This is a completely new account (credit card, mortgage, car loan, etc.) that the victim knows nothing about until the bills go unpaid and the duped creditor comes looking for the victim, rather than the identity thief, to pay.

Account takeover, on the other hand, occurs when a criminal somehow gains access to the victim's legitimately opened account and uses it to make fraudulent charges.  This is much more common and is commonly confused with identity theft.  For example, if someone uses your credit card in some far off place to make fraudulent charges, this is an account takeover.  The credit card is legitimate, the charges are not.  In identity theft, neither the credit card nor the charges are legitimate.

Most identity theft criminal statutes make both identity theft and account takeover a crime.

But even putting aside the fact that identity theft and account takeover are two separate animals, closed paid in full accounts are still no indication to me of identity theft.  Who is closing them?  Not the identity thief, they want them open to continue buying cool stuff on someone else's dime.  The credit card company is not going to close the credit card, absent a dispute of fraud charges, because they are getting paid and, as long as they get paid, they aren't too worried about whether the charges are legit.  And if the victim reports the fraudulent charges, then the victim already suspects identity theft and/or account takeover, so the fact that the account ends up closed after the fraud dispute does not indicate anything new to the victim.

The cynic in me thinks their advice to "check your credit report" if an account gets closed is just a ploy to generate more revenue for their affiliate http://www.freescore.com/.  But maybe I just don't see the real reason why a suddenly closed, paid account is an indication of identity theft.  Can any of the dozen or so people that actually read my blogly musings explain why a closed paid account is an indication of identity theft?

Illegal immigrant's identity theft conviction reversed

The Minnesota Court of Appeals recently reversed the conviction for identity theft and forgery of Iris Janeth Maldonado-Arr-eaga, who was rounded up along with 48 others as part of an immigration raid in Willmar, Minnesota in April 2007.

The conviction was reversed because the prosecution introduced into evidence biological information that should have been suppressed pursuant to the U.S. Constitution.  Other convictions from the same raid (and maybe others) should also have been reversed but the illegal immigrants were deported long before they could perfect an appeal.

I know from my experience investigating personal injury cases (particularly involving injured farm workers) that the use of stolen and/or purchased Social Security numbers is rampant among illegal immigrants.  They apparently do not give it a second thought.  That is why there are so many identity theft convictions that come out of INS raids, such as the one in Mississippi last year.

Cousins nabbed trying to rip off Wal-Mart in identity theft scam

Cousins tried to rip off Wal-Mart by trying to pass forged checks in two different Wal-Marts.  Both sisters were arrested for identity theft related charges.

Kelly Danyel Holmes of Hercules, California, attempted to use a forged check at the Wal-Mart in Anderson, California.  Alas for Ms. Holmes, the forgery didn't fly.  Wal-Mart security matched Holmes to the description of a suspected forged check passer from the Wal-Mart store in Medford, Oregon.  Wal-Mart security then alerted the Anderson Police Department.

Holmes then gave false identification to the Anderson police officer who arrived to investigate, prompting her immediate arrest.  Items found during a search of Holmes' purse linked her to identity theft, burglaries and forgeries in seven different jurisdictions of California and Oregon.

Interestingly, Holmes' cousin Brenda Hackett was caught at another Wal-Mart store received the same type alert from the Medford Wal-Mart.  Anderson police suspect that the two cousins were traveling together committing the same type crimes.  How's that for family fun?!

Former Chicago Transit Authority employee sentenced for identity theft

Chicago's Miranda Smith was sentenced to four years in prison on September 16, 2009, after pleading guilty to aggravated identity theft.  Smith's job at the Chicago Transit Authority involved taking calls and credit card information to assist customers needing to replenish their CTA fare cards.  With this access, Smith stole the credit card information of thirteen CTA customers and used their credit card information to make purchases from Chicago area department stores. 

Smith was caught when one of her victims reported fraudulent charges on a credit card that had been used to purchase CTA fares.  Fortunately, Smith only had access to credit card numbers of the customers she personally dealt with, rather than the entire customer database which would have allowed for much greater damage.

