Opt Out Detectives Identity Theft Blog

Blog Talk Radio

Opt Out Detectives will host the 1st show on Blog Talk Radio at:

www.blogtalkradio.com/optoutdetectives

Opt Out Detectives

New Blog Format

OptOutDetectives is making the move to Blog Talk Radio....  That's right!  We will be hosting our own blog talk radio show where you can call in and ask questions.  We hope to have it up and live in the next 2 weeks!

Join us at www.blogtalkradio.com/optoutdetectives

Thanks!

Mike

OptOutDetectives Not Affected by Lifelock Court Ruling

In a decision that has privacy advocates and others scratching their heads, a federal judge has ruled that LifeLock has been breaking California law for years by placing fraud alerts on its customer’s credit profiles.

The decision is a blow to the burgeoning identify-theft protection industry, and means that companies that experience data breaches may no longer be able to offer victims free subscriptions to such services — a standard damage-control tactic in recent years. Consumers can still place fraud alerts by contacting one of the three U.S. credit reporting agencies directly.

Bo Holland, founder and CEO of Debix, a competitor of LifeLock, called the ruling “dramatic and unexpected.”

“It causes a real shift in the industry,” he told Threat Level.

The pre-trial partial summary judgment comes in a lawsuit filed last year against LifeLock by Experian, one of the nation’s three credit reporting bureaus. Experian claimed LifeLock is trying to “game the system” of fraud alerts to make a profit.

LifeLock, a controversial company that gained notoriety for publishing its CEO’s Social Security number in advertisements, charges $120 a year to consumers to place fraud alerts on their credit profiles, among other services. The company also offers a $1 million guarantee to reimburse the expenses of any customer who suffers losses from identity theft while subscribed to LifeLock.

Under the 2003 Fair and Accurate Credit Transactions Act, or FACTA, fraud alerts are available for free to any consumer who believes he may have been a victim of identity theft, or is at imminent risk of it. With a fraud alert on a consumer’s credit profile, banks and other businesses are required to make a reasonable effort to check with a consumer before opening a new line of credit in his or her name.

The consumer normally has to contact a credit reporting bureau directly to place the alert, and then repeat the process every 90 days for as long as the risk remains — a minor hassle that LifeLock and other companies have been happy to help consumers avoid, for a fee. On its face, the business model appeared consistent with FACTA, which allows fraud alerts to be placed by third parties acting on behalf of the consumer.

But in its lawsuit, Experian complained that LifeLock “surreptitiously placed hundreds of thousands” of alerts on Experian files “by posing as the consumer,” even when there was no suspicion of identity theft. LifeLock then renewed the alerts every 90 days.

Claiming it was losing “millions of dollars every year” processing such requests, Experian asked a judge to rule that LifeLock was engaging in unlawful and unfair business practices under California’s Unfair Competition Law.

U. S. District Judge Andrew Guilford granted the motion last week, finding that federal lawmakers, in writing FACTA, did not intend for consumers to be able to contract with a business to place fraud alerts.

To reach his conclusion, Guilford examined the legislative history of the law and determined that Congress intended only that a family member, guardian or attorney should make the request on behalf of a potential fraud victim, not “companies and entities such as credit repair clinics.”

The judge’s ruling opens the door for Experian to seek damages from LifeLock, and for the judge to issue an injunction barring the company from placing fraud alerts with any credit reporting agency.

LifeLock did not respond to a call for comment. Experian, in a statement sent to Threat Level, called the ruling “not just positive for Experian, but for consumers.”

Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse, found the ruling odd, but says consumers haven’t lost anything.

“They still retain the right to make an independent judgment as to whether or not it is appropriate to place a fraud alert on their credit reports,” he says.

But Chris Hoofnagle, director of information privacy programs for the Berkeley Center for Law and Technology, says the ruling is a disappointment.

“The idea that we could some day see a market where we pay $10 a month to a company to opt us out of junk mail, to monitor our credit, to do all sorts of privacy-enhancing steps that we don’t have time to take … for that market to emerge, LifeLock’s business model and similar ones have to be legal,” Hoofnagle says.

LifeLock isn’t the only company impacted by the ruling. Debix, which offers fraud alert services at an annual subscription of $24, says it will have to cancel its fraud alert placement service.

