11.7 MILLION Victims of Identity Theft in U.S.

According to a survey conducted in 2008, the results of which were just released on December 16, 2010, by the Bureau of Justice Statistics, an estimated 11.7 million U.S. citizens were victims of identity theft during the two year period prior to 2008.

The losses from this vast number of instances of identity theft totalled more than $17 billion (with a "b").

However, the definition of identity theft used in the survey was quite broad.  It included what we have discussed on this blog as actual identity theft (i.e. the fraudulent use of someone's personal identifiers to open new accounts) as well as account take over (where an existing legitimate account is used by someone other than an authorized user for their personal gain). 

In my experience, many more people are victims of account takeovers than identity theft, so this seriously skews the numbers of this survey.  In fact, I was a victim of an account take over between the period of 2006 and 2008 when someone in Germany made three fraudulent purchases with my Discover card.  My experience was like most who are victims of account takeover.  It was all fixed with a simple call to my credit card.

Identity theft, on the other hand, is never that simple to fix.  It usually takes years of vigilance and time spent by the victim making phone calls, writing letters and generally proving his or her innocence because, unlike in the criminal justice system, the identity theft victim is considered guilty until he proves his innocence and, usually, even after he has proven his innocence time and time again.

According to the survey, the average loss was only $1,870.  This again is skewed by the inclusion of account take over in the identity theft definition the survey used.  I would think that most account take over victims suffer either no financial loss or possibly the cost of a stamp or two.  Identity theft victims, on the other hand, suffer much greater financial loss, usually in the several thousands of dollars.  That's if they are not sued and forced to hire an attorney by the hour to defend them from the frivolous lawsuit against them.  Of course, if they hire someone like me to represent them in a lawsuit against the credit bureaus and/or the fraudulent credit grantors, the attorney should not charge by the hour but should instead be paid a contingency fee after successful resolution of the lawsuit.

Also, 16 percent of the victims in the survey were the victims of multiple types of identity theft, such as the traditional version and attempts to obtain government or health insurance benefits.  I recently represented a victim of identity theft whose brother used his identity to obtain student loans and eventually went to work for Fed Ex in Memphis using my client's Social Security number.  This resulted in my client suffering the tax burden of his brother's wages.  Very much a mess that took a lawsuit against Sallie Mae and others to straighten out.

More stats from the survey -

• 6.2 million were victims of actual or attempted account take overs of traditional credit cards;
• 4.4 million were victims of actual or attempted account take overs of debit cards;
• 1.7 million were victims of true name identity theft;
• Income matters - those with a household income of more than $75,000 were more likely to be victims;
• Gender does not matter - men and women are equally likely to be identity theft victims;
• Only about 17 percent reported the crime to law enforcement (but this again is skewed by the inclusion of account take over victims in the definition of identity theft);
• Approximately 20 percent described the identity theft as "severely distressing" (again skewed by the inclusion of account take over); and
• Nearly 40 percent had some idea how their personal identifiers were compromised.

All in all, some pretty interesting results.

$1 million verdict against Equifax won't be reduced

This man's story reminds me of a client I represented a while back against ... you guessed it ... Equifax.  More about my case below:

By Maria Dinzeo

SAN FRANCISCO (CN) - A cancer survivor who won more than $1 million from Equifax for improperly handling his identity theft report can keep the full award, a federal judge ruled.


U.S. District Judge Susan Illston rejected the credit reporting agency's motions for a new trial or to set aside so-called "excessive" damages.

Eric Drew, who was twice referred to hospice care by hospitals that said they could not treat his cancer, had his identity stolen in 2003 by a phlebotomist working at the cancer center where he had undergone treatment.

Drew discovered that multiple fraudulent credit accounts had been opened in his name with thousands of dollars in balances.

"Plaintiff testified that, while he was away from home being treated for near fatal cancer, he singlehandedly caught the individual who had stolen his identity even though the police and hospital personnel had not believed him or wanted to help him," Illston wrote.

Fearing that his life was in danger, Drew called newspapers, the FBI, police and his hometown mayor in Los Gatos, Calif.

When a local television station picked up his story, the identity thief was caught and convicted of criminal violation of the Health Insurance Portability and Accountability Act.

Over the next two years, however, Equifax and a number of other credit reporting agencies and banks allegedly thwarted Drew's attempts to repair his credit and reinvestigate his claims of identity theft.

After a nine-day trial, a jury awarded Drew $6,326.69 in economic damages, $315,000 in noneconomic compensatory damages and $700,000 in punitive damages.

Among Equifax's requests on appeal, the company argued to reduce "excessive" compensatory and punitive damages to $200,000 and $50,000, respectively.

"Here, defendant leaves the court to speculate where its $200,000 figure comes from," Illston wrote. "It does not explain why $315,000 is shocking to the conscience or unsupported by the evidence while $200,000 is a proper number."

Illston refused to grant remittance, finding that Drew had "presented significant evidence of emotional distress that he suffered as a result of his unique circumstances."

"The evidence strongly supports a finding that the harm plaintiff suffered was not the result of mere accident," the ruling states.

Against all odds, Drew identified the man who stole his identity, beat cancer and launched an unprecedented criminal HIPAA prosecution, "but he couldn't navigate the system that defendant had set up to correct his credit report," Illston wrote.

Now, about my case.  Just like Eric Drew, my client helped the authorities nab his identity thief who, among other things, had opened scores of accounts in my client's name and had even bought 2 or 3 vehicles, including a Harley, using my client's identity.  Thanks to the persistence of my client, the authorities (the FBI if I remember right) caught the identity thief while riding the ill-gotten Harley.  The identity thief was tried, convicted and sentenced.

Unfortunately, just like Mr. Drew, my client's story did not end there.  Equifax and the other three bureaus refused to believe my client's disputes regarding the scores of accounts opened in his name, despite the conviction of the identity thief that opened the accounts.  In fact, the identity thief served his entire sentence before Equifax and the other bureaus finally fixed my client's credit reports and then only after I had sued the bureaus on behalf of my client.  In other words, the conviction of the identity thief was not good enough proof for Equifax, Experian and Trans Union.  But my federal lawsuit ironically got the job done, but not before my client suffered very, very significant emotional distress.  At his lowest point, he was sitting in his closet with a gun in his mouth because of the sheer shambles that this life had been turned into after the complete loss of his financial independence caused by the credit bureaus' failure to do their job.

Luckily, he did not pull the trigger and eventually fought back through his lawsuit, which led to his credit reports being corrected.  Equifax should be ashamed to claim that Mr. Drew's damages did not justify an award of $315,000 in light of their intentional and flagrant disregard for their statutory duties.  I'm glad the judge saw through Equifax's sham of an argument.  But I'm sure they will appeal to the next level.

As for my client, his case never went to trial as Equifax and the other bureaus settled for a "confidential" sum after suit was filed.

Background Screening Company Doesn't Want Equal Employment For All

Judy Gootkind, member of the Board of Directors of the National Association of Professional Background Screeners, a group made up of resellers of consumer reports for background checking purposes, testified yesterday before the House Financial Services Subcommittee regarding a new proposed law entitled "The Equal Employment for All Act", H.R. 3149.  From reading a transcript of her testimony (reprinted below), it appears that NAPBS's main beef with H.R. 3149 is their claim that it would limit the types of companies who could use credit reports as part of background checks to "financial institutions", as defined by the FCRA.  I will have to do a bit more research to see if Ms. Gootkind's claims are valid. 

Her testimony is below:

"Sep 24, 2010 (Congressional Documents and Publications/ContentWorks via COMTEX) --


Chairman Gutierrez, Ranking Member Hensarling and members of the committee, thank you for this opportunity to testify. My name is Judy Gootkind and I appear here today on behalf of the National Association of Professional Background Screeners -- NAPBS. I am a member of the NAPBS Board of Directors. My company, Creative Services, Inc., located in Mansfield, MA, is a member company of NAPBS and I am Vice President of Finance & Administration. Creative Services, Inc. is located in the Fourth Congressional District of Massachusetts, Chairman Frank's district.

NAPBS is a trade association founded in 2003 which represents over 700 companies engaged in employment and tenant background screening across the country. Of this figure, approximately 360 member companies are Regular Members, meaning that they are primarily engaged in the business of providing employment and/or resident background screening services directly to end-users, such as employers, landlords and businesses. The majority of those Regular Members are small businesses, with 12 or less employees. Having said this, our membership does include a range of companies, from Fortune 100 companies to small local businesses. Collectively we conduct millions of employment and tenant screening checks each year.

In the employment context we provide background checks for private employers, volunteer organizations, non-profits, government, public utilities, healthcare, higher education and publicly held corporations. NAPBS seeks to promote ethical business practices, promote compliance with the Fair Credit Reporting Act and State law analogs and foster awareness of issues related to consumer protection and privacy rights within the background screening industry.

Our industry is highly regulated, both by the Federal Trade Commission and the newly created Bureau of Consumer Financial Protection. n1 Our ability to provide our employer end-users with consumer reports is driven by consumers' consent for such reports to be generated when they apply for employment or seek a promotion.

