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December 31, 2012

Equifax buys CSC

Credit bureau Equifax recently purchased CSC Credit Services, Inc. for the price of $1 Billion.  CSC was one of the last (if not THE last) of the affiliate bureaus to the big three credit bureaus.  Back when I started suing credit bureaus using the Fair Credit Reporting Act, there were several affiliate bureaus to the credit bureaus, including CSC and one right up the road from here called Memphis Consumer Credit Bureau.  

The affiliate bureaus basically "owned" the credit files of consumers living in certain geographical areas, even though the data comprising the credit files were stored on one of the big three bureaus' computer systems.  CSC owned consumers' Equifax credit files from Texas to Indiana (I know because I have sued them in both states and many in between).  

This led to a lot of confusion for consumers, who would buy their Equifax credit reports, find an error, then dispute the error to Equifax.  At first, Equifax would just write the consumer back and say that Equifax did not own their file and they would have to contact CSC to dispute the error.  They stopped this practice eventually, probably because lawyers (myself included) kept arguing that Equifax, when it receives a dispute, has to investigate it, particularly when the disputed data is housed on Equifax's computer system.  Equifax never did agree, but started forwarding the disputes themselves to CSC to "investigate", instead of relying on the consumer to re-send the dispute.

The Equifax/CSC relationship made for trickier lawsuits, since Equifax retained the duty to "follow reasonable procedures to assure maximum possible accuracy" of the credit reports it generated, but shifted the responsibility for performing reasonable procedures to CSC since they owned the data that Equifax was publishing for the consumers located in CSC's ownership area.  So, in some cases you would need to sue both Equifax and CSC but in some (those involving only botched investigations) you could sue just CSC.

At least the purchase of CSC will possibly do away with some of the confusion, both for consumers and lawyers suing Equifax.  

Funny side note - I got word of the purchase of CSC by Equifax a couple of weeks ago (I'm slow to blog about it thanks to the holidays and a busy work schedule).  After hearing the news, I received a call from an Equifax attorney on the other side of one of my FCRA cases.  I told him about it and he had not even heard yet.  Then, a week or so later, he calls and leaves me a message to "let me know" that Equifax had purchased CSC.  Funny, I thought I had let him know, not the other way around.  Guess even Equifax's attorneys do not follow reasonable procedures to assure maximum possible accuracy.

December 27, 2012

Fifth Circuit affirms FCRA verdict

The United States Court of Appeals for the Fifth Circuit recently affirmed a verdict in a Fair Credit Reporting Act case from the United States District Court for the Western District of Texas against consumer finance company Santander Consumer USA.  In the lawsuit, the plaintiff alleged that Santander failed to properly investigate his disputes of its erroneous publications to the credit bureaus.  The jury agreed and found that Santander had negligently failed to properly investigate the plaintiff's disputes.  Santander did not dispute the jury's finding of liability on appeal but did dispute the sufficiency of the plaintiff's proof of the damages he suffered.  However, the Fifth Circuit found the plaintiff's proof to be sufficient to affirm the verdict.

Santander contended on appeal that the proof of the plaintiff's damages resulting from the inclusion of the erroneous listing of the Santander account on his credit report was not sufficient to support the verdit in the consumer's favor.  The consumer's damages included a lowered credit limit, increased interest rate on a refinanced mortgage, the deferment of personal expenditures due to the uncertainty of his credit situation and mental pain and anguish, embarrassment, and difficulties caused to family and business relationships.  While the Fifth Circuit found that a diminution of his credit line alone is not sufficient to support the damage award, the Court found the rest of the plaintiff's proof sufficient to support the $20,437.50 verdict in his favor.  The consumer's attorney should also be entitled to his attorneys' fees to be paid by Santander, an amount which, given the time spent trying the case and then having to defend an appeal, should dwarf the verdict.

It is good to see the Fifth Circuit affirm a verdict like this.  It even cited one of my old cases, Cousin v. Trans Union Corp., as support for the plaintiff's damage claim.  

December 13, 2012

CFPB to release report on CRAs soon

It looks like the Consumer Financial Protection Bureau is now moving past its initial first steps and moving on to the type of topics it was created to address.  Below are the prepared remarks from its director Richard Cordray which I received ahead of the press call later today.  I can't wait to read the actual report!

Prepared Remarks by Richard Cordray
Director of the Consumer Financial Protection Bureau
Credit Reporting White Paper Press Call
December 12, 2012
The Consumer Financial Protection Bureau is releasing a report on the big three credit reporting companies – Equifax, Experian, and TransUnion – and how they manage consumer data.

The report highlights the basic systems the credit reporting companies use to collect, organize, and maintain consumer credit information.  It is based on information submitted by the three largest credit bureaus and other sources, and is one of the most comprehensive looks at the credit reporting industry to date.  And, importantly, it brings us one big step forward in understanding this industry and making it more transparent for consumers.

As you know, credit reporting plays a critical role in consumers’ financial lives.  Credit reports on a consumer’s financial history and behavior can determine eligibility for credit cards, car loans, and home mortgage loans – and they often affect how much a consumer is going to pay for that loan.  The industry is critical in our economy.  Without credit reporting, many consumers would likely be unable to get credit.
Almost every adult in America has a credit file.  Estimates are that Experian, TransUnion and Equifax each maintain files on about 200 million Americans gleaned from approximately 10,000 providers of information.  The amount of data collected and exchanged is astounding.  Each year, approximately 36 billion updates are made to consumer credit files.  There are more than 1.3 billion trade lines actively reported.  Trade lines are individual consumer credit accounts, so one person will likely have multiple trade lines, such as her car loan, bank account, and home mortgage, as well as different trade lines for each credit card she holds.

Today’s report found that credit card history makes up more than half of the information on an average credit report.  It also found that most of the information provided to the credit reporting companies comes from a few large companies, such as big banks.  This means credit cards are given great weight in credit profiles – a lesson that consumers could end up learning the hard way.  Especially around this holiday season, consumers may take out a retail credit card in order to save 20 percent off their purchases on a given day.  If they are not responsible with that one card, it could end up costing them a lot more down the line when they go to take out a mortgage and that credit card is a black mark on their credit report.

We also learned that more than a third of consumer disputes have to do with collection items.  Now, some of that may have to do with a consumer’s incentive to wipe out any negative information on their report.  But whatever the incentive, we found the information provided by the collections or debt buying industry is more likely to be questioned by a consumer than, say, the data from their mortgage lender.  In fact, the information provided by the collections industry is five times more likely to be disputed than mortgage information.

