Will the Experian versus Lifelock law suit help identity theft victims?

Lifelock -- one of the companies that offers identity theft protection at a cost -- is being taken on by one of the big three credit bureaus. Last week, Experian filed a law suit seeking damages for their costs associated with placing and replacing credit alerts.

Before continuing on, it needs to be noted, as it has been by Lifelock CEO Todd Davis that Experian and the other members of the big three are involved in the identity theft protection business, also.

There is an interesting article by Terry Bibo at the PJStar.com about a Catepillar retiree, who was offered free credit monitoring after a data compromise. According to the article, the retiree tried to use the company provided protection service (ConsumerInfo.com), which is owned by Experian. The end result is seven months later all he has received is someone else's credit report and nothing has been done to protect him from becoming a victim.

It should also be noted that Lifelock isn't the only identity theft protection service that operates along the business model of charging people to place credit alerts or freezes on their reports.

Other companies, such as Debix and Trusted ID offer pretty much the same service.

Unfortunately, I'm not certain that any of this is necessarily going give any additional recourse to the millions of identity theft victims, who should be what this is all about. This law suit seems to be more about who is going to cash in on the identity theft protection industry, which by most estimates is showing double digit growth.

Lifelock has been under fire since it was disclosed by Ray Stern at the New Phoenix Times that one of the founders, Robert Maynard had been banned by the FTC to work in the credit repair industry and had been accused of identity theft by his father, who bears the same name he does.

At the time, Lifelock marketed their product by claiming it was inspired by Maynard being wrongfully arrested after his identity was stolen. The article revealed evidence that this wasn't true, and revealed that Maynard had been arrested for not paying his bill at a casino. The story was backed up with a booking photo of Maynard and a statement from an official source at the Clark County DA's office that Maynard had never claimed identity theft at the time of his arrest. In fact, according to the source at the DA, he made full restitution, which prevented the case from being prosecuted.

Shortly thereafter, CEO Todd Davis made headlines when he organized a "posee," complete with film crew to go after the person, who stole his identity to get a loan. The identity thief in question was described as mentally disabled by the authorities and the charges were dropped because of the questionable tactics used, referred to as coercion.

There are a lot of forms of identity theft and not all of them show up on a credit report. The fact that Todd Davis' social security number (which he plasters all over the universe as a marketing tool) is a pretty good indicator of this.

Stephen Lemons, who writes Feathered Bastard column for the New Phoenix Times wrote about the pending law suit. He pointed out that despite the negative publicity that Lifelock has received, it's business continues to grow.

The advertising campaign referred to consists of everything from television advertising to blogs. In fact, some of these blogs could probably be classified as splogs (my opinion). Recently, I've even seen e-mails touting the service that were caught in my spam filter. These e-mails have the following verbiage, "BBB: "LifeLock is the best Identity Theft Protection We Have Found."

When looking into this it was pointed out to me that the BBB (at least the Better Business Bureau?) doesn't provide endorsements.

Another thing, I noted in the several unsolicited e-mails I've received was that I was getting them because I had "opted in" at either Lifelock, or an affiliate. Strange, I don't remember ever opting in to receive e-mail campaigns from Lifelock? I do remember tracing a mysterious link from a Lifelock affiliate to this blog. When you tried to click on this link, which was set up on a Chinese domain, it redirected right to the main Lifelock website.

There are a lot of players in pay per credit alert business. Will this litigation eventually be the precedent for further litigation? I suspect Lifelock is the initial target because of some of the aggressive marketing tactics they use.

In November, the New York Times published an article by Brad Stone about Gideon Yu and his investment in Debix. In the article, he wrote:

Gideon Yu, the former chief financial officer of YouTube and current chief financial officer of Facebook, is one of the most notable new executives in Silicon Valley. But while Mr. Yu operated in high-tech’s highest circles over the last two years, an impersonator was quietly using his name and credit card number to make fraudulent purchases.

This is another testament that just about anyone can become an identity theft victim and it noted the frustration Mr. Yu went through trying to resolve his personal issue.

Another item mentioned in the article was that the credit bureaus make it difficult for the average person to protect themselves:

Other individual investors and venture capital firms also see opportunity in the business of combating identity theft. The big three credit agencies — Equifax, Experian and TransUnion — offer several tools for preventing ID theft, but generally make putting such measures in place difficult for consumers — requiring them to send requests by certified mail, for example, and making them renew fraud alerts every 90 days.

