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June 28, 2011

Identity theft - the latest summer risk for kids?

Its summer.  I know this due to the repeated "I'm bored" comments I hear from my nine year old.

Summer also brings additional risk of identity theft to children.  Thanks to the additional free time caused by the long days of summer, children spend more time in front of the computer or on their internet capable cell phones.  With this additional time online comes the additional risk of identity theft.

Why would an identity thief want to steal the identity of a child?  Basically because the child's credit history is a blank slate and can be misused longer than an adult's credit history, since the kid is not out doing the things that cause identity theft victims to learn of the theft of their identity, like applying for credit.

“The younger the victim, the more time these thieves have to exploit the child’s identity,” said Sandy Chalmers, Administrator of the Wisconsin Division of Trade and Consumer Protection. “Identity theft against a child can go undetected for years and do a lot of damage to their good name.”

So, parents, please warn your kids not to give out personal information online unless and only if its to a reliable source.  And, be sure to monitor what your kids are doing online.  A little bit of prevention can prevent a lot of problems later on.

June 27, 2011

Social Intelligence - a new social network credit bureau?

According to a recent article on, the Federal Trade Commission has authorized a new company called "Social Intelligence" to conduct background checks of consumers based not on their credit or criminal histories, but instead using the online social network activity.  This means there is yet another way that your online activity (or posts online regarding your less than stellar offline activity) can affect consumers' ability to land a job.

It was a big deal when companies started running a credit report on job applicants during the vetting process.  But this made sense.  Sometimes its because the job applicant would be handling large sums of money and, if they are in deep debt, they may be more likely to embezzle from the company.

This is even bigger.  Now, a potential employer doesn't have to expend its own resources to check your online identity, it can hire Social Intelligence to do it for you.  According to the PC World article, the potential employer would indicate what type of activity its worried about (i.e. illegal drug use, racism, or other illegal activity) and then Social Intelligence would allegedly only report back to the potential employer about anything it found related to those areas of concern.

But, in reality, Social Intelligence would be a consumer reporting agency (as defined by the Fair Credit Reporting Act) and thus would have to comply with the requirements of the Fair Credit Reporting Act, including maintaining its database of information in such a way that the reports it generates are done so utilizing "reasonable procedures to assure maximum possible accuracy" and that it would have to perform reasonable investigations of any disputes made by the consumer of items reported to the potential employer.

How, pray tell, is Social Intelligence going to perform a "reasonable investigation" of the online content?  That's got potential for some interesting case law.

The moral of the story, though, is to quit posting your business on Facebook and quit tweeting from the bar, etc.  Limit your Facebook posts to the kind of things an employer wants to see - i.e. things that demonstrate stability and maturity, not childish or inappropriate behavior.  This isn't new advice.  I've been telling clients for a while to watch what they post (and to make their profiles "private" to limit access to what they do post), because defense lawyers have started trolling plaintiff's facebook and other online profiles for juicy information to use against them later.

So, listen up folks, watch what you post 'cause it could come back to haunt you.

June 04, 2011

Horrible decision on s-2(b) claim

A bad decision was rendered recently, dismissing a consumer's claim against a furnisher who failed to perform a reasonable investigation of the consumer's dispute of the collection of a fraudulently opened account.

In Healey v. Trans Union, a decision rendered May 18, 2011, by the United States District Court for the Western District of Washington threw out a consumer's 15 U.S.C. 1681s-2(b) claim against a furnisher because the Court found that the furnisher's investigation, which was non-existent as best as I can tell, was sufficient.

Healey was the victim of identity theft.  The impostor opened an account with Sprint, which eventually resulted in the fraud Sprint account being sold to DRS, a collection agency.  Despite numerous disputes made by Healey to DRS regarding the fraudulent nature of the collection account, DRS continued to report the account to the credit bureaus for inclusion on Healey's credit reports.

Healey then disputed the DRS collection account to the credit bureaus, including Trans Union and Experian, pursuant to 15 U.S.C. 1681i.  Apparently, Healey did not possess evidence that Trans Union forwarded the 1681i dispute to Trans Union and thus could not establish that DRS's requirement to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b) was ever triggered.  Thus, dismissal of the s-2(b) claim against DRS relating to the Trans Union dispute was proper.

However, the dismissal of the s-2(b) claim related to the Experian dispute is another matter.  There was proof that Experian complied with 1681i and forwarded the dispute to DRS.  However, the Court found that summary judgment was appropriate because there was no evidence regarding what exactly DRS did to investigate and it was Healey's duty to establish that DRS' investigation was not reasonable.  DRS obviously failed to include in its "investigation" a review of its own files regarding Healey's previous disputes.  As a result, it is clear that DRS did not perform even the most elementary investigation of Healey's dispute to Experian regarding the DRS collection.  However, the Court did not think so and, as a result, wrongly (in my opinion) granted summary judgment.

Unfortunately for Healey, it was a sad day for justice in the western district of Washington.