We also found that only about 44 million consumers – just one in five people with a credit history – check their report in a given year.  This is a shame because the most effective way for consumers to identify errors in their reports is to obtain copies of them and review them.  This is also a shame because – while we do not know for sure how common these errors are – we know that people do find errors.  And if consumers are not checking their reports, these errors can persist and pop up when a consumer can least afford them, blocking them for borrowing money for a larger purchase or causing them to pay a higher rate of interest than they should.

We also found that the credit reporting companies resolve an average of 15 percent of consumer disputed items internally, without getting the data furnishers involved.  The remaining 85 percent are passed on to the furnishers.  Today’s report found that the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate and report back to the credit reporting company.

As a data-driven agency we believe in informational reports like this.  We believe in doing deep dives into the markets we regulate, because we think the best and most effective way to oversee an industry or market is to understand it thoroughly.  And our markets teams, such as those that authored this report, are key to this function of our mission.

I also consider today’s report a significant addition to the Consumer Bureau’s oversight of credit reporting.  You will recall that in July, we adopted a rule to begin supervising the larger credit reporting companies.  These companies had never been supervised at the federal level.  Then, in October, we began taking individual complaints about credit reporting companies.  If a consumer files a complaint with a credit reporting company and is dissatisfied with the resolution, the CFPB is available to assist.

Today’s report establishes a baseline knowledge about the industry as we embark on our regulatory and supervisory mission.  Given our supervisory role over many of the providers and distributors of credit report information, we can play a positive role in resolving accuracy issues and other risks to consumers within the system.  And given our enforcement authorities, we can make sure that consumer financial laws are being followed.  Overall, we are very interested in finding better ways to measure and improve accuracy within this system.

What consumers can do is to be smart about how they manage their own credit.  They need to know how to build up their creditworthiness, so they can take control over their credit history in a positive way.  They also need to be aware that federal law gives them the right to a free credit report once a year from each of the nationwide credit reporting companies, which they can obtain at  It is critical for each of us to exercise that right.

Keep in mind that nobody else has as much incentive to protect you as you have to protect yourself.  Checking your credit report can reveal odd entries you do not recognize, which may be signs of identity theft.  It also can uncover errors that will hurt your creditworthiness unless you dispute them and get them fixed.  I urge every consumer to perform this self-check at least once every year.  Consumers can learn more about how to check their credit reports, and fix any errors that they may find, at

Today’s study helps bring clarity to the confusing world of credit reports.  It will help educate regulators and consumers about how this important industry works.  If consumers know how these companies handle their credit histories, they can make better decisions on how to manage their financial lives.  And, as I said earlier, credit reporting is a critical market at the heart of our lending systems.  Given its enormity, given its influence over people’s lives, and given its wide impact on our overall economy, you can see that there is much at stake in ensuring that it is working properly for consumers.


The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit

December 04, 2012

Article about new website

A very nice and almost embarrassingly flattering article written by Einstein Law about the launch of the Kittell Law Firm's new website.  Check it out here -

Soon, I will start blogging about more than just FCRA topics on the Kittell Law Firm's website's blog but will keep on posting here as well regarding FCRA matters (and any future embarrassingly flattering articles about yours truly!).

November 26, 2012

New firm's website

Last week, the Kittell Law Firm launched its new website.  Please visit it here - - to read about my most recent Fair Credit Reporting Act and identity theft cases, as well as my personal injury cases.

October 01, 2012

Terrible acts by American Express lead to them having to pay a settlement with FDIC and CFPB

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
  • Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
  • Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
  • Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.

In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

September 25, 2012

See, I told you so - the scores the credit bureaus sell you may not accurately reflect the score they provide to your potential lenders!

From the Consumer Financial Protection Bureau:

One out of Five Consumers Likely to Receive Meaningfully Different Score than Creditor

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released a study comparing credit scores sold to creditors and those sold to consumers.  The study found that about one out of five consumers would likely receive a meaningfully different score than would a lender.

“This study highlights the complexities consumers face in the credit scoring market,” said CFPB Director Richard Cordray. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”

The complete Analysis of Differences between Consumer and Creditor-Purchased Credit Scores is available at:

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to compare credit scores sold to creditors and those sold to consumers by nationwide credit bureaus and to determine whether differences between those scores harm consumers. Today’s study analyzes credit scores from 200,000 credit files from each of the following credit bureaus: TransUnion, Equifax, and Experian.  It is a follow up to a study the Bureau released in July 2011 that described the credit scoring industry, the types of credit scores, and the potential problems for consumers that could result from differences between the scores they purchase and the scores creditors use.

The study released today determined:

·        One out of five consumers would likely receive a meaningfully different score than would a creditor: When consumers purchase their score from a credit bureau, the score they receive may be meaningfully different from the score that a lender would consult in making a decision. A meaningful difference means that the consumer would be likely to qualify for different credit offers – either better or worse – than they would expect to get based on the score they purchased. 

·        Score discrepancies may generate consumer harm:  When discrepancies exist between the scores consumers purchase and the scores used for decision-making by lenders in the marketplace, consumers may take action that does not benefit them.  For example, consumers who have reviewed their own score may expect a certain price from a lender, may waste time and effort applying for loans they are not qualified for, or may accept offers that are worse than they could get.

·        Consumers unlikely to know about score discrepancies:  There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision.  As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.

The Bureau recommends that consumers consider the following in evaluating the credit score they receive:

·        Shop around for credit.  Consumers benefit by shopping for credit.  Regardless of the scores different lenders use, they may offer different loan terms because they operate different risk models or face different competitive pressures.   Consumers should not rule out of seeking lower priced credit because of assumptions they make about their credit score.  While some consumers are reluctant to shop for credit out of fear that they will harm their credit score, that negative impact may be overblown.  Inquiries generally do not result in a large reduction in a consumer credit score. 

·        Check the credit report for accuracy and dispute errors.  Credit scores are calculated based on information in a consumer’s credit file.  Inaccurate information may be the difference between a consumer being approved or denied a loan.  Before shopping for major credit items, the Bureau recommends that consumers review their credit files for inaccuracies.   Each of the nationwide credit bureaus is required by law to provide credit reports for free to consumers who request them once every 12 months. 

The Bureau will begin supervising consumer reporting agencies as of September 30, 2012.  The CFPB’s supervisory authority will cover an estimated 30 companies that account for about 94 percent of the market’s annual receipts.  The Bureau’s examiners will be looking to verify that consumer reporting companies are complying with federal consumer financial law, including that the companies are using and providing accurate information, handling consumer disputes, making disclosures available, and preventing fraud and identity theft.

September 05, 2012

BIG news!!!

Big happenings going on in my household right now, which explains at least partially my silence of late.  Two major events are occurring as I type this.  First, the wife and I are moving the family from Clarksdale, Mississippi to Hernando, Mississippi.  Hernando is about an hour northeast of Clarksdale, so not really a long distance move but still a major event.

