Credit Industry Opposes Anti-ID Theft Method

athloi alerts us to an opinion piece running in USA Today on the backlash against an effective tool to fight identity theft. The big three credit bureaus don't like the numerous state laws that have been passed requiring them to give consumers a simple way to freeze their credit. Watch for a push at the federal level to get a watered-down statute that pre-empts state laws. "Lawmakers across the country — pushed by consumer advocacy groups — ... have passed laws that allow consumers to freeze their credit, a surefire way to prevent thieves from opening new accounts or obtaining a mortgage in a consumer's name. Under a freeze, a consumer cuts off all access to his credit report and score, even his own. All lenders require that information, so no one can borrow money in the consumer's name until he or she lifts the freeze. It's simple, and it works. So, of course, it's under threat from the Consumer Data Industry Association, which represents the Big Three credit bureaus. They make millions gathering and selling consumer data. Freezes cut into that business."

Comments

Credit Freeze = Relief

[Applekid]

Another happy side-effect of freezing your credit: No snail-mail spam about preapproved credit offers. It's saved me much over the last year in time devoted to shredding.

Re:Credit Freeze = Relief

[j.sanchez1]

According to this, the following states have this Credit Freeze option open to their residents. Use it while you can.

Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Indiana, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, New York, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, Wyoming

It also lists fees and such.

Re:Credit Freeze = Relief

[Shakrai]

No snail-mail spam about preapproved credit offers. It's saved me much over the last year in time devoted to shredding.

Actually, most freeze laws (at least the one in New York, which I'm most familiar with) do not stop the pre-approval offers that are clogging your mailbox. The most effective way to do this is to "opt-out" with all four CRAs. You can do that here. A five year opt-out is completely online. For a permanent one you need to sign a letter and mail it back to them. This is what I did.

Regardless of whether or not you freeze your credit (not everybody can) everybody should do this. Opt-out with all four agencies and follow up with them a few months later to make sure they actually did it. Three (Trans Union, Equifax, Innovis) processed it properly for me but Experian never did until I followed up with them.

Re:Credit Freeze = Relief

[Schmendr1ck]

Incorrect.

I work for a DoD contractor and possess a security clearance. One of my coworkers lost a clearance based solely on filing for personal bankruptcy protection. It had nothing to do with a "pattern of abuse"; legitimate personal circumstances forced this person to make that decision.

Security clearances are denied or revoked based on risk to the government. Poor credit puts you in a high-risk group because (so the theory goes), you are more vulnerable to take money in exchange for classified information. And individual situations are rarely taken into account - if your credit report fits the profile for vulnerability, you don't get a clearance.

A credit report doesn't just affect your ability to get a loan. In some fields, bad credit (valid or not) can severely limit your employment options. Yet another reason to rebalance the laws in favor of the consumers.

Re:Credit Freeze = Relief

[crabpeople]

What a great idea! put all your personal information into a form linked from slashdot.

but but but they have an ssl cert! it must be safe!

Re:Credit Freeze = Relief

[HomelessInLaJolla]

The only way to get "bad" credit is to be fiscally irresponsible.

That's false. As far back as 1890 it was known, per census, that average household debt was nearly double average household income. As of 1998 average debt was still $200 less than average income. This isn't a fiscally irresponsible problem--this is a system of debt which has been deliberately allowed to continue.

Unless you would like to suggest that it's human nature, across a national population, and across over 100 years (documented) to be "fiscally irresponsible" at which point then it again becomes obvious that the credit reporting bureaus are a legal method of discriminating against those who aren't independently wealthy to begin with.

So if the poor don't screw themselves, they will have good credit.

False again. The poor are not screwing themselves. They are deliberately maintained in a system which ensures that they will have debt and statistically ensures that they will never be able to escape that debt. The fact that the federal government began, in 1776, $73 million dollars in debt (which the "poor" never signed for) doesn't help them any.

The government isn't taking her money and giving it to the rich. The government is taking nothing and giving her cash

For every $1000 which goes to some hapless single mother, how many hundreds of thousands are boondoggled in administration? Oh, wait, the expense of administration and the pork which goes along with the salaries for the upper managers and the contracted accounting firms probably doesn't fit with your high-and-mighty self-superior reality, does it?

