Alabama Consumer Law Blog

Denise Richardson has a great post that lists the "Top 10 Things You Will Never Hear From The Big Three Credit Bureaus". Please read this funny but sad post and the rest of her excellent site.

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Incredible. Click here to read the entire post by Larry Magid. According to the article, here's why identity thieves like to target our children:

Youth are targets because, unlike many adults, they have clean credit records. Because kids aren't applying for credit or jobs or renting an apartment until at least their mid-teens, chances are no one is checking their credit reports, so thieves can get away with exploiting kids' IDs for years. Eventually, older teens will run into a problem when applying for a driver's license, a bank account, credit card, student loan, or that first apartment.

The person stealing a child's identity could be a stranger or someone they know. It could even be the child's own parent, according to Ms. Foley. "About 2/3 of the time, it is someone in a parental position or in a guardianship."

Children of divorced or divided families are especially at risk. "We often see with split families that one family member suspects there's something strange – the child is at the other parent's home and calls to say goodnight, they see on the caller ID that it's their child calling but the reality is that the account is in the child's name." Some parents, says Ms. Foley, "talk themselves into believing they're not hurting their child," and, in some cases, "say they're going to help their child by giving them a good credit history, but the reality is if they didn't pay their own bills, they're not going to pay their child's bills."

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The state has an excellent website which details many resources for victims of identity theft. We encourage you to visit it because, as Attorney General King says,

A character in one of Shakespeare's plays once asked, "What is in a name?" Today, the answer is that your name encompasses your very identity. Unfortunately, as technology has improved our lives and as we have grown busier, the door of opportunity has also been opened to unscrupulous thieves who steal our identities, who wreak havoc in our lives, who destroy reputations, and who wipe out life savings.

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Last week the FTC settled claims with debt settlement or debt elimination companies who had misled many consumers. Read here to find out more about this and to protect yourself. We often get contacted by people who are getting sued and they are shocked because they were working with one of these debt elimination companies. These companies can't prevent a creditor or debt collector/debt buyer from suing you so be careful in dealing with these debt elimination companies.

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CL&P has a nice post with commentary on the fact that we as Americans love our credit cards but we don't like the results of missing payments or trying to correct errors. Read the whole post here which also includes the link to the Washington Post story it is based upon.

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Brett Weiss has an excellent post summarizing how the Fair Debt Collection Practices Act can be used to stop harassment from collection agencies or debt collectors. The post is entitled "How to deal with debt collectors: stop the harassment!" We recommend you read this post and the related posts that he has on the excellent blog Bankruptcy Law Network.

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One time as I was passing an intersection I saw a police car stopped and a car very close behind. The officer was out of the car and then I realized some unfortunate soul had rear ended the police officer. I was reminded of this when I read this post at the South Carolina Trial Law Blog (an excellent blog by the way - I read all the posts there). Hopefully no one was hurt so read the post and enjoy the picture.

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While we don't normally write about stolen pictures and porn DVDs, this post at the Consumerist is very troubling. Here's the gist of the problem:

When Lara placed a self-portrait taken at age fourteen on deviantART, she never expected it to be stolen by TVX Films and placed on the cover of the DVD porno "Body Magic." Lara asked the President of TVX Films to remove her photo and compensate her for the theft. He responded with the following email:

I'M SURE BY THE END OF THE MONTH YOUR FACE WILL BE HISTORY. WE HAVE STOPPED SELLING THE DVD UNTIL COVER IS REPLACED. WE HAVE FURTHER CHECKED OUT YOUR NAME AND ITS NOT LIKE IT'S A HOUSE WHOLE NAME. ACTUALLY, REMOVING YOUR IMAGE WILL HELP IMPROVE THE SELL OF THE DVD..... SO FAR IT BOMBED.

THEY ARE REMAKING THE COVER AS WE SPEAK SO YOUR TEN SECONDS OF FAME WILL SOON COME TO AN END.

AS FOR COMPSENSATION;YOUR SILLY!

The unrepentant attitude expressed in the email above speaks volumes about these clowns.

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This morning in the Birmingham News there is an article entitled "Credit Scores Sixth Lowest In U.S." by Roy L. Williams. We recommend everyone read this fine article, particularly our Alabama readers. Here is a brief excerpt:

The average credit score in Alabama was the sixth-lowest in the nation last year, meaning a greater percentage of state consumers may face difficulty getting loans or face higher interest rates, according to a new survey by Credit.com.

The San Francisco-based credit research firm found the average credit score in Alabama was 672. Four of the other lowest scores were also in the Southeast - South Carolina, at the bottom with 665, followed by Georgia, Mississippi and Louisiana tied at 667. Wisconsin had the nation's highest average: 717.

Credit scores range from a low of 300 to a high of 850, based on the Fair Isaac Corp. credit scoring system commonly used by lenders. John Ulzheimer, head of Credit.com Education Services in Atlanta who presented a free credit seminar in Birmingham last Saturday, said a lack of financial education and high debt loads are major reasons behind Alabama's poor credit scores.