Even bigger than that is the other news.  Not only are we moving, but the wife and I are starting the Kittell Law Firm.  That's right, I have made the huge step of going out completely on my own.  No more law partners.  Just me and my wonderful and beautiful wife, who is going to be the firm's paralegal and office manager.

We are close to being completely open.  The office needed some renovations, which were completed first.  Then came office furniture.  Now, today, our computers are being installed as well as our phones and Internet.  Since leaving the old firm, I have been referred to by my wife as the "Lincoln Lawyer" since, much like Matthew McConaughey in the movie of that name, I have been practicing out of our vehicles, usually with one or more kids in the backseat.

So life is very exciting right now.  And, for the first time in a long time, the practice of law is both enjoyable and fulfilling once again.  So watch out credit bureaus, collection agencies and credit card companies, the FCRA lawyer is back ... and soon to be out of his Tahoe and back in an actual office.

July 17, 2012

CFPB to start supervising credit bureaus

Finally, the Consumer Financial Protection Bureau is going to start supervising the credit bureaus.  The legislation creating the CFPB was enacted shortly after President Obama took office but the CFPB is just now getting up to cruising speed, having survived attacks by the Republican side of the aisle regarding its purpose and who would lead it.

Below is the official reaction by the National Consumer Law Center to the CFPB's supervision of the credit bureaus:

WASHINGTON─Advocates at the National Consumer Law Center (NCLC) applauded today’s announcement by the Consumer Financial Protection Bureau (CFPB) that the agency would begin oversight of the nation’s largest credit reporting agencies on September 30. “The fact that the CFPB will oversee the large credit reporting agencies is a game changer,” stated Chi Chi Wu, staff attorney at National Consumer Law Center. “This could potentially improve the economic lives of millions of Americans by improving the accuracy of the system and its responsiveness to consumers.”

A credit report is a record of how a consumer has borrowed and repaid debts. About 200 million Americans have their credit reports on file with the three largest credit reporting agencies (CRAs)–Equifax, Experian and TransUnion (also known as the “Big Three”). These reports also form the basis of credit scores, the three-digit numbers from FICO and VantageScore.

Credit reports and scores have an enormous impact on the economic lives of Americans, because they are used by the vast majority of lenders in the U.S., as well as by insurers, employers, landlords, and others. Yet until today, these three companies were not subject to supervision by any federal agency. The Federal Trade Commission (FTC) had the ability to take law enforcement actions against the Big Three CRAs, but such actions were difficult, rare, and costly.

“The CFPB will have far stronger tools to regulate the Big Three CRAs,” explained Lauren Saunders, managing attorney of National Consumer Law Center’s office in Washington, D.C. “The CFPB will have the authority to examine the policies and procedures of these companies, to go deep in its supervision, and to require changes much more quickly through the supervision process than the FTC could.”

Wu expressed hope that oversight by the CFPB would lead to better accuracy and a better credit reporting system. She noted that there have been longstanding complaints about the accuracy of credit reports, as well as the handling of disputes over errors. Studies by consumer groups have found errors in 25% of credit reports serious enough to cause a denial of credit, while studies funded by the industry have claimed that this rate was less than 1%. Even an error rate of 1% is problematic, given that means that two million consumers would be affected. Consumers can check their credits reports for errors and are entitled to one free report from each of the Big Three CRAs each year, available through
As for the dispute process, the Fair Credit Reporting Act (FCRA) requires that credit reporting agencies conduct a “reasonable investigation” when a consumer files a dispute over an error in their credit reports. Yet a 2009 report by NCLC ( found that the Big Three CRAs have turned the FCRA dispute process into a travesty by conducting investigations in an automated and perfunctory manner. The Big Three translate the detailed written disputes submitted by desperate consumers into two or three digit codes, and limit their role to little more than selecting and sending these codes off to the creditor or other entity that furnished this information.

“This week, the CFPB celebrates its one-year anniversary, and it is the bureau that is giving the American public a great birthday gift,” noted Wu. “We are thrilled that consumers finally have a government agency on their side whose mission is to make sure that the credit reporting system works for them.”

July 11, 2012

New scam claims that President Obama will pay your utility bills

Although if true they might help his re-election chances, recent claims that President Obama will pay your utility bills through a new federal program are actually scams. The scammers have reportedly used telephone calls, fliers, social media and text messages in several different states to try to lure their victims into giving the crooks their Social Security numbers and bank routing numbers.  If the victims provides the requesting information, he or she is given a fraudulent bank routing number to pay their bill through an automated telephone payment service.

No matter how hot it is, consumers should not believe these scams.  The end result if they do is likely that their identity ends up being stolen.

The primary reason so many people are falling for this scam (2,000 so far in Tampa, FL and 10,000 so far in New Jersey) is that it appears to work ... for a little while.  The payments seem to go through and get credited to the victims' accounts.  The victims then spread the word to family and friends, only to later learn that their payment is rescinded when its too late to warn the people the original victim told about the "federal program".

Don't fall for this scam.  But if you already have and do end up a victim of identity theft, remember that I am more than willing to help you.

July 09, 2012

Credit Score myths

Here's a link to a good article at Forbes magazine about three myths about credit scores.  I suspect a lot of people think the same thing that the author of this article used to think about her credit score.

Here's the article -

July 06, 2012

The Types of Jobs where your Credit History Matters

I have posted previously about how potential employers often run the credit histories of potential employees as part of the decision making process on whether to hire the potential employee.  A recent poll shows how prevalent this practice really is.

The Society for Human Resource Management (I bet they throw one heck of a Christmas party!) recently polled its members regarding whether they utilize credit reports during the hiring process.  47% of those polled indicated that they run a credit history on at least some candidates and 13% run a credit report on all potential employees.

But what are the types of jobs where employers want to know about your credit history?  The top such jobs are those that include a fiduciary or financial responsibility (I once represented an airline pilot that could not change to a bigger and better airline because of a ding on his credit report - airline pilots get to use the company credit card and they thought he was too much of a risk).  Other jobs where credit reports are often used are top level jobs (i.e. CEOs, CFOs, etc.) and those with access to either highly confidential or highly sensitive information.

What types of bad credit harm potential employees' chances the most?  Judgments top the list (who wants an employee that gets sued a bunch?!) as well as bankruptcies and outstanding collection items.  A high debt to income ratio also appears to be a red flag for employers.

So, if you are planning on applying for one of the types of jobs listed above, you'd better check your credit report first and fix/correct/pay anything you can.

July 03, 2012

What is rapid re-scoring?

When applying for a mortgage, most lenders offer the consumer the opportunity for a rapid re-score, which is basically a way to quickly dispute errors on a credit report in the hopes of increasing the credit score just enough to get a better rate or qualify for the mortgage at all.