My complete tax burden (all local, state, and federal taxes, including my $400,000 home and 100 acre farm's real estate tax) is under 20%

So you admit that you're on the positive side of the pyramid scheme and have never bothered to take a long hard look at where your wealth comes from. Congratulations. You're exactly the kind of people that the bankers want.

How you manage to make off with a complete tax burden of under 20% is either a result of some questionable accounting, outright tax evasion, or the exploitation of loopholes--the very things which cause the remainder (and majority of the population) to have to pick up the slack that you're dodging. Don't feel guilty, though, I'm sure you sleep quite well in your $400,000 home on 100 acre farm.

The welfare for the rich (assuming you mean payments for big famring companies, billions for oil companies and such) is tiny compared to the welfare for the needy

The welfare for the rich is not in subsidies. I'm not surprised that you've not bothered to actually look into this since ignorance lends itself so neatly to your argument. The welfare for the rich is in the first two or three levels of disbursement between the US Treasury, Wall Street, and the bank accounts for the recipients of those disbursements from the US Treasury. You have a farm? The first pigs to the trough eat the most and it's as simple as that.

The real welfare for the rich is the military-industrial complex.

No. The real welfare for the rich doesn't even go through the government. The real welfare for the rich is the insider trading information that comes from Washington DC when the people on the gravy train know when to invest in the companies receiving the disbursements, loans, grants, subsidies, etc. from the US Treasury and when to sell when there's a Congressional investigation into accounting coming along.

I would be willing to forgive your ignorance of these systems if you'd decide to face the fact of a deliberately contrived system of debt to ensure the perpetual profit for the same 5-10% of the population whose families have enjoyed the priveleges of the pyramid scheme for the last 200 years, or more.

getting a good paying salaried job

There's the first one. Most people don't get a "good paying salar

Re:Credit Freeze = Relief

[HomelessInLaJolla]

This is because if he looked at ALL the facts, You mean the facts that show that the US government has been $73 million in debt since its inception and hasn't been out of debt once since? How about the fact that the debt does nothing but increase over the years? No. We couldn't have that fact. It's too obvious.

Classical conspiracy-theorist fact-finding Such as the fact that the easiest money ever made is interest paid on a $73 million dollar debt over the course of 200 years?

Look. In 1890 the average household was in debt twice what they made. 870/475 (about 400 dollars short) or something close to that. In 1998 the average household was in debt about the same as what they made, but about 200 dollars short. 33k/32800.

Now, figure in the growth in population, and the other side pyramids, and the effect of the number of people having to pay taxes on "stuff" (eg. in 1870 we didn't have gasoline taxes and alcohol/tobacco taxes were regulated significantly differently than they are now) and it almost seems as if...

WE'RE STILL PAYING THE SAME GOD-DAMNED PRINCIPLE 200 YEARS LATER!!!

You're such an ignoramus that you should be shot.

Re:stolen identity

[morgan_greywolf]

The freeze laws require that the credit card agencies setup a secret password that only you know. The password is never to be revealed to anyone.

Credit Reporters

[gEvil (beta)]

I was the victim of identity theft several years ago and had a "credit lock" put on my accounts with all three credit reporting agencies. What this supposedly does is makes it so that the three agencies will contact me first before a line of credit is opened in my name. This is supposed to be in effect for seven years from the time I established it. However, since then, I have opened two lines of credit and never once been contacted them as they claimed they would. These guys feel no obligation to follow their own guidelines. Why would they follow someone else's?

Re:Credit Reporters

[infinite9]

These guys feel no obligation to follow their own guidelines. Why would they follow someone else's?

I had a near miss with identity theft about six years ago. The mortgage broker that sold us our house (we knew it was him, just could find him or prove it) stole our file along with a bunch of files from other people. We would check out mail to find credit card bills that were torn open, rearranged, then haphazardly stuffed back into the envelopes. We finally figured out what was happening when we got a rejection letter for a small business loan for $18,000 that was declined for a technical reason. He put my birthday down as something like 1905 for some reason. All the other info was dead on. When I called the bank, they apologized for turning me down and asked me to come in and fix the problem to get the loan.

