November 26, 2002
Not everyone watched in horror as news unfolded about the U.S.'s largest identity theft ring. In fact, yesterday's Fed bust is just what the credit industry ordered.
We're not saying that credit bureaus orchestrated the thievery of more than 30,000 credit reports. But behind their public horror (after all, it was their databases that were hacked), the marketers must have felt at least a little bit giddy.
Fear sells. The fact that three crooks practically hand-picked 30,000 IDs to swipe -- with initial losses estimated at $2.7 million -- was, well, scary. Especially for the estimated 200 million Americans whose credit is tracked by the three main credit bureaus -- Experian, TransUnion, and Equifax(NYSE: EFX).
So many identities to steal! When your product preys on paranoia, a worst-case scenario can be a blessing in disguise. That was evident as Equifax's chief privacy officer geared up for the softball Maria Bartiromo lobbed his way on The Closing Bell. How can individuals prevent their identities and credit record from being stolen? What a no-brainer, Maria. Simply subscribe to Equifax's Credit Watch monitoring service. Ka-CHING.
The sale of credit information -- including individual credit reports, combined reports, FICO scores, monitoring services, and now other credit-based scores used by insurance companies -- directly to consumers has the potential to become a billion-dollar industry by 2005, up from $600 million this year, according to a report in USA Today.
This sort of event changes the investment thesis argument for companies such as Equifax -- which reports $1.1 billion in revenues right now -- and generally for the better. Why should the credit bureaus be the only ones making a mint off of people's fear? Heck, if you click that Credit Watch link two paragraphs up, we Fools will get a little coin from the comfort our advertiser is offering.