Using rapid re-scoring, the consumer can get accurate information added to his or her credit report in days rather than weeks.  A rapid re-scoring service can get the errors investigated in days, whereas the credit bureaus have 30 days to investigate disputes directly from the consumer.  Of course, rapid re-scoring is usually only available when a consumer is trying to get a mortgage and does not make sense for disputing information at other times.

Rapid re-scoring is also NOT credit repair.  Rapid re-scoring deals with inaccuracies on a consumer's credit report.  Credit repair, which is almost always a scam, deals with trying to get accurate (but derogatory) information removed from a consumer's credit history.

So if you are applying for a mortgage, you should check your credit report to see if there are any inaccuracies that, if rapidly re-scored, might get you a better interest rate.

June 28, 2012

Dr. X's ordeal with Bank of America

Bank of America certainly has a tendency to make their customers mad.  They have done it to me.  They have done it to scores of clients I have represented in litigation against them over the years.  Now, they've done it to Dr. X.  And he wants the internet to know about it.

Read his story here -  It sounds oh so familiar.

June 22, 2012

The Truth About Credit Repair Companies

I am often asked what the deal is with credit repair companies.  Can they really remove derogatory but accurate credit history from a person's credit report.  The short answer - NO!!!  So, all of you out there, quit paying money to these companies to "fix" your bad credit.  Instead, use that money to pay your debts and get your own self out of the hole that you unfortunately find yourself in.

Apparently, I'm not the only one being asked this question.  Below is a link to an article on regarding credit repair companies.  Their advice mirrors mine.  Here's the link -

June 21, 2012

The Band is Back!!!

Anyone who has read this blog knows that I don't exactly love Experian.  I also don't really like their subsidiary, since they don't really offer free credit scores.  But I have to admit, I liked the down and out band that starred in the original commercials.  From living in the basement of their in-laws and having to settle for early '90's style cell phones, all due to bad credit and not knowing their credit score, these guys exemplified the rough life of having bad credit.

I'm not sure if they wrote their own songs, but the songs were so great and really underscored why your credit score is so important.  In fact, given Experian's tendency to not report accurate credit (which in turn leads to inaccurate credit scores), I think the commercials starring the original band were helpful in educating potential jurors across the nation about the importance of credit scores, jurors who hopefully would make Experian pay proper compensation to those injured as a result of Experian's failure to abide by the provisions of the Fair Credit Reporting Act.

For some reason, did away with the popular band, held a contest to find a replacement which simply turned out not to be as entertaining as the original band.  Apparently seeing their blunder, has announced that its bringing the original band back!  I can't wait to see some new material from them.

June 20, 2012

Online data - the new credit report?

Here's a link to a good article about the emergence of type consumer reporting agencies and the importance of the Fair Credit Reporting Act being applied to them. The collection and sharing of online data about consumers is really a growth industry right now and one that I will be focusing more on in future posts and (I am sure) future lawsuits for consumers.

Here's the link I mentioned -

June 19, 2012

Vermont passes legislation to limit use of consumer reports by employers

A Vermont law going into effect on July 1, 2012 will severely limit the use of consumer reports by employers during the job application process.  Joining California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington, Vermont is the eighth state to pass such a law, with Vermont's arguably being the most restrictive to date.  For a full summary of the new Vermont law, click here -'s article on destroying high interest debt

As usual, I love what is saying.  Here's another excellent article from them about destroying your high interest debt. Definitely worth a read.

Another way to help destroy high interest debt?  Make sure your credit report is accurate.  Inaccurate derogatory payment histories kill your credit score.  Also, credit cards that don't report an accurate credit limit can hurt your credit score because that can affect your debt to available debt ratio.  Too high of a ratio is a bad sign to potential lenders, so they up the interest rate they charge you to cover their perceived added risk.

Also, make sure the balances reported by your creditors is correct.  Too high of a total balance of debt is bad for your debt to income ratio, which can also hurt your credit score.

But I digress.  Here's the link I mentioned -  Happy reading!

June 18, 2012

Potential data breach at the University of North Florida

From the Florida Times-Union's website:

A computer database containing information about 23,246 people who submitted contracts to live in the University of North Florida’s residence halls might have been compromised by a hacker.

School officials have locked down the affected computer server as they try to find out if any personal information was taken.

The database included names and Social Security numbers of people who submitted housing contracts between 1997 and spring 2011. The hacking could have occurred as long as a year ago, according to UNF officials.

“When we first started to suspect someone who was not authorized had gotten into the database, we immediately began investigating,” UNF spokeswoman Sharon Ashton said. “At the same time, we moved the information off that server and put it on a different server, and put additional security measures in place.”

The investigation needed a few weeks to determine which file was broken into, then how to get in touch with everyone on it to alert them to the breach, Ashton said. Now the university is sending them letters and emails about the breach.

“We don’t have any evidence that any information, or that anything, was copied from the files, but it is a possibility,” Ashton said.

So far, Ashton says, none of the people that were in the database have reported their personal information was used. The school will pay for one-year memberships in a credit-protection program for anyone impacted. It has set aside $80,000, but is prepared to pay for all 23,246 if they request it. And school officials recommend they place a fraud alert on their credit files via Equifax, (800) 525-6285; Experian, (888) 397-3742; or Trans-Union, (800) 680-7289.

In October 2010, someone gained access to personal information on almost 107,000 UNF students, potential students and employees. Other universities have been affected by hackers more recently.

The University of Nebraska identified an undergraduate student in May it says is responsible for breaking into a school database with information on more than 650,000 students, parents and employees, according to And in January, Arizona State University shut down its web services after someone downloaded an encrypted file containing user names and passwords of an unknown number of students, faculty and staff, according to the school.

June 15, 2012

Equifax's stock hits 52 week high

Equifax's stock price has reached a high point for the past year yesterday, closing Thursday at $47.78.  I guess it pays to outsource your investigation department to Jamaica where you can pay investigators less than minimum wage.

Scam Alert - Placing an ad on your car doesn't get you paid

I just heard of a new scam.  It goes like this.  You receive an e-mail or other solicitation that indicates that you can add an advertisement to your car, drive it around, and get paid by the advertiser.  To do this, you just need to pay a one time fee of $39.95.

Unfortunately, this is a scam.  While it is true that there are companies that will hire you to drive around a vehicle with their ads on it, you don't have to pay a membership fee to do so.  Any offer where you are supposed to get paid but requires a payment from you to get started is almost always a scam.

As I often heard growing up, if it sounds too good to be true, it probably is.  And that's even more true in this day and age.