While Smith was charged with identity theft, the actual crime she committed was account takeover, since she took over the use of an existing account instead of opening an entirely new account.  Both crimes typically fall under the statutes outlawing identity theft but the difference can be important, especially since credit card companies are good about reversing fraudulent charges in an account takeover situation but are typically horrible about removing fraudulently opened accounts from victims' credit reports.

Potential new consumer protection legislation being pushed

Robert Rizzuto with the Post-Journal reports on new legislation being pushed to strengthen punishment for identity thieves and provide more consumer protection.

Here's a quote from the article:

With a reported 25 percent increase in reported cases of identity theft in 2008, U.S. Sen. Charles Schumer is pushing legislation intended to increase the criminal penalties for offenders and take action to protect consumers.


The Personal Data Privacy and Security Act, sponsored by Sen. Patrick Leahy, D-Vt., would address the fundamental ways that information gets into the hands of evildoers and penalize companies who are lax in notifying people that their information has been compromised.

Schumer relayed the story of Albert Gonzalez, a 28-year-old former government informant who recently pleaded guilty to identity theft charges after being accused of stealing millions of credit and debit card numbers from national retailers.

At the time of his arrest, authorities reported that he was driving around Miami with a laptop computer looking for open networks at retail stores to hack into. He then stole and sold the numbers which were used for various fraudulent transactions around the world.

In addition to the charges he plead in the New England area, additional charges are pending in a number of other states.

"Right now, there is a patchwork of local, state and federal laws dealing with identity theft but it isn't adequate," Schumer said.

"This bill would provide comprehensive protection for consumers and stiffer penalties for offenders. Some of these people are stealing upwards of a million dollars and getting a year in prison, turning around and doing it again because its lucrative."

The rest of the article can be found at http://post-journal.com/page/content.detail/id/540081.html?nav=5018. 

Senator Schumer, if you want companies to comply with whatever law you help get passed, then you'd better include private enforcement (i.e. a right for private individuals to sue non-complying companies whose violations cause them damage).  Otherwise, the law will be useless and better off not passed, since its passage will likely preempt state laws that do provide for private enforcement.

LifeLock hires new Chief Marketing Officer

LifeLock, the scam of a company, has hired Marvin Davis as its new Chief Marketing Officer.  Davis is the former Vice President of Verizon Wireless.  That's fitting.  I've sued Verizon a couple of times in identity theft cases.  Verizon has this strange, baseless notion that it need not comply with 15 U.S.C. 1681s-2(b)'s duty to reasonably investigate disputes lodged by a consumer with a credit bureau regarding a Verizon account if the consumer previously did not provide something to Verizon that Verizon requested.

In my case, my client was the victim of a fraud account opened by Verizon.  The identity thief used my client's name and SSN to apply for a phone.  Verizon pulled my client's credit report but did not bother to actually look at it (according to sworn testimony).  If it had, Verizon should have noticed that the birth date given by the perp was completely wrong and that my client lived in North Carolina, not Illinois where the account was being opened.  Alas, less than 10 seconds after the application was submitted, the perp had his shiny new fraud account.

My client learned of the fraud when, of course, the identity thief did not pay the $1000 or so in charges racked up on the cell phone.  Verizon then was able to look at my client's credit report, realize he was stationed in North Carolina, and start trying to collect from him there.  My client was in the military and set to be deployed to Afghanistan a few days after he first learned of the fraud account. 

When he called Verizon to dispute the account, Verizon requested copies of his SSN card, driver's license, and a police report.  My client provided the SSN card and driver's license but could not provide a police report.  His local North Carolina police would not take a report, since the crime occurred in Illinois.  And the Peoria, Illinois police would only take a report in person which, being on the way to war, my client was not able to do.  My client told Verizon all this and even provided a statement from his superior officer that he was in North Carolina and never in Illinois where the account was opened.  Verizon refused to listen and took the stance of "no police report, no correction".

