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.

Equifax hires ID Thief

These days, identity theft is being used for more than to commit financial crimes. A woman in Georgia (Tonia Leach) discovered her identity was stolen after an inquiry showed up on her credit report from a temp agency and Equifax. The still not identified impostor used the woman’s identity to obtain employment at Equifax.

When I say the impostor used the identity for more than committing financial crimes, I didn’t mean the victim wasn’t left with a lot of financial liability, as a result of this occurence.

WSBTV.com (Georgia) reports:

The woman also opened credit cards in Leach’s name. Leach even got a bill from the IRS. Leach said her life has been turned upside-down.

When the creditors call, they call me at 6, 7, 8, 9, every hour of every day. They will call you because they want their money. It was horrible, said Leach.

Equifax, one of the big three credit reporting agencies made the following statement:

We can confirm that an individual posing as Ms. Leach was employed with Equifax for less than a year, beginning in early 2006. There were no indications with the identification information that she provided or through the work history or the credit report that this was a stolen identification.

Equifax also claims, the impostor didn’t have access to sensitive information, but the article doesn’t say exactly what she did, or if there was any sensitive information accessible where she worked?

After all, this person seems very adept at stealing information and it’s possible, she could have found ways to steal it, using other people’s access. Access codes and passwords are frequently compromised by dishonest employees, who intend to steal, or commit other misdeeds.

If you are interested in how easy it is to get all the documents necessary to pose as someone else, I did a post about Suad Leija, who has shared a lot of information on this subject:

Paper weapons (counterfeit documents) enable more serious crimes than illegal immigration and identity theft

With the amount of stolen identities, backed up by easily available counterfeit documents, we can expect to see more people obtaining employment using someone else's information.

Most identity theft experts recommend you check your credit report at least once a year. It's a good idea to pay attention to what inquiries have been made and be wary if you don't recognize, who has been making inquiries into your credit.

Tom Fragala at MyTruston, who is a fellow blogger, provides an easy to use method to check to see if you are a victim of identity theft. Checking to see if you are a victim is always free and you only pay if you choose to use his recovery services. The recovery services are cheaper than anything I've seen out there, thus far.

MyTruston is also "privacy friendly," which means you don't have to give up your personal information to be stored in someone else's database. Identities are stolen from databases, pretty frequently.

You can link to MyTruston, here.

WSBTV.com story, here.

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

Just got my copy of the Consumers Union newsletter and they did an interesting article about "credit card gotchas."

Here is what they had to say:

The bank can change the interest rate and other terms at any time, for no reason, and you get stuck with a higher interest rate on purchases you already made. You mail the bill before it's due, but get hit with a late fee anyway. You sign up for a 7% interest rate, but it goes to 27% if you bounce a check, go over the limit, or miss payments.

Congressional elections are coming up. Let’s tell our members of Congress -and their challengers- that we want better treatment. Demand sensible reforms for credit cards!

These credit card "gotchas" aren't just happening to you. A recent Government Accountability Office report shows that one fifth of credit card holders pay an interest rate of 20% or more. Even if you have a lower rate, it can go up at any time, for no reason. The report also found in just a year, more than one third of consumers were charged a late fee averaging $34! And, credit card companies are still raising interest rates based on whether the consumer missed a payment to a different creditor. Every year, bills to reform credit card practices are introduced but not passed. To learn more, click here.

Link to Consumer Union article, here.

This made me wonder how many times a victim of identity theft is hit with higher interest rates because they were compromised and negative data was erroneously (wrongfully) put on their credit report?

The answer is probably pretty scary and how much "extra revenue" could financial institutions be making as a result of this?

Then consider how much personal and financial information has been breached at financial institutions - where "everything was kept as quiet as possible" and we were told the victims were compensated.

As I've said before -- no business is in the business of losing money -- and the costs associated with fraud (in reality) are passed on to everyone.

Perhaps if more "sensible laws" on this matter were passed - financial institutions would have to protect people's personal and financial information a little better to maintain their profitability?

The latest tally of people breached (courtesy of the Privacy Rights Clearinghouse) is 95,000,000 - and some might argue - when we see those being breached "being very tight-lipped," the true figure might be higher.

Here is a post, I did on how fraud costs are misplaced:

Are We Addressing Cyber Crime from the Wrong End