June 14, 2012

Dishonesty on credit card applications at three year high

The level of dishonesty on credit card applications is on the rise, according to a recent study by Experian.  Not that Experian is actually known for its accuracy, but for the sake of argument, lets assume Experian's study is accurate.

According to Experian, 44 out of every 10,000 current account applications were found to be fraudulent in the first quarter of this year.  This represents an increase of 23 percent over the last three months of 2011 (which would include the holiday shopping season which to me would seem like a time of the year that would be highest for this sort of fraud).

Current account fraud includes things like misrepresenting income or exaggerating or hiding personal information, such as bad credit histories.

While troubling, another way to look at the figure of 44 out of 10,000 is that its a lot less than Experian's error rate which is somewhere around 2,500 out of every 10,000 credit reports containing serious errors!

June 13, 2012

Experian's 2012 Annual Report

Here's a link to Experian's 2012 Annual Report -

Looks like Experian is raking it in. Their revenue is nearly 4.5 billion and is up by over half a billion from last year. I need to start requiring them to settle with my clients for more.

June 12, 2012

Spokeo Settles FTC Charges

Spokeo to Pay $800,000 to Settle FTC Charges Company Allegedly Marketed Information to Employers and Recruiters in Violation of FCRA

Spokeo, Inc., a data broker that compiles and sells detailed information profiles on millions of consumers, will pay $800,000 to settle Federal Trade Commission charges that it marketed the profiles to companies in the human resources, background screening, and recruiting industries without taking steps to protect consumers required under the Fair Credit Reporting Act. This is the first Commission case to address the sale of Internet and social media data in the employment screening context.

The FTC alleged that Spokeo operated as a consumer reporting agency and violated the FCRA by failing to make sure that the information it sold would be used only for legally permissible purposes; failing to ensure the information was accurate; and failing to tell users of its consumer reports about their obligation under the FCRA, including the requirement to notify consumers if the user took an adverse action against the consumer based on information contained in the consumer report.

It was a pretty complicated issue as to whether Spokeo is a consumer reporting agency or just a search engine.  The difference between Spokeo and Google, for instance, is the focus of searches run on the different sites.  On Google, you can search for anything.  On Spokeo, your search is limited to the online identities of individuals, i.e. their identities on Facebook, MySpace, Ebay, dating sites, etc.  Spokeo is thus a dream site for potential employers to research potential employees.  Yet Spokeo did not comply with any of the FCRA's requirements regarding being a consumer reporting agency or regarding the publication of consumer reports to employers.  I suspect that will change with today's settlement.

The ins and outs of 0% balance transfers

Yet again has an insightful article with good, basic advice. This particular article is about the benefits and risks of zero percent credit card balance transfers. Basically, the risk is the fee that most credit card companies charge to transfer a balance and the risk that you lose the incentive to pay down the debt while york are not being charged interest. The pros are that, if done right, you can save a ton on interest.

The article is here and is worth a read - Happy reading and balance transferring!

June 11, 2012

Another article about credit scores affecting insurance premiums

The Columbus Dispatch has published a well written article about the effect your credit score has on the cost of insuring your vehicle and home and how most consumers don't even know about how their good or bad credit history affects them.

A good point made by the article is how the use of credit scores when setting insurance premiums underscores why the accuracy of credit reports is so important. It's not like you can dodge insuring your car (which is required in many if not most states) and mortgage companies rightly require that a home be insured before financing the purchase. Thus, the protections afforded consumers by the Fair Credit Reporting Act are important because they help ensure accuracy. In fact, the FCRA requires that credit bureaus use reasonable procedures to assure maximum possible accuracy of the credit reports they generate.

Litigation pursuant to the FCRA is thus an important threat to keep the credit bureaus as accurate as possible. Without the threat of a lawsuit, the FCRA would be a dog without teeth - all bark with no bite. Many legislators who cater to the interests of businesses over consumers often want the litigation threat of new laws limited to non-private enforcement. Such a limitation means that a consumer can not sue due to a violation, only a government regulator type entity (i.e. the FTC or state attorneys general) can sue. And, even if willing to do so, most such entities do not have the manpower to do so. Hence the reason why private enforcement through private representation by attorneys is so important to the enforcement of the FCRA because, without it, the credit bureaus could run amok, causing havoc to the entire economy.

The article is here - - and includes personal stories of consumers with perfect driving histories that miss a credit card payment or two and suddenly are perceived as horrible drivers or more apt to have their homes hit by a tornado.


June 07, 2012

Identity theft insurance - just not worth the money

Money Talks News recently published an article about eight types of insurance or other protections that are not worth the money they cost. What did Money Talks list as the number one not worth it protection? Identity Theft Insurance.

Here's what Money Talks said:

"Identity theft insurance doesn’t protect you from becoming a victim of the crime, or sometimes even replace money lost. The insurance only covers some of the expenses you accrue dealing with identity theft – like the cost of mailing letters to your creditors and maybe some legal fees. And it costs $20 to $100 per year – plus a $100 to $1,000 deductible, according to MSNBC.

Instead of paying for extra insurance, see if your credit card company offers identity theft recovery services. Some companies, like American Express, help you free of charge.

If your card doesn’t come with it, you can still protect yourself. The Federal Trade Commission has a list of steps to take if you’ve been victimized by identity theft on their website – like placing a fraud alert on your credit report and canceling affected credit accounts."

What do I think? I think identity theft insurance is not only not worth the cost, its also harmful in a lot of cases. The identity theft insurance policies I have seen often limit the insured's ability to file any type of lawsuit or seek compensation for his or her injuries. Others limit your attorney selection to the attorney hired by the identity theft insurance company, who will probably not be willing to pursue a claim on your behalf.

You are much better off to take the steps that I and others have suggested - i.e. the vigilance and diligence mantra that I espouse ad nauseam - and, if those steps don't work, hire an Fair Credit Reporting Act experienced attorney to file a lawsuit for you.

May 31, 2012

Awesome article about how to raise your credit score

Since stumbling upon Money Talk News, I have been very impressed with the research and writing of their articles, particularly on consumer issues.  Since starting this blog, I have read countless articles about how to do this or that, but most offer just basic advice that doesn't really help much.  Not so about articles from Money Talk News.  Their articles are almost always insightful and well written.  This article is no different.  I highly advise you to read it and follow its advice to raise your credit score.  Here's the article -

May 30, 2012

Interesting article about specialty consumer reports

As you know if you've been following this blog, the term "consumer report" applies to much more than just the common credit report.  According to a recent article on, the most common types of "specialty" credit reports include:

  1. Check-writing history—bounced checks and accounts closed due to fraud or insufficient funds.
  2. Tenant history—rental history, including eviction actions obtained from court records or previous landlords.
  3. Insurance claims history—history on your past homeowner and vehicle claims.
  4. Medical history—routine health information and history of medical conditions such as diabetes, asthma or depression.
  5. Prescription history—prescription drugs used and dosages/refill history.
  6. Employment background—screening for criminal history, marital status, prior addresses and driving record.
The Fair Credit Reporting Act applies to these types of reports as well as providing special rights and protections that apply to these reports.  The rights that the FCRA affords to consumers that apply to specialty reports include:

  • The right to one free report every year or upon notice of adverse action. Upon request, specialty consumer reporting agencies must provide a free copy of your report once per year or upon denial based upon information in the report.
  • The right to dispute inaccurate or obsolete information. The specialty consumer reporting agency must investigate your dispute and correct or remove inaccurate or outdated records.
  • The right to be advised of a background check. An employer who plans to conduct a background check must notify you and get your permission.