Before responding to the Committee's questions provided to NAPBS, I would like to point out our concerns with H.R. 3149, "The Equal Employment for All Act". We believe this legislation, as drafted, too narrowly restricts the use of credit reports for employment purposes, and all but prohibits them in the private employment space. As drafted, the legislation would limit the use of credit reports for those jobs requiring national security or FDIC clearance, state or local government agency employment, supervisory, managerial, professional, or executive positions at a financial institution, or when otherwise required by law. Our specific concerns are as follows:

* The legislation would limit the use of credit reports in private employment to certain positions at financial institutions, a narrowly defined term under current law. The term "financial institution" is defined in the Fair Credit Reporting Act to mean, "...a State or National bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person that, directly or indirectly, holds a transaction account (as defined in section 19(b) of the Federal Reserve Act) belonging to a consumer." n2

* The legislation as written would prohibit the requesting of credit reports for the following types of positions, all of which are examples of actual job applicants for which NAPBS member companies provide credit reports: lawyers, mortgage lenders, property managers, cashiers, pharmaceutical representatives, pharmacists, asset management and financial planners, public safety officers, jewelers, health providers, NBA referees, executives in non-financial institution employers, accounting employees, finance employees, Information Technology employees, procurement employees, academic financial aid employees, Human Resources employees and other positions where employees have access to large amount of cash spending or personal information of other employees or customers.

Some would say that credit reports are reputation collateral and for many consumers, their credit history may be a good thing rather than the negative light in which they are being cast. NAPBS feels that there are instances beyond those which H.R. 3149 would allow in which it would be important and/or necessary to our employer end users to request a credit report. While NAPBS understands that this legislation seeks to limit the use of credit reports so that the credit history has some bearing on a person's job responsibilities and duties, as written, it eliminates many other positions where credit could be at least a potential sign of someone's judgment.

In your letter of invitation, you have asked NAPBS to address particular issues and questions regarding credit reports and employment background checks.

Committee Question -- Please explain the process of developing the reports that you provide to employers, including what types of information is used and how it is filtered. For example, do you alter or modify the information that you receive from the credit bureaus? If so, why and how?

Some background on how we operate is necessary to answer this question. Each Company who provides consumer reports to a third party is defined under the Fair Credit Reporting Act ("FCRA" or "Act") as a "consumer reporting agency". We provide "consumer reports" to third party end-users, for a variety of "permissible purposes" under the Act, including for employment purposes. The FCRA specifically lists those "permissible purposes" for the use of such reports in section 604 which is entitled "Permissible purposes of consumer reports". One such permissible purpose is for employment purposes, which is defined in the law as, "...a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee." n3

A consumer report could include information from a variety of sources, including a credit report/credit history, public record information such as a criminal report, or employment or education verification. It is important to mention that in the context of employment checks, a credit score is never included. The three major credit bureaus do not sell credit scores for employment purposes nor are consumer reporting agencies able to report such scores if the purpose of the consumer report is for employment purposes. In fact, contractual agreements are in place which prohibit our access to, or use of credit scores, in the employment context. Moreover, the bureaus audit end users as well as resellers of credit information for compliance with their agreements. As such, technical measures are in place to ensure that an end user identifies its permissible purpose upon ordering the report, leaving little room for an end user to receive an actual credit score by accident or otherwise.

Important steps in the background screening or consumer report preparation process. Prior to requesting a consumer report, an employer must provide to the prospective employee a written notice stating what information will be requested, the source of the information and the purpose for which it will be used. An employer must also provide a copy of the consumer report, including the credit report, to the consumer upon request, and prior to taking an adverse action in whole or in part based on the credit report. With the report, an employer must also provide a copy of the Federal Trade Commission's document entitled "A Summary of Rights Under the Fair Credit Reporting Act." The employer must then wait a reasonable period of time before making the ultimate decision thereby allowing the consumer the opportunity to dispute any inaccurate information in the report. n4 If an adverse employment action is taken against a prospective employee based on any information contained in a consumer credit report, for instance, the end user must provide the name and contact information for the consumer reporting agency to the consumer. Consumers can also request and obtain all the information about themselves in the files of a consumer reporting agency and they have the right to dispute incomplete or inaccurate information n5. Furthermore, consumer reporting agencies must correct or delete inaccurate, incomplete or unverifiable information.

Committee Question -- Has the use of credit reports/checks for employment purposes increased over the past decade?

This question is better addressed to the end users of such reports as we do not have such statistical data on hand at NAPBS.

Committee Question -- Do you add any information to the reports you receive from credit bureaus? If so, please explain what, why and how.

Generally, No. As a reseller of credit reports, most consumer reporting agencies merely pass through the credit reports they receive from the credit bureau(s).

Committee Question -- What kind of information is included in the reports you provide to employers?

A credit report includes information about a consumer and their credit experiences, such as name, addresses, employers, social security number, trade accounts, credit limits, balances, payment history, collection accounts, bankruptcies and tax liens. It may also provide additional verification and/or identify discrepancies with regard to the applicant's name, address, social security number and employment history.

Committee Question -- Do you have any proof that a credit record is an indicator of someone's propensity to commit a crime or their ability to successfully perform the duties of the job for which they might be considered? Please explain your views on this particular issue.

As consumer reporting agencies, we are the providers of information to end users when they are requesting background information, be it education or employment references/verification, credit history or criminal history. We believe the Committee is better served by facts rather than our personal views.
One study that may be of interest to the Committee is that conducted by the Association of Certified Fraud Examiners entitled "2008 Report to the Nation on Occupational Fraud & Abuse" which states that "...credit checks were by far the least common form of background check performed by victim organizations. Past research indicates that financial pressures are one of the key motivating factors of occupational fraud, and indeed, in [their] survey [they] found that the two most commonly cited behavioral red flags among fraudsters were 'financial difficulties' and 'living beyond one's means'". n6

Committee Question -- Please provide the subcommittee a standard, sample credit report for employment purposes that would normally be purchased by your clients. You may redact any personal or confidential information.

A sample credit report is included with this statement.

n1 The Bureau of Consumer Financial Protection was created by the Consumer Financial Protection Act of 2010 (Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203).

n2 Section 603(t), FCRA.

n3 Section 603(h), FCRA.

n4 Section 604(b)(3), FCRA.

n5 Section 609(a), FCRA.

n6 Association of Certified Fraud Examiners, "2008 Report to the Nation on Occupational Fraud & Abuse" found at http://www.acfe.com/documents/2008-rttn.pdf

New scam aimed at attorneys!

As if attorneys weren't maligned enough, I just received this from the Mississippi Bar Association.  Apparently there is a new scam out there targeting lawyers.  Every lawyer out there needs to be aware of this scam because I could see how one could easily fall for it.

The Bar has been advised of at least two scams being perpetrated on lawyers involving a common set of facts. The lawyer is hired by an out of state client to assist it with collecting a debt from a local business debtor. The premise is that the creditor believes it might settle with the local debtor, but wants to get the case ready just in case. The amounts involved are in the low six figures. The lawyer is either hired by phone or email and may or may not insist on a written employment contract. A day or two after the lawyer agrees to represent the fraudulent client and before the lawyer contacts the debtor, an official bank check appears in the mail for the full amount of the collection. Many of the scams involve an official Citibank check (although any bank could be used in the scam).

Often, the mailed checks originate in Canada, even though the debtor is a local business. The envelopes containing the official bank check have Canadian postmarks and are sent via air mail. The lawyer is asked to deposit the check into his or her trust account. A few days letter, the lawyer is asked to wire the funds overseas due to an emergency and to remit the funds net of attorneys fees. The check eventually is returned as account closed, NSF, or for other reasons in a week or two. The lawyers trust account debited for the full amount. Since the funds were wired, the opportunity to retrieve the funds from an overseas bank account is virtually nonexistent. The Bar urges all lawyers to develop specific policies to insure trust account funds are protected at all times.

So, fellow barristers, beware!

Time Limit for Reporting Tax Liens

Tax liens are treated differently than any other item on a credit report.  Most adverse items are allowed to be reported for seven years from the date of delinquency, regardless of whether the item is ever paid.  Tax liens, on the other hand, potentially fall under two different seven year reporting periods.

15 U.S.C. 1681c(a)(3) says that paid tax liens are allowed to be reported for seven years from the date they are paid.  All other tax liens fall under the catch all provision found at 15 U.S.C 1681c(a)(5) and are allowed to be reported for seven years from the date they come into existence (since they are immediately considered adverse). 

Thus, you could have an unpaid tax lien reported for seven years, fall off the report, then, when paid, reappear for another seven years.  It is therefore not in a consumer's best interest (at least as far as credit reporting) to pay a tax lien after seven years.  But, it would be in the consumer's best interest to pay the tax lien as early in the seven year unpaid tax lien reporting period as possible, since this will allow both seven year periods to run more or less concurrently.  Kind of like a two for one sale.

But what about tax liens that are satisfied and/or released without any payment.  For instance, I had a client call me about an eight year old tax lien appearing on his credit report that had been "released" due to his bankruptcy about four years ago.  In this instance, the lien should have fallen off the report as obsolete since it was over seven years old and had never been paid.  A release does not always mean payment.  This is one such instance.  Another is where the lien is entered in error and released not because of payment but because of a recognition of the erroneous nature of the lien.

Unfortunately, the credit bureaus do not appear to have a mechanism in place to recognize the interplay between 1681c(a)(3) and 1681c(a)(5) when applied to tax liens.  As a result, tax liens often appear on consumers' credit reports longer than they should and often require a dispute to the credit bureaus (or more) to get them removed.

