June 18, 2007 | written by Rachel Kim
Holding the Credit Bureaus More Accountable
Just recently introduced by Congressman Elton Gallegly, the Credit Agencies Identity Theft Responsibilities Act may require credit reporting to report any anomalies in consumer credit reports to the Secret Service. Identity fraud continues to be an enduring problem, costing $49 billion in 2006 alone. Our data also shows that existing card fraud increased over the last year from 1.82% to 2.05%.
Currently, agencies only notify consumers when they believe fraudulent activity has harmed an individual’s credit. But if there were 3 different birth dates associated with the name of the consumer, no action would be taken to alert the potential victim.
Passing this legislation would have obvious benefits, but could it be too burdensome for the industry? If it doesn’t pose unfeasibly costly difficulties, it seems like a good idea. Credit bureaus obtain thousands of credit reports everyday, making them an useful vehicle for discovering identity theft. Although identity thieves are increasingly facing federal prosecution, consumers must still be effectively empowered to prevent and detect fraud on their own. If this act is passed, the victim ought to be notified in addition to the appropriate government authority, so that they may take any necessary action.
Speaking for myself (and not for my employer), I think credit bureaus hold the key to stopping identity theft. For example, how many different files will they establish under the same SSN without ever notifying the Social Security Administration or the consumer? They sell pricey analytical products to businesses and yet the consumer is pretty much left in the dark. I think this bill is a good start but doesn’t go far enough. Credit bureaus need to act as responsible corporate citizens in exchange for the right to sell our information often without our knowledge and consent (e.g., prescreening). By using some of their already existing analytical models, they could spot identity theft early on and alert both the consumer and appropriate law enforcement. Build it into the cost of a credit report. And never establish more than one file under the same SSN. That’s identity theft on its face and credit bureaus should not be facilitating it.
Mr. Henrick’s comments are right on the money.
The triggers for the Credit Reporting Agencies to suspect ID theft under this legislation (HR 2568) are: – 3 or more names associated with a single SSN – 3 or more home addresses in a single year – 2 or more birth dates
This legislative attempt is a great first step. I would like to see a modification so that suspicion raised with TWO or more SSNs associated with a single name.
I agree with Randy’s comments. As important as credit reporting agencies have become, I believe it is irresponsible for them to take the position that they are only posting what data they receive from creditors and have no real responsibility for the accuracy of their files. They have plenty of analytic capability to improve the accuracy but choose not to use it (until government forces them to) in even the most blatent cases of error (like dupe-SSN, as noted by Randy).
In a personal case the the credit bureau had a record of a credit card with CitiBank on my record. I told them I had no such card. They said I would have to get Citi to fix the problem but did not provide the full account number on my credit report. Citi could find no account in my name and asked me for the full number. Just one small example of of the many “Catch-22” situations the bureaus’ “accuracy-is-not-my-job” attitude creates.
They are not the neighborhood bullitin board, they are an important part of our modern economy and need to start acting like it. Clearly they have had plenty of opportunity to address the data accuracy issue and have blatently chosen not to do so. Government regulations generally are the result of real abuses and/or lack of private sector actors taking responsibility.
Google references:
Rights = 2.9 billion
Responsibilities = 122 million
Everyone wants rights but only 1 in 23 want responsibilities.