The real problem in ID theft
In “Reckoning day for ChoicePoint, “Rich Stiennon writes:
The real culprit is actually ChoicePoint itself and the three bureaus. By creating what is supposedly a superior solution than the old fashioned way of granting credit (knowing your customer, personal references, bank references, like they do it in most of the rest of the world) they have created a system that is prone to identity theft and over extended borrowers.
He’s right. The players at the heart of identity theft in the U.S. are the credit bureaus. But, what they’ve done is more than just creating a system which is prone to identity theft. Let’s review how the credit bureaus work. They serve businesses by selling information about creditworthiness. Their customers (businesses extending credit) are happy to charge higher rates for people with poor credit, so there is little incentive for the business or the bureau to eliminate errors from the credit data. Worse, as the problem of identity theft becomes more widespread, the credit agencies can sell “credit monitoring” services to consumers and “enhanced authentication” to businesses and make even more money.
The credit agencies now run TV commercials touting credit monitoring, threatening people with identity theft. They don’t quite say “nice credit score you’ve got there. Shame if we were to do something to it,” but they come close.
Small wonder it’s hard to address the problem.
I suggest that the FTC, various Attorneys General, and the trial lawyers, target the credit reporting industry for reform. Maybe we can starve the cyber criminals out by making identities less valuable goods.
I think it would be simpler to remove their exemption from libel law. The credit agencies share default data just fine. They should have to share remedial data as well, or be accountable for the costs which they impose by their negligence.