FTC cracks down on advertising for non-free services while ordering your free credit reports

NewJersey.com reports on new restrictions by the FTC -

In an attempt to make sure credit reporting agencies don't put a fast one over on consumers seeking free credit reports, the Federal Trade Commission has adopted tough new disclosure rules in response to more than 1,000 comments it received from consumers and others last fall.

Under a federal law passed in 2003, the three credit reporting agencies — Equifax, TransUnion and Experian — are required to provide consumers with a free copy of their credit report each year, but the agencies have found ways to recoup fees they used to get for those reports.

Part of the problem is that the gateway to the free reports — AnnualCreditReport.com — takes you through sites for the individual agencies. There, they try to sell services for which there is a fee, such as monthly reports (rarely needed) or your credit score (needed only occasionally).

And it's not just the three agencies, as other commercial sites use bait-and-switch tactics, drawing you in with the lure of free reports before pushing you to pay services.

Starting April 1, the commercial enterprises will still be able to sell their wares, but they'll have to do a better job of distinguishing between free and paid services.

The rest of the article can be found here - http://www.northjersey.com/news/business/85754242_Indeed__a_free_credit_report.html.

Another Career Involving an Identity Thief

As I have reported in the past, the careers that have spawned identity thieves has been many and diverse, from bankers to radio hosts, from nannies to car dealers.  Well, here's a new one - postal worker.

A former mail carrier has been sentenced to serve 180 days at the Middlesex County Adult Correction Center for taking an ATM card from the mail and using it to withdraw $7,533 from an individual’s account, Middlesex County Prosecutor Bruce J. Kaplan announced Tuesday.
Jennifer James, 44, of Howard Street, New Brunswick, also was placed on probation for five years and was told to repay the victim’s bank, which covered the individual’s losses.

James was sentenced in New Brunswick by Superior Court Judge Frederick P. DeVesa on February 22, after she pleaded guilty on Nov. 17, to a count of identity theft.
The plea agreement was reached following negotiations with Middlesex County Assistant Prosecutor Manuel Sameiro.
James was arrested and charged following an investigation by New Brunswick Police Officer William Contreras, who determined the defendant took the ATM card from one of the residents on her route.
The investigation further determined James used the card to make cash withdrawals at various ATMs between April 2, and April 7, 2009.

James, who had worked as a mail carrier for 15 years, subsequently was dismissed from her job.

Another Credit Repair Company Sued

According to a lawsuit filed by Colorado Attorney General John Suthers, a “credit repair” company has clearly violated federal and Colorado law by charging upfront fees and failing to disclose the total cost of its services.
The suit was filed in Denver District Court against Veracity Credit Consultants, a credit repair company that charges consumers initial fees of up to $99, and subsequent monthly fees as high as $79. Colorado law prohibits credit repair companies from charging fees until their services are complete.
The credit repair company of questionable character boasts of “results” and claims to be one of the best credit-repair outfits available.
According to the Colorado Attorney General, many of the company's claims are exaggerated at best. He specifically pointed to the company's claim that it can “optimize” consumers' credit reports by repairing or erasing bad credit as worthy of suspicion. Both the federal Fair Credit Reporting Act and Colorado Consumer Credit Reporting Act provide that credit bureaus can continue to report negative information about a consumer's credit for up to seven years.  Veracity's claimed tactics apparently fly in the face of the FCRA and Colorado's Consumer Credit Reporting Act.

Veracity's website says that the company “uses knowledge of the law and years of experience perfecting a proven formula to provide results while protecting your rights.” Once a consumer opens an account, according to the site, Veracity “investigates and works with credit bureaus and creditors” and works “to remove errors, delete negatives, and highlight good accounts.”
Despite these impressive claims, Veracity's “client-services agreement” explicitly says that the company doesn't “represent or warrant that it will achieve specific results for client.”
I have yet to meet a credit repair company that is above board.  Credit repair companies that are willing to try to remove accurate, non obsolete information from a consumer's credit report for a fee simply fly in the face of the entire credit reporting system and hurt those consumers who do pay their bills.  Just as strongly as I feel that credit bureaus should correct errors on consumers' credit reports, I also believe that consumers should have to live with their legitimately bad credit for the seven years that the FCRA allows the reporting of adverse credit items.  Credit repair companies are shady at best and those consumers who try to skirt the rules by using credit repair companies are, in my opinion, questionable as well.

Excellent post about how to build your credit report from scratch

Here's a link to an excellent article I read about how to build your credit report from scratch the right way!  Here's the link - http://www.theoldarmy.com/2010/02/building-you-credit-score-from-scratch/comment-page-1/#comment-413.

Check it out.

Watch Out India!

Experian Credit Information Co has received the final approval from the Reserve Bank of India (RBI) to set up a credit bureau in the country, it announced on Thursday. The bureau will have to begin operations within six months.


“Now that we have the licence, we will begin the process of collecting credit data from lenders,” said Phil Nolan, the newly-appointed managing director of Experian Credit Bureau.
In November 2009, Experian formed a credit information company in India by roping in seven partners, including Axis Bank, Federal Bank, Indian Bank, Magma Fincorp, Punjab National Bank, Sundaram Finance and Union Bank of India.
At present, Credit Information Bureau (Cibil) is the only functional credit bureau in the country.
“Cibil has a 5-year headstart and that is a big advantage. But, the advantage for us is that data sharing principles have already been established in the country. This will make our job simpler,” said Nolan.
In April last year, RBI had granted an in-principal approval to four credit bureaus, including Cibil, Experian, Equifax Information Services and Higmark Credit Information Services.
In January this year, Equifax announced about setting up a credit bureau in joint venture with six Indian partners, including Bank of Baroda, Bank of India, Kotak Mahindra Prime, Religare Finvest, Sundaram Finance and Union Bank of India.

New Bill to Require Free Credit Scores if Passed

Way to go U.S. Representative Steve Cohen, a Democrat from Memphis, TN.  Even though I've never met him, I feel like I know Representative Cohen, since I live and grew up just an hour or so south of Memphis and our local TV stations all come out of Memphis.  Cohen was a TN state representative but is now a freshman U.S. Representative, having won Harold Ford's old spot after he left it to unsuccessfully run for the U.S. Sentate.

Cohen has introduced H.R. 4538, a bill which would amend the FCRA to require that the credit bureaus provide consumers with their credit scores for free with their annual free credit reports.  As I have reported on many times previously, every consumer is entitled to one free credit report from each of the three main credit bureaus (Equifax, Experian and Trans Union) each year.  To get that report, consumers must use the website http://www.annualcreditreport.com/ or submit the request form via mail that can be found on that site as well as at my firm's website http://www.merkel-cocke.com/.

The primary problem with the free credit report is that it did not include your credit score.  For a consumer to get their all important credit score, the consumer must pay extra (usually around $5) directly to the credit bureau.  While the credit scores sold by the credit bureaus are not your true credit score, they are still good barometers for what your real credit score is.

Cohen's bill, if passed, would eliminate this problem with http://www.annualcreditreport.com/ and help consumers everywhere.  Mr. Cohen, if you read this, please know I congratulate you on a very good bill and offer any help I might provide through my nationwide contacts to help get the bill passed.  I know practically every attorney nationwide that handles FCRA litigation on a regular basis and would be happy to help drum up support for your bill.

Percentage of Americans falling behind on credit cards has leveled off

Good news for the economy -

The percentage of Americans falling behind on credit card bills stabilized in January, according to data from the six major lenders, signaling that U.S. consumer credit woes may be leveling off.

The rest of the article can be found here - http://www.reuters.com/article/idUSTRE61F4JB20100216

Credit Denial Codes

You would think that its is the credit lender that comes up with the reasons why it does not want to grant your credit application.  Wrong.  The lender makes the decision but it is the credit bureaus that provide the reasons why your credit application is denied to the lender which the lender then inputs on the adverse action letter they send you informing you that your application was denied.  Every time a credit bureau sends out your credit report to a third party, it includes four reasons why you should be denied credit, no matter how good your credit history is.  Even if your payment history is flawless and you have a "perfect" credit score, the credit bureaus still provide 4 reasons you shouldn't get credit.  Crazy, right?