  • The article also provides a nice list of the "other" consumer reporting agencies and how to request a consumer report from each.  I've reprinted it below:

    To order a check writing history report, contact Chexsystems at 800-428-9623; Shared Check Authorization Network at 800-262-7771; and Telecheck at 800-366-2425.
    To order a tenant history report, contact ChoicePoint at 877-448-5732 and SafeRent at 888-333-2413.
    To order an insurance claims history report, contact ChoicePoint at 866-312-8076 and A-Plus Reports at 800-709-8842.
    To order a medical history report, contact Medical Information Bureau at 866-692-6901.
    To order a prescription history report, contact MedPoint at 888-206-0335 and IntelliScript at 877-211-4816.
    To order an employment background screening report, contact ChoicePoint at 866-312-8075.
    To order a ChoicePoint Full File Disclosure, visit
     The full article can be found here and is worth a read -

    May 29, 2012

    Identity theft via malware on the rise

    According to a recent article by David Radin at the, the use of malware to steal personal information later used to steal identities is on the rise. While Mr. Radin does not cite statistics to back up this claim, I believe him to be correct. I too seem to be getting more e-mails of late from those infected by malware.

    Malware is defined by wikipedia as malicious software "designed to disrupt computer operation, gather sensitive information or gain unauthorized access to a computer system." A lot of malware will take over a victim's e-mail account and send messages to everyone in the victim's address book, attempting to trick them into responding or downloading malware to steal information. People are more susceptible to this type of phishing scheme since the e-mail appears to come from someone the intended victim knows.

    How does one avoid becoming a victim of malware? Again, by being viligant and diligent. If you get an e-mail from a friend or associate that includes an unexpected attachment or asks you to click on a website, e-mail the friend or associate to confirm that he or she meant to send it to you. Some may think that would be rude, but those savvy to the Internet will certainly understand. Also, if you get a malware e-mail, alert the person "sending" it that their computer has been compromised, as they are likely unaware of the malware's hold on their system.

    May 28, 2012

    Identity theft of a business - it does happen!

    Everybody who hasn't been living under a rock has heard of the theft of an individual's identity and the havoc that can cause. But what most people don't realize is that identity thieves can also steal the identity of a business.

    Business identity thieves accomplish their crime by altering the business records filed with a state government to impersonate companies with good financial histories. Using altered documents, the business identity thieves apply for lines of credit in the name of the business and then, of course, do not repay the loans. This leaves the business stuck with the debt and the black mark on the reputation of the business. Also, the Fair Credit Reporting Act only applies to consumer reports, so it provides no help to the business victim.

    How does a business protect itself? Same as a consumer - be vigilant and diligent. Businesses should check their online filings regularly to make sure no alteration has occurred. Some secretary of state offices provide for e-mail alerts when changes are made so be sure to sign up for this service if available in your state. Also, be sure to monitor records of even inactive businesses, since those are prime targets due to the increased chance of the crime going undiscovered for a longer period of time.

    Also, monitor your bills, accounts and bank statements for anything unusual. If you spot any unauthorized changes to your business records, report it to your secretary of state immediately.

    May 21, 2012

    Fraud Center Network - a new consumer reporting agency?

    A lot of people either forget or never realize that the Fair Credit Reporting Act applies to more than just Equifax, Experian and Trans Union, the traditional "big three" credit bureaus. The Fair Credit Reeporting Act defines "consumer reporting agency" as any person who assembles or evaluates consumer reports. A "consumer report" is any written, oral or other communication by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living.

    I recently learned of the Fraud Center Network, which is a website that threatens blacklisting to any consumer that does not pay for his or her online purchases. If a seller has a beef with a purchaser because the purchaser does not pay as promised, the seller reports it to the Fraud Center Network. The Fraud Center then e-mails the buyer who allegedly did not pay and gives him or her a chance to pay before being blacklisted. Most pay at this point, regardless of whether they owe the money. The ones that don't pay get blacklisted. Subscribers to the Fraud Center Network have access to the entries supplied by aggrieved sellers for a fee, regardless of accuracy.

    It seems to me that the compilation of information regarding consumers supplied to the Fraud Center Network's subscribers are consumer reports. The Fraud Center Network would then be considered a consumer reporting agency and subject to the Fair Credit Reporting Act.

    I would like to know more about the Fraud Center Network. A Westlaw search shows no decisions I cases involving them. A google search did not reveal much more. If any of you have had any dealings with them, please contact me.

    May 16, 2012

    More ID Theft and Online Fraud in 2011

    According to the Internet Crime Complaint Center, which is a partnership between the FBI's Cyber Division, the Department of Justice's Bureau of Justice Assistance and the National White Collar Crime Center, ID theft and online fraud both increased slightly in 2011.

    The Internet Crime Complaint Center logged over 300,000 complaints of internet crime which includes identity theft and online fraud.  The complaints totaled $485.3 million in losses.

    This is an increase of 3.4% from 2010 but is still down from 2009, which apparently was a peak year for online crime.

    The top five states for online crime were California, Florida, Texas, New York, and Ohio, with people aged 40 to 59 being the most victimized.

    While not all internet crimes reported to the Internet Crime Complaint Center resulted in financial loss, the ones that did averaged a $4,187 loss.

    The crimes include auto auction fraud, where the criminal sells a car online that he never actually owned, work from home scams where criminals recruit employees for fake jobs that are actually covers for crime, romance scams where the unlucky in love type is schemed out of money and, finally, loan intimidation scams.

    May 15, 2012

    Equifax says pay day lenders not reporting correctly

    According to Julian Knight at The Independent, Equifax issued an alert recently indicating that some pay day lenders are failing to report all of their lending transactions.  This causes the credit histories provided by Equifax about consumers who utilize pay day lenders to be incomplete.  As a result, when a potential creditor accesses such a consumer's credit report, the creditor will be unaware of the pay day loans and the subsequent payment history of the consumer on those loans.

