It's highly probable that, at this very moment, thieves are living large by using my good name and diligent bill-payment history -- buying high-definition TVs, stacks of silk suits, and beachfront properties.
On the other hand, there's a really good chance that no one gives one whit about my pristine credit score (save for my mother and future mortgage lender), having been thwarted by the Fort Knox constructed around my credit file.
Your feelings about identity theft -- denial, fear, anger, acceptance -- depend a lot on what statistics you believe. The Federal Trade Commission says ID theft complaints nearly doubled in 2002 to a mildly menacing 162,000. The U.S. Postal Service estimates that there were more than half a million victims of the crime in 2001 alone.
Regardless of the true number of infractions, credit reporting agencies are getting a lot of press from the recent spate of high-profile identity theft crimes.
And what are credit reporting agencies and their clients doing to guard the secrets of our borrowing ways? Asking us for money to protect them, that's what.
The price of fear
To keep infidels from corrupting your credit...
- Start by purchasing a copy of your credit report from one of the major reporting agencies -- Equifax, Experian, or TransUnion -- for anywhere from $7 to $10.
- Since these agencies operate independently of one another, the information they have on you may not be identical. So you'd better go ahead and pony up for reports from at least the three major credit bureaus. Don't worry, they've introduced some convenient products that enable you to purchase an all-inclusive credit report that lays out the goods on you from all agencies side by side. That'll run you $30-something.
- Oh, but don't stop there. For a true measure of your creditworthiness and whether any dings from the past still matter to the lending world, go ahead and shell out a few more bucks to get your FICO score -- your overall credit GPA. That'll be an additional $10, please. And perhaps you're curious about how you stack up in the eyes of auto ($12.95-$14.95) and homeowner ($12.95) insurers.
- If you're in it this far, you might as well keep an eye on things and subscribe to a credit monitoring system that will alert you whenever there's activity in your file -- by you or the bad guys. Oh, by the way, that $70-$80 tracking service will only alert you to breaches that occur at the agency from which you order the product. If you really want to cover your bases, you'd better be prepared to pay three times that to keep tabs on your file at all three major reporting agencies.
Sound like overkill? If you're the type who dons a bee suit at the first sign of spring, then maybe not. (We've got our own, less-costly suggestions for protecting yourself from ID theft here.)
There's certainly a built-in consumer base for these products. The credit reporting agencies track highly sensitive credit information for millions of us. If you've ever applied for a store credit card or had a utility bill in your name, they've got your number. Your credit report shows how many lines of credit you have, whether you're using them, how vigilant you are in paying your bills on time, how often you shop for new lines of cash, and if that vet bill from 1997 has been resolved one way or another. In fact, FICO scores are consulted in more than 75% of all mortgage applications.
Don't get me wrong, I understand that quick access to this sensitive information is how we get mortgages, instant credit approval, and the occasional ego boost at the office when we check our FICO score on a good day. I accept that a credit check is required for me to qualify for the six-months interest-free financing on a buttery-soft leather chair (so comfy!) and to comparison shop for the lowest mortgage rates.
On one hand, credit reporting agencies want to assure the public that their data is safe with them. On the other hand, the path to profits is paved with paranoia. 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.
And exactly why is it my responsibility to protect the data these agencies collect and sell to banks, retailers, property managers, utility companies, and the occasional mother-in-law to be? It's not even like I have a choice in the matter. I'm not bandying about my Social Security number and past eight residences. I haven't even fallen for the latest ID theft scam perpetrated at job search sites.
But the information on me is out there, and it appears to be my job to keep my good name out of the hands of bad people. Though someone in the chain of credit command sold my name to a marketing firm, I have to call and have my name taken off junk mail lists and stop pre-approved credit card offers from piling up in my mailbox. If some inside hacker starts selling my name and access to credit lines for a song to his buddies up in the Bronx, the responsibility to catch the crook in his tracks falls to me. I'm expected to carve time out of my calendar to keep close tabs on the credit activity in my name.
I already have a full-time job, thank you very much.
Should I fall short in my security duties and become a victim of fraud or theft, I'll only be responsible for $50, at most, for a crook's shopping spree. But ask anyone who has had to deal with ID theft, and they'll tell you that there's no recompense for the months spent dealing with credit agencies, financial institutions, and police departments, writing letters, making phone calls, and collecting evidence to repair the damage done to their good name.
The culture of credit fear
We're getting used to being on guard. According to a recent survey by FindLaw.com, most Americans take some steps to protect themselves from identity theft. It found that 88% of us review bank/credit card statements for fraud, 77% shred/destroy credit card receipts or other financial documents, and 51% never give out Social Security numbers. And get this: The credit report campaign is working. A whopping 64% of us check our credit reports as a measure against identity theft.
Politicians are beginning to razz the credit information gatekeepers. On Jan. 1, Californians gained the legal right to lock down their credit reports at the three major bureaus. When access is needed, consumers can unlock their reports for a specific period and have control over who has access.
Oh, but there's one catch: Unless you have been a victim of identity theft -- and filed a police report -- you have to pay for this protection, from $12 per freeze to $59 to cover a year of security.
Those in the business of compiling and distributing and making business decisions based on this information have a responsibility to make sure their data is secure. Companies who have breaches of security should be subject to fines and be required by law to notify anyone whose information might have been compromised. There should be harsher prosecution of offenders. Businesses should stop using Social Security numbers for identification. Take it off our driver's license, insurance cards, and delete it from the mail you send to us.
But most of all, stop making us pay to protect the information we've entrusted to you.
Dayana Yochim, the author of Couples & Cash: How to Handle Money with Your Honey, double locks her door at night and uses credit card solicitations as kindling. If you want to, you canemail Dayana, who reveals all in her Fool-required disclosure.