The four reasons come in the form of four code numbers.  Here is a list of what those code numbers mean -

EQUIFAX – BEACON Score Codes


39 – serious delinquency

38 – serious delinquency, and derogatory public record or collection filed

34 – amount owed on delinquent accounts

33 – proportion of loan balances to loan amounts is too high

32 – lack of recent information on installment loan accounts or lack of installment loan accounts

31 – too few accounts with recent payment information

30 – time since most recent account opening is too short

28 – number of accounts established

24 – no recently reported revolving balances

23 – number of bank or national revolving accounts with balances

22 – accounts not paid as agreed, public record, or collection agency filing (FORECLOSURE)

21 – amount past due on accounts

20 – length of time since derogatory public record or collection is too short

19 – too few accounts currently paid as agreed

18 – number of accounts with delinquency currently or in the past not paid as agreed

17 – no non-mortgage account balances or non-mortgage balances not recently reported

16 – lack of recent revolving account information

15 – lack of recent bank revolving information

14 – length of time accounts have been established

13 – time since delinquency is too recent (or unknown) or trade narrative reported

12 – length of time revolving accounts have been established

11 – amount owed on revolving account is too high

10 – proportion of balances to credit limits is too high on bank revolving or other revolving accounts

09 – too many accounts recently opened

08 – too many inquiries last 12 months

07 – recent payment history is too new to rate

06 – too many consumer finance company accounts

05 – too many accounts with balances

04 – too many bank or national revolving/open accounts

03 – too few bank or national revolving/open accounts

02 – level of delinquency on accounts

01 – amount owed on accounts is too high

O – beacon not available, no recently reported account information

FA – number of inquiries adversely affected the score, but not significantly

TRANS UNION – EMPIRICA Score Codes

42 – length of time since most recent consumer finance company account established(**factor not currently in use)

41 – no recent retail balances (**factor not currently in use)40 – derogatory public record or collection filed

39 – serious delinquency

38 – serious delinquency, and public record or collection filed

36 – payments due on accounts (**factor not currently in use)

31 – amount owed on delinquent accounts (**factor not currently in use)

30 – time since most recent account opening is too short

29 – no recent bankcard balances

28 – number of established accounts

27 – too few accounts currently paid as agreed

26 – number of bank revolving or other revolving accounts (**factor not currently in use)

24 – no recent revolving balances

23 – number of bank or national revolving accounts with balances

22 – serious delinquency derogatory public record or collection filed (FORECLOSURE)

21 – amount past due on accounts

20 – length of time since derogatory public record or collection is too short

19 – Date of last inquiry too recent

18 – number of accounts with delinquency

17 – no recent non-mortgage balance information

16 – lack of recent revolving account information

15 – lack of recent bank revolving information

14 – length of time accounts have been established

13 – time since delinquency is too recent or unknown

12 – length of time revolving accounts have been established

11 – amount owed on revolving accounts is too high

10 – proportion of balances to credit limits is too high on bank revolving or other revolving accounts

09 – too many accounts recently opened

08 – too many inquiries last 12 months

07 – account payment history

06 – too many consumer finance company accounts

05 – too many accounts with balances

04 – lack of recent installment loan information

03 – proportion of loan balances to loan amounts is too high

02 – level of delinquency on accounts

01 – amount owed on accounts too high

00 – no adverse factor

MODEL NOT SCORED: INSUFFICIENT CREDIT message occurs when a credit file does not contain
a trade line opened for at least 6 months and trade line updated within the last 6 months.

FA – in addition to the factors listed above, the number of inquiries on the consumer’s credit file has adversely affected the credit score.

MODEL NOT SCORED: DECEASED message occurs when the subject’s Social Security Number matches the Social Security Administration’s deceased Social Security Number file, or is reported as deceased by a credit grantor.

EXPERIAN – FAIR ISAAC Score Codes

40 – derogatory public record or collection field

39 – serious delinquency

38 – serious delinquency and public record or collection filed

37 – number of finance company accounts established relative to length of finance history

36 – length of time open installment loans have been established

33 – proportion of current loan balance to original loan amount


32 – no recent installment loan information

31 – too few accounts with recent payment information

30 – length of time since most recent account established

28 – number of accounts established

26 – number of revolving accounts

25 – length of installment loan history

24 – lack of recently reported balances on revolving/open accounts

22 – account(s) not paid as agreed and/or legal item filed (FORECLOSURE)

21 – amount past due to accounts

20 – length of time since legal item filed or collection item reported

18 – number of accounts delinquent

17 – no recent (non-mortgage) accounts balance information

16 – insufficient or lack of revolving account information

15 – insufficient or lack of bank revolving account information

14 – length of time accounts have been established

13 – length of time (or unknown time) since account delinquent

12 – length of revolving account history

11 – current balances on revolving accounts

10 – proportion of balance to high credit on bank revolving or all revolving accounts

09 – number of accounts opened within the last 12 months

08 – number of recent inquiries

07 – Unable to evaluate recent payment history

06 – number of finance company accounts

05 – number of accounts with balances

04 – Too many bank revolving accounts

03 – Too few bank revolving accounts

02 – delinquency reported on accounts

01 – current balances on accounts

Exclusion Messages

9003 – Experian/Fair Isaac Score Not Available Due to Lack of Credit History – The Profile report does not contain any trade lines which have been open for at least six months

9002 – Experian/Fair Isaac Score Not Available Due to Model Exclusion Criteria – The Profile report does not contain any trade line which satisfies both of the following:

1. Status date within the last six months, or a balance within the last six months if the status code is not “11″ (“Current account”)

2. Does not contain disputed information

9001 – Experian/Fair Isaac Score Not Available Due to Report of “Deceased” Status – The Profile report contains a subscriber transaction with a status code of “21″ or an association code of “X” indicating the consumer is deceased

9000 – Experian/Fair Isaac Score Not Available Due to System File Size Parameters – The Profile report contains more than 100 subscriber trade and inquiry transactions

Five Secrets to your Credit Report

From creditdebt.toughchild.com - 

If you’ve ever applied for a loan or credit card, chances are your lender acquired and examined a copy of your credit report before deciding whether or not to grant you credit.


Your “Credit Report” is a record of your credit history and it’s prepared by agencies called “Credit Bureaus”, or “Consumer Reporting Agencies.” These are private organizations and have no affiliation with the United States (or any) government. There are 3 major credit bureaus in the United States (2 in Canada) and their names are Experian, EquiFax, and Trans Union.

Did you know that credit reporting is a multi-billion dollar a year industry? It’s true! The credit bureaus are for-profit organizations that generate billions of dollars in revenue each year from selling copies of credit reports to creditors and mailing lists.

Your credit report affects more than your financial life. It could affect your education, career, and even your relationships. Your credit report is used not only by lenders and creditors, but also by auto, life, and home insurers, future employers, and even some educational institutions. It affects the interest rates you’ll pay on everything!

So as you can see, your credit report can have a critical impact on many facets of your life. For example, because of a bad credit report you could be forced to pay tens of thousands of dollars MORE in loan interest over the life of your home mortgage. This is no exaggeration!

Since the credit bureaus prepare and distribute your credit report to lenders, they clearly wield a great deal of power over both your financial and personal life. But it would be a grave mistake to be intimidated by them, or to think that you have no choice but to live with the negative effects of a bad credit report.

In fact, there’s plenty you can do!

Always remember; Knowledge is power! There’re a few facts the credit bureaus would rather you don’t know. Let’s take a look at them, and you’ll see why.

1. Credit reports are filled with errors!

It will probably astonish you to learn the percentage of credit reports that contain errors. While there seems to be some disagreement, estimates range from 1 out of every 3 (on the low end) to as high as 90%! Here’s a “run down” on error estimates.

Percentage of Credit Reports Than Contain Mistakes

Attorney General of NY 1/3

Consumers Union 48%

US Congress 1/2

Charles Givens Organization 90%

So no matter who you believe, it’s clear that way too many credit reports have errors. So even if you think you have good credit, it might be well worth your while to get a copy of your credit report and take a careful look at it.

2. The law is on your side!

In 1972 Congress passed the Fair Credit Reporting Act (FCRA) to curb abuses by the credit bureaus. The FCRA is the governing federal law on the issue of credit reporting.

Under the FCRA, you have the right to dispute negative information in your credit report. The credit bureaus then have 30 days to verify the disputed information with the creditor. If they cannot (or do not) verify the disputed information within 30 days, it must be deleted from your credit report.

3. Even accurate data in your credit report must be deleted if it’s not verified.

If you’ve done any research into credit repair you’ve no doubt run across statements to the effect of “Negative data in your credit report that is accurate cannot be removed.” As stated above, the FCRA stipulates that any disputed information must be verified within 30 days, or it must be deleted. The “burden of proof” (in a manner of speaking), is on the credit bureaus.

4. Credit repair DOES WORK in most cases!

You’ll hear all kinds of opinions as to whether “credit repair” (i.e. efforts to improve your credit report) can be successful. The truth is, credit repair doesn’t always work perfectly. But in almost every case the process of credit repair will result in at least SOME improvement in your credit score, and most often that improvement is substantial. So credit repair does work!

Now you may be wondering why repairing your credit score would be of any concern to the credit bureaus. After all, don’t they make money by compiling and distributing credit reports regardless of whether those reports are negative or positive?

Well, yes they do, BUT…they also make money (a GREAT DEAL of money) selling names of people with poor credit, to creditors who have a specific interest in those people.

So why would some creditors want to bother with people who have poor credit? Because they know they can charge higher interest rates to those people, because the “bad credit risks” have no choice but to pay those exorbitant rates or forgo credit altogether!

Besides, investigating disputed information costs the credit bureaus time, manpower, and money. They have nothing to gain, and plenty to lose, when people take the initiative and dispute negative information on their credit report.

5. It’s perfectly legal to hire third party help to repair your credit.

There are plenty of “Credit Repair Agencies” who will help you repair your credit. But if a credit bureau even suspects you’re using such an agency, it’s likely they’ll try to discourage you from doing so. In some cases they’ll even go so far as to send you a letter stating that use of such agencies is illegal.

Such statements are (to put it as politely as possible) garbage! In fact there are laws that regulate such agencies. Now laws don’t exist to regulate illegal activity, except to ban it! When was the last time you saw laws that regulate what cocaine dealers must do to operate within the law?

Once again, repairing a bad credit report just isn’t in the best interest of the major credit bureaus. But unless you happen to be the CEO of one of those bureaus, the most important question as far as you’re concerned is “What’s in MY best interest?”

First of all, get a copy of your credit report and examine it. You can get a free copy of your report at http://www.annualcreditreport.com.

Secondly, take steps to improve your credit report. You can go about it in one of two ways.