After repeated phone calls to Verizon from Afghanistan (and even being hung up on once by a rude Verizon employee), my client disputed the fraud account to the three credit bureaus.  Each of these bureaus relayed his disputes to Verizon, which triggered Verizon's duty to investigate pursuant to 1681s-2(b).  Keep in mind that this duty to investigate is triggered even if my client had never contacted Verizon directly.  What did Verizon do in response to the credit bureau disputes?  Nothing.  Nada.  Zip.  Verizon claimed that it did not have to investigate because my client had never provided a police report which he was not physically able to do (short of holding a gun to a cop and forcing him to do a report) and, of course, is not even required by the FCRA.  The law is clear.  Verizon had a duty to investigate.

Three credit bureau disputes later and still no investigation or correction.  Finally, after being denied a home loan due to the Verizon fraud account on his credit report, my client found me and we filed suit.  The lawsuit triggered something that nothing else had ... removal of the fraud account.  And a confidential settlement approximately a year later.

Based upon the above, I am sure Marvin Davis will fit right in with LifeLock's shenanigans.

Police nab former Lone Star Bank loan officer for identity theft

Emma Vigil, a former Lone Star National Bank loan officer, was arrested at her McAllen, Texas home and charged with one count of aggravated identity theft and five counts of bank fraud.  Vigil allegedly made several fraudulent debit transactions from May 2005 to September 2008 from high balance, high traffic accounts, apparently hoping the fraudulent transactions would not be noticed.

Vigil also used her customer's personal identifiers to secure funding for one of the fraudulent loans and fabricated applicants' names and information on other loans.  Due to her criminal actions, her victims and Lone Star National Bank are out over $600,000.

Another guilty plea from an identity thief

While it is still the most under prosecuted crime in the nation, I do see that this crime is prosecuted thanks to trying to report the news on this blog.  Here's yet another guilty plea from an identity thief.

United States Magistrate Judge Henry Pittman in Manhattan received a guilty plea from Kenneth Wiltshire, who pled guilty to mail fraud and aggravated identity theft.  Interestingly, Wiltshire is the brother of a former employee of the Federal Reserve Bank of New York.  Prosecutors claim Wiltshire used identities stolen from the New York Fed to obtain over $900,000 in fraudulent loans, primarily used to purchase boats.

Wiltshire's brother, Curtis L. Wiltshire, was also charged.  He was fired from the New York Fed in February.

Kenneth Wiltshire faces between 57 months to 65 months in prison.  Curtis Wiltshire maintains his innocence.

Identity thief gets 15 years

Adam Lynn with The News Tribune reports the following:

Convicted identity thief Larry Alan Hayes asked a judge for a second chance.


What Hayes really wanted was an eighth one, and Pierce County Superior Court pro-tem Judge Eric Schmidt wasn’t inclined to give it to him.

Instead, Schmidt handed Hayes an exceptional sentence of 15 years in prison for his role in an identity-theft ring that committed crimes in three states before authorities broke it up in 2007.

“Society needs to be protected from you,” Schmidt told Hayes on Friday before announcing the sentence.

Deputy prosecutor Bertha Fitzer argued that Hayes – who had seven felony convictions on his record before his latest troubles – helped to lead the enterprise, which she described as “vast and sophisticated.”

She asked for a sentence of at least 17 years, 10 months in prison.

A jury in June convicted the 41-year-old man of leading organized crime, six counts of identity theft, six counts of possession of stolen property and two counts of possessing a stolen vehicle, according to court records.

Authorities contended Hayes helped orchestrate the theft of 800 credit card receipts from a storage unit rented by a hair salon chain. He and others then used some of those receipts to make fake credit cards they used to buy or rent merchandise in Washington, Idaho and Oregon.

Prosecutors wrote in charging papers that Hayes had a taste for expensive vehicles, including luxury SUVs and high-end motorcycles. Police found a 2007 Hummer 3, a 2007 Chevrolet Tahoe and parts from a stolen Harley-Davidson motorcycle when they raided Hayes’ Gig Harbor home after his arrest.

