The Tightening Net: Part One

Rack up a debt or crime, no matter how minor or how many years ago, and you're tagged for life, sometimes unfairly, sometimes erroneously, in mushrooming, linked databases used by credit and collection agencies, banks, governments, insurers and employers. In recent months, I've been getting a ton of e-mail offering fresh horror stories from people -- many of them students -- snared by information-tracking programs disgorging past debts and misdemeanors to unaccountable, indiscriminate business entities. This is just a taste of how privacy (and dignity) are being eroded by technology. (Note: First of a two-part series.)

JD got a letter in the mail just before Christmas, telling him his student loan application had been denied because an independent credit search agency had uncovered a $120 debt he'd allegedly incurred four years ago -- when he would have been a teenager. The bank said it wasn't responsible for the credit information, and the collection agency that listed his debt wasn't responsible for the loan denial.

With his University of Minnesota tuition money held up, he couldn't register for classes, access his grades or eat at the cafeteria. When he called the bank loan officer (it took three days to reach her), she told him a computer credit agency in Arkansas had red-flagged his loan. All she could tell JD was that the debt had showed up in an online collection agency's files; she didn't know the details. "We don't really have anything to do with it," he remembers her telling him in an odd farewell. If the bank didn't have any responsibility, he wondered, who did?

When JD called the number for the credit firm listed on his loan rejection form, he got a recording: the firm didn't take telephone calls about credit information, supposedly for security reasons (but probably to evade enraged callers.)

The message instructed those people questioning their credit problems (JD had no debts, so far as he knew; he was too young at the time of the alleged problem to have credit cards) to write registered letters, then submit the overdue payments by mail. In the meantime, there was no way he could learn the details of the alleged delinquency, or even how to pay up.

JD wrote the letter -- his tuition payment was past due by this point, and desperation was setting in -- only to get a form saying he owed the $120 for music ordered by mail. He could challenge or appeal the debt, but that would take at least another 30 days, by which time, he'd be suspended, a "ghost" student, allowed to stay in his dorm and attend classes, but not to register or get grades.

I've gotten a number of e-mails like this in recent months, raising serious questions about growing databases, the way financial firms share personal information and use tracking software, and the impact these factors have on privacy, personal dignity and consumer's rights.

We've heard some public discussion about "identity theft," and about credit ratings damaged by thieves and crackers, but there may be an more widespread problem: privacy invasions of people who have minor legal or financial problems -- all now collected and instantly reported by credit and collection agencies using high-powered tracking software -- and institutions' often disproportionate responses. Sophisticated software and growing computer networks and databases mean that no transgressions of any sort are private, or truly past. Rack up a debt or commit a crime, no matter how minor or long ago, and you're tagged for years, perhaps for life.

Suddenly, we all seem to live at the mercy of credit-tracking companies. Companies and organizations -- especially those, like insurance firms, that rely on stats and formulas -- are no longer able to make sensible or humane judgements about what these agencies uncover. Instead, software seems to be making the calls on consumers' reliability and integrity.

For instance, JP56 at earthlink writes that she was denied a teaching job because of a drunk driving arrest that occurred a few weeks after she'd turned eighteen (she's now twenty-eight). She had gotten drunk at a high school graduation party, and drove afterward. Dumb behavior, for sure, but she says she isn't a regular drinker, has had no other violations, and that her penalty was a 60-day license suspension.

Dan was denied car insurance after he hit two deer in Pennsylvania within a six-month period. "Because of mild winters, there are tons of deer around," he wrote me. "I was doing a lot of driving -- I was working two jobs to pay for school -- late at night. One time a deer ran into the side of the car, another I hit it straight on. Then I moved to San Francisco. Three years later, I get a letter from my insurance company referring me to this credit tracking company. My insurance is denied, says the insurance company. It was years ago, and it wasn't my fault. But there wasn't anything I could do. I had to get into this state pool and pay three times the going rate. And I've never had a traffic ticket in my life."

Peter agreed to buy some vintage comic books from a phone-order firm on a monthly payment plan. He says he didn't realize how elaborate a procedure was required to stop getting the comics. He went off to college, not realizing the bills were still piling up (plus his family had moved), until he applied for a car loan and got turned down because a collection agency had red-flagged him in a computer database. No car. "First off, this comic place took advantage of kids like me. I did order the comics, but didn't understand the complexity of the arrangement. Then I moved and didn't get any more bills or comics. I had no idea this was building up, and no way of straightening it out that wouldn't cost a fortune and take months and months. Now my name is in some computer and I owe a lot of money. And the original company has changed hands a dozen times. Nobody there wants to hear about this. It's a nightmare."