One key first step before approaching a lender is for consumers to obtain credit reports, available free once a year from the three credit bureaus, and finding out their credit scores, McCall said. Then they can get advice on ways to improve their scores and get the best loan, he said.

Thanks to Roy Williams for this good story.

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This one caught us off guard that a major store would do this:

The Connecticut Attorney General has announced a lawsuit against Best Buy in regards to a secret internal website that is identical from their public website except for the prices. Consumerist has received reports of this website being used to attempt to trick our readers as recently as March 19, 2007.

Customers coming into the store looking for prices they saw at home on the public website were told that the sale had ended and were shown a separate internal website that reflected different in-store prices. The customers were led to believe that they were looking at the same website they accessed at home.

Busch, Best Buy's spokeswoman, said the company intends to vigorously defend itself in court.

"The future of our company depends on our ability to build trusted relationships with our customers," Busch said.

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Click here for a wonderful story on a slumlord who has been ordered to stay in his own building.... Here is a description:

Lakewood Municipal Judge Patrick Carroll ordered Richard Naumann to live in his Lake Avenue apartment building -- which has no heat, hot water, operable stoves or ovens...

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Marc Chase does not hesitate to speak his mind. We don't know how he feels about a lot of issues but we know he is passionate about credit reporting errors and scores. (And he seems like a nice guy - had a pleasant conversation over the phone with him a week or so ago). Check out his article on how to lower credit scores - definitely food for thought on what NOT to do...

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We have not heard of this but we ran across this post that describes the information the Medical Information Bureau (MIB) stores on a good percentage of Americans. Here is the introduction from the Because I Am Here blog by Aaron Titus

Long before Will Smith and Tommy Lee Jones hit the screen as intergalactic secret agents, the MIB was doing undercover work of a distinctly terrestrial nature. Amassing storehouses of medical information since 1902, the Medical Information Bureau maintains a sort of “Medical Credit Report” on roughly 20% of the United States population.

When you apply for life, health, or disability insurance, insurance companies collect information about factors that might affect your health or longevity, such as age, sex, drug or alcohol use, and other risk behaviors. There is a good chance that at one point or another, you have signed a waiver permitting an insurance provider to transmit this information to the MIB, which creates a record of the insurance findings.

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There is an interesting article that makes this simple, yet powerful, suggestion to help all of us avoid being victims of identity theft:

And if people who don’t actually need specific pieces of information ask for it, Thompson says to use the word his niece recently started using on him — why.

“Why?” he asked the audience. “Do not become paranoid; just be vigilant.” Most people who ask for that information can settle for some other, less critical, information. If not, you first need to consider whether their service is one you truly need.

Then you need to ask a few more questions:

l Why do you need the information?

l Where will it be stored?

l Who will have access to it?

l How will you destroy it when you no longer need it?

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We have family in Texas and there are a number of readers of this blog from Texas. Here is a story for those living in the great state of Texas:

If you`ve used the financial corporation Check `N Go recently you could have been exposed to identity theft.
Investigators with the Texas Attorney General`s office discovered that Check `N Go stores in Texas discarded business records in easily accessible trash cans behind the stores.
According to investigators, the records included customers` names, addresses, and social security numbers.
Investigators say if you`ve interacted with Check `N Go you should carefully monitor bank, and credit card statements for evidence of suspicious activity.
If you wish to file a complaint contact the Office of the Attorney General at (800) 252-8011 or online at www.oag.state.tx.us.

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There is a good article at Creditbloggers about the federal government's plan to reduce the risk of identity theft from its own actions. Read the introduction below and check out the rest of the article for the encouraging news.

Amid the whirring of pigs' wings and crackling of ice from the underworld comes another unexpected noise: the sound of someone in government actually taking charge. Believe it or not, federal agencies across the board have been given 120 days to go through their files, track down every unneeded SSN, and put a plan into place to "eliminate the unnecessary collection and use of Social Security numbers within 18 months."

These long overdue marching orders arrived in a memo from Clay Johnson III, deputy director for management of the Office of Management and Budget, which he sent to the heads of every federal department and agency. The agencies were also told to review all information that could be used to identify an individual citizen or employee, make sure those records are accurate, and "reduce them to the minimum necessary" for the agencies to do their job.

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Fox news has twelve steps for Alabama consumers to consider to protect our identities while doing business online. Read the full article here. Good advice - particularly for those of us who enjoy doing business online....

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We have noticed in our practice an increase of family members who are committing identity theft against each other. We often see this in the context of a divorce - a spouse or ex spouse will steal the other's identity so that they can get access to credit. But we have not seen a daughter steal her mother's identity but apparently it happens as reported here:

Charges include obtaining a money transfer for £6,000 from the Alliance and Leicester by falsely representing she was her mother, Gail McGibbon, obtaining a credit card by falsely representing she was her sister, Sarah Dibb, obtaining a credit card from Egg by deceptively claiming she was Gail McGibbon, theft of £614, £1,203 and £150 from Egg and theft of £284, £250 and £100 from Monument.

