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: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: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: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.

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.