1. Hire third party help.

If repairing your own credit report sounds too intimidating, there are plenty of credit repair agencies that will do it for you. But if you take this approach, there are three things you need to know.

First, they’re not cheap. Expect to pay from $2,500 to $5,000 for an attorney or $795 to $2,000 or more for a credit repair agency. Secondly, they don’t always do it right! Some will manage to get the negative data on your credit report removed while actually doing damage to your “credit score” (a calculated number used by creditors to evaluate you credit worthiness.) Finally, many are outright scams!

That’s not to say you shouldn’t hire third party help. If you do your “home work,” ask for references, and carefully select a reputable credit repair agency, you’ll be much better off than if you had done nothing. Still, if you’re willing to do a little work, there’s a much better alternative.

2. Repair you own credit report.

Anyone can fix their own credit report. If you can write a few letters, address, stamp, and mail them you can repair your own credit. There’re plenty of good books available that can walk you thought the whole procedure, and once you’re done a little study, you’ll be surprised at how simple the process is.

Bad credit will cost you many thousands of dollars and limitless anxiety. Even if you have fair credit, fixing you credit could still save you thousands in interest payments over the years.

Get a good book on the topic of credit repair, and get started fixing your credit report today! And don’t be intimidated by the credit bureaus. Remember, the law is on YOUR side!

New case law out of the Seventh Circuit Court of Appeals

According to a recent ruling by the United States Court of Appeals for the Seventh Circuit, sovereign immunity does not apply to protect the federal government from credit reporting violations.

The federal government is protected against individual lawsuits in all cases except where Congress explicitly states the immunity has been lifted. The question in the case, Talley v. United States Department of Agriculture, was whether Congress waived the federal government’s immunity in the Fair Credit Reporting Act.


The FCRA was amended in 1996 to apply to all "persons", with no mention either way as to whether its definition of a "person" included the federal government.  The U.S. Department of Agriculture argued that Congress did not intend to do away with sovereign immunity when it amended the FCRA.

“You are asking us to presume that Congress is a bunch of blithering idiots,” responded Chief Judge Frank Easterbrook. He added that “Congress is presumed to know what is in the statute books when it amends them.”  He added that “because Congress need not add ‘we really mean it!’ to make statues effectual, and because courts don’t interpret statues to blot out whole phrases, that line of argument has poor prospects.”

Potential Blue Cross ID Theft Victims Top 500,000

Look out, former and current members of Blue Cross and Blue Shield of Tennessee.  Another 301,628 of you are going to find out shortly that you may be another victim of identity theft.  Don't worry, you've got company, as 220,133 people were already notified of their potential fate.

Last year, computer hard drives were stolen that happened to contain the personal identifiers and other information regarding over 500,000 members of Blue Cross/Blue Shield of Tennessee.

Blue Cross is offering free credit and ID remediation to those potentially affected.  Whoop tee do.  That's like offering a condom to a pregnant woman.  Nice gesture, but a little bit ineffective at this point.

Blue Cross should be offering these people cold hard cash for the worry and stress of potentially being a victim of identity theft.  These people paid good money to Blue Cross to insure them.  Blue Cross, they trusted you to keep their personal identifiers and medical information secure.  But you didn't.  Now over 500,000 people are at risk of one of the worst things that can happen to anyone, losing their good name due to the fault of another. 

I bet if the big wigs at Blue Cross had their identity stolen, they would be the first to balk at "free credit and ID remediation" and demand real justice.  Now lets see if they will step up for their customers.

Identity Theft Ruins Man's Life

Here's a pretty bad but fairly typical account of what an identity theft victim goes through -

In fewer than six months, some $900,000 in merchandise, gambling and telephone-services charges were siphoned out of his debit card. His attempts to salvage his finances have cost him nearly $100,000 and have bled dry his savings and retirement accounts. His credit score, once a strong 780, has been decimated. And his identity -- Social Security number, address, phone numbers, even historical information -- is still being used in attempts to open credit cards and bank accounts.


"I have no identity," said Crouse, 56. "I have no legacy. My identity is public knowledge and even though it's ruined, they're still using it.

"It really ruined me," he said. "It ruined me financially and emotionally."

Crouse is among the 11.1 million adults -- one in every 20 U.S. adults -- last year who have the dubious distinction of breaking the record of the number of identity-fraud victims in the U.S., according to a recent study by Javelin Strategy and Research. That figure is up 12% over 2008 and is 37% ahead of 2007. The cost to the victims: a collective $54 billion.

"The odds have never been higher for becoming a fraud victim," said James Van Dyke, Javelin president and founder. "It's an easy crime to perpetrate, a crime that's almost impossible to catch when done in a sophisticated manner and a crime in which enforcement is very limited."

Endless paperwork

Crouse can attest to that. Once an avid fan of online shopping and banking, the Bowie, Md., resident would auction on eBay.com, download songs from iMesh.com and use his ATM card like a credit card.

He first noticed suspicious activity in his account in February of 2009 for small charges of $37 or $17.98. He had a full-time job then and was spending out of an account that generally held $30,000.

"All of a sudden it really got bad," he said. "In August the charges hit big time -- $600, $500, $100, $200 - all adding up from $2,800 to $3,200 in one day."

He called his bank immediately and started what began a tiresome process of filling out what he said finally amounted to about 20 affidavits swearing that he was not responsible for the charges. He said one day he filled out an affidavit about a charge and the next day the bank had accepted similar charges approaching $4,000.

"At that point I was going to the bank every day and looking at everything," he said. He had the time then. Five months before that he had been laid off his $180,000 a year construction-industry job.

Now he was in a double bind: His $2,300 a week net income had dwindled to $780 in unemployment checks every two weeks and his accounts were getting drained daily -- even after he closed his debit account.

He opened a new account at a new bank and the next day both accounts got hit with a $1,100 charge. The new bank told him it was keystroke malware that had likely done him in. Someone had hacked into one of the sites he visited regularly, his computer got infected and picked up all his personal information by tracking every key he struck.

While much of the fraud came from online purchases and at gambling sites, there were new accounts opened in different names but linked to his bank account. There was one purchase of a plasma TV from a Best Buy in Florida that was shipped to a Brooklyn. N.Y., address. In another case a woman in North Carolina was writing out checks tied to his account.

"It was nasty," he said, admitting that he even contemplated suicide. "I just couldn't take it. I didn't feel like a man anymore. I was violated and I didn't know what to do."

High-value targets

Identity thieves steal mostly through two means, according to Michael Stanfield, chief executive of Intersections Inc., a risk-management firm. They take an established address and phone number of an identity that "has some value," he said, like a doctor or a lawyer. In many instances, they can go to the Internet and acquire the matching Social Security number for as little as $50. They then have enough information to get an address changed with your bank account or a credit card account. They apply for new accounts as you.

For the rest of the article, see here - http://www.marketwatch.com/story/the-rise-of-identity-theft-one-mans-nightmare-2010-02-10

Experian kills off another consumer

What's with these credit bureaus?  One of the many recurring problems with the credit bureaus is that they often report consumers as deceased when they are very much still alive.  But don't let a little thing like a pulse contradict a credit bureau's pronouncement of death!  Here's a quote from an article about yet another "deceased" consumer with a heart beat -

"They said, 'I'm really sorry, but we can't process this loan any further because we have a report declaring you deceased," Julie Kerr recalled.


No one was more surprised to hear the report of Julie's mother's death than Julie's mother herself, Ann Howe of Bothel, Washington.

"I just said, 'What? What are they talking about?' I said, 'I'm certainly alive. My doctor knows I'm alive," Howe said.

Howe indeed is alive and well, but she could not get anybody to believe her even though she goes into Bank of America all the time.

"Everybody knows my mom there," said Kerr. "My mom's this happy-go-lucky chatterbox."

"Bank of America knew that I was coming in there. I have automatic deposits that go in there," Howe said.

However, seeing was not believing. So, Howe sent an official notarized letter to Bank of America saying, "The report of my demise is inaccurate information."

"We understand she's alive. We understand it's a mistake, but because we can't get a credit score from Experian, there's nothing we can do," Kerr said.

SO even though the lender knew this "happy-go-lucky chatterbox" was alive, they believed Experian's claim she was dead over the lady's own beating heart.  And, of course, Experian refused to fix the problem, thereby violating the Fair Credit Reporting Act, which is a pretty common occurrence at Experian. 

Kerr was finally able to resurrect her mother after a local TV station got involved and put some heat on the situation.  Good for the tv stations, but, really folks, it shouldn't take the threat of bad press to get a simple to fix error fixed.  Guess she should have use the magic words "its only a flesh wound"!

Here's a link to the full article - http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=7270195

2010 Census - stand up and be counted ... but make sure its legit first!

A buddy of mine forwarded the following to me regarding tips to avoid census fraud -

AVOID ID THEFT DURING THE 2010 CENSUS
Zander Insurance wants you to be aware of scam artists using the 2010 Census as a means to steal your personal information.
THE CENSUS will be mailed to 134 million households on March 1. The form has 10 questions about your age, date of birth, race and whether you rent or own a home. It does not ask for your social security number or information about your taxes and income. If you do not return a completed Census Form by April 1, it is likely that a Census Taker will either call you or come to your door to obtain the information.
BE CAUTIOUS AND USE THE FOLLOWING SAFETY TIPS:
1. The Census does not ask for your Social Security Number – do not give that information out to anyone claiming to be with the Census Bureau.