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Check out this amazing story from the Boston Globe (courtesy of this post at the Consumerist):

A debt collector trying to repossess a 2000 Ford Focus tried to yank a young mother out of her car so violently that he ripped off her necklace and punched her in the face, a prosecutor said today in court.

While the woman's 5-year-old daughter watched in horror Friday, another debt collector jumped on the hood like a “madman,” said Brendan Barnes, a prosecutor for the Plymouth County district attorney's office.

Afraid she was being carjacked, Sara Bradley, 25, drove to the Abington Police Department with the man clinging to her hood while his partner followed in another car. The two debt collectors from South Shore Auto Recovery -- Robert Simeone, 21, and his brother, Michael, 17 -- were arrested and charged with assault and battery with a dangerous weapon.

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The diabetes drug Avandia has been reported to have serious health risks to patients who take this drug. As many of you know, one of our favorite blogs is the Consumerist and they have an excellent post today about what, and when, the FDA knew about the risk to patients using this drug. Here is an excerpt:

The maker of the drug, GlaxoSmithKline, separately told the FDA of the risk last August, but neither the drug maker nor the Agency warned the public.

The study was outed yesterday on the New England Journal of Medicine's website. The editors of the journal and the study's lead author both warned that the research methodology left the "findings open to interpretation."

Even though the FDA was aware of the risks since last summer,

...the publication of the study on the journal's Web site prompted the Food and Drug Administration to issue a public safety alert and advise users of the drug -- an estimated million people in this country and two million worldwide -- to consult their doctors about the potential cardiovascular risks.

Congress wants to know why the FDA can't walk and chew gum . . . .

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Sometimes Alabama consumers ask us why they should worry about wrongful items being on credit reports? There are many answers but one is illustrated by this story which describes what appears to be a very aggressive tow truck operator who allegedly threatened to put (and maybe did put) wrong information on an Air Force officer's credit report.

While we don't know who is right or wrong in this case, we have seen unscrupulous creditors and debt collectors and collection agencies use the threat of putting false information on credit reports to force innocent people to pay money they don't owe. An attorney friend of ours was told one time by a collection agency that the debt collector knew the amount being collected was wrong "but it will mess up your refinance so why don't you just pay it". The attorney did. This type of misconduct must stop and suing the bad guys is certainly one way to motivate them to stop doing this....

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CNN Money recently ran an article that Alabama Consumers should carefully consider. The title of the article is "6 Ways to Kill Your Credit Score." It gives some great advice on six important areas where consumers can either hurt or help their credit scores. Below is a summary of this list:

1. Don't let your balances on your credit cards exceed 30% of your credit limit.
2. Pay your bills on time. (One expert estimated that late payments of 30 days can result in up to a 60 point drop in your credit score)
3. Having only one or two credit accounts can hurt your score.
4. Creditors like older accounts. So avoid opening a lot of accounts at any given time.
5. Don't close out accounts when you transfer a balance.
6. Review your credit report at least yearly to make sure there are no errors on there that can hurt your score. (If you find errors, visit our website to read an article on correcting errors on your credit report)

The article goes into greater detail about things that can affect your credit score and gives more advice on things to do to boost your score. To read more on the CNN Money article click here.

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We know many Alabama consumers follow Dave Ramsey's envelope system - here is a post that discusses how to do this using Quicken.

We appreciate the recent post in the Consumerist and Lifehacker for pointing this out to us.

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Earlier we discussed how to determine if debts that have been discharged are being reported accurately. If these accounts show a balance, then you should dispute them. This post shows one way of disputing.

One way is to write to the consumer reporting agencies (Equifax, Experian, and Trans Union) and tell them that the accounts listed in your letter should have a "zero balance". Do not mention anything about bankruptcy. You can read here for general information about disputing inaccurate accounts.

There are other ways to dispute (such as including all bankruptcy papers to the agencies) but this way seems effective. The agencies send a notice to the furnishers you have listed in the dispute letter that you claim the balance should be zero. The furnishers get that notice and investigate (or they are supposed to investigate). Obviously the furnishers know that the account should have a zero balance - they have received notice that the account was discharged. We trust they take federal orders, such as discharge orders, seriously. When they see the account was discharged, they will finally do what they should have done immediately after the discharge - report your account as "included in bankruptcy" and show a zero balance.

If they don't, then you should consult an experienced consumer lawyer and consider suing the creditor/furnisher. Here is an example of one of our many cases where we have sued the furnisher/creditor for not investigating and correcting an account that was discharged in bankruptcy.

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Ever wonder what these Identity Thieves do with all the merchandise they buy with their bogus credit cards? Read this interesting article:

The suspects allegedly used counterfeit American Express, MasterCard and Visa credit cards to buy items from department stores using counterfeit California driver's licenses, Sailor said.

The suspects returned the purchased goods to the stores for cash back or sold them on eBay. Authorities estimate losses to currently be in the hundreds of thousands of dollars.