AndyP wrote two months ago that he'd been arrested for vandalism after one Halloween mischief night when he was sixteen. An online tracking agency dug up the arrest -- even though it was a misdeanor offense, was supposed to be kept sealed, and had happened a decade earlier. "I was turned down because my company was working on a government project and we all needed a moderate security clearance. I never got it sorted out, because it was technically true. But jeez, it was a spray-painting incident. I guess in certain quarters, I'm unemployable for the rest of my life."

My e-mailers complain that even though appeals and application procedures exist, there are few checks on these agencies devoted to rummaging through people's pasts. Most of us have messed up a bit at one point or another, and now those incidents can be dredged up and used against us without much in the way of due process. Some are in blatant defiance of supposed federal consumer-protection laws, laws which seem porous, to say the least. Do people have the right to own the details of their own lives?

Students in particular have sent me a stream of stories like JD's, but the issue is getting much broader than student loans. Credit and collection companies run down past traffic tickets, immigration problems, child support payment histories, arrests and debts, all being fed into rapidly expanding databases as records are digitalized. Banks, insurers, employers and government agencies can hire these companies to run credit and security checks, then claim they have nothing to do with the resulting decisions. For the people trapped in this tightening net, it's a procedural nightmare.

Under the federal Fair Credit Reporting Act, consumers have the right to contact these companies and get some details of their supposed crimes or debts. But since almost any financial agency can enter information into these growing and increasingly-linked data banks, it can take weeks or months to figure out exactly what the alleged problems are.

You might be surprised to know what your credit "rights" are under the U.S. Fair Credit Reporting Act, especially considering how often they seem to be ignored. You can find the complete text of the FCRA 15 U.S.C. 1681-1681u at the Federal Trade Commission's web site. Among the protections provided to you by law:

• You can dispute inaccurate information with the consumer reporting agency (CRA) involved. Anyone who uses information from a CRA to take action against you -- denying an application for credit, insurance or employment -- must give you the name, address and phone number of the CRA.
• Inaccurate information must be corrected or deleted, assuming you can prove it's inaccurate and the CRA agrees it's inaccurate, but the CRA is not required to remove accurate data from your file unless it is outdated.
• You can dispute inaccurate items with the source of the information (if you can reach them).
• Outdated information may not be reported. In most, but not all cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptices. (My e-mail suggests this is wantonly ignored. Some institutions don't always have to say precisely why they took an action, and in many cases, you'll never know).
• Your consent is required for reports that are provided to employers, or reports that contain medical information. And you may choose to exclude your name from CRA lists for unsolicted credit and insurance offers, assuming you know where the CRA is and what it's doing and can reach them.

(Note: Credit rights are also covered by the Fair Debt Collection Practices Act; thanks to reader William Lockwood for the reminder.)

It doesn't sound half bad, but trying reaching a CRA for yourself to test how easy it is or how responsive they are. Notice also that there are no restrictions on selling information or passing it along to agencies the CRA deems appropriate.

And where there are disputes, people often have no recourse but time-consuming and expensive legal action. Even then, there are no clear guidelines for resolving disputes. Simply because a consumer says he never incurred that debt, banks and other institutions aren't required to accept his word. There are no uniform national laws requiring credit companies to respond in a particular way. Although I have no hard statistics, many of the people e-mailing me said they paid these debts rather than fight or challenge them, simply because they couldn't afford not to and were afraid of a time-consuming process. "It's an unconscious kind of extortion," write Jan, a student from the University of Florida. "They don't threaten you, but they don't have to. How can you prove you didn't owe $100 bucks five years ago, and can you afford to have your loan held up in the meantime? Not me."

There's scant protection for people who might have been victims of theft or simple error, or who made a minor mistake earlier in their lives, or who need issues resolved quickly. Only perfect people, it appears, are safe.

Next: Technology is eroding some rights, as the reasons for collecting data on citizens grows. Is privacy worth keeping in the country that invented the idea? Some other countries think so.

Comments

It's not technology; it's people!

[kroymen]

Dignity and privacy are not being eroded by technology. They're being eroded by people. The technology is simply "how" they're doing it. Take the technology away, and as long as the people are still determined to violate each other, they will find a way to do it.

Re:It's not technology; it's people!

[Mr. Slippery]

They're being eroded by people. The technology is simply "how" they're doing it.

It's not just a how - it's sometimes a why.

"We need your social security number. Our computer won't take a new record without it."

"Well, the computer says you owe $120. No, sir, our computers system doesn't have any bugs."

"Well, you seem like a good credit risk to me, but I'm afraid our computer program says we can't give you the loan."

Using computers often removes any opportunity for people to apply their own judgement, because the model of events that the software is based on is too limited.

Tom Swiss | the infamous tms | http://www.infamous.net/

Re:It's not technology; it's people!