2. Never invite a Census Taker into your home.

3. All Census Takers carry official government badges marked with just their name, a Department of Commerce watermark, and an expiration date.

4. The Census Worker is supposed to provide you with a letter from the Census Director on official letterhead.

5. The Census Bureau will not contact you via email.

6. Do not click on any websites that pop up disguised as a census survey. The Census Bureau does not solicit information over the internet.

7. The Census does not ask for credit card or bank account information.
Visit the U.S. Census website at http://www.2010.census.gov/ or call the U.S. Census Telephone Questionnaire Assistance Center at 1-866-872-6868 for additional information.

Its tax time ... which means its time for tax time scams!

In my line of work as a consumer attorney, I see the tragic results of a lot of different types of scams.  One type of scam that I am seeing more of is scams involving tax returns.

A couple of tips -

First, never sign a blank return.  That's just dumb.  That return can then be used to send your refund to some other person's account or some other similar scam. 

Second, never pay someone a percentage of your refund to prepare your tax return.  That is also silly and usually means the tax return preparer is less than above board.  A legit tax preparer will charge you a flat fee or a set hourly fee.

Lastly, never use any tax preparer that tries to get you to make false or misleading deductions or do anything else that's not totally accurate.  Doing so just brings the IRS to your door and where will that tax preparer be?  I don't know but neither will you, so you will be on your own.  Reminds me of a cartoon I saw one time about a guy visiting his doctor.  He asks the doctor to recommend a good laxative.  The doctor replies "A letter from the IRS always works for me."

Don't be that guy.

Strategic defaults are becoming more and more common

A research study using 24 million individual credit files found something surprising - that consumers with higher credit scores are more likely to "walk away" from a mortgage than consumers with lower credit scores.  In fact, consumers with higher scores are 50% more likely to strategically default on their mortgage than consumers with lower credit scores. 

The research study found some interesting things, such as the following:

1.  The number of strategic defaults is far beyond most industry estimates -- 588,000 nationwide during 2008, more than double the total in 2007, representing 18% of all serious delinquencies that extended for more than 60 days in last year's fourth quarter.

2.  Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they've fallen behind on other accounts.

3.  Strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and have cratered since 2006. In California last year, the number of strategic defaults was 68 times higher than it was in 2005. In Florida it was 46 times higher. In most other parts of the country, defaults were about nine times higher in 2008 than in 2005.

4.  Two-thirds of strategic defaulters have only one mortgage -- the one they're walking away from on their primary homes. Individuals who have mortgages on multiple houses also have a higher likelihood of strategic default, but researchers believe that many of these walkaways are from investment properties or second homes.

5.  Homeowners with large mortgage balances generally are more likely to pull the plug than those with lower balances. Similarly, people with credit ratings in the two highest categories measured by VantageScore -- a joint scoring venture created by Experian and the two other national credit bureaus, Equifax and TransUnion -- are far more likely to default strategically than people in lower score categories.

6.  People who default strategically and lose their houses appear to understand the consequences of what they're doing and in fact, strategic defaulters are clearly sophisticated, based on the patterns of selective payments observable in their credit files. For example, they tend not to default on home equity lines of credit until after they bail out on their main mortgages, sometimes to draw down more cash on the equity line.

Illinois Federal Judge rules that FACTA does not apply to e-merchants

In the case of Shlahtichman v. 1-800 Contacts, Inc., U.S. District Judge John Darrah ruled that FACTA's truncation requirements for "printed" receipts does not apply to e-mails sent to purchasers by internet merchants.

The theory, according to Judge Darrah, behind FACTA's requirement that credit card numbers and expiration dates be truncated on receipts, is that such truncation would help prevent "low tech" types of identity theft such as dumpster diving.  According to Judge Darrah, an e-mail sent to a e-purchaser does not fall under the definition of "printed receipt" since its not actually printed, merely e-mailed.  While that is true, I disagree that an e-mail is not a risk for identity theft.  Why should FACTA not try to prevent high tech identity theft as well?

While Judge Darrah is technically correct in his ruling, Congress should take note of his ruling and amend the law to fix this loophole and, in the age of the information superhighway, help protect us all, not just those who do not partake of e-commerce.

Alaska employees at risk of identity theft - push Equifax to establish call center

From newsminer.com - 77,000 current and retired public employees from 2003-2004 at risk of identity theft due to security breach by PriceWaterhouseCoopers.  Read on.

The 77,000 current and retired public employees who may be at risk for identity theft because of information lost by a state contractor should receive letters within the next week or so with details on what to do next. The state is pressing a major credit agency to get a call center in place, perhaps by Feb. 15, to process individual cases.

There have been no reports yet of cases of identity theft resulting from the loss of the prices information, but unless or until PriceWaterhouseCoopers recovers the lost information, the risk remains.

The names, Social Security numbers and birth dates of employees or former employees who were in the Public Employees Retirement System and the Teachers Retirement System in 2003-04 were lost by PricewaterhouseCoopers in Chicago in early December.
The company, which failed to tell the state about its mistake for nearly two months, said in late January that it “regrets that the information was misplaced” and that it has made a “significant commitment” in trying to protect the people at risk.

The information was given to the accounting firm for analysis of financial models which are part of building the state’s lawsuit against Mercer, the company that the state claims mishandled the investments in the two retirement systems, creating losses in the billions.

Part of the settlement is that PricewaterhouseCoopers is to provide credit protection and safeguards for the 77,000 people, who are state and local government workers, teachers, university employees and retirees.

Department of Administration Commissioner Annette Kreitzer said the credit rating agency Equifax is being pressed to get the call center in place as soon as possible that will allow individuals to check on their records and take precautionary measures.

Equifax says it won’t be ready with its call center until Feb. 15, she said.
Kreitzer said a letter with instructions on how to contact the center and a unique code for each person is to be sent out late next week.

“I have questioned whether the call center could be set up more expeditiously, but Equifax has maintained that it cannot,” she said.

“The worst thing we could do is give the instructions out and then have people more frustrated because Equifax hasn’t had time to train its call center operators with our specific settlement information,” she said.

Do consumers in hard times pay their mortgage first or their credit cards first?

From ConsumerLoanWire.com:

The economic downturn has forced many consumers to make difficult financial choices, one of them being the choice to make a credit card payment or a mortgage payment. Historically consumers would protect their mortgage while letting a credit card fall delinquent if forced to make the choice, but a new trend shows that consumers are choosing to pay off credit debt at an increasing rate.

A study released by Chicago-based credit bureau Trans Union found that 6.6% of consumers were delinquent on mortgages but current on credit card payments in the third quarter of 2009 but that only 3.6% of consumers were delinquent on credit card payments while remaining current on mortgage payments.

Sean Reardon, author of the study, attributed this shift to a “perfect storm” of lowering housing prices and rising unemployment. Consumers know that they may be losing equity on a mortgage but they need to stay current on credit cards since they may be living on them for day-to-day expenses.

This strategy almost always makes no sense.  Why risk your most valuable investment, your home, just to keep your credit score better.  The only time this strategy does make sense is apparently what is happening - i.e. the home is not the most valuable investment.  Thanks to the collapse of the housing market, a lot of people owe much more on their house than what they are worth.  Thus, even if they make their house payments on time, they are not gaining any equity.  But they may need their credit cards to survive (like if they are currently unemployed). 

But missing payments on anything puts your credit score at risk, which also puts your credit card limits at risk, at least until the final provisions of the new credit card law finally go into effect.  Currently, if a credit card company sees something that worries them about your credit report (like missing payments), the credit card company can lower your limit, raise your interest rate or cut you off completely.  Once the new credit card law completely goes into effect, credit card companies will lose their draconian ability to unilaterally change the terms of your agreement, so long as minimum payments are made on the credit cards, regardless of what is happening with the rest of your credit.  But until that goes into effect, be wary of this strategy if at all possible.

Equifax announces quarterly dividend

On Friday, Equifax announced its quarterly dividend payable on March 15, 2010, for all shareholders of record as of February 22, 2010.  The dividend will only be 4 cents per share. 

Does checking your credit report hurt your credit score?

I get asked all the time whether a consumer checking his or her own credit report hurts the consumer's credit score.  The short answer - no.  When you as a consumer check your own credit report by requesting a copy from one of the big three credit bureaus, it is considered a "soft inquiry", which is only seen by the and does not affect the consumer's credit score in any way.

When a third party, such as a potential creditor, views a consumer's credit report, that is considered a "hard inquiry" and is seen by others reviewing the consumer's credit report.  A hard inquiry can also potentially affect your credit score.  But not always.

For instance, when you go out trying to buy a new car, the car dealership(s) you visit usually shop your credit around to try to get you the best financing and, as a result, increase their chances at a sale.  This shopping around causes multiple "hard inquiries" on your credit report.  However, these inquiries are treated as one inquiry, rather than several, for the purpose of keeping the inquiries from dragging down your credit score.

But I know of no set of circumstances where requesting your own credit report from one or more of the big three credit bureaus would hurt your credit score.

West Virginian sentenced to two years for identity theft

Tammy Aleshire, a West Virginian was sentenced last Friday by U.S. District Judge John T. Copenhaver, Jr. to a mandatory sentence of two years in prison for aggravated identity theft.  She was also oreded to pay restitution to the victims of her identity theft scheme.