We see the motivation of Identity Thieves - real money can be made. Protect yourself and take action when you find any evidence of Identity Theft.

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An excellent summary of what makes up our credit scores can be found by clicking here

This post explains how (1)Payment History; (2)Outstanding Credit Balances; (3)Length of Credit History; (4)Type of Credit Mix; and (5)Inquiries can impact our credit scores.

Please read this post to find out more about what makes up your credit score.

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According to a recent Bankrate article the most common type of Identity Theft is now "synthetic" identity theft which is explained as follows:

Thieves literally create new identities either by combining real and fake identifying information to establish new accounts with fictional identities or create the new identity from totally fake information.

In typical synthetic fraud, a fraudster uses a real Social Security number and combines it with a name other than the one associated with that number. The combination often doesn't hit the consumer's credit report, says Chris Jay Hoofnagle, senior staff attorney to the Samuelson Law, Technology and Public Policy Clinic and senior fellow with the Berkeley Center for Law and Technology at the University of California.

Synthetic fraud is quickly becoming the more common type of identity fraud, surpassing "true-name" identity fraud, which corresponds to actual consumers. In 2005, ID Analytics reported that synthetic identity fraud accounted for 74 percent of the total dollars lost by U.S. businesses to ID fraud and 88 percent of all identity fraud "events" -- for example, new account openings and address changes.

"True-name identity fraud was the prevalent identity theft mode about five years ago," says Steve Coggeshall, chief technology officer of ID Analytics. "Synthetic identity fraud is the dominant mode now."

While this primarily affects creditors it can lead to collection agencies or debt collectors contacting the consumer based upon the social security number. Read the rest of the article for more information on this disturbing trend.

We appreciate the Consumerist pointing out this post to us in their blog today.

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Click here to listen to an interesting podcast of an interview with Attorney General Troy King. He discusses issues surrounding Identity Theft and this is certainly worth you time to listen to this.

We appreciate Kenny Smith for doing this interview and for alerting all of us in Alabama to this good podcast at his blog entry here.

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Atlanta, Georgia news station reporter Rachel Kim, recently did an excellent story for a WSBTV Channel 2 news broadcast that Equifax apparently hired a woman who used stolen information to obtain a new identity. This was discovered not by Equifax, but by the victim of the identity theft.

After reviewing her credit report and seeing that Equifax and another company had run a background check, the victim began investigating and realized her identity had been stolen. Though the thief has not yet been caught, authorities have traced her trail and have found that she was able to open several credit cards, obtain a driver's license and has outstanding taxes owed to the IRS under the victim's name.

One might wonder how Equifax could allow such a breach of security to occur. Equifax has issued a public statement that while the identity thief worked there for almost a year, she did not steal anyone else's identities or personal information. Given Equifax's obvious inability to perform an adequate background check, you have to wonder what they really know about what their employees are doing. The victim, herself, raised an important point when she asked, “I didn’t understand how when you do a background check you check for a credit report but you do not pull up a picture from the DMV to see a picture to verify.” You would have thought this would be something Equifax already did considering ita role in protecting everyone's identity.

Its difficult to find a more appropriate example of the fox guarding the hen house. While Equifax will move one, the victim now has the IRS to deal with and receives numerous calls from debt collectors at almost every hour of everyday, including as late as 9 at night.

To read the story or watch the newscast click here.

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Marc Chase has a humorous post on debt collectors entitled "Boy Did Your Mother Do A Number On You". Here is a brief excerpt:

The debt collector! I’m not referring to every one obviously, but the ones where there is such a disconnect from reality, they think the only way to get what they want is through bullying, criticism. lies and insults.

We just got done reviewing some tapes and emails from debt collectors and I just can’t grasp what goes through some of your feeble little minds. How on earth can you think that you’re going to get your way by saying things such as…

“I’m going to tell all your neighbors you’re a deadbeat”

“No wonder you’re not married, you have no money”

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Alabama consumers are pressured into buying extended warranty agreements when buying cars. This recent post by Ronald Burdge shows why that may not be a good idea.

Extended warranties have been one of the highest profit customer ripoffs ever seen in the auto industry. Worse yet, with little regulation, they are likely to stay that way. So, what can you do to avoid being ripped off by one?

First, don't buy one. Everyone in the industry knows that the profits are high and the payout is low. No matter what they are wanting to charge you, the odds are that over half that money is pure profit to the car dealer. And if the warranty company's name isn't the same as an auto manufacturer, then you can bet that the profit margin is even higher, probably at least 60 percent and more likely 75 percent of the price is pure profit.

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Yesterday, in Bach v. First Union, the Sixth Circuit Court of Appeals reduced the verdict for violating the Fair Credit Reporting Act. The original verdict was $400,000 in compensatory damages and 2.6 million in punitive damages.

The first appeal resulted in the court directing the district court to review the punitive damage award and reduce it. The district court did so by reducing the punitive damage award by $400,000, the amount of the compensatory damages.