[JCCyC]

Correct. That's why such "tightening" can work in ways other than intended. For instance, let's see one of the cases:

AndyP wrote two months ago that he'd been arrested for vandalism after one Halloween mischief night when he was sixteen. An online tracking agency dug up the arrest -- even though it was a misdeanor offense, was supposed to be kept sealed, and had happened a decade earlier. "I was turned down because my company was working on a government project and we all needed a moderate security clearance. I never got it sorted out, because it was technically true. But jeez, it was a spray-painting incident. I guess in certain quarters, I'm unemployable for the rest of my life."

I tell you, any place that does hire AndyP -- either because they don't run paranoid checks on people or because they don't mind such a minor, ancient offense -- earns karma points in my book. Think of it this way: not only employers select employees; it works the other way around too.

Of course, there might be some areas in which the demand/offer balance is in a way that people get truly screwed. IT, however, isn't one of them.

Automated Bureaucracy.

[pb]

So you're describing a dysfunctional organization of disconnected entities that claim no responsibility for the system as a whole, and make no sense together...

...much like the latest Katz article. Is this deconstructionism? Katz, are you getting literate on us? :)

Seriously, though, I'm not surprised; this is the logical extension of bureaucracy and outsourcing, two horrible recent trends. Not only does everyone give you the runaround, but since they're all independent companies, they all claim no responsibility for their actions, and give you no customer service.

In fact, it sounds like there should be a niche market for people who know what the procedure is here, and help you cut through red tape for a fee. That would help a lot more than, say, home equity loans...
---
pb Reply or e-mail; don't vaguely moderate.

Not News

[wiredog]

Hell, read Database Nation for a much better overview of these types of problems.

Loss of Personal freedom...

[dfenstrate]

Through coporate beuacracy and risk reduction. It seems to me nowadays that few entities like risk... most avoid it like the plauge, and those that don't charge a ridiculous interest rate.

Trouble is, I wonder how they can show that even accurate information ten years ago leads to a bad customer today. They seem to be going overboard, where the risk vs reward calculation is falling out of their favor.

Sure, if someone did something two or three years ago, they might not have learned much, and may be liable to do it again.... but I find it hard to believe that actions that haven't been repeated in the past ten years (like the would-be teachers drunk driving conviction) show any correlation to the likeliness of them doing it today.

In the meantime, my fellow young people, keep your nose clean. incidentally, does Katz get paid by the word?

In Perspective

[Golias]

Most kids going in to college have a "red flag" or two in their credit report. If you can get a parent to co-sign the loan, what you did or did not do with a CD-of-the-month club bill several years ago becomes meaningless.

As for this particular kid's problem... what the hell was he doing signing up for classes before his loans cleared? How would he have handled it if the loan was rejected for a legitimate reason?

A credit card of mine was stolen during a break-in once, and clearing the charges on the stolen card took me almost a year... so I know how frustrating the stituation can be, but a lot of people make things worse by actually relying on credit. Every financial advisor in the world will tell you the same thing: Live within your means. You should not carry an ongoing balance on your cards, and should only borrow long-term for a house, education, and maybe your car. As spiffy as the new Apple G4 may be, you should try to get along with your P133 Linux box unless you have the cash to buy something new.

If people did not overextend themselves on credit, debtor errors would be less of a personal tragedy, and more of a mere inconvenience.

Re:In Perspective

[Kingfox]

My roommate my sophomore year at college had a full ride to our school. Every semester he ended up being withdrawn because one of his scholarships always sent the check too late for the university's books. Every semester he had to walk down to the Business Office, get cleared, re-register, and explain that it happened every semester. He just graduated last year, and sure enough, the same thing happened all eight semesters.

You're required to sign up for classes two thirds into the semester before at our school, which is well before loans or such are taken care of. My sophomore year, I attempted to get a promisary note for the loan I was getting in order to get cleared before classes started. Financial Aid couldn't do that until I was re-registered. Couldn't register until the Business Office cleared me. Couldn't get cleared at the Business Office until... sure enough... I had to get the promisary note. After explaining this neverending circle of miscommunication and red tape to the director of the Business Office, she merely said, "I don't care." Luckily the Financial Aid office broke the rules and got me taken care of, a week after classes began.

I don't think this situation was created by technology or computers, forming some sort of 'Tightening Net' as Katz speaks of. These were three different backwards departments, in the same building, on two floors of said building. These people saw each other every day, and shared the same vending machines and bathroom. When the circle formed, they had each other on the phone instantly. This is a human thing - human blunders, human red tape, human stupidity. While I can see how technology would make it that much harder to get taken care of, a good dose of human misunderstanding can go just as far if not further.

Check ALL of your credit reports

[Anonymous Coward]

I am about to begin looking to buy a townhouse, and started doing some research, and all of the books point out that you should check your credit reports for mistakes (obviously). I filed to get copies from the 3 major companies (Trans Union Credit, Experian, and Equifax) and discovered that 2 of the 3 had "minor" mistakes on them. One had an old drivers license number, and another had my last name mispelled AND had that I still owed $30 on a student loan (paid off 2 years ago, but the $30 would not have been due for probably another 5+ years) but it still was a mistake. Even these minor problems could possibly cause problems when applying for a mortgage. Anway, people should check their credit reports from ALL 3 of these major credit report agenceies to verify mistakes. I know that Mass residents are entitled to one free copy/year from each, as well as a few other states, but even if you are not, it is probably worth spending the $8/report on all three of these at least one time, and probably keep up every so often as well.