Hayes’ attorney, Clayton Longacre, argued for a sentence of nine years, which would have been at the low end of the standard sentencing range. Longacre said his client’s addiction to drugs drove him to commit crimes and that Hayes is a good man when sober.

“This is a man who has a future if he can stay off drugs,” Longacre said.

Hayes’ brother and mother also testified on his behalf.

His brother, James, said the defendant is not a monster and likely could change his life with drug treatment and intense supervision.

“I know with help a person can change,” said James Hayes, who testified he had spent time in prison himself before turning his life around.

Larry Hayes then asked Schmidt for “a second chance.”

“I am no angel,” Hayes said. “I used drugs, and I committed crimes to feed my disease.”

Fitzer countered that Hayes has had his chances and that many people’s credit scores were hurt as a result of his crimes.

“He has had his opportunities to assist the world,” she argued. “He chose a life of crime.”

Schmidt agreed.

“The cause of your behavior may well have been your drug addiction,” the judge said. “But, as the testimony in this case showed, your actions in feeding that habit caused substantial damage."

Houston police bust major identity theft ring

Houston police showed up at the rented office of Robert Lee Lyles with a search warrant and caught him "red handed" in the process of printing a counterfeit check and a fake Texas driver's license.  Talk about a good time to hit "control alt delete"!  Lyles is allegedly the mastermind behind a major identity theft ring that has victimized over 450 people and over 80 businesses across 25 states.  Lyles is believed to have had a large network of people working for him.  The scheme allegedly included the stealing of victims' personal checks then looking up their driver's license numbers in an online database.  Identity thieves in the ring would then add their pictures to high quality fake Texas driver's licenses bearing the victims' names and other personal information.  They then used the fake ids to buy things with counterfeit checks.

The police seized pictures of 191 identity thieves that were ready to be coupled with the fake drivers' licenses.  Police are now looking for these 191 people to arrest them too.

Lyles was charged with engaging in organized criminal activity, a first degree felony. 

Also arrested and charged with engaging in organized criminal activity were William Douglas Jackson, Jr. and Derald Lane Dresso.  Finally, Evelyn Dixon was also arrested.  She is alledged to be Lyles' "runner" - i.e. the person who took the fake IDs to the identity thieves that did not want to venture to Lyles' office.

Lyles, Dress and Jackson are being held without bail.  Dixon is being held on $50,000 bail.

Pretty good article with tips to improve your credit score

The Bellingham Herald (not sure where that is) has a pretty good article that lists 5 ways to improve your credit score.  Pretty good because I actually agree with 4 of the 5 suggestions.  The article can be found at http://www.bellinghamherald.com/thriftyliving/story/1062195.html.

"Worried about having a low credit score? Well, you can do something about your score, but it will take a good dose of self-discipline.

The Better Business Bureau offers the following advice on how to improve a credit score.

—Review your credit report at least once a year. Errors on your credit report could hurt your score. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. Only one Web site is authorized to fill orders for the free annual credit report — www.annualcreditreport.com.

—Pay your bills on time. Late payments tarnish a credit score.

—Pay traffic tickets on time. Tickets for simple parking and moving violations, and any other fines owed to your local government, can hurt a credit score.

—Keep credit card debt and balance low. Carrying a large balance relative to a credit card limit can have a negative impact.

—Limit the number of credit cards you hold.

—Consider credit counseling. Credit counselors can help a person get debt under control and manage it better."

I agree with the first three points completely.  The fourth point about limiting the number of credit cards is true but don't go closing cards you already have because that can hurt your score too. 

I would also be wary of the last tip.  There are a lot of debt counseling companies that are nothing but scams.  Be sure to check them out thoroughly (including googling for others' experiences with them) before using them at all.

