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July 23, 2011

More about the social network credit bureau

I wrote previously about a new consumer reporting agency called the Social Intelligence Corporation that mines date from social networking websites such as Facebook and MySpace to build a consumer report about you.  My previous post is here -

The latest article which provides a good bit of detail of how the Social Intelligence Corporation will operate is here -

July 20, 2011

Identity thief arrested at her own wedding

When the audience was asked whether anyone objected to this marriage, the police said "we do!".  A woman was arrested at her own wedding on a Michigan warrant for identity theft recently.  Police actually allowed Tammy Lee Hinton of Port Richey, Michigan to finish her wedding before hauling her off to jail.  She was held for less than half an hour before the new hubby bailed her out.  Wonder if he had some wedding cake on the way to the jail?

According to authorities Hinton used a computer to commit her crimes and charged around $3,000 in utility bills under her victim’s name in 2009. However when she learned there was a warrant for her arrest in Michigan, she fled to Florida.

Way to start off a marriage, huh?

Way to go Senator Gillibrand!

Talk about a no brainer.  U.S. Senator Kirsten Gillibrand from New York is pushing legislation that will force the removal of Social Security numbers from Medicare cards and communications from Medicare.

Forty million Americans carry Medicare cards with their Social Security number on them.  They also receive letters and other communications from Medicare that include their Social Security numbers.  As a result, these people are at an increased risk of identity theft if their cards or communications from Medicare are compromised.

“Listing Social Security numbers on Medicare cards needlessly leaves millions of New Yorkers susceptible to identity theft,” said Gillibrand. “We must protect Medicare beneficiaries by deterring identity theft. Removing Social Security numbers from Medicare cards is simple step to help keep our seniors personal information secure.”

The proposed legislation, aptly named the Social Security Number Protection Act, would eliminate the display of Social Security numbers on Medicare cards and would stop the Department of Health and Human Services from collecting Social Security numbers and from listing Social Security numbers in communications to Medicare beneficiaries.  

I think this legislation is long overdue and, based on what I've read (which does not include the text of the proposed legislation), is a no brainer.  Good to see someone in Washington proposing something useful.  Good job, Senator Gillibrand!

Credit Scores Disclosed for Free Starting Tomorrow ...

but only when you suffer an adverse action based on a credit report, such as when your credit application is denied.

Starting tomorrow, July 21, 2011, the latest amendments to the Fair Credit Reporting Act go into effect.  The new amendments require lenders or other users of credit scores to include those scores on their adverse action letters they send consumers who suffer the adverse actions.  The publication of the score will be in addition to the reasons for the adverse action and the identity of the consumer reporting agency whose report was used in the decision to deny credit already required to be part of the adverse action letter.

This is a helpful change to the law.  Before, consumers would only know what score was assigned to them during a credit application if litigation resulted and the lender's files were subpoenaed.  Scores purchased even thirty seconds later from the consumer reporting agency could bear little resemblance to the score used in the adverse action, since lenders often use their own credit scoring models, which differ from the credit scoring models used by the CRAs.  If you do buy a score, buy it directly from FICO, as that's the scoring model most lenders use.

July 19, 2011

Is your child a victim of ID theft?

Identity thieves are not ones to discriminate based on age.   In fact, some of their favorite targets are children.  This is so for various reasons, not the least of which is that their crime is likely to go undiscovered longer if the ID theft victim is a child.

A recent study performed by Debix, an identity theft monitoring company, found that 4000 children's identities had been stolen or otherwise compromised out of only 40,000 children surveyed.

So what do you do to protect your children's identity?  First, when your child turns 16, check his credit report.  This should leave enough time to correct any errors caused by any identity theft before the child starts college and starts needing credit in his own name.

Second, watch out for any early signs of identity theft.  If your minor son or daughter starts getting collection calls or preapproved credit offers, then you should request his credit reports from the Big Three to see what's up.

When you request the report, the credit bureaus should respond that there is no report regarding your child.  If they have a report, then your child is either the victim of identity theft or a mixed file.  How do you tell the difference?  Two ways - first, if all three bureaus have a file on your child, its probably identity theft.  If only one has a file, its likely a mixed file.  But, the only way to know for sure is to contact the creditors who appear on the report and find out what Social Security number was used to open the accounts.  If its your child's SSN, then he or she is a victim of identity theft.  If its a different but similar SSN, its a mixed file and all the blame lies with the credit bureau's faulty matching logic.

In either scenario, the first step after learning of the problem is to dispute the errors to the credit bureaus in writing.  If that doesn't work, after multiple tries, then you need to hire someone like me to sue the bureaus' for your child.  Remember, I'm only an e-mail away.