What's interesting about this is that most identity theft has been enabled by the buying and selling of too much personal information without protecting it very well (my opinion). It makes sense that those profiting from selling information and protecting us from the fall out wouldn't want to make identity theft protection easy. If they did, it probably would cut into some profit margins by making it harder to issue credit. Of course with the record amount of bad debt out there, this might not be such as bad idea (my opinion again)?

I'm not sure where this lawsuit will go, or if this action will spawn others in the future. The only thing I do know is that it would be nice to see the victim get a fair shake for once. There has to be a better way for the average consumer to protect themselves.

The article quotes Gail Hillebrand at the Consumers Union:

Many consumer advocates say that no one should have to pay anything to defend against identity theft. “Having to renew a fraud alert every 90 days is a pain, and I can see why there’s demand for these services,” said Gail Hillebrand, a senior lawyer at Consumers Union. “But the ultimate solution is not for consumers to pay someone extra. It’s for the credit agencies to make this an easier process and to extend fraud alerts for a year.”

NY Times article about Gideon Yu and Debix, here.

Feathered Bastard article, which contains a link with the actual Experian complaint, here.

In case you can't afford the extra money to protect yourself, or simply are frugal, here are two links on how to "do it yourself," I recommend taking a look at:

FTC site on how to deal with identity theft, here.

Information by the Privacy Rights Clearinghouse, here.

Consumers Union (quoted above) does a lot of work to advocate for better laws that will be more consumer friendly, also.

Consumers Union launches Valentine's Day campaign against unfair credit card fees!

Consumers Union is launching a campaign for Valentine's Day to let Congress know that despite overwhelming evidence that credit card companies seem to be gouging a lot of people, very little has been done to correct the problem.

From their website:

Just before the start of this holiday season, the GAO released a scathing assessment of the credit card marketplace and its regulation. Click here for the report itself. See Consumers Union's response to the report and to the problems faced by Consumers. With a national spotlight on an out-of-control industry, its time now to push this to the top of the agenda as a new Congress reconsiders its priorities for Americans.

Many more examples of a LOT of evidence that consumers are due some relief, here.

In their own words, here is a description of the campaign:

Kiss them goodbye--send the Valentine's Day card at right to each of your lawmakers, asking them to pass real reforms for you. As the economy tightens, you need fair credit, not "gotchas." Our goal: 100,000 cards ready for delivery by February 14th.

I'll provide a link to the campaign (in case anyone is interested in an easy platform to voice their opinion), here.

There is no doubt that we are facing an impending crisis with bad debt. Please note that this doesn't only apply to credit card debt. In case you haven't noticed, a lot of people are facing the loss of their homes because of what many consider irresponsible lending practices.

Part of this is caused by fraud, which is what I normally write about. Fraud has been enabled by extremely loose marketing procedures designed to drive selling credit cards, as well as, other financial products.

Whenever a company has losses they have to pass it on in their cost of goods to the people buying their product.

I've often suspected that there is a direct correlation between all the bad debt caused by not very responsible lending practices and some of these hidden fees that keep getting charged to people, who are trying to be responsible and pay their bills.

Is it fair for the people trying to pay their bills to subsidize a lot of bad debt caused in part by irresponsible marketing practices?

Here is one of my favorite posts, which shows how bad debt is enabled by a rush to market a credit card in a not very responsible manner (my humble opinion):

Ever wonder how well you are protected from credit card fraud?

Previous posts, I've written about Consumers Union and their efforts to bring a little sanity to this problem, here.

If you take time to look at these previous posts you will notice that effective action keeps getting blocked before anything is done about this problem. This is probably the best reason (I can think of) to let politicians know that this is an important issue to the people, who will be deciding whether they should remain employed in their current positions.

My guess is that these fees can pay for a lot of special interests to block any meaningful legislation from being passed.

USA Today did an interesting editorial about how much money (an estimated $74 million in the past two decades) has been donated by the card issuers to political campaigns, which might point to the reason why legislation keeps getting blocked.

Consumers Union launches a holiday campaign against unsafe products!

Some might say that the global economy has ushered in an era of corporate irresponsibility. Daily, we discover that certain corporations are distributing goods that pose a clear and present danger to our safety.

Many of us are also wondering if certain politicans have let us down on this matter.

After all, how could only 15 inspectors be assigned to oversee 200 million containers of goods being shipped into the country every year?

Consumers Union, who is the non profit right arm of Consumer Reports has launched a major campaign to let Congress know the public is sick and tired of corporate irresponsibility in the global economy.