Identity thief sentenced to 111 months in prison

A Maryland man who pled guilty to identity theft was sentenced yesterday to 111 months in prison.  Charles H. Belim pled guilty to bank fraud and aggravated identity theft.  Belim was allegedly the mastermind behind pickpockets who stole personal documents from victims and other co-conspirators (including his wife) who would dress up in wigs and glasses to impersonate the identity theft victims and allow them to withdraw cash from the victims' accounts. 

Belim's scheme involved more than 50 victims and netted between $70,000 and $120,000 in stolen funds.  United States District Judge Alexander Williams, Jr. sentenced Belim to pay restitution of $72,600 and to serve 111 months (9 1/4 years) behind bars. 

No word yet whether his fellow inmates will make him dress up in his wigs and glasses for their "entertainment".

Informative article about car dealers pulling your credit report

Jeff Blyskal with http://www.consumerreports.org/ wrote an interesting article about car dealers not needing your SSN to pull your credit report.  Here's the article:

Considering all the time we spend fretting about protecting our Social Security numbers, this may come as a shock: Your SSN isn’t necessary for a car salesperson to surreptitiously peek at your credit report. He or she has the technological ability to unlock your file using only the information on your driver’s license.

“An auto dealership checking a consumer’s credit through TransUnion is not required to have the individual’s social security number (SSN) in order to submit the request,” says Steven Katz, a TU spokesman. Does the dealer need your permission to do that? “The dealer does not need ‘permission’; rather, it needs only certify a permissible purpose (such as extension of credit),” says Katz.

Equifax told us the same thing about the ability to get your credit report without your SSN, but stressed that anyone who pulls your file must get your permission to do so.

Experian did not respond to our query.

TransUnion prefers to get the SSN, because it more reliably helps locate your exact credit file, but it’s not absolutely necessary. The credit report access keys on the license are your name, address, and date of birth, all of which are essentially public information. The driver’s license number itself is not relevant, since the credit bureaus don’t use that as an identifier.

Car dealers commonly ask for and photocopy your driver’s license before they’ll let you take one of their cars out for a test drive, says Charles Cyrill, a spokesman for the National Automobile Dealers Association. If you encounter this situation and are worried that your privacy may be compromised, explicitly tell the salesperson that you are not authorizing use of your license to pull your credit report.

Under the federal Fair Credit Reporting Act, a car dealer must always get your permission to look at your credit report. He or she can get that permission in writing—when you sign a release or a loan application—or by implication, without your signature, if there is a “legitimate business need.”

What does that mean? According to the FTC, simply shopping around, checking deals, and even taking test drives does not constitute a legitimate business need by itself. Rather, it’s only when you’ve gone further along into an obvious purchase transaction that your actions qualify as business that possibly involves a need to check your credit, according to a 1998 FTC staff opinion letter.

“Only in those circumstances where it is clear both to the consumer and to the dealer that the consumer is actually initiating the purchase or lease of a specific vehicle and, in addition, the dealer has a legitimate business need for consumer report information may the dealer obtain a report without written permission,” says the FTC opinion.

Whoever Jeff Blyskal spoke to at Equifax was completely misinformed or being untruthful.  Equifax allows companies to pull consumers' credit reports all the time without their express permission.  This is allowed by the FCRA as long as there is a permissible purpose, as laid out in 15 U.S.C. 1681b. 

Car dealers are the worst about not following the law in multiple ways, the FCRA being but one of them.  While all car dealers know that they can not pull your credit report without either your permission or a permissible purpose such as you actually applying for financing to purchase the vehicle, many pull your report anyway. 

Not having a permissible purpose arise until the consumer actually applies for financing makes sense.  For instance, what if the buyer is paying cash?  In that instance, his or her credit history matters not so there's no permissible reason for the car buyer to pull the credit report.  Or if the potential buyer is just test driving or walking the lot "kicking tires".  At that point, there is no legitimate need to pull the person's credit report.  But it is all too easy for the car dealer to simply indicate either consent or a "legitimate business need" even when one does not exist yet (and may never exist).  The credit bureaus simply "trust" their customers, whether they are credit card companies, banks, car dealers or bottom feeding collection agencies.  The CRAs even trust them after being informed of a pattern of impermissibly pulling credit reports.  But why should the CRAs care when they make more money by turning a blind eye to impermissible pulls (i.e. sales of credit reports)?  Selling your credit information is what CRAs do best.  Why let a little thing like 15 U.S.C. 1681b get in the way of that?!