Aleshire had previously pled guilty in October 2009 to the aggravated identity theft charge.
Aleshire learned the name and social security number of another individual when applying for a credit card at K-mart in St. Albans, West Virginia. The U.S. Postal Inspection Service and the Putnam County Sheriff's Department investigate Aleshire and learned she had used that person's identity to open credit card accounts.
Subsequently, Aleshire used the victims' name and social security number to obtain multiple credit card accounts which she used over 50 times to purchase merchandise totaling approximately $16,000.
Assistant United States Attorney Erik S. Goes handled the prosecution.This case was prosecuted as a part of the United States Attorney's identity theft initiative.

Haitians worried about identity theft

On top of all their other injuries, loss, worries and problems, Haitians are also worried about identity theft, as illustrated by the below article by Efrem Graham with CBN.com:

PORT-AU-PRINCE, Haiti -- Victims of Haiti's earthquake are dealing with yet another painful reality as they struggle to get back on their feet.

Many have no identification to prove who they are and they're afraid they could become victims of identity theft.

Slow Signs of Recovery

There are tiny signs that life is slowly returning to normal in Haiti. However, there are even bigger signs of just how slow that recovery is.

For instance, Jonas Julien sleeps in one of the countless tent cities, but has no tent.

"My family has eight persons," he explained. "They are in the street. They are on the street."

Another survivor, Antoine Demorcy, walked the street searching to see if family members' bodies were trapped beneath the rubble. So far, he's found three.

"You can't do nothing about. That is life," he said. "You have to keep looking to see. Be very strong and keep looking that is why I am going by my feet to see."

In one area of Port-au-Prince where many people lost their lives, some are still buried beneath rubble.

However, many people also escaped. Now they have returned to search through the debris hoping to retrieve important belongings such as bank statements, birth certificates, even their college degrees.

Jean Robert was looking for his passport and the deed to his land.

"People used to steal your ownership if they know that you don't have the paper that should prove, that can certify that you are the owner of a thing," he said.

He is worried about losing his identity, after losing so much more.

"My brother died," Robert said. "I had the chance to rescue him, but he died after because he could not breathe, I mean five days after."

Robert's mother, who lived on the first floor of a five-story building, was also killed in the earthquake.

"My mother is still under the stuff," he said.

Truly tragic. 

Opponents of CFPA attempt to mislead the public

I don't often go to my own blog.  Seems weird at first, but I usually go straight to the "behind the scenes" view of my blog where I can post and respond to comments from readers.  Its not often that I go to my main page that you see when you go to my blog.  I do it occasionally though, primarily to make sure everything is still looking right and to see what ads are showing up on my blog.  I don't get to pick the ads I want displayed.  Google does this for (or to) me.  But I can block ads that I don't want on my blog.  Of course, they first have to appear on my blog before I can block them.  I have mostly blocked sites that offer "free" credit reports that are not really free or other scam or anti-consumer type ads.

Today, I blocked an ad for http://www.stopthecfpa.com/.  I checked this site out to find out that it ony provides made up horror stories and misleading information about the Consumer Financial Protection Act. 

Here are its "horror stories" about what would happen if the CFPA is passed -

“You guys are regulating us out of business. I am a small business owner–but my business may shut down due to the COST of complying with government regulations. Alex, my 1 full-time employee, and Kathy, Amanda, Sandy, Hannah, Caleb, & Stephanie, my 6 part-time employees, may lose their jobs.” — Ben
“I am a small business owner, and it seems like these days, government doesn’t like us.” — Tim Byers
“How the CFPA affect me? Simple: my cabinet shop business will cease to exist.” — Mona Steck
“While I agree that we need to strengthen consumer protection laws, I am concerned this bill will have significant unintended consequences that will harm consumers, rather than protect them. It is all ready difficult to run my business, which has twelve employees. With new restrictions that would further decrease the options for people to do business or pay for services; I can only see more of the same spiral that we are in. I know that my business might not seem like a big problem, but I am not alone. I am like the regular Joe American. I am like what makes up America.” — Greg Welch

Notice that none of these blurbs provide any basis for the people's so called fears.  The CFPA would not restrict consumers' options for paying for services.  It would have no effect on that at all.  Here's what the CFPA would really do -

To begin with, be aware that the agency's powers and oversight would extend far beyond mortgages and real estate -- into all credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list.


It would have the authority to alter long-common practices that nettle consumers, such as mandatory arbitration clauses in the fine print of contracts that automatically send business-consumer disputes to arbitrators rather than to courts. The agency could ban or limit such clauses in specific products if they are shown to tilt against consumers' interests.

The agency would write the user-safety rules for virtually all consumer financial products and would have the legal firepower to levy huge fines -- tens of thousands of dollars a day per violation in some cases -- and prosecute lenders, brokers and others who break the rules.

The agency would be the dominant federal consumer protector in all home real estate settlements. It would regulate "affiliated" title, escrow and financing businesses connected with realty firms and builders. It would oversee equal credit opportunity and fair housing, and would set standards for all mortgage offerings, whether from the biggest national banks or the smallest local brokers. Generally it wouldn't seek outright bans on mortgage products that carry elevated risks -- interest-only loans, for instance -- but would require that lenders restrict such mortgages to well-informed applicants who can document that they understand the risks and can afford the payments.

Within its first year, the agency would be tasked with creating consumer-friendly, uniform disclosures for all home purchase and financing transactions, starting with a combined "good-faith estimates" and truth-in-lending statement.

The core idea behind the proposal, supporters say, is to pull together consumer oversight powers that are now scattered among various agencies, and to put consumer interests where they should be -- much higher on the priority list than they were during the years leading up to the housing and credit bubble and bust.

Banking and mortgage trade group leaders generally agree that the existing regulatory system failed badly -- for consumers and the industry itself.

The CFPA, if passed, would be good for consumers and only bad for credit card companies and other large companies that broke the rules.  Its basically a lot like the FTC is now, only with the power to actually enforce the laws that the FTC does not have the manpower to enforce.  Small businesses would not be affected so long as they followed the rules which, if they are good businesses, they would already be doing since doing so is good business for their customers.

PA identity theft ring member sentenced

From the EthiopianReview.com -

Richard S. Hartunian, United States Attorney for the Northern District of New York, John F. Pikus, Special Agent in Charge of the Federal Bureau of Investigation (FBI) Albany Division and Steven Heider, Chief of the Town of Colonie Police Department, announced today that JOHN W. WINDLE, 44, of Philadelphia, PA was sentenced by U.S. District Judge Gary L. Sharpe to 70 months of imprisonment for his involvement in an identity theft ring.


On September 6, 2007, WINDLE pled guilty to four felony offenses: one count of identification document fraud, one count of wire fraud, and two counts of aggravated identity theft, in violation of 18 U.S.C. Title 18, United States Code, Sections 1028(a)(5), 1343, and 1028A, respectively. WINDLE was sentenced to 46 months for the identification document fraud and wire fraud and 24 months for the aggravated identity theft counts, three years of supervised release, forfeiture, and full restitution to the victims of his crimes.

According to court documents, WINDLE admitted that he was a team leader in a so-called “flip, bite, and write” identity theft scheme in which ring members targeted elderly women shopping in grocery stores. Teams led by WINDLE traveled to locations where retail stores, usually one that sold groceries, were located in close proximity to stores where electronics could be purchased, such as Best Buy, Circuit City, or Sears. Typically, a member of WINDLE’s team distracted the elderly female victim in the store (“the flip”), while WINDLE stole the woman’s credit cards (“the bite”). WINDLE then went to his vehicle nearby and, using a laptop and ID printer, made a false identification document (ID) in the victim’s name with a picture of one of the ring members traveling with him. The false identification documents WINDLE created included state driver’s licenses and United States Armed Forces identification cards. Using the stolen credit cards and fake ID, WINDLE and his team members then purchased expensive electronics, miscellaneous merchandise, and gift cards, signing the victim’s name to the credit card receipts (“the write”). WINDLE sold some of the electronics to KHURRAM FARID, who in turn sold them on the internet, while other proceeds were divided among the team members.

WINDLE admitted that he and ring member ANN M. GRICE carried out the identity theft scheme in the capital district region in July 2004, victimizing elderly women and businesses in Latham, Brunswick, Clifton Park, and Wilton, New York. WINDLE and GRICE were arrested by the New York State Police in Wappingers Falls, N.Y., after leaving this area and victimizing another elderly woman in a supermarket in Poughkeepsie, N.Y. WINDLE and GRICE were indicted by a federal grand jury in this District on February 16, 2007.* GRICE remains at large.

On October 12, 2006, NELSON SLAUGHTER, another team leader in the identity theft ring, pled guilty before Judge Sharpe to felony offenses related to his participation in the “flip, bite, and write” scheme and was sentenced to 73 months imprisonment on May 7, 2008. WINDLE and SLAUGHTER operated the scheme, which they developed with others, starting in at least 2001, and committed acts throughout the United States, including New York, California, Massachusetts, Connecticut, Pennsylvania, Ohio, Indiana, Virginia, and North Carolina. Additionally, on August 20, 2009, KHURRAM FARID was indicted by a federal grand jury in the Eastern District of Pennsylvania on charges of conspiracy and transportation of stolen property for receiving and reselling on the internet the stolen goods procured by WINDLE and SLAUGHTER.