With Black Friday and holiday season upon us, they are focusing on dangerous products being passed on to our children with a campaign called, "Not in my cart."

You can see that this campaign is all about in a parody about this matter. To view the parody, click on the picture below:



Also included in the video is information, where to let Congress know how you feel about this!

To sum up what the parody is about, Consumers Union writes:

We hope you enjoyed our parody, but the truth is that our system for keeping food and products safe is in serious need of repair.

This year, more than 25 million toys have been recalled, many for dangerous lead paint.

80% of toys are made in China.

The agency responsible for the safety of more than 15,000 products has only 15 inspectors at ports nationwide.

The FDA inspects only about 1% of imported food.

Despite the severely underfunded staff of FDA Inspectors, Consumers Union has made it a little easier to keep track of all the recalls, here.

The sheer number of them is enough to scare just about anyone!

Congress is considering a law to stop Social Security Numbers from being posted in unsafe places

I’ve written a lot about how the buying and selling of personal information enables a lot of identity theft to occur. This multi-billion dollar industry assures our most personal information is available to ANYONE, who wants to buy it, and stored in a lot of places that might, or might not be very secure.

With all the data breaches that occur, my guess is that it is stored in a lot of not very secure places.

The Consumers Union’s FinancialPrivacyNow.org is running a campaign, where you can write your elected representative and let them know how you feel about this subject:

No more Social Security Numbers on Medicare cards, checks, or on the Internet! The House Ways and Means committee has unanimously passed legislation that would accomplish just this. H.R. 3046 would stop the widespread and unnecessary sale, purchase and displaying of Social Security Numbers by government and businesses that has made consumers more vulnerable to identity theft. Twenty-five House members have already expressed support. Urge your House member to support H.R. 3046 and make sure that industry doesn’t create holes in the bill’s protections.

Link to where you can write your elected representative, here.

Because employers are checking applicants more carefully, many are saying that illegal immigrants will be forced to use real social security numbers to obtain employment. Here is a post, I wrote about that:

Will stricter enforcement cause more illegal immigrants to assume real people's social security numbers?

This might make a growing problem worse. Personal and financial information is already being stolen and sold in a lot of places, including chat rooms on the Internet.

Stopping one of the reasons information is too easy to steal could have a positive impact on what has become a very negative situtation!

Congress needs to take a hard look at credit practices

Right before Christmas, the Consumers Union spearheaded a campaign calling for credit card reforms. It now appears as if some of the issues they surfaced are being looked into by the Senate Committee on Banking, Housing and Urban Affairs.

And Consumers Union isn't alone - a lot of other consumer groups are pretty much calling for the same kind of corrective action for the industry, here.

But it's not only consumer groups that are up in arms. Merchants seem to be, also.

The Merchants Payment Coalition is also applauding this development and is calling for a "deeper look" into interchange fees, which they say cost consumers $30 billion a year. Notably, they state that this amount represents twice the amount the industry charges for late fees, which have also been under attack by the consumer groups mentioned above.

The describe these fees as:

Americans pay a hidden fee on virtually every transaction they make, whether they use a credit card or not, costing consumers tens of billions of dollars a year. This fee, called interchange, is a percentage of each transaction that Visa and MasterCard banks collect from merchants every time a consumer uses a credit or debit card to pay for a purchase. The fee varies with type of card, size of merchant and other factors, but averages close to 2 percent for credit card and signature debit transactions. These hidden fees drive up the cost of goods and services for all consumers whether they pay with plastic, cash or check.

Merchants Payment Coalition page about this, here.

The National Retail Federation is also very "passionate" about interchange fees.

In July, they issued a press release, stating:

The National Retail Federation welcomed a hearing on soaring credit card interchanges rates scheduled to be held today by the Senate Judiciary Committee. The hearing is expected to focus on the $26.3 billion in credit card interchange fees collected each year, the impact of the fees on American retailers and consumers and whether the price-fixing practices involved in setting interchange fees violate federal antitrust laws.

National Retail Federation press release, here.

Since this release was issued in July stating that interchange fees brought in 26.3 billion, I guess the current estimates of $30 billion means that these fees were more profitable than anticipated for the credit card issuers?

We seem to be living in a world, where the amount of debt carried by consumers is at an all time high and fraud is running rampant. Critics claim that credit is issued too easily and not very responsibly.

Please note, this doesn't only apply to the credit card industry, we are (also) beginning to see the impact in the mortgage industry - where defaults are at a record high. Probably the result of too many people "flipping properties," and what appears to have been a record amount of "mortgage fraud."