But Debix sees hope in a relationship it has established with Experian competitor TransUnion. Beginning in September, Debix plans to sell a version of TransUnion’s credit monitoring service, which provides customers with alerts whenever someone inquires about a customer’s credit history, attempts to open a new credit account in the customer’s name or makes a change to the customer’s address.

Under that service, TransUnion monitors inquiries and changes made to credit accounts in its own database, as well as the databases of Experian and Equifax. It will feed an alert to Debix whenever there is activity on one of its customer’s accounts, and Debix will notify the customer. The company will pay TransUnion a fee for every customer it signs up for monitoring.

Holland says Debix currently has about 400,000 customers signed up for its now-outlawed fraud-alert service, which will end in 90 days. After that, Debix will provide those customers with free credit monitoring for the duration of their subscriptions.

Child ID Theft

Parents will usually do just about anything to protect their children. They try to provide them with the best nourishment, take care of them when they are sick, and give them lots of unconditional love. Parents also try to do everything in their power to prevent complications so children can have the best chance to grow up healthy and happy.

However, parents now must face a growing problem that could harm the financial futures of their children: Child Identity Theft.

Keeping an eye on your child's credit now can save them from a tremendous amount of financial heartache in the future from identity theft and fraud.

Child identity theft can cause a lifetime of headaches. Even though their children may not be in high school yet – or even have all of their teeth – parents should remain vigilant against child identity theft and check their child's credit score for fraudulent activity.

Parents who think they have many years before they need to worry about protecting their children from identity theft are sadly mistaken. Children are highly attractive identity theft targets because they have untouched and unblemished credit records. Identity thieves steal a child’s identity early, nurture it until they have a solid credit score, and then abuse and discard it.

According to Sileo, child identity theft is the fastest growing type of the identity theft. Although it’s difficult to estimate exactly how many children lose their identities – since the crime can go undetected for years – the Federal Trade Commission (FTC) estimates that 5 percent of identity theft cases target children, which translates into approximately 500,000 "kidnapped" child identities each year. Even more troubling, the Identity Theft Resource Center discovered that in over half (54 percent) of the cases, the child was under the age of six.

So how does child identity theft happen?

All an identity thief needs to ruin a bright financial future for children is their name and Social Security Number (SSN), and these pieces of personal information are exposed in a variety of ways:

• When registering for daycare, schools, and recreational sports.
• When filling out medical, dental, and hospital records.
• When joining organizations like the Girl Scouts or Boy Scouts.
• When the child's information is permanently stored and accessed by volunteers or employees.
• When one of the organizations storing the child's information is breached by a hacker or malicious software.
• When an adult becomes a "friend" to a child on a social networking site like MySpace or Facebook and tricks the child into disclosing personal information.

While the child’s age should show up on any credit background check, the majority of people screening the credit report rarely give it the time and care necessary to detect fraud and simply match the name and the SSN provided. Identity thieves are then free to wreak havoc on a child’s perfect credit, leaving a maxed out credit card, unpaid bills, and possibly even a criminal record.

Even worse, the age of the “applicant” – i.e. the identity thief posing as a child – becomes official with the credit bureaus upon the first credit application. This makes clearing a sabotaged credit record even more difficult because parents have to prove to the credit bureau that their child is not old enough to have a credit card and isn’t responsible for the accumulated debt.

Unfortunately, both parent and child might not discover the identity theft until the child is older and tries to open a bank account, apply for a job, get a driver’s license, or enter college. At that point, the grown child could spend years cleaning up someone else’s fraudulent mess.

Parents acting now on behalf of their children will protect them from the consequences of child identity theft:

• Starting adulthood with a low credit rating.
• Being denied a first loan, credit card, or apartment rental because of a crime committed many years earlier (the passage of time makes this crime very hard to clear up).
• Being denied access to college or a new job.
• Having a warrant out for an arrest for crimes that they didn’t commit.

For parents, cleaning up the disaster of child identity theft for their children is costly and time consuming. Just as parents can’t protect their children from every bruise and scrape, nothing can entirely remove the risk of identity theft. However, taking steps right now to protect children from child identity theft is a one of the best investments parents will make in their children's financial future.