Identity thief caught impersonating Florida Marlins' reliever

This identity thief should have wished for a rainout.  Arizona state police stopped 41 year old Oscar Corral for driving with a low tire.  Corral presented one of the officers with a fake Puerto Rican driver's license in the name of Enrique Calero Carrion, whom most know as Kiko Calero, a right handed reliever for the Florida Marlins.

The officers arrested Corral on suspicion of stealing the Marlins reliever's identity.  Probably wishes he had his fastball too.

This arrest was as lucky as a "grounder with eyes".  But in arresting identity thieves, just like in baseball, luck counts.

Another identity theft conviction

Tim Pfarr of http://www.newcastle-news.com/ reported the following regarding an identity theft conviction:

"Gabriel Jang, 36, of Renton, [Washington], has changed his plea for his role in an identity theft ring that brought in more than $3 million during a seven-year period. 

Jang, arrested Nov. 20, 2008, operated from a Newcastle post office box.

He faced 21 charges, including wire fraud and aggravated identity theft, and in January he pleaded not guilty to all of the charges.

His trial was scheduled to begin in February, but it was delayed.

In August, he entered into a plea agreement in which he changed his plea to guilty on four charges — conspiracy to commit bank fraud, access device fraud, aggravated identity theft and structuring currency transactions. The remaining 17 charges were dropped.

With these four charges, Jang could face as many as 57 years in prison and much as $1.75 million in fines.

Jang is scheduled to be sentenced Dec. 4."

Identity theft's version of Humphrey Bogart in Casablanca

"Of all the gin joints in all the towns in all the world, she walks into mine."  Humphrey Bogart uttered this famous quote in Casablanca.  An identity theft victim in Seattle thought something very similar when an identity thief visited her customer service desk and tried to open an account in her name using a fake id in her name. 

Twenty-three year old Michelle McCambridge was working as a customer service representative at a J.C. Penney when a person presented a fake id with McCambridge's name on it to her and tried to open a credit account in McCambridge's name. 

McCambridge, shocked at first, quickly composed herself and excused herself to alert J.C. Penney's security.  Unfortunately, police could not arrest the identity thief right there, but used surveillance video of her to link her and several others who were allegedly responsible for stealing 39 identities.

"Out of how many customer-service desks, out of how many registers she could have gone to, and she had to come to me?" McCambridge said. "It was fate."

Bet that identity thief and her friends are cursing their bad luck from their jail cells.

Ameritrade settlement one step closer to approval

Six million customers and former customers of Ameritrade (of which I am one) will unfortuantely have to wait a little while longer to learn if the proposed settlement regarding the theft of their personal information will be approved.  A hearing was held before U.S. District Judge Vaughn Walker in San Francisco on Thursday.  Judge Walker, who gave preliminary approval to the settlement way back in May, took the issue under advisement and will issue his ruling at a later date.  No indication as to how much later that date is going to be.

Anyone who either provided an e-mail address to Ameritrade or held an account there before September 14, 2007 will be able to benefit from the settlement.  Unfortunately, even if the settlement is approved, that doesn't mean much to you, me and the rest of the 6 million affected.  The settlement will pay nearly $1.9 million to the attorneys for legal fees.  I have little problem with the amount of attorneys' fees, except for the fact that the plaintiffs will get zip, nada, nothing in the way of cash.  The plaintiffs will receive one year of anti-spam software.  Woop-tee-doo.  Does anyone else think the plaintiffs should at least get enough to buy a happy meal?! 