We are also seeing a growing amount - especially with all the data breaches - of payment card (credit/debit) card fraud.

It makes one wonder how much longer it will be before we hit "bottom," and an economic disaster is the result. If this happens - who will pay the cost?

Our leaders need to examine this problem carefully - and take appropriate action to fix it. Passing the costs of it between businesses (and ultimately consumers) will only work for so long.

Consumers Union Calls for Congress to Protect People's Personal Information

The Consumers Union is calling for voters to let their elected officials know they are concerned about identity theft.

Here are what the Consumers Union considers to be the key issues:

In every state, you should be able to place a "security freeze" on your credit file so thieves can't open new accounts in your good name. Companies and agencies should be required to notify you when the security of your private information has been breached. If lawmakers are serious about making us more secure, this should be the first thing they do when they return to Washington. Help us send this clear message now to your Congressional Representative and Senators.

If you are concerned about this issue, you can add your thoughts by sending a message to Congress, here.

The last time this issue came up before the election - a bill was being pushed through. Here is more information on it and what I wrote about it:

Don't Allow HR 3997 to Take Away Rights from Identity Theft Victims

This bill is still pending - and if passed in it's current version - it threatens to mute State laws already enacted to protect people from identity theft.

Ever Wonder How Well the Credit Card Companies Protect Your Personal Information?

Ever wonder how well your personal information is protected by credit card issuers? If you are like most people - your mailbox is filled with pre-approved credit card offers.

In April, I did a post on how easy it was to tape together a ripped up credit card application, change the address and telephone number (a cell phone was used) and get a brand new credit card.

NBC News did basically the same thing that Rob - Cockeyed.com blogger did - and got similar results:

From the NBC News story:

You think ripping up those credit card applications is enough to prevent identity theft? Think again.

Getting the credit card applications has never been the problem. It's what to do after they pile up that's the real consumer dilemma.

We've been warned for years-- if you don't want 'em, destroy 'em. However, ripping and tearing may no longer seem like enough.

With five applications, and a little muscle, we started ripping. Scotch taped them back together. And wrote around the tape- filling out the application the way an identity thief might if he'd been digging in our garbage.

NBC News story, here.

And the results were a 60 percent success rate, or they got 3 brand new credit cards.

The official responses to how this happened by the credit card companies were:

In a statement, chase card services says it has "rigorous policies" for handling applications and a "special handling process" for the rare torn applications. In this case, however, "it is clear to us our procedures were not entirely followed for this particular application...and we are investigating."

For the two cards it issued, Bank of America, which merged with MBNA, says the applications "both went through the proper verification processes" and that "the signature, social security number and birth date matched" a (current) customer with excellent credit.

The company added that it sometimes sends cards to unrelated addresses as a convenience customers have requested.

Many of these institutions are claiming they have a "zero liability" for fraud - the reality is that we are all paying for it in the form of increased fees and interest rates.

After all - how would they stay in business otherwise?

A lot of them are also selling "identity theft products," which adds another revenue stream to their coffers. Some believe they have helped create this industry by not protecting their customer's information in a "responsible manner."

The conclusion of the NBC article was to "opt out" and of course - buy a good shredder.

You can opt out by calling 1-888-5-opt-out.

It's a shame that we all need to buy shredders and "opt out" to protect ourselves from "marketing practices" that victimize innocent people.

Here is a recent post, I did on how credit cards can (getcha):

A Hidden Cost of Identity Theft - "Credit Card Gotchas"

Don't Allow HR 3997 to Take Away Rights from Identity Theft Victims

Received an e-mail from the Consumers Union - about the identity theft bill (HR 3997) being voted on in Congress this week.

This bill (many believe) isn't consumer friendly and will weaken existing state laws to protect the rights of "identity theft" victims.

I decided to pass this on and see if anyone else wants to let Congress know how you feel.

Here is the letter:

Great news! Together, we're putting the kibosh on identity thieves. In roughly one year, consumers like you sent more than 420,000 emails to lawmakers across the country asking them to pass strong identity theft protections.

Due to these efforts, 25 states have passed laws protecting consumers. Last week, more than 1,500 consumers from 49 states and the D.C. called their representatives and asked them to “vote no” on HR 3997, a do-nothing identity bill. The effort paid off as the House delayed a vote on the bill! Help us kill this bill once and for all. Find out how you can help!

If you are interested in why (many of us believe) this isn't the bill to pass, here is my most recent post - along with previous posts about this subject:

The Financial Data Protection Act Doesn't Protect the Citizen