On the second appeal, the appellate court said the punitive damages could not exceed the compensatory damages. Thus, the maximum the punitive damage award could be is $400,000 for a total verdict of $800,000 (plus we assume attorney's fees and costs).

The court felt in this specific case that because the compensatory damages were so high that the punitive damages should not exceed the compensatory damages. The court cautioned, however, that if smaller compensatory damages had been awarded, a greater ratio (than 1:1) might be appropriate.

A couple of observations. First, this case shows the potential for large verdicts in FCRA cases. Defendants in these cases often claim that no jury will punish the furnishers of information (such as First Union or Wachovia now) or credit reporting agencies (such as Equifax, Experian and Trans Union). It also shows that significant compensatory damages ($400,000) can be awarded in these cases which is also something that the industry lawyers suggest won't or can't happen.

While we don't think the court should have reduced the punitive damage award again, fortunately the verdict is still substantial and will hopefully encourage the industry to take errors on credit reports seriously.

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We have made a number of posts about Identity Theft that primarily deal with the financial type of theft - someone opens a credit card in your name, takes out a loan in your name, etc. This story yesterday from the Courier News (Chicago area) discusses criminal identity theft:

One lawyer calls it "a case from hell."

An average law-abiding citizen applies for a job, but is turned down because a background check isn't clean.

Landlords deny the lease for an apartment and other red flags come up when the check is done.

The problem is, this person did nothing wrong.

Instead, someone else being charged with a crime gave the name and personal information of this unfortunate citizen.

This is called criminal identity theft. It's not as publicized as financial identity theft, but it can haunt a victim for life.

According to Christie Fischer, assistant defender in the office of the State Appellate Defender of Illinois, 60 percent of the calls she receives are about these kinds of matters -- people trying to clear up their background information after someone has used their names and details when charged with a crime.

Please read this article for more information on this problem. We will post more on how to correct this problem in a future post. There is no perfect solution but you do have options that can help.

Via the Flying Hamster.

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You can read for free a nice booklet produced by the Colorado Attorney General John Suthers. This will be helpful for Alabama consumers even parts of it are specific to Colorado law (such as a security freeze). We appreciate the good work that went into this booklet and we also appreciate the Colorado State Publications Library for letting us know about this booklet.

Read this - it will be worth your time.

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Hundreds and hundreds of Alabama consumers are sued every single month by debt buyers (Palisades, Asset Acceptance, Unifund, etc). First a bit of background and then we will mention the two essential things Alabama consumers should remember when sued by a debt buyer.

Debt buyers are companies that purchase old debt for a few pennies on the dollar. They are also known as debt purchasers, debt scavengers, bottom feeders, and other not entirely flattering names and descriptions.

The whole business model is that they want Alabama consumers to default on the lawsuit so the debt buyer will win without a fight. Then a judgment will be present on your credit reports and you can have your wages and bank accounts garnished.

If you are sued, we suggest you hire a lawyer or at least go see a lawyer.

Whether or not you have a lawyer, there are two essential things to remember.

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Continue reading "Alabama Consumers Sued By Debt Buyers Or Collectors - Two Essential Things To Remember" »

According to the Birmingham News business calendar

"Credit Camp" seminar, 10 a.m.-2 p.m., BJCC. Finance expert John Ulzheimer and identity-theft expert Adam Levin will present. http://getcreditwise.com.

We would like to attend but we will be in Denver at a Fair Credit Reporting Act conference. If anyone goes to this credit camp with John Ulzheimer, let us know how it goes. We are confident you will learn some good stuff.

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Thanks to Consumer Law and Policy blog for this post which picked up on an amazing NPR audio story. You will find interviews with former Ameriquest employees who detail the level of deception as Ameriquest made loans all over the country, including Alabama.
Given what we have heard from clients who were mistreated by Ameriquest, this story is very credible.

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We previously referenced a disturbing story from the Consumerist about KFC threatening a small pub for advertising a once a year "Family Feast". Today the Consumerist has an update as follows:

Only a few days after confirming that legal action would proceed against the tiny Tan Hiill Inn for the use of the trademarked term "Family Feast" on their once-a-year Christmas menu, KFC has changed its tiny chicken-sized mind.

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This is an article from MSN's Liz Pulliam Weston who wrote one of the best articles we've seen on zombie debt - debt bought and sold by debt purchasers or debt buyers. This is a huge problem in not only Alabama but all over the country. Here's a sneak peek:

An identity thief victimized Nancy Rose 10 years ago, running up a $5,045 bill on a credit card account in her name.

Rose, a Baton Rouge saleswoman, battled collection agencies for years over the bogus account. They harassed her by phone and trashed her credit report. She'd no sooner convince one that the debt wasn't hers than the account would be sold to another and the calls would start all over again.

The collection agency settled for $40,000, according to Rose and [attorney David] Szwak. They thought they had finally won the war.

That was in 2003. Three years later, Rose got a letter in the mail -- from a new collection agency, dunning her for the same $5,045 debt.