My Mysterious Car, House and Jewelry

[waldoj]

I'm completely unable to get a credit card, even the ones that you pay $500 for to get $500 in credit. I own a successful business, I have employees, I pay my vendors. I pay all of my monthly bills: telephone, health insurance, cable, bank loan, etc., etc. Yet I'm always turned down for credit, because I have no credit. A catch-22.

Out of curiousity, I ordered a copy of my credit report about a year ago. It reported that I still owe on a house that I bought when I was 12, a car when I was 14, and some rather-pricey jewelry that I got when I was 15. I must have been one hell of a precocious youth.

Of course, I called the credit agency. They told me that it was a "computer error," and removed all of those from my record. At least that part was easy. What I want to know is how many of those credit checks brought up the same result. And if this information has propagated to other databases.

Credit baffles me. I hate it.

-Waldo

Guilty til proven innocent...

[sterno]

The biggest problem I see with this whole system is the built in assumption that the credit reporting agencies are correct. They are prone to error at rates that I don't recall exactly but I remember being disturbing. If you call up the credit agency to deal with a mistake, they should immediately remove details of the mistake from the report (merely listing that it's being contested), and then give the reporting agency a period of time to proove their claim. If they cannot proove that you did it, then it should be expunged permanently.

Another problem with the system is that there are three major credit reporting agencies. So, you may have a clean slate at one, but the other has red flags all over the place. So you might get your credit checked through one agency and discover everything is fine, but the same check through another agency could turn up problems. In theory the agencies share info but not always.

Personally I recommend that everybody make a point of getting a copy of their credit report on a routine basis. If there is a problem it is much better to see it early on rather than get an unpleasant surprise when you are trying to buy a house, a car, or an education. There's several services out there that offer credit monitoring services that will report problems and give you quarterly updates of your information.

---

You have rights (and options)

[budcub]

But all these things take time, and if you're waiting on a student loan to come in, you might not have it.

I used to work for a small consumer finance agency, where I'd review credit applications, look at credit bureau reports, and did telephone collections. Unless things have changed, and they either have for the case of student loans, these kids dont' know all their rights or options.

"They don't threaten you, but they don't have to. How can you prove you didn't owe $100 bucks five years ago, and can you afford to have your loan held up in the meantime? Not me."

You don't have to prove you didn't owe $100 five years ago, they should prove it. At the very least they need to provide a signed piece of paper (promissary note) saying "I owe you $xxx.xx" If they can't produce this, or some other evidence then you don't owe them anything. But in your case you probably don't have much time for all this fighting. All I can suggest is contact your state banking commission and file a complaint.

If you've ever been turned down for credit, you're entitled to a free credit report. Two credit reporting agencies are Equifax and Experian Contact them, and get a copy of your report. Its kind of tricky to read if you've never seen one, but they include instructions and everyone should check their credit report once a year.

If something doesn't look right on your credit report, challenge it. The lending institution has to respond within a certain amount of time (30-45 days?), or it will be wiped out of your credit report. That is, unless the law about this has changed since I've worked in the collections field.

People have Power

[beefjerky_com]

There are some poeple who could make it their mission to work against these credit agencies, some are hackers, some are more extreme.

One small thing everyone can do to create change is take those pre-paid envelopes that regularly come in junk snailmail, stuff them with blank forms or paper, and return them to the junk mailer.

This causes the junkmailer to pay twice for their junk, once to send it, and once to get it back. Plus all the time it takes for their staff to open and discard the blank returns. It not much more than a raised middle finger, but at least it is something, and it hits them where it hurts, the bottom line.

To the Moon!
http://www.beefjerky.com

Credit baffles me as well

[imadork]

My wife and I both have excellent credit records, we checked them (and fixed the minor errors) before we bought our house. We pull down decent salaries, as well.
Yet, when we went to get a car loan from our Credit Union, we were told we couldn't get the "A" rate because our credit wasn't good enough. Those "scores" that pop up on bankers' screens really, really baffle me. I asked for an explanation for why the score was what it was, and the standard reply was "You must have something bad in your report, but the Computer figures out your score and I have no clue how it does it." I knew that our reports were clean...
Morons! I would have pushed the issue and figured out exactly how that score got computed, but I shopped around and got a great rate from the dealer, and promptly forgot about the whole affair until now.

Lessons learned:

Get all your credit reports BEFORE getting loans on your own.
If that's not possible, definitely ask for more information if you get declined for a loan and get your report then!