He must have been a novice because he made a number of other failed attempts. We ended up putting this fraud alert on our credit credit reports. Our experience has been hit or miss. For example, my wife walked into a target and spent several hundred dollars. The offered a 10% discount for applying for a credit card. She told them it would automatically deny us because if the fraud alert, but they told her she would get the discount anyway. The result: $10,000 limit on the spot with a little note that would allow her to max the card there in the store that day. Home depot gave me a little trouble though. The person behind the counter abruptly handed me the phone. The person on the phone said, "Do you know why I'm talking to you?" I told her about the fraud alert. Result: $5000 limit on the spot. At least it wasn't as bad as target. We bought a car no questions asked. Getting a cell phone contract from sprint was hell however. They kept canceling the order. The third attempt worked and they did as they should have.

CDIA != Credit Card Companies

[schwaang]

As the summary said, the Consumer Data Industry Association "represents the Big Three credit bureaus". According to their membership information, CDIA member companies are engaged in credit reporting, tenant screening, employment reporting, etc. Companies that are not eligible for membership include:
        * Commercial Banks
        * Retail Stores
        * Bankcard Issuers
        * Retail Credit Card Issuers
        * Credit Unions
        * Mortgage Brokers
        * Real Estate Agencies
        * Nonbank Banks [wtf?]
        * Savings and Loan Institutions

So CDIA is the credit reporting agencies, plus (most likely) ChoicePoint and Axciom and other datamining privacy haters. But not credit card companies or lenders, or anyone who loses money when identities are stolen.

Re:naturally...

[truthsearch]

MasterCard and most banks spend a lot of money each year on preventing and detecting fraud. I used to work for MasterCard and can tell you they do see profit in preventing credit card fraud, and to a lesser extent id theft. If consumers lose trust in the brand name they'll hurt very bad. They track their own reported fraud rate very carefully and set a performance threshold for the department to maintain. MasterCard works closely with all of their member banks to aggregate fraud statistics and raise flags when any banks see a spike.

Re:Which states?

[TheteSigma]

I found this link that should answer your question.

"State Security Freeze Laws"
http://www.consumersunion.org/campaigns/learn_more /003484indiv.html#AK

Re:Freezes cut into their business?

[Nom du Keyboard]

How, exactly, do freezes legitimately cut into their business? No one is supposed to be able to get a credit report on you without your explicit authorization anyway.

They sell solicitation mailing lists to credit card companies who specify the parameters of the consumer they're most trying to reach (i.e. Visa might want to market to current AmEx card holders with household incomes above $75,000, no late payments in the last year, and living on the eastern seaboard). That's a major source of additional income for them.

Re:Freezes cut into their business?

[GodfatherofSoul]

There are two types of credit queries; solicited and unsolicited. The way I understand it, the credit bureaus sell your credit ratings for unsolicited queries (which I assume contain less information) to lenders. If the lenders like what they see about you, they send you a pre-selected or pre-approved offer. If you take the bait, they then make a solicited query (which you have to approve of) which contains all of your credit information. Check out your credit report or take a home-buying class and you'll see what I mean. The credit bureaus weren't set up for YOU, they were set up for businesses to mitigate the costs of investigating each potential loan applicant. That's why their practices are so pro-business/anti-consumer. But, the Libertarians don't see a problem with that, right?

Re:Credit BS = Karma

[Shakrai]

Obviously you've never had to deal with the fallout from a bad credit file. Yes, on the surface it appears that the law is written in the consumers favor. Go read some credit repair boards and see how well that works out in practice. See how the data providers(credit card companies) just "verify" any dispute that comes down without doing actual research. See how the credit reporting agencies outright refuse to follow the law (try getting them to do a proper procedures request).

The entire industry is set up in favor of their customers (the data providers and creditors), not the consumers whose lives they ruin. The existing laws are either too weak or are just ignored outright.

Re:Useless Freeze?

['nother poster]

Um, your second "Clueless Customer Rep" lin is incorrect, that is what you are missing. It should read a bit more like this...

Thief: Knave here, I would like to remove the freeze on my account, I'm buying myself a sweet car.
Clueless Customer Rep: Very good sir. Please enter your pin number to lift the freeze.
Thief: Um, I just remembered I need to see a man about a horse. BRB.