"It never ends," Rose said

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We are members of a great organization called NACA - National Association of Consumer Advocates - and there is a section of the website that gives wonderful advice for consumers living in Alabama and other states who are dealing with collection agencies and debt collectors.

We love this excerpt and suggest you read the entire article:

The Federal Fair Debt Collection Practice Act (FDCPA) bars all forms of unfair, abusive and deceptive collection practices. While the statute provides a laundry list of potential violations, this list is not exclusive. The statute also provides a general prohibition on any form of deception, abuse, or unfair treatment.

Here's a general rule of thumb you can use to interpret this: If your mother would be upset about you treating other people the way that you were treated by the debt collector, then the conduct probably violates the FDCPA.

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We normally think of Identity Theft as opening accounts in the victim's name but this story from the Nashville, Tennessee news station of WKRN reminds us that the thief can actually take over our identity and do bad things in our name:

[Dahlstrom] received a notice that a credit card application had been rejected but he hadn’t applied for a card.

Over the next ten years, Dahlstrom was told he had crashed a rental car, run up a host of unpaid parking tickets, and was involved in a hit-and-run accident.

Just this last year, Dahlstrom received word from his local police department that there was a warrant for his arrest in California.

Los Angeles City Attorney Rocky Delgadillo says this is not your typical identity theft, saying, “Traditional identity theft I think all of us think of as financial fraud, credit card fraud. That is very common but this is one of the most serious types, where an individual steals your identity and goes out and commits crimes in your name.”

Even though the man that stole Dahlstrom’s identity has been apprehended, Dahlstrom continues the struggle to clear his name.

Dahlstrom is only one of an estimated nine million victims of identity theft each year. Officials say that many more people have had their identity’s stolen and don’t even know it yet.

Delgadillo says that identity theft is very serious and the damage it does to individuals is significant. As technology advances there will be new and increasingly sophisticated ways for a determined criminal to become someone else, possibly you.

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We have discussed various ways to protect ourselves from identity theft or to correct it once it happens (click here to see all the identity theft posts). This post is designed to talk specifically about how we can fight back and whom we can sue for the harmful effects of identity theft.

First, as we previously discussed in a post, we need to dispute the fraudulent accounts on our credit reports. If the credit reporting agencies (Equifax, Experian, TransUnion, and others) do not correct our credit reports, then we can potentially sue the credit reporting agencies for several items. First, the failure to maintain maximum accuracy in our credit reports. Second is the failure to do a proper investigation (or "a re-investigation," as it is known under the law). Finally, state law offers remedies as well, particularly defamation (as the agency has reported false information about you), invasion of privacy and negligence. There are legal issues involved with state law claims in that certain types of claims are preempted (or set aside) by federal law.

The second set of possible defendants includes the furnishers or the creditors. These creditors have furnished information to the credit reporting agencies that we owe them money or that we are late or that we have failed to pay. When this involves an account opened by identity theft, then it is not only inaccurate, but it is also false. If we have properly disputed the accounts, then we have a claim under the Fair Credit Reporting Act for the failure to conduct a reasonable investigation or re-investigation. Normally, the furnishers limit their investigation to comparing their computer screen to see if the Social Security number and name match. Strangely enough, this is exactly how an account is opened by identity theft -- the thief has your Social Security number and date of birth. Thus, the investigation by the furnisher is usually worthless. Another option that exists before a dispute is made and in some cases after a dispute is made is to sue under state law as we discussed above. This includes defamation, invasion of privacy, and negligence. In most circumstances, we do need to let the furnisher know that the account is one opened by identity theft before we sue under either state or federal law.

The third possible set of defendants includes the actual identity thieves. Most of the time, we will not know who these people are, but in the context of identity theft in a divorce, we may know who has stolen our identity. Alabama has a specific statute 13A-8-199 that allows us to sue the identity thief and recover our actual damages, attorney's fees, and, in the appropriate situation, up to $5,000 in statutory damages. As we mentioned, this may be rare to know who the thief is; if we do, then it may be appropriate to sue the identity thief.

We do want to make this point clear with respect to identity thieves. Oftentimes, the credit reporting agencies and the furnishers will say that they are not at fault but that it is only the fault of the identity thief. It is true that the identity thief is the one who stole our identity, but once that has occurred and we let the credit reporting agency and the furnisher know about the fact that it has occurred, then it is no longer the fault of the identity thief for Equifax or for Capitol One to continue to report this false information. They have their own responsibility under federal and state law to have accurate credit reports, and if they have failed in that, then they can hardly blame somebody else.

The bottom line is that we have options on suing the responsible parties who refuse to correct our credit reports and who refuse to stop reporting false and defamatory information about us. Contact us if you have any questions about a possible suit that may be appropriate for you if you have been the victim of an identity theft.

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An article yesterday in the www.timesdaily.com discussed a recent meeting in Northern Alabama where speakers from the Better Business Bureau and the Federal Trade Commission discussed Identity Theft in Alabama. Several highlights from this excellent article by Tom Smith:

“Identity theft is a growing problem; it happens every day,’’ said McDaniel, president and CEO of the Better Business Bureau of North Alabama

. . .