If you know your credit is good, shop around!

Re:Credit baffles me as well

[The-Bus]

I worked at one of the largest credit card banks, and I looked at people's credit everyday. The score you are referring to is a 'FICO' score, which is computed, as the teller told you "by a computer" ... It takes in an impossible amount of data, not only payments made to other creditors but even WHAT you charged: I guess charging $400 for a new DVD player is less risky than charging $400 for your taxes.

The point is these scores are not the end-all to-be-all. Next time tell the teller that if they want your business, they should give you the 'A' credit regardless of what some obscure and obfuscated algorithm developed by a bank says.

A Lack of Accountability

[Royster]

I was the victim of an inaccurate background check. Five years ago, I was hired for a job in NYC for which a background check was required. I had to give my notice to my old company before the check could be begun. I did so. Two weeks later, after my last day at my old company and as I was about to leave Chicago with my stuff packed up in my car, I got a phone call that there was a problem with the background check -- there was a bench warrent for my arrest for failure to appear to answer a drug charge. This was a Thursday and I was scheduled to begin work on Monday.

Now I've never been arrested and I've never failed to appear before a judge when summoned. The company was going to check into it further, but they wanted me to bring proof that there *wasn't* a warrant out for my address.

I called the local police who said "Come on down and we'll work it out." I wasn't stupid enough for that one. I called the office of the State's Attorney and asked them to look up the warrant. At first they said that they couldn't tell me anything. After explaining my story the guy said he shouldn't tell me this, but there were no warrents out for my arrest.

I felt more confident, but still had nothing to show my new employer. I went to the local police station and they took my ID and ran a warrant check. They said there were no warrants, but they couldn't give me anything in writing.

I left the next morning and called the company from the halfway point. They said that Equifax (a credit reporting company) had to send someone to the courthouse. Don't bother reporting for work on Monday.

I drove the rest of the way to New York not having a job. In the end it worked out alright. The warrant was for someone with the same name but different address and date of birth. I started the new job on Wednesday (and was paid for the two days that I didn't work while they were checking out the report.)

But it could have been much worse. Equifax sent me a copy of the report listing the warrant for my address, but it had disclaimers all over it that they are not responsible for the accuracy of the information. If I had lost that job because of a slanderous background check, would I have had any recourse?

Don't even have to screw up.

[rkent]

I don't think you even have to screw up to get lousy credit these days. In my previous apartment, I lived with my brother during his summer break and right before I moved away for a job. Because I had to leave before he did, I left the utilities on, but asked that the bills be forwarded to my new address.

Everything seems to have worked out fine, except that it inexplicably took over a month to get 3 of the bills forwarded, at which point some nasty letters had been sent. Consumers Energy sent my name to a collections agency (I'm still less than 2 months overdue, here), and the next time I applied for a credit card I got rejected for "excessive debt" and "failure to pay" some bills.

Excessive? The bill was $109. And I was making $48,000 per year at the time. AND the whole reason I didn't pay on time was because I was busy moving and the mail forwarded so slowly.

Tough Question:

[rho]

"[...] But jeez, it was a spray-painting incident. I guess in certain quarters, I'm unemployable for the rest of my life."

Not to sound like a complete shit, but what about those of us who DIDN'T vandalize somebody else's property?

If there are enough people who didn't do such a thing when they were young to pick from, why take even a minimal risk with somebody who did? I spent my teenage years quietly doing what I was supposed to do, obeying my parents, trying to work hard, and learning everything I could. Why SHOULDN'T I be preffered over somebody who spray painted "SuX0R my B4LLz" on the side of a building?

Now, the point that he was a minor and the record should have been sealed is a different matter. (of course, it could depend on the state as to whether the record is sealed or not, or to the amount of damage the vandalism caused) If that is the case, then the guy shouldn't have any problems, and should count himself lucky for that fact.

But to wave the "wild and crazy youth" flag and expect everybody to salute it is poor thinking. There are enough people who were mature enough at 16 to understand that other people's property is to be respected, not trashed. And they SHOULD be preffered over a reformed hooligan.

Course, that's just my opinion

Re:In Perspective + credit card advice.

[kettch]

I don't have any credit cards yet, but one thing that i do with my ATM card and Debit card is to sign the back like your supposed too. I always leave enough room on that writing strip so that i can write "See Drivers License" (yes it can be done. you can fit two lines of writing on that strip) This makes it so that when you are in a store, when they check your signature, they will usually ask for your ID, and you can show them your picture.

While this doesn't help any for online transactions, it does help if your card gets stolen. Anyway most cards have a policy of non liability for fraudulent transactions.

A Lack of Rule of Law

[Steve B]

Equifax sent me a copy of the report listing the warrant for my address, but it had disclaimers all over it that they are not responsible for the accuracy of the information. If I had lost that job because of a slanderous background check, would I have had any recourse?

