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Making Money From Their Mistakes

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Observer View Drop Down

Joined: 17/January/2005
Location: Canada
Points: 61
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    Posted: 08/August/2005 at 2:56pm

The following article appeared in today's Toronto Star. Having been in the business I can say that this is just like them (Credit Reporting Agencies). What the article failed to mention is that credit bureaus also sell info to credit marketers. And all of the silly public thinks their info is is sacred... Show support email  the writer Tyler Hamilton at




Aug. 8, 2005. 01:00 AM

Making money from their mistakes


Thomas Chapman, chief executive of credit-reporting giant Equifax Inc., stood in front of a few dozen corporate leaders in late June and declared that identity theft is an "epidemic that worries me to death."

He then went on to say that there's no silver bullet to dealing with the fast-growing crime, which has turned the lives of many Canadians and Americans upside down.

But for Atlanta-based Equifax, which saw revenues jump 15 per cent to $363 million (U.S.) in its last quarter, there is a silver lining. Take a visit to Equifax's website and the first thing you'll see is a house advertisement for the company's Credit Watch Gold product.

"Don't let identity thieves ruin your credit," the ad says before proceeding to tout what it describes as the "most in-depth identity theft protection plan" on the market. And it only costs $129.95 a year.

Online auction leader eBay Inc. has reportedly struck a deal with Equifax to sell its credit monitoring service to tens of millions of eBay users. If only 1 per cent of eBay customers signed up this year, it could mean more than $100 million in additional revenues for Equifax.

Worry. What worry? Where there's fear there's opportunity. Chapman should be popping the champagne.

In Canada, Equifax rival Trans Union LLC sells a similar product for roughly $92 (Canadian) a year, offering "security and peace of mind" from identity theft. The service, advertised prominently on the front of the company's website, includes weekly email alerts and quarterly online access to your credit profile.

It's hilarious in a sick way. Here we have profitable companies that are pulling in billions of dollars in revenues by compiling, packaging, dissecting and selling your personal information.

The information is collected and accessed by others behind your back. The information is often out of date or riddled with inaccuracies.

And as we've been reminded by recent data security breaches in the news ChoicePoint, Bank of America, CardSystem Solutions and LexisNexis, to name a few this information is sometimes illegally accessed and abused by criminals.

Now, we're being encouraged to pay for "protection" by the same multibillion-dollar companies that are supposed to be guardians of the information they benefit from.

In March 2004, Equifax Canada disclosed that about 1,400 customer profiles were accessed by "criminals posing as legitimate credit grantors." One of the company's responses was to offer each customer a free one-year subscription to Credit Alert, another service that monitors credit profiles for signs of identity theft. It wasn't an isolated incident.

In June of this year, Equifax Canada gave the same one-year subscription to another 600 Canadian customers whose credit profiles were accessed without authorization, putting them at greater risk of becoming identity theft victims.

Offering a one-year subscription assumes, of course, that the identity thief will use the information right away to commit crimes, such as writing bogus cheques, applying for and running up credit cards, or obtaining line-of-credit accounts.

But studies have shown that signs of identity theft often don't show up until well past a year, and ID fraud can continue to re-emerge several years after the initial theft of personal information.

A one-year subscription to a credit monitoring service doesn't cut it. It comes nowhere close to addressing the anxiety and stress that comes with being a likely target or victim of identity theft.

Nationwide Mutual Insurance of Columbus, Ohio, found in a recent poll that 28 per cent of 1,097 identity-theft victims were unsuccessful in trying to restore their reputation, despite more than a year of effort.

"The survey shows that recovering from identity theft can be difficult, costly and stressful, but what is most alarming is that despite the time, money and personal duress victims go through, resolution is not always achieved," stated Nationwide Mutual when it released the poll results last month.

Here's a whacky idea: Why don't the credit bureaus do a better job of protecting the information in the first place, rather than trying to profit after the fact by selling fear?

Dan Barnabic, president of Consumer Federation Canada, which has been lobbying hard for stricter regulation of credit-reporting agencies, says one way of cracking down on authorized credit requests is to require that all credit grantors be licensed, making it difficult for criminals to set up fake businesses.

"If we license hot dog vendors, we should license people who can get access to our most sensitive information," says Barnabic.

Barnabic isn't the only one looking for change. The Consumer Measures Committee, a group of federal and provincial government representatives, last month released a discussion paper.

The paper (at lays out 10 measures that could be taken to curb identity crimes in Canada, achieved through amendments to existing legislation or from the creation of an entirely new identity theft law.

Some of the options are commonsense and have nothing to do with credit-reporting agencies. These include truncating of credit-card numbers on retail receipts (a change I've been pushing for two years now), making it illegal to use social insurance numbers as a customer identifier, and mandatory and timely disclosure of any security breaches of customer data.

Specific to credit bureaus:

  • More responsibility would be placed on credit-reporting agencies to authenticate people and organizations that attempt to access the credit reports of consumers.

  • Consumers who suspect they may be at risk of identity theft would have the right to place a freeze on their credit report without charge.

    The "freeze" would prevent the credit bureau from releasing a credit report to any third party without direct authorization from the consumer. If an unauthorized request were made, the consumer would be alerted, "making it more difficult for an identity thief to qualify for credit in their name," the paper states.

  • Credit bureaus would be required to put fraud alerts on any credit report that has been linked to a privacy breach, for example, when CIBC was faxing customer information to a junkyard in Virginia.

    Finally, the committee suggests that any breach of the above rules would leave credit bureaus or any other organization legally liable for damages to the consumer.

    In essence, victims could sue all organizations that don't take reasonable steps to prevent identity theft.

    No doubt these are ideas that will not be popular with the credit bureaus, because it means spending money not making it. And that's a good sign, because it means such measures will probably work.

    Retired Collection and Credit Executive
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    Staretz View Drop Down

    Joined: 20/November/2004
    Points: 120
    Post Options Post Options   Thanks (0) Thanks(0)   Quote Staretz Quote  Post ReplyReply Direct Link To This Post Posted: 11/August/2005 at 12:33am
    Sheesh maybe I should pose as a potential creditor in order to getr my OWN credit information.  I sent off an application for my "free credit report" weeks ago and havent heard a peep.  I will try again after i get back from my vacation.
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    montyloree View Drop Down

    Joined: 17/August/2005
    Points: 6
    Post Options Post Options   Thanks (0) Thanks(0)   Quote montyloree Quote  Post ReplyReply Direct Link To This Post Posted: 17/August/2005 at 9:15am

    If you suspect yourself of being a victim of identity fraud, contact your Consumer Protection - Dept of Justice.  They regulate the credit bureaus in Canada.

    Also, contact the federal Privacy Commission's office.  They're all about keeping your privacy strictly in your control.   Look for P.I.P.E.D.A. act.

    If the credit bureaus are being negligent with your personal information you have the right to vigorously complain about it.

    Credit bureaus are in business of selling your credit information to your current and future creditors.  These include lenders, life insurance companies, landlords, potential employers.

    It's important to know that there is NO LAW that says anything must be listed on your credit reports.  Credit listings can only be put on your credit report by your written authorization.  This is called "consent to disclose" in the PIPEDA act.

    Monty Loree

    Canadian Money Advisor
    Financial Maturity Blog
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