He pointed out that despite common belief, the Internet is not the most common source of identity theft.

“They still do dumpster diving, where the thieves will search through trash for personal information, but the old-fashioned method of stealing is still very popular,’’ Davis said.

He said stealing mail is a popular way for thieves to get personal information.
“In smaller, rural areas, that’s the more popular method,’’ he said.

He said about 10 percent of identity thefts occur online.

“The low tech method – mailboxes or stealing – are the ways (thieves) normally get the information,’’ he said.

Davis said although the elderly remains the largest group targeted in identity theft, younger people aren’t immune.

He said the 18 and younger age group is one of the fastest growing age groups targeted in identity theft incidents.

The article points out that education is the key and that is one of the purposes of this blog - to provide information to protect against Identity Theft, correct it if it happens, and to be able to prosecute the responsible parties under civil law.

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In Alabama and around the country, a relatively new scam is underway to steal identities by getting you to reveal your social security number and date of birth. According to this article by the FBI, here is how this insidious scam works:

The phone rings, you pick it up, and the caller identifies himself as an officer of the court. He says you failed to report for jury duty and that a warrant is out for your arrest. You say you never received a notice. To clear it up, the caller says he'll need some information for "verification purposes"-your birth date, social security number, maybe even a credit card number.

This is when you should hang up the phone. It's a scam.

The FBI explains how it works and why it works:

"They get you scared first," says a special agent in the Minneapolis field office who has heard the complaints. "They get people saying, 'Oh my gosh! I'm not a criminal. What's going on?'" That's when the scammer dangles a solution-a fine, payable by credit card, that will clear up the problem.

With enough information, scammers can assume your identity and empty your bank accounts.

"It seems like a very simple scam," the agent adds. The trick is putting people on the defensive, then reeling them back in with the promise of a clean slate. "It's kind of ingenious. It's social engineering."

As the Identity Thieves get more creative, we have to be on our guard. When we find out we have been the victims of Identity Theft, we need to go on the offensive against the responsible parties which include the credit card companies and the credit reporting companies when these companies do not remove the fraudulent accounts. We will post more on this subject in the coming days. [5-14-07 Update - click here for a post on victims fighting back under state and federal laws].

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In this humorous yet scary post by Finis Price, he details an experiment he has done while purchasing computers, etc for his new solo practice. Let's listen as he tells it in his own words:

How do I know this? Well, I’ve done sort of an experiment over the past three weeks; actually it’s an extension of something I do with my personal debit card to get my wife riled up. I sign the receipt or digital screen they present me with whatever name comes to mind at the time e.g. Big Poppe (nickname I have for my friend Hans Poppe), Micky Mouse, Mighty Mouse, Spider Man, Heckel and Jeckel, you get the idea. Not a single cashier has even batted an eye when I do this, even when I write on the digital tablet and it’s presented on the register monitor right in front of them and then reprinted onto my copy of the receipt.

At first I thought my hand-writing was so illegible they couldn’t see what I was writing and so just ignored it. So I decided to start printing “Bob the Builder” for my name (yes, I came up with this when purchasing something at Home Depot). Now there is no way they can confuse “Bob the Builder” for Finis R. Price, III, which is how I sign my name.

What scares me is that even this most simple way of verifying the identity of a card user, is the purchased signing with the same name as is printed on the card, is not being used. I’m not even complaining that they don’t verify my signature resembles the one on the back of the card, they aren’t even looking at it! This troubles me, especially since every bank I go to, even my own, go to such great lengths to verify my identity as to require me to present three forms of ID. They don’t do that to the caucasian customers in front or behind me, heck, they don’t even do it to my wife, which she has finally started noticing after my own bank had to call and verify I truly was issued a check. She’s not part Puerto Rican, so she doesn’t get this sort of ’special attention’. But the point is, if the bank is targeting me for possible identity theft, even when they see me every week, why aren’t these cashiers?

I guess you get what you pay for; how can they expect more from these teenagers working at Best Buy when they pay them $5.25 an hour? Now I know why identity theft is so rampant.

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Here is an interesting article that discusses a problem that is seen by financial institutions all over the country related to Identity Theft:

BankNet360: How is address-discrepancy identity fraud committed?
Adam Elliot: There are two types of fraud tied to an address. One involves a fraudster obtaining all your personal information, then calling your lender to inform them that you moved and asking for a new card to be sent to the new address. This is known as account takeover, which is virtually undetected in financial institutions. The other form involves a fraudster using your information to open a whole new account or credit line, using an address that’s not yours.

BN360: Is there a way for lenders to check for this?
AE: Credit-scoring agencies let lenders know whether a person is worthy of credit, but they also tell them if there’s a difference in your address. An address discrepancy is the fundamental, leading early-indicator of identity theft.