And therein lies the problem -- according to the laws which are supposed to apply to everybody, a disclaimer is not a magic shield against a slander action. (That is, you can't just assert any old thing and CYA by inserting weasel words like "alleged".)

Apparently, credit agencies have gotten themselves a special loophole based on the rationalization that they'd otherwise be unable to risk reporting any negative information. This is nonsense -- they can buy liability insurance just like anyone else in a similarly exposed position, and have the cost thereof rise and fall with their error rate -- presented as a fig leaf to cover a political special favor.
/.

Phony SS Numbers

[Boiner]

I'm in the habit of making up random SS numbers when people ask for them -- so much easier than the old 'Do I *have* to supply it?' routine.

Anyway, I'm in the process of getting an AT&T cell, and they ask for the last 4 digits, which I promply made up. You know what? The sales droid told me "Sorry sir, that's not what I have here in the computer". WTF?

Of course, I went straight to the head-droid-in-charge and asked what the deal was. She told me that they bought my SS# from a credit agency, which didn't make me too pleased.

Anyway, when I told her that I made up SS numbers all the time, she got real upset. Told me I could screw up my credit reports, etc.

I was happy to remind her that it's a credit world, I don't need credit, I don't want credit, and I've got people lining up begging me to take it. The only thing I might screw up was the AT&T database, and that really didn't keep me up at night.

We went round & round for almost 10 minutes -- it was a *lot* of fun.

call att.tweek("garbage keys") //

Re:I don't see how this is a problem.

[MarkCC]

The problem isn't so much that these agencies are stockpiling information; it's that they are *not* careful about ensuring that it's correct, and that they hide behind layers of subcontractors and bureaucracy to make it impossible to determine what the facts are, and how to correct them.

To give a personal example: 11 years ago, when I was an undergraduate at Rutgers University, I worked for the university as a programmer. The university made an error my first month on the job, and overpayed me by $500. Next month, they deducted the overpayment from my paychecks, and I assumed everything was straightened out.

Two years later, the University sent me a bill demanding repayment of the overpayment. I argued with them, including producing the pay stubs showing this, and they "cleared" the record.

One year after that, they came after me again. I again showed them the pay stubs, and this time they refused to even look at them, and sent it to a collection agency. At this point, I gave in, and repayed them - again.

Now, 10 years later, I'm supposed to get a refund from my NJ income taxes. I don't get it, because a different office at the University noticed the overpayment at some time in the last ten years, and filed it with the state as a delinquency.

It's over 10 years later. I no longer have the pay stubs, or the cancelled checks to show that I've payed this stuff *twice*. I need to pay it *again*, and I've got a delinquency on my credit record.

Who's responsible? I *can't* find out. It's all carefully hidden behind an elaborate web of agencies and offices, all of which deny both responsibility and authority to correct it. There is simply *no way* that I can get this straightened out, except by paying it *again*, and in all likelyhood, even if I pay it again, it will reappear a few years from now.

That's the problem: the tangled web of information providers, none of whom take any responsibility, none of whom can correct an error. Any time you try to correct an error, it gets deleted from one source - and almost instantly reappears in that source because they exchange information with all of the others.

Re:It's not technology; it's people! -- not quite

[OmegaDan]

Thats not always possible ... sometimes dumb mistakes find you.

Identity theft -- theres almost no way to protect against it ...

And then theres totally weird shit... my brother was arrested for hit and run for an accident he was never in because some scam artist decided he looked like a good mark that day ... (Person gets you arrested for felony hit and run and says, -- um, -- if you pay us, 1000$ we won't file these charges against you (in CA they have the option sometimes) ... you can probably prove you weren't there but then you have to go to criminal court, hire a lawyer ... ).

TransUnion's OPT-OUT phone number

[jhein]

1-888-5OPT-OUT
Call them, then listen to the options:
"Press 1 to be removed from marketing lists for 2 years"
(forgot what 2 was)
"Press 3 to be removed from marketing lists *permanently*"

Isn't it funny how they hide the "permanent" option?

From http://www.transunion.com/General/MarketingOptOut. asp

"If you want your name and address removed from all mailing lists offered by the
main consumer credit reporting agencies: Trans Union, Experian, Equifax and
Innovis, call 888-5OPTOUT (888-567-8688), or write to the following address:

Trans Union LLC's Name Removal Option
P.O. Box 97328
Jackson, MS 39288-7328

Requests should include the following information:

First, middle, and last names (including Jr., Sr., III)
Current address
Previous address (if you've moved in the last six months)
Social Security Number
Date of birth
Signature

If you opt-out, you will no longer appear on direct marketing lists offered by
these four credit reporting agencies. However, you may continue to receive
commercial mailings based on lists from other sources. "

Where's the CRA's responsibility?