While I realize the whole point of class actions is stop many little wrongs that, taken alone, are not worth the cost of correcting, but c'mon, the attorneys get $1.9 million and the plaintiffs don't get $.01?  Doesn't sound fair to me.  I have never handled a class action but I know and have worked with attorneys who have.  A tremendous amount of work goes into handling any litigation, but especially a class action.  But still ... shouldn't the injured parties get SOME kind of financial consideration?  I would suspect that most of the 6 million already have anti spam or, if they don't, its because they don't care to have anti-spam software.  So the offer is pretty much worth $0 to most of the 6 million, or so I would suspect.  Pretty crappy, if you ask me.

I have settled cases in the past where I ended up with more than my client, but its usually because I sunk a lot of my own cash into expenses in the case that I was not guaranteed to get back.  When the case settled, I got my percentage plus reimbursement of my expenses, which in some case nets me more of the final settlement but only because I have put my money at risk rather than my client's.  But I have never settled a case where my client got nothing in the way of compensation.  And I hope I never will.

Lack of posts

Sorry for the lack of posts the last few days, but I've been on the beach.  I'll be back soon (unfortunately) so I'll be back to blogging.  Don't be suprised if you see a post or two tonight.

New FCRA case - Eller v. Experian and Trans Union

A new case was released on August 20, 2009 in the United States District Court for the District of Colorado.  The case was filed pro se by Gerald Hansen Eller but he apparently hired attorney Steven T. Nolan after Trans Union moved to dismiss his Complaint as not containing sufficient facts to support his claims that Trans Union violated the FCRA. 

Since attorney Nolan did not have sufficient time to review the complaint or determine whether the complaint should be amended, the court viewed the motion to dismiss using the standard applied to pro se filed complaints, i.e. very liberally.

While the Court did find that Eller did not provide sufficient facts to establish his claims of violations of the FCRA, the Court found that amendment of the complaint was the appropriate remedy, not dismissal.  As a result, the Court granted Trans Union's motion in dismiss in part (the part that claimed lack of sufficient facts) but denied dismissal, instead opting to give plaintiff and his new counsel an opportunity to amend the complaint to allege sufficient facts.

I agree that amendment is appropriate, however, I do not think it is required.  The Federal Rules of Civil Procedure merely require "notice" pleadings, i.e. pleadings sufficient enough to put the defendant on notice of the claims filed against it.  The plaintiff's complaint provided sufficient notice to Trans Union for Trans Union to discern the types of claims lodged against it.  Trans Union could then have used the discovery period of the litigation to flesh out the facts supporting the claims against it.  That's what discovery is for.  Fortunately, the Court avoided a complete injustice by giving the plaintiff an opportunity to amend his complaint.

That's my opinion, at least.  But what do you think of the Court's ruling?

Tip for college students to avoid identity theft

Back to school time again ... buying pens, paper, folders, backpacks, etc.  One thing to add to the list for college students (or any other dorm resident) is a small safe for storage of bank statements, credit card statements and receipts, passwords and identification documents (birth certificates, etc.).

College students are more at risk for identity theft thanks to close living conditions and a more lax attitude that most college students have.  Help them protect themselves by buying them a small safe, which can easily fit in the bottom of a dorm room closet.

Members of credit card skimmer ring convicted

An identity theft ring involving the use of a credit card skimmer was busted and convicted in Illinois.  Here's the article from http://www.identitytheft.info/identity-theft-carder-ring-convicted-1457.aspx:

"Three individuals caught using a credit card skimmer and encoder were convicted for a string of financial crimes including but not limited to identity theft.

The individuals conducted a credit card cloning and ID theft scam using a credit card skimmer to steal credit card numbers and a credit card encoder to create physical copies of the stolen credit cards. The stolen credit cards were skimmed from customers at a Taco Bell restaurant and from gym members in Broomfield, Woodland Park, Lakewood, Pueblo, and Canon City.

Police said this week that thirty two year old Mark Nielson was convicted of identity theft and racketeering and sentenced to 10 years in prison. Twenty four year old Corey Skinner was convicted of identity theft and received a 10-year sentence.

