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COLUMN: Equifax hack proves need for legal reform

By: Scott Weiser
September 12, 2017 Updated: September 12, 2017 at 4:06 am
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Equifax, one of three major credit reporting bureaus, just reported that as many as 143 million of its detailed credit records were stolen by hackers.six weeks ago. Unlike hacked companies that may have your credit card information, Equifax has your Social Security number, and it knows enough about you to be able to steal your identity. You can change your credit card, but you cannot change your Social Security number. That's a huge problem because now someone else has half the country's Equifax's data.

The threat of identity theft is so severe and occurs often enough that an entire industry has arisen that purports to protect you against identity theft for a monthly fee. Vendors include the credit bureaus Experian, Equifax and Trans Union. This doesn't address the root problem however. The question is why does our government allow credit practices that facilitate rather than protect against identity theft?

Ease of use for consumers is one reason. Money is the most obvious other reason. By making it ridiculously easy for consumers to incur credit debt those who profit from that practice, which is just about every merchant in today's cyber society, have little incentive to be scrupulous about confirming the identity of consumers who ask for instant credit because companies are largely immunized against that form of fraud by the law.

Someone with the data Experian keeps can open an account in your name, buy lots of stuff and then walk away from the account. You won't even know it happened until you start getting statements claiming that you owe for purchases you never made on an account you didn't open.

When you try to tell the merchant that you didn't open the account he will laugh in your face and tell you to pay up because he's got your Social Security number and other personal identity information as proof you did open the account. But now that's no longer true for 143 million people. That demands legal reforms.

Getting out of that trap is expensive, can take years and can ruin your credit for a decade. That's why the identity-theft insurance industry exists. You pay them to monitor your Social Security Number and to stop suspicious attempts to use it and to insure you for the costs of repairing your credit record.

But why should you have to pay anything to anyone because a criminal stole your identity?

The problem lies with the credit-issuing industry. It has little incentive to require identity verification for the extension of credit services. It also lies with our government, which doesn't require the industry to obtain verifiable photo identification of people trying to open credit accounts.

The solution is relatively simple. Federal law must require that as a condition of opening a credit account the individual who opens it must provide government-issued photo identification like a driver's license, passport or state-issued photo ID. This photo ID must remain attached to the credit file at all times. There is no technological reason that credit applications cannot be required to contain such verified photo identification.

Should a dispute arise over a claim of identity theft, the merchant must present the photo ID image and credit application records at a court hearing in the jurisdiction where the alleged debtor lives and prove that he is the person who opened the account. If the merchant can't match the photo ID and other data with the alleged debtor, who must also appear at the hearing, the debt is voided.

Credit issuing companies don't care if your identity is stolen because the monkey is not on their back to prove you owe the debt and they can make money off their own incompetence.

You have to prove your innocence even though you are the victim of the crime, and the company will fight tooth and nail because if you win they have to eat the debt. That's simply unconscionable and unfair and the law needs to be changed.

Demand that Congress put the burden of proof that a debt is truly owed where it belongs, on the credit issuer, not on the innocent consumer whose identity has been stolen.

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