[DunbarTheInept]

People aren't complaining about the consequenses of their actions. They're complaining about being saddled with the consequences of OTHER people's actions: other people with the same name who get mistaken for you, other people who don't bother to tell you that you owe them money, other people in the post office who screw up your mail (This has happened to me - for some dumbass reason about half the mail sent to me gets rejected saying "Doesn't live here anymore", even though I *do* live here, and *some* mail does reach me. I've asked the post office to fix it and they don't. I'm at the point now where I just call the phone company and power company every so often and ask them what I owe them, since I don't always receive the bills.)

The problem is that these credit reporting agencies have NO accountability. If they lie about you, YOU have to prove them wrong. You are guilty until proven innocent.

Corporation is the idea that you can treat a company like a person in the eyes of the law, but unfortunately there is no accountability that goes with this. If a PERSON slanders you, they owe you damages. If a PERSON murders someone, they go to prison. If a Credit Reporting Agency screws you, they aren't taken to task on it.

Why

[Shotgun]

Why, oh why, can't the credit reporting agencies be sued for slander?

They will continue the current practice for as long as it is profitable to do so. Their system now is to take whatever information companies pay them to take and dump it into a database. Proof and error checking be damned. They just say, "We're not responsible."

Well, if I go around spreading lies, I am responsible, doubly so if I do it without even attempting to verify any facts.

Unfortunately, those denied credit are generally those who can't afford to launch a legal attack against a well funded opponent.

It's a Minor Problem

[tbo]

The system, as is, works fairly well. Yes, there are problems, and I'll address those. First, I'll deal with the Katzian whining:

Everyone knows that mail-order CD/comic warehouses try to rip you off. If you were stupid or greedy enough to think you could get 12 CDs for $1 or whatever and never be obligated for more, you deserve the hassle (especially since artists generally don't get royalties for CDs sold at a discount like that).

The deer guy? I lived somewhere with shitloads of deer, too (there were 19 on my lawn once), and I never hit any. To some degree, it's luck, but it's also a test of reflexes. The insurance company sees two claims in six months, and figures that either a) you suck at driving, b) you like hitting deer, or c) you drive at risky times in risky places. Consequently, you end up having to pay more for insurance. You still got insurance, it just cost more.

All the other people are being nailed for offenses they actually did commit. Drunk driving, and she only got a 60-day suspension? What the fuck? She could easily have killed someone. I wasn't that stupid when I was 16 or 18. Personally, I don't think she should be allowed to drive until she's 30. Getting turned down for a job seems like a small price to pay. Funny how everyone went nuts over Bush's DWI conviction, but it's somehow OK if you're just Joe Citizen.

The real problem here is not that these agencies exist and do what they do, but that it isn't easy enough for people to check and correct their own records. People should be notified whenever an "incident" is added to their record, and given the opportunity to dispute it. Jon Katz should be complaining about the errors, not the actual collection of the data. If you fuck up, there are consequences. Learn that, and everyone will be better off.

It's people like you.

[Tau Zero]

Everyone of Katz's stories were submitted by people that need to learn responsibility. The one exception being the 16 year old who was charged with a misdemeanor...

Are you saying the 16-yr-old wasn't responsible for what he did? What about Dan, who got hit by the deer (one from the side, where it may very well have come at him from outside the spread of his headlights)? What about JD, whose student loan was denied for a debt he was legally too young to incur?

Your attitude amounts to "The system is perfect, it's the people who screwed up even if they were not personally to blame." But people made the system, how can it be perfect? How can anything that needs a registered letter to get any information about a so-called bad debt be called anything but deliberately obstructive?

You need an attitude adjustment.

"
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ChexSystems

[exploder]

A close relative of the CRA's is an agency called ChexSystems. ChexSystems is supposed to keep information on people who have defrauded banks, but often all it takes to get on their list is one bounced check, or forgetting to move an automatic debit to your new account after closing the old one. A ChexSystems record is the KISS OF DEATH financially speaking.

I was reported to them for a car payment which was auto-debitted from my checking account. After cancelling my old account, I informed my bank that I wanted the payments to come from the new checking account. They didn't do it for three months (during which time I was calling them regularly to try to get the auto-debit moved), and the ensuing confusion was cause enough for this bank to report me to ChexSystems. Not that I knew anything about it at the time. It was only a year later, when I moved to another city and attempted to start a checking account there, that I found out what had happened. After looking all around town for a bank that did not use ChexSystems (and in a town like Dallas, there are a lot of banks to look at), I finally concluded that the only way for me to get a checking account would be to get rid of the ChexSystems record.

After some research, I determined that a ChexSystems entry stays on file for FIVE YEARS, and that it is almost impossible to either get the record removed before then (whether or not the information is valid) or to get an account with any institution despite the entry. After a week or so of trying to contact ChexSystems, it became obvious that if I was going to get anything done, it would be through the bank, not through them. ChexSystems said that the only way they would update their information would be at the request of the bank who reported me. Fine. I called the bank and it wasn't hard to get them to fax documentation to ChexSystems saying that all amounts were paid in full and that no outstanding debt existed. Thinking I had the problem taken care of, I attempted again to open a checking account.