    Pay day lenders are short term lenders that lend short term with huge interest rates.  Interest rates on the short term loans can be as much as 4,000 percent (yes, you read that right).  The loans are so short term that the interest on them seems small, even though its actual yearly percentage is huge.  The pay day loan industry is accused of targeting the poor and the young and forcing them into a debt ridden lifestyle.

    Pay day lenders should report their account histories correctly, thereby rewarding those that pay timely with good reporting that could improve the consumer's credit score and hopefully allow him or her to escape the pay day loan trap.  Unfortunately, pay day lenders do not have much incentive to do this, since it could conceivably cost them future business.

    My advice - avoid pay day loans like the plague.

    May 14, 2012

    Judge resurrects consumer when credit bureaus can't

    Below is a link to an article written by a Utah attorney whose client had what is unfortunately an all too common experience with the credit bureaus. All three credit bureaus started reporting his client Joe as deceased. Joe learned of his death when he was turned down by his banker for a loan.

    Even though he was sitting across from his banker and very much alive, the credit bureaus would not score his credit report. No score, no loan. The attorney wrote the credit bureaus, providing such proof as a recent pay Stubbs (most dead folks retire upon death).

    The letter and proof should have been good enough to ressurect Joe but, you guessed it, a pulse is simply not enough proof for the credit bureaus. They responded by informing Joe that he was still dead.

    So what did the lawyer do? Pretty creatively, he filed a motion in a case he already had pending for Joe asking that the judge declare Joe as alive. The judge even took testimony, which consisted of one question - "Are you alive?" which Joe answered in the affirmative, which most deceased folks are apt not to do. The judge granted the motion, thereby establishing that Joe was indeed alive.

    The question I still have is whether that was enough for the credit bureaus? The article does not say. Unfortunately for Joe, he might still be dead. Read the whole article here - Deep breath not enough to persuade credit bureaus you are alive

    May 11, 2012

    Death and taxes - identity thieves put both to work with latest scam

    They* say that the only certainties in life are death and taxes.  Identity thieves are now taking advantage of both in a new scam.  Thanks in part to the publication of the "Death Master File" (sounds like something from a Hitchcock movie) that lists the Social Security number and other information about the deceased, identity thieves are being able to file tax returns in the names of dead people or use deceased persons as dependents, thereby increasing their tax refunds.

    According to the IRS, tax related identity theft has victimized nearly 500,000 tax payers since 2008.  The IRS has already flagged another 91,000 suspicious returns for investigation this year.

    Another problem is that the IRS won't tell victims of this or other tax related identity theft who the suspected perpetrator is.  This protects the privacy of the criminal but also makes it harder for the victim to defend himself from other forms of identity theft committed by the criminal.

    I have had many calls about tax refund identity theft over the past two years.  The problem is there really isn't anyone to sue (unlike when accounts are fraudulently opened, you can sue the company that negligently opened the fraud account or the credit bureau that continued to report the fraud account after being alerted to its fraudulent nature).  So its hard for me to do anything with these cases other than give the victim some advice, primarily do whatever the IRS says so they can get it straightened out.   And that's the same advice I give to all of you, that and be vigilant and diligent in your fight if your identity is ever stolen.

    *  As my wife always says, who is this "they" you speak of?

    May 10, 2012

    Consumer Financial Protection Bureau

    Really good article about the Consumer Financial Protection Bureau, which I think is one of the crowning achievements of the Obama administration.  The CFPB now enforces several of the consumer protection statutes formerly enforced by the FTC, who really didn't do that much enforcing.  These statutes include the Fair Credit Reporting Act ("FCRA"), Truth in Lending Act ("TILA"), Electronic Funds Transfer Act ("EFTA"), the Fair Debt Collection Practices Act ("FDCPA") and the Real Estate Settlement Procedures Act ("RESPA").

    The article can be found here -

    May 09, 2012

    Inmates - the latest type of identity theft VICTIM?!

    This is a new one on me.  Just read an article about a new identity theft ring in Arizona that targeted some of their own kind - i.e. convicted criminals.  Four female prisoners became victim to identity theft when the criminals outside the prison used their identity to apply for federal student loans.  The scheme worked for a while, allowing the identity thieves to receive over $150,000 in student loans as well as grants.  They attended classes but reaped the benefits by pocketing the amount exceeding the cost of tuition and books, etc.

    Wild.  Wonder if the credit bureaus will believe the victims were actually not at those classes if the warden provides documentation that they were incarcerated at the time?!

    May 08, 2012

    Upgrading your iPad? Your old one might just be an identity thief's treasure trove

    If you are like me and my family, you have gone though a lot of electronics lately. We upgraded the blackberrys my wife and I had to iPhones. Then we both got new iPads. Add in our daughter's iPod Touch and her cell phone and that's a lot of upgraded devices. And that doesn't include the museum of laptops we have apparently started.

    Why does this matter? Because all of those old devices have storage that contains information that an identity thief would love to get his hands on. And following the manufacturer's instructions on clearing the device's memory may not really delete everything that one might think. Or want deleted.

    A lot of people sell old devices once they upgrade. But the safest thing to do is not sell the old devices. Anyone with much computer knowledge can access information that you thought was long gone. And this can definitely expose you to identity theft.

    So don't trash those old devices or sell them. Keep them for your electronics museum and, by doing so, help keep your good name intact.

    May 07, 2012

    Estimate of victims from Global Payments increases dramatically

    The estimated number of victims from Global Payments' data breach has grown exponentially - like Bruce Banner growing to Hulk size in this weekend's Avengers movie.  The number of estimated victims more than quadrupled. I previously reported that the estimated number of victims of the data breach was approximately 1.5 million. Now, the estimate stands at 7 million.

    The drastic increase is caused by the revelation that the period of time that hackers had access to Global Payments' account information was much longer than originally expected. Originally, the time of exposure was thought to have lasted from January 21 to February 25. Now the breach is thought to have occurred in the previous spring.

    As a result, many more people are potentially exposed to identity theft due to the data breach.  If that happens, they will probably be mad enough at Global Payments to turn into their own Hulk.

    My initial coverage of this incident can be found here -

    May 01, 2012

    Credit Card Companies ignoring ban on marketing to college students

    In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act, which in part forbid credit card companies from advertising to students under the age of 21.  Even I am young enough to remember going through the registration process the day before classes started and having shoved in my hands credit card application after credit card application, even receiving "goodies" for beginning life in the dorm.  While I was taught well enough by my parents to avoid that credit card trap, I am sure there were many who ended up deep in debt as a result.

