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SHHHH, Credit Companies Don't Want You to Know This
A Case of Mistaken Identity
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These days credit is just as good as cash. So it's easy to think credit companies would guard your private information and allow you free access to your credit rating. Think again. Credit companies have the right to sell your credit report without your consent in every state except Vermont. Not only do these credit companies charge you to monitor your own credit rating, they've made an industry out of selling credit data to marketing companies and shady businesses in an era where identity theft and consumer fraud is at its peak.

Last year 700,000 was the number of identity theft victims reported by the Federal Trade Commission (FTC). It's the most popular and the most profitable form of consumer fraud, winning titles for the number one source of consumer complaints and the fastest growing financial crime in the U.S. This is bad news for consumers.

When an identity thief uses your credit to rack up unpaid debt, the delinquent accounts are reported on your credit report, which can severely damage your ability to own a home or borrow money to go to school. Most victims of identity theft are denied credit or home loans, and the average victim spends more than $1,000 to deal with identity fraud damage, according to the FTC. With the time and expenses related to cleaning up a trail of credit hassles, the thief might as well be taking cash right out of your bank account. It typically takes 14 months before a victim discovers that their identity has been stolen, and in some cases victims can spend years redeeming their good name to creditors.

"I spent months dealing with bounced checks and credit companies after my check book was stolen," says Lisa Lewis, a hard-working restaurant professional. "It has been a huge time expense, stress and hassle."

In a consumer-driven society it doesn't take a rocket scientist to understand just how important a positive credit rating is in the U.S. economy. These days, "plastic cash" seems to be the norm. Let's face it, we live in an economy that thrives on credit and debt. Last year, Americans carried $531 billion in credit card debt, according to Warren Heller, chief operating officer of Veribanc Inc., an independent bank rating and research firm. Low interest rates have allowed Americans to keep borrowing and manage their debt effectively enough to buy homes and other consumer goods despite daunting unemployment rates.

With the rate of identity theft and consumer fraud on the rise one of the best proactive steps consumers can take is to check the accuracy of their credit report on a regular basis. However, only six states allow access to your credit report for free regardless of whether or not you've been denied credit or become a victim of identity theft. Equifax, Experian (formerly TRW) and Trans Union charge $6 - $8 for a copy of your credit rating. These same companies also have the right to sell your credit information to direct marketers for any credit purpose. This includes your unlisted telephone number, birth date, Social Security number and mother's maiden name. This is significant because the buyers of this credit information may not always do the best job of keeping your credit information safe from thieves.

In 1992 Trans Union was sued for misusing information, confessing to enjoying a $11-million-a-year business selling credit information to junk mailers. In November of 2002, federal prosecutors began investigating a software company that allegedly sold access to consumers' credit histories. These federal prosecutors believe it to be one of the largest identity theft cases in American history, with losses adding up to nearly $3 million.

Until recently, consumers had little, if any, control over credit bureau companies and credit reporting practices. In 1996, the first major updates were made to the 1970 Fair Credit Reporting Act. The 1996 Consumer Credit Reporting Act finally granted consumers the right to a free credit report, but only after a denial of credit. The act also made credit bureau companies responsible for correcting credit errors.

Despite these small consumer rights advances, credit bureau companies are still making a buck off your credit information. Many credit bureau companies have developed revenue-producing services that charge consumers for the ability to protect their credit. For instance, Equifax will charge $39.95 a year to notify subscribers by e-mail of any significant new entries on their credit file within 24 hours of the posting. For $79.95 a year Experian has a more comprehensive plan called Credit Manager that provides access to credit reports, credit scores, educational materials and instant e-mail alerts to help subscribers battle identity theft. Gee, what a deal.

In a November airing of National Public Radio's Talk of the Nation with Neal Conan, Ed Mierzwinkski of the Public Interest Research Group supported the notion that credit bureau companies are unnecessarily charging consumers.

"The companies have what I call a protection racket," said Mierzwinkski. "Some of them have set up services where they're charging consumers $59, $69, $79 a year to look at their reports, but it's unlike the mob. The mob, when you paid the mob off, wouldn't burn down your store. But the companies still allow you to become a victim of identity theft. It should be free."

While consumer advocacy and public interest research groups battle to gain greater control over credit reporting practices, credit bureau companies aren't likely to slash their identity protection streams of revenue anytime soon. In the meantime, here are a few resources to help you protect yourself from identity theft and take action if you happen to become a statistic.

If you're a victim of fraud, contact your local police or the police in the city in which the identity theft took place. Get a copy of the report in case the bank, credit card companies or others need proof of the crime. Also, contact your credit bureau to have a warning put on your credit report.

To report ID theft:

1-877-IDTHEFT or www.consumer.gov

Federal Trade Commission (FTC) Identity Theft Hotline: 877-438-4338 or http://www.ftc.gov

To contact the credit bureaus mentioned here for a copy of your credit report, or to report that you have been a victim of fraud, see the numbers below:

Experian: 1-888-397-3742

Equifax: 1-800-685-1111

Trans Union: 1-800-916-8800

Other resources:

The Privacy Rights Clearinghouse has many resources for victims: www.privacyrights.org

National Fraud Information Center: 1-800-876-7060 or www.fraud.org

National Credit Union Administration: 1-800-827-9650 (Fraud Hotline)