(P.S. I know what PIN stands for and that I don't need the word number there, but that is what the CR would say. They are clueless, ya know.)

Re:It's cheaper because they dump it on the mercha

[zippthorne]

Credit reporting agencies, when functioning as intended, allow individual risk to be borne by the risky individual. Without them, the interest rate has to reflect the overall risk that banks must take by loaning to individuals.

In other words, if you have good credit, you really don't want to get rid of the idea entirely, if it can be made to function as it's supposed to.

Similarly, insurance companies must average over all of their customers. Evaluating the risk allows them to charge more appropriate rates to individuals. Without the ability to segregate based on risk, people who wisely build their homes well above a flood plain end up subsidising people who build right up on edge of the beach, who, ironically, are typically much better off financially than their inland-dwelling counterparts.

Re:Freezes cut into their business?

[Maxo-Texas]

I do not think that is correct.

I got my credit report yesterday actually (from the real site: Annualcreditreport.com NOT the scam site: freecreditreport.com)

My credit report shows 12 promotional inquiries by businesses wishing to extend me pre-approved cards between january and may. I'm sure they paid a fee to the credit agency each time. Freezing my credit might turnoff that revenue stream.

Citizens Against Credit Report Abuse

[Intrinsic]

I'm an avid believer in minimizing my credit use. I think obtaining credit for certain things like buying a car or a house is fine, but I think credit cards give us a false sense of security. In that, it causes us to to devalue what things are worth. When you buy something with cash in hand you feel a sense of empowerment because you have the means to accomplish what you set out to do NOW. With credit you are operating at a deficiency (if you use credit cards to pay for things with money that you don't plan on having in the early future) You don't have worth to give you to the means to accomplish what you want, so you resort to sacrificing your financial future for a short term gain that isn't always quantifiable. This causes you to accumulate debt that you didn't think you would have. Now im not blaming people for this, its just the way it is and I understand that people feel like they need to obtain credit to buy in times of need, im just not sure how far you should go.

Secondly, I think that credit report system is flawed, having lenders use it for lending purposes are certainly understandable. The problem is I don't think its a good idea to use it as an end all solution to determine if someone is legit. People change, mistakes are made and are possibly corrected. Also the big thing i have a problem is with is that it is used by non-lenders. Paying bills such as utilities and rent should not even be factored into the use of credit reports. The largest problem of all, you don't have much control over what goes on your record. Basically you are putting someone else in power of determining your creditability and that is not something you want to do.

I'm interested in knowing if anyone would be interested in joining a grass roots effort to limit the scope of credit bureau influence.

I'm going to setup a website put something together, please email me if you are interested
trinsic@in-trinsic.net

No profit in good customers

[Anonymous Coward]

Actually deadbeats (the technical term) are some of the best prospects for banks and the credit industry. It's hard to make money off someone with a 820+ FICO (super prime) as they are unlikely to revolve (run a balance) or incur overlimit or late fees. Even if they do revolve, the interest rate will be Prime + 1.9 or a similarly low rate. In addition, high FICO customers generally have multiple bank relationships so the bank will usually waive an accidental late payment.

The real money is to be made in the sub-prime (FICO 620) segment where you can charge high interest rates (Prime + 15%) and get lots of fees. And the other hand, all the the credit risk (chance of not ever getting paid) is in the low FICO customers.

GreenDimes = carbon-neutral + less junk mail

[sydbarrett74]

Hop on over to GreenDimes and sign up. For $36/yr (at least that's what it cost when I signed up a few months ago), they purge your name from all these mailing-lists AND plant one tree a month in your name. So you can reduce the flow of junk (which saves trees) and have trees planted. It gets you that much closer to carbon neutrality.

FWIW, before I signed up, I used to have my box stuffed with junk on a daily basis. Now only the occasional piece trickles in, and that's only from companies who haven't scrubbed their lists yet.

Its worse than that, SS# isn't even needed!

[toy4two]

Sorry to inform you but the days where a creditor needed a social security number to put something deragatory on you credit report are LONG gone. It is actually one of the biggest myth's of credit reports. See this: See MYTH #8: http://www.fatwallet.com/t/52/225082/