July 18, 2011

The Fourth Credit Bureau?

If you have been reading this blog much, you have probably seen me refer to Equifax, Experian and Trans Union as the Big Three.  They could also be called the Three Stooges, but I'd hate to insult Moe, Larry and Curly.

But what a lot of people don't realize is that there are many, many consumer reporting agencies outside of the Big Three.  I was reminded of this recently when I read a Washington Post article entitled "Five Facts about the Fourth Bureau".  At first I thought there might be a new bureau emerging (kind of like Shemp, the fourth stooge).  Instead, the article lumps together all the smaller, unorthodox consumer reporting agencies as the "fourth bureau".

The other bureaus tend to cover topics that are missed by the Big Three.  Some can be seen as niche market CRAs, such as the ones that collect information about rent paying history, which they then sell to potential landlords.  Other types of information collected by the "fourth bureau" are payment histories regarding utilities payments, cellphone bills, magazine subscriptions and gym memberships.  Some even keep up with whether consumers return their rental movies on time.  Others include companies that compile investigative consumer reports and that provide criminal history type reports that can be used for background checks.

These smaller bureaus can play important roles as over 30 million U.S. consumers don't show up in the Big Three's databases.  These consumers are in a credit morass, as they can not get a loan without a credit history and can not get a credit history without getting loans.  But they can rent apartments, rent movies, sign up for utilities, etc.  The payment histories generated by these actions can sometimes be used in place of a more traditional credit report.

But these types of payment histories can also hurt a consumer's chances of getting credit if they do not reflect a responsible payment pattern, or if they contain damaging errors, which they are apt to contain.  Approximately 25% or more of the Big Three's reports contain damaging errors, so the other bureaus are likely to have a similar error rate.  The good news ... even though these companies are not the "Big Three", they are still subject to the vast majority of the requirements of the Fair Credit Reporting Act, including the requirement that they provide to consumers upon request a complete report of all information in their database about the consumer and 15 U.S.C. 1681i's requirement that they reasonably investigate consumer's disputes of inaccurate information.

The down side ... to get your report from the small bureaus will cost you some money (approximately $11) since the yearly free credit report requirement only applies to the Big Three.  Consumers can also get a free credit report from any CRA if they are denied credit (or suffer some other adverse action) as a result of the contents of the CRA's report.

The same rules regarding disputing errors also apply to the "fourth bureau" ... namely disputing in writing and dispute often.  If that doesn't work, hire someone like me to sue for damages resulting from the errors (which usually also includes the benefit of a corrected credit report.  Funny how a lawsuit will do things that a multitude of even the best dispute letters can not.)  If any of  you need help with the Big Three or the "fourth bureau", I'm only an e-mail away.

July 17, 2011

Starbucks' new iPhone app a risk for identity theft?

According to (Colorado's News Leader), Starbucks' new iPhone app, that allows iPhone users to pay for purchases, check gift card balances and purchase gift cards for others, is causing identity theft concerns.

Actually, the identity theft concerns are not really related to Starbucks' app as the concerns would apply to many apps.  Any app that encourages the storage of personal financial information (i.e. credit card info, passwords, etc.) on a mobile device increases the chances of identity theft, just because mobile phones are easier to lose than a desktop computer.  Just ask my niece, who loses her cell phone at what seems like a rate of one a month.  But that's a subject for another blog.

One of the next waves of technology will no doubt be some way to pay for purchases using your cell phone rather than a credit card.  But the trade off for something so convenient is the increased risk of identity theft.  Just like the trade off of being able to receive instant credit decisions while you wait to buy a toaster at Sears is that the decision must be based on information that can be transmitted to Sears while you wait.

True story - I once had a client who was unable to purchase a toaster on credit at a Sears because of an error on his credit report.  The defendant in the case was Experian, one of the three national credit bureaus.  Their argument regarding the credit denial was that he was not denied credit due to the error but due to the statement added to his credit report regarding the error, indicating that he was an identity theft victim and that he should be called at his home number to verify his identity before being granted credit.  In the case of instant credit, he would never be home to receive the verification call, since he would be out shopping, waiting for the credit decision.  Kind of a catch 22, huh?  Client should have used his cell phone number but, then again, this was back before everyone had cell phones.

Anyway, the trade off for "instant" stuff is almost always going to be an increased risk of something such as identity theft.  The trick is first recognizing the increased risk and then building safeguards into the app to handle the increased risk.  Hopefully, the apps of Starbucks and others take this into account when designing their apps.