No luck. It turns out that even if all amounts are paid, the mere presence of a ChexSystems record of the event is enough to be denied for any sort of account. I had to climb the bank's chain of command all the way to the director for the southwest region before getting any action. After spending a half hour of her (no doubt very expensive) time explaining what had happened to me, I was able to convince her to request that ChexSystems remove the record entirely. She told me that this essentially is never done, and that it was an enormous exception to their policies. I don't doubt it.

I consider myself very lucky. That was a year ago. The incident in question was a year before that. If I had not been able to convince this woman to purge my record, It would still be three years from now before I could have any hope of getting a basic checking account. During the time while I was sorting this stuff out, I was paying my apartment rent with money orders, cashing my paychecks at the local branch of the bank my company uses, and paying cash for everything I bought. No check card. No credit cards at that time. Can you imagine living that way for five years, because of either a screwup that wasn't your fault, or for one small mistake? It's appalling.

Here's an article that gives a fairly objective overview of the situation. And here's a site that takes a move combative stance.

Sorting out the issues

[d_pirolo]

1. Everybody here agrees, I'm sure, that something needs to be done to prevent errors in this type of database. Credit agencies need to be doing redundant cross checking on their data, rather than just entering it and forgeting it.

2. There needs to be some kind of coherent scheme to decide what kind of information credit agencies should have access to. If I'm 55, a vandalism conviction from my teens clearly shouldn't prevent me from getting a home improvement loan. In fact, the agency probably shouldn't even have that data. However, there has to be some sort of resource to allow reasonable background checks. Banks need to know if their customers have declared bankruptcy in the past before they are approved for a new loan, for example.

3. Once rules have been created to decide what information is allowable, there needs to be a system in place to enforce these rules. If a juvenile conviction should be sealed, it's out. If the information is more than seven years old, it's out. And so on. Unfortunately, that doesn't seem to be happening.

4. Lastly, banks, employers, and others who use to data from the credit agencies need to use that information responsibly. They shouldn't be able to reject you out of hand as soon as some blip shows up on your record. First, the users of the data need to check the information for accuracy. Second, the information should be used fairly, and only when rationally acceptable.

In summary, banks, employers, and insurance providers have to right to rationally reject an applicant based on their past. They should have some access to information and should be able to turn you down based on appropriate criteria. However, some information shouldn't be available at all, and the information that is available should be examined by a real person who can make a reasonable decision about the importance of that information.

what I've always wondered . .

[Pfhreakaz0id]

... is why in criminal matters (at least here in the U.S.) you are presumed innocent but all someone has to do is SAY I owe them money and I have to go to great lengths to prove I don't in order to get it off my credit card company.
---

True Story: How I Cleared It and Advice

[d.valued]

All right.

When I was a teenager, I slipped a disk in my spine after practice (because I lifted my 50 lb. plus bookbag the wrong way) and had to see a doctor. I filled the forms and thought my insurance would pay for the procedure needed to jolt my disk back into place.

Boy, was I wrong.

The insurer started a credit file on me with all the agencies and, when I wanted credit at 18, I got no,no,no,no,no,no,NO!

I requested my files and saw this item.

I got in touch with the dispute resolution and told them that it was simply impossible for me to owe money before the age of majority. I mailed them a notarized affidavit with a xerographic copy of my passport and a few weeks later, it's gone.

Now, tips...

1. Very few people ever need your SSN. Basically, your employer, your bank (if you have an interest-bearing account), and your brokerage need it for tax purposes. Now, IANAL, but restricting access provides a level of protection.

1a. You don't need to give your SSN to a doctor, school, testing firm, grocery store, or anyone else who wants it for "identification." If they demand a 9-digit number, you can create an instant null SSN by replacing one 'field' of the number with 9's or 0's. (Eg: 999-00-9999: The 3,2,4 are the 'fields.')

2. You can pull your credit file from each of the major credit agencies at least once annually. They all have toll-free numbers for this use. Also, if you are declined you can request another personal pull.

NOTE: The 'gimme' pull they provide is much less detailed than a proper credit report given to a firm. Some firms will be able to give you a full pull, for a fee.

NOTE: It's worth mentioning that the number of pulls within 30 days, six months, and two years are factors in credit approval/denial. The more pulls, the more likely that you've been denied.

3. If you are denied for something which happened before the age of majority in your state, be it 18, 19, or 21, (check with a lawyer if you're not sure) you've got every right to contest until hell freezes over. As in my case, persistance pays off.

4. Check when you DON'T need it. Time is your friend; the more time you have, the more you can fix and rescind.

Later, when I'm less sleep-deprived, I'll follow up with phone numbers.

Joy.