According to court documents twenty three year old Amanda Stillwell was convicted of racketeering and is awaiting a sentencing hearing near the end of the month.

Devices similar to the credit card skimmer used in these crimes are available legally in the US and advertised on multiple web sites. During a search we conducted we encountered one retailer even running “15% off sale” on credit card skimmers. The credit card encoder, which takes the data collected by the credit card skimmer and “writes” it onto either old credit cards or blank credit card stock, is also readily available for sale online.

This ring of criminals used the cloned credit cards to purchase merchandise. Crooks using credit card skimmers also sell the data to other criminals know as 'carders' in online chat rooms."

This is what a credit card skimmer looks like:

As you can see, they can be as small as a lighter, anything big enough for a credit card to be swiped through it.  It is used to steal the credit card number and other information that is accessed when a credit card is scanned.

This is what a credit card encoder looks like -

 Or it can look like this -

Encoders are used to transfer the stolen credit card information onto another credit card or, in the case of the second picture, to create a whole new card. 

Watch out for scanners that are added to ATMs or other machines where you scan your credit card.  If you pay attention, you should be able to tell if an identity thief has added a scanner to a legitimate machine.

  

New identity theft arrest

Here's the latest to be arrested for identity theft - straight from the Topeka (KS) Capital-Journal:

"A Wichita [Kansas] woman charged with multiple counts of identity theft totaling more than than $100,000 was confined at the Shawnee County Department of Corrections on $20,000 bond, jail officers said Friday.

Angela Nicole Russell, 28, was booked into jail about 8:20 p.m. Thursday in connection with forgery, making a false writing, theft between $1,000 and $25,000 and identity theft with a monetary loss of more than $100,000.

Shawnee County court records indicate Russell was charged on Aug. 24 with five counts of forgery with three or more subsequent convictions, three counts of identity theft with intent to defraud for economic benefit, one count of felony theft and one count of making a false writing.

Topeka police detectives working the case were unable to be reached Friday evening for comment.

A police report filed with Topeka police in July 2008 lists at least three victims, including two Topeka businesses. An unknown amount of merchandise was reported stolen from Kohl's department store, 6130 S.W. 17th, and K-Mart, 1740 S.W. Wanamaker, according to a police report. A Garnett resident was listed as a third victim.

Additional details about the case weren't immediately available.

Kansas Department of Corrections records indicate Russell was convicted in 2008 of forgeries in Miami, Anderson and Franklin Counties."

Once again, identity theft did not pay.  Good riddance.

Another new FCRA case - Shurland v. Bacci Cafe & Pizzeria

Can't say I've ever sued a pizzeria before.  But one of the latest FCRA cases involves a lawsuit against a pizzeria - Christopher Shurland v. Bacci Cafe & Pizzeria.  The case comes to us from the United States District Court for the Northern District of Illinois, District Judge Rebecca R. Pallmeyer presiding.

The plaintiff purchased a pizza from Bacci Cafe & Pizzeria and paid with a credit card.  His receipt, however, contained his full credit card number and expiration number, a big no no under the FCRA.  Shurland then sued Bacci Cafe & Pizzeria in a class action lawsuit on behalf of everyone else that received receipts with non-truncated credit card numbers.

The pizzeria moved to dismiss the plaintiff's claims via summary judgment, arguing that their violation of the FCRA was not willful (the defendant admitted violating the FCRA) because it did not know of the requirement to truncate credit card numbers.  A willful violation is one committed knowingly or with reckless disregard for the law. 

The Court correctly did not buy the pizzeria's argument that its alleged lack of knowledge of the law gives it a pass.  First, ignorance of the law is no excuse.  Second, the evidence shows that the pizzeria was called by at least three employees of the company that sold it the credit card machine and told that it needed to update its software to comply with the FCRA's requirement to truncate credit card numbers.  Further, the credit card machine company's monthly bill to the pizzeria indicated that truncation was required.  Yet, the pizzeria did nothing (except bake pies). 

The Court correctly denied the pizzeria's motion for summary judgment and granted class certification.