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According to this post today in the BayouBuzz.com, we are reminded that a football coach has a lot of responsibilities outside of just coaching and recruiting. Nothing unusual to those of us who live the football crazed state of Alabama but the article did catch our eye with this statement:

Tigers coach Les Miles kicked off three of his players back in April after they were arrested in separate incidents. [names deleted] sealed their fate following arrests on charges of simple burglary and identity theft after allegedly taking a woman's credit card from her residence in Baton Rouge.

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According to this recent post there is an increase of Identity Theft. As the post notes,

Rena Mears, Partner in the auditing firm of Deloitte & Touche was the keynote speaker at the Governors conference and in her remarks she indicated that Deloitte’s estimate of identity theft crimes for this period was in excess of 15,000,000 victims in 12 months. In addition she commented that the financial impact of identity theft crimes had doubled in the pas 12 months. In other words the amount of money stolen or defrauded had increased significantly. She also noted that victim recovery (the ability to recover the financial loss – but not the loss of time and effort) had dropped from 87% in 2005 to 61% in 2006.

5-14-07 Update - click here for a recent post on how victims can fight back under state and federal law.

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This fascinating post on the Consumerist caught my eye. Here's a brief excerpt to give you the flavor of this story:

Do not be so bold as to name a menu item "Family Feast," even if you sell the item once a year on Christmas and you own a tiny pub on top of a remote mountain in England. What? Didn't you know that KFC's trademark applies to people who live on top of mountains and own pubs and have their picture taken with sheep wandering around? Tracy Daly is such a person, and she has received a very serious legal threat from KFC over an item on her menu called, "Family Feast."

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The Consumerist is always packed full of good information that you can get quickly. Kind of like a fast food meal at Burger King? Well, read this post and be reminded to always check your receipts. Here is a small taste of this excellent post:

Guadalupe Pequino of Fountain Inn, South Carolina bought $8.64 worth of food from Burger King with her Visa Check Card. Unfortunately for Guadalupe, the cashier typed in $8,648.54 as her total and the amount was debited from her account.

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Many who live in Alabama and elsewhere would like to read the text of the Fair Credit Reporting Act. The Cornell law school makes this very easy with their online legal resources.

Click here to have free and easy access to the FCRA.

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One of the most entertaining blogs we read is the Legal Juice - we enjoy the posts very much. A really strange story involves chewing tobacco and human toes. Here's an excerpt:

Really. Mr. Bryson Pillars was chewing some tobacco when ... [I'll let the Mississippi Supreme Court take it from here. They just don't write them like they used to.]

It seems that appellant [Mr. Pillars] consumed one plug of his purchase, which measured up to representations, that it was tobacco unmixed with human flesh, but when appellant tackled the second plug it made him sick, but, not suspecting the tobacco, he tried another chew, and still another, until he bit into some foreign substance, which crumbled like dry bread, and caused him to foam at the mouth, while he was getting "sicker and sicker."

If you can, click here to read the rest of this story and check out the other posts on Legal Juice.

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Our friends at Consumer Law & Policy Blog have a great post on a recent decision that can impact victims of debt collection abuse in Alabama and elsewhere.

In a forceful opinion issued today, Sayyed v. Wolpoff & Abramson, No. 06-1458 (May 9, 2007), the Fourth Circuit rejected a debt-collection law firm’s argument that it enjoys common-law immunity from FDCPA claims that arise out of statements made in the course of litigation.

Farid Sayyed alleged in federal district court that the law firm Wolpoff & Abramson (W & A) had filed, in a state-court debt-collection action, interrogatories and a summary judgment motion that contained false statements. W & A argued that it was absolutely immune from FDCPA claims arising from statements made in litigation, and the district court agreed and dismissed.

The Fourth Circuit reversed.

It was absurd to argue that a debt collector can lie in litigation but its nice to have a well written opinion rejecting this crazy argument. Read the rest of the post at CL&P for additional analysis of this opinion.
Update on May 11, 2007 - read this good post for the perspective of the Michigan Debt Collection Law Blog for the analysis of a collection attorney.

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An article yesterday in the Lone Star Times describes how quickly Identity Theft can change your life. While we have some clients who fight a long and tiring battle with one account being opened every few months, this article's account is frightening for how fast the thieves moved to open numerous accounts over a several day period.

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Continue reading "A Sobering Email Describing Identity Theft That Started With Applying For A Macy's Card" »

While it would be wonderful (we guess) if everyone knew every law, there are three banking laws that impact Alabamians on a regular basis. The Mint has an excellent post on this which we recommend you read by clicking here.

You know the post has to be good when it starts off like this:

Ah. Banking regulations and laws, these are the stuff that truly inspires excitement — about as much excitement as watching another re-run of Everybody Loves Raymond.

Taking the fun factor aside, here are three common banking regulations that you will come across everyday, which you should know just a little bit more about. Why? Because if you accidentally run afoul one of them, it will cost you in fees and headaches!

Enjoy.

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An excellent blog that Alabama residents should know about is the Stock Broker Fraud Blog by lawyers out of