    A recent survey by a University of Houston law professor indicates that credit card companies are still advertising to college students, despite the Credit Card Accountability Responsibility and Disclosure Act going into effect in 2010.  University of Houston law professor Jim Hawkins surveyed over 500 students.  68 percent of those surveyed had received credit card offers in the mail in the last year and 40 percent had witnessed credit card companies promoting gifts to students (i.e. the "goodies" I recall).

    Its sad when credit card companies get away with breaking the law, particularly at the expense of those just starting out.  Its tough enough to make it starting out with no debt, much less a pile of credit card debt, not to mention student loans.

    April 29, 2012

    Federal Trade Commission seeks public input on how's identity theft affects senior citizens

    The Federal Trade Commission is seeking input from the public about the effect of identity thef on senior citizens. Senior citizens are more at risk to be victimized by identity theft due to their increased susceptibility to identity theft scams such as phishing scams, both via e-mail or over the phone. Phishing occurs when a consumer is contacted by what appears to be a reputable source and is tricked into revealing private identifiers that can be used to steal their identity. Senior citizens are also at risk because most of their Medicare cards bear their Social Security numbers, which is absolutely ignorant in this day and age. The FTC wants information about particular identity theft scams and their use to target senior citizens. The deadline to submit information to the FTC on this subject is July 15, 2012. For more information, see here -

    April 23, 2012

    Consumer Federation of America issues results of study about identity theft services

    The Consumer Federation of America has issued the following press release regarding its study about how well identity theft prevention/protection services measure up to the services they claim to provide.  Good reading:

    CFA Report: How Identity Theft Services Measure Up to Best Practices

    Less Hype, More Clearly Presented Information About What ID Theft Services Actually Offer is Needed

    Washington, D.C. – Today Consumer Federation of America (CFA) is releasing Best Practices for Identity Theft Services: How Are Services Measuring Up?, which analyzes how well identity theft services are providing key information to prospective customers. The study is based on CFA’s Best Practices for Identity Theft Services, voluntary guidelines that CFA developed with the help of identity theft service providers and consumer advocates. Released last year, the best practices resulted from CFA’s first study of identity theft services in 2009, which raised concerns about misleading claims about the ability to protect consumers from identity theft, lack of clear information, and other troublesome practices.

    The new report examined the websites of 20 identity theft services and also looked at Internet complaints about identity theft services. “We found that most of the services’ websites did a fair job of complying with the best practices but there is need for improvement,” said Susan Grant, CFA’s Director of Consumer Protection, who led the project.

    The CFA study focused on the how the services did in these categories:

    Don’t misrepresent protection

    Provide clear information about how they protect/help consumers

    Use statistics accurately

    Don’t misrepresent risk or harm of identity theft

    Provide basic company information

    Clearly disclose refund and cancelation policies

    Provide a clear privacy policy

    Provide clear, complete cost information

    Don’t request consumers’ free credit reports

    Clearly describe fraud assistance

    Cleary describe insurance and guarantees

    “Now that we have examined identity theft services’ websites through the lens of these best practices, we’ve identified improvements that identity theft services need to make to meet the goals they set,” said Ms. Grant.

    What CFA found:

    Some of the hype goes over the line. Statements such as “stop fraud before it starts,” “stop identity theft in its tracks,” and “prevent identity theft” imply that identity theft services can do more than they really can. While these services may alert consumers about possible identity theft quicker than they would discover it themselves, they can’t prevent consumers’ personal information from being stolen or detect identity theft in all instances. It’s not always possible to stop identity theft, especially if someone’s Social Security number has been compromised. CFA recommendation: Identity theft services must avoid statements that overpromise how they can protect consumers.

    There is some sloppy use of statistics. Statistics about the number of identity theft victims, the rate of identity theft, and the amount of time it takes to resolve problems are frequently used as marketing tools. In some cases the statistics used are out of date. Also, complaint statistics are sometimes used to indicate the incidence of identity theft, which is inappropriate since complaint data are not representative of the population as a whole. Another problem is with id theft services that claim to be “#1” or “top-ranked” without providing the source or date. CFA recommendation: Statistics used to describe identity theft should be the most recent available. Sources and dates should always be provided for statistics, and care should be taken to use complaint statistics properly.

    Information about the features that services offer and how they work could be improved. In some cases to find the details of features such as monitoring and alerts, CFA had to hunt through FAQs, terms of service, and other less obvious places. Sometimes it was never found. Some descriptions were unclear and key information was sometimes lacking. For instance, if a credit score is provided, some services don’t explain that it is an educational score, which is not the same score that lenders use. CFA recommendation: Critical details of services should be provided where they are first listed or in prominent links. All services must be clearly explained.\

    Refund and cancelation policies aren’t always adequately disclosed; on disclosing the cost, services did better. Some services provide the refund and cancelation policy on the main product page and others have a link to it at the bottom of every web page. But in many cases it is buried in an FAQ, in the terms of service, or on the enrollment page. Sometimes the policies are unclear. While most services did better on price disclosure, in one case CFA couldn’t find any information about the cost after the free trial offer, and in another it was only on the enrollment page. CFA recommendation: Refund and cancelation policies should be clear and easy to find, and all costs must be provided before the page where consumers sign up for the service.

    In many cases the assistance provided to identity theft victims isn’t clearly described. This problem, noted in CFA’s first study, continues. Some identity theft services act on behalf of customers if they become victims to resolve their problems, but most only provide advice and counseling. Vague descriptions such as “a trained specialist will guide you through the process of recovering your credit and good name,” and 24/7 access to helpful identity theft specialists, do not tell consumers what to expect and may lead them to expect more than they’ll actually get. Sometimes the details are only found in the terms of service or insurance policy. CFA recommendation: Information about exactly what services do to help victims should be clear, straightforward, and easy to find.

    Details about insurance are much easier to find. While CFA believes that identity theft insurance is of little value, it is frequently touted as a feature of identity theft services and consumers need to know what it does and does not cover. In CFA’s first study it was difficult to find the insurance details. While this time it was easier, there were still cases where the detailed information was not easily accessible or even provided at all. CFA recommendation: A detailed summary of the insurance should be provided via a link from wherever it’s mentioned.

    Consumer Complaints

    The most frequent complaint about identity theft services is not covered in the best practices: Free trial offers. While many identity theft services are offered for free for a limited trial period, from the complaints that CFA found online it appears that the terms aren’t always made clear. In addition sometimes consumers can’t get through to the company to cancel. Some consumers are charged even though they never agreed to try the service, usually because they gave their financial account information to that company or a partner of that company for something else. CFA recommends that companies:

    Not share consumers’ financial account numbers with affiliates or other companies for marketing purposes;

    Provide consumers with 48 hours’ notice that a free trail is ending, along with information about how to cancel and the cost if they continue;

    Provide quick and easy means of cancelation – no endless busy signals, no multiple hoops to jump through.