The criminal investigation was conducted by the FBI, the Town of Colonie Police Department, the Social Security Administration Office of Inspector General, the Defense Criminal Investigative Service, and the New York State Police, and was prosecuted by Trial Attorney Nicola J. Mrazek of the Fraud Section of the Criminal Division of the U.S. Department of Justice and Assistant United States Attorney Tina Sciocchetti of the United States Attorney’s Office for the Northern District of New York.

(Source: FBI)

Stay OFF the tennis court! Tennis is the most common trait of identity theft victims

Guess Tiger Woods is safe from this one.  But Venus Williams, Andre Agassi, John McEnroe and Anna Kournikova better watch out.  Experian has compiles what it sees as the most common traits of an identity theft victim.  The most common?  Tennis.  Yes, tennis.  Check out the article below.

Most Common Traits of ID Theft Victims
by Jeremy M. Simon
Friday, January 29, 2010
Wealthy consumers who enjoy leisure activities such as tennis, skiing and international vacations are top targets for identity thieves, according to a new report.
A report released Wednesday by credit bureau Experian shows that fraudsters are on the hunt for the most affluent suburban consumers. Compared to the general population of credit applicants, Experian says these consumers live in and around metropolitan areas, favor leisure activities, have college diplomas or advanced degrees and more often tend to be married.
Affluent are more often victims of ID theft, report shows”The crooks are going where the money is,” says Gail Hillebrand, senior attorney with Consumers Union, the nonprofit publisher of Consumer Reports magazine.
Most Common Traits, Activities
Experian identifies the common activities of those most often victimized by ID theft:
• Tennis

• Politics

• Foreign travel

• Charities/volunteering

• Cultural/arts

• Skiing
Where — and how — these consumers live also seems to make them more of a target. “The opportunities to steal discarded documents would be greater in suburban areas,” says Linda Sherry, director of national priorities with advocacy group Consumer Action. “More affluent households may have domestic help and service people who may have the opportunity to steal personal info from the home that can be used to acquire credit.”
How did Experian identify this group of wealthy victims? The bureau’s Fraud and Identity Solutions group — in conjunction with Experian Marketing Services — compared credit application data with thousands of individual fraud records between January 2007 and November 2008. It found that three of its 12 demographic groups were the most highly sought-after by identity thieves: “affluent suburbia,” “upscale American” and the more middle-class “American diversity” category of consumers.
Experian found that compared with the general population of credit applicants, the consumers most often victimized by fraudsters tend to own more new and luxury vehicles and live in higher-income neighborhoods that contain many more homeowners than renters. Additionally, these borrowers tend to be based in densely populated metropolitan areas and often reside in multifamily homes or condos.
Thieves aren’t the only group focusing on wealthy borrowers. “Lenders are obviously targeting some of these demographics as well,” with better and more frequent offers of financial goods and services, says Keir Breitenfeld, director of product management for Experian’s Fraud and Identity Solutions group. As a result, thieves who target these consumers and steal their information have an easier time getting credit and services in their victims’ names. “If you’re a fraudster, you want to assume the identity of someone who can go out and get high-value services,” Breitenfeld says.
How to Protect Yourself
Consumer advocates, meanwhile, say that if the affluent can be victimized by ID thieves, anyone can. “You can’t protect yourself. Even the most affluent suburban households, it’s still happening to them,” Hillebrand says. She says that banks and other institutions have an obligation to better guard consumer data. “We don’t have much control over that as individual consumers. People who receive our data decide how carefully to protect our information,” Hillebrand says.
However, Experian says lenders need to strike a balance between guarding consumers and not making them struggle unnecessarily to get approved for credit. If consumers must jump through too many hoops in order to get a loan, Experian says, the bank may end up losing their business. Still, Experian says its report suggests that financial institutions may want to do more to protect certain high-risk borrowers.

Talk about a bad day ...

Imagine reading your local paper's crime report and seeing that you have been arrested for a crime.  Only you weren't arrested.  That's what happened to Dennis Lewis of Hattiesburg, Mississippi.  According to the Hattiesburg American, Lewis was listed in their January 18 crime report as being charged with vagrancy and interfering with a police officer.  Only Lewis was not charged with anything.  And, for the record, this happening in Hattiesburg apparently had nothing to do with Tiger Woods or the Hattiesburg sex addiction facility he is currently visiting.

Lewis has now filed identity theft charges against Ben Scroggins for using Lewis' name and date of birth at the time of Scroggins' arrest.

Mortgage assistant guilty of identity theft

From WCCO.com:

A former mortgage assistant is awaiting sentencing after he pleaded guilty Friday to stealing information on the job and using it to commit identity theft, according to the U.S. Attorney's Office.


In his plea agreement, 32-year-old Jason Alan Tauer of Robbinsdale admitted to stealing the files of 93 people who'd made loan applications at Ameriquest Mortgage, where he worked from March 15 to April 29, 2005. He also admitted to getting information from stolen mail and things he took from gym lockers, according to the report.
The Attorney's Office said Tauer then used the information to make fake identification documents and checks, which he used to get cash, services and other items. In one example given in the news release, Tauer obtained a U.S. Bank credit card in another person's name and withdrew cash from ATMs throughout Minnesota, sticking the victim with a $30,529.63 bill.
During a Dec. 4, 2007 search of Tauer's home, investigators found 93 files stolen from Ameriquest Mortgage as well as other documents containing information on 208 people, according to the release.
The charges in the plea agreement include two counts of bank fraud, one count of device fraud and three counts of aggravated identity theft. Though Tauer has yet to be sentenced, he could be sent to prison for more than 70 years.

Equifax keeps expanding

This from Zacks Investment Research at http://www.dailymarkets.com/stocks/2010/01/20/equifax-partners-1010data/ -

"Information solution major Equifax Inc. ... recently announced that the company is expanding its partnership with data provider and analytics company 1010data. This collaboration will help Equifax to provide its individual and household marketing data to retailers via the 1010data analytics platform.

The 1010 data platform will provide retailers with the option to combine their internal transaction data with Equifax’s marketing data. This combined application will especially help retailers to be able to run queries, help them to choose the proper store site, as well as improve their merchandising and inventory effectiveness.

New product innovation and advanced solution development ability is helping Equifax retain its leadership position in the information solution and data management sector. While Equifax’s core business remains solid, the company is driving growth through new product launches and international expansion. International expansion are a part of the company’s expansion strategy in its four targeted geographical regions—India, Russia, China and Latin America.

This apart, the company is adding new technical heads to increase its talent pool and enhance operational efficiency. Equifax has recently appointed David C. Webb as its Chief Information Officer. David will be absorbed in the company’s senior leadership team and will report directly to its Chairman and CEO Richard F. Smith. David will be shouldering the responsibility of forming global technology strategy and will innovate effective solutions for customers.

The introduction of new products and solutions through collaborations along with the addition of key technical personnel is a good growth strategy for Equifax, but competitive pricing remains a key parameter for these products and services to succeed. However, given the strong correlation to consumer and financial markets, as well as the company’s U.S. exposure, the results are gradually expected to revive with the recovery of the U.S. economy."

17 years in the making - Feds to unveil auto database

And I thought it was taking a long time to get the "Red Flag Rules" up and running.  17 years after Congress first passed legislation requiring it, the Feds are unveiling an auto database to deter theft and fraud regarding vehicles titled in the United States.  Read all about it here - http://www.detnews.com/article/20100123/AUTO01/1230331/Feds-to-unveil-auto-database-to-deter-theft--fraud.  Good read and about time!

See, I was right!

This article supports what I've been saying about the so called "free" credit reports.  Good read. 

So many people are worried about identity theft and the status of their credit report these days. But with so many companies claiming to offer you a free report, it is no wonder consumers are confused and overwhelmed about how to get the information they need. The truth is many companies are not entirely interested in giving you a free credit report, as they are in making money off of you with their other products and services. How does a consumer know where to turn for the information they need?



The Federal Trade Commission is Your Friend


The Federal Trade Commission, a Federal agency set up to protect consumers, is the only place online that offers a truly free credit report through Experian, Equifax, and TransUnion. You can receive reports on your credit every 12 months with no strings attached. Consumers often times are not even aware that they are entitled to review reports on their credit at least once a year, much less get it from a government agency.


Pitfalls to Getting Your Credit Report


Other companies will entice you to their website by stating you will receive a free credit report. Once at the website, you will often times find that you have to buy other products or services before your report will be issued to you. That’s great, if you are interested in the other products and services, but most times consumers just want to see their credit records only.


You may see ads on television or the Internet, or hear ads on the radio from companies offering free credit reports. Be alert to the fact that when you visit the website you might be obligated to buy additional products or services before receiving a report on your credit status. The FTC receives many complaints from consumers who have fallen into this credit report trap. In fact, they encourage you to report any spam websites that you come across.


How to Get Your Free Credit Report


The FTC advises consumers that you cannot get your free credit report directly through Equifax, TransUnion, and Experian. You must contact these companies directly through the FTC website. Simply type in “annual credit report” and look for the official website in your search engine. There are many websites that will have a similar name to this one, so be sure you are on the correct website by typing your search carefully. The site will guide you through the appropriate steps to receive a free report on your credit status.

Consumers typically type in search phrases such as “free credit score,” “free credit history,” and other similar phrases only to land in a website that wants to sell you something you don’t need. Avoid using these searches in the future to avoid spam websites.

You can get your annual report on your credit status for free. You can keep a watchful eye on your credit history in these days of high identity theft rates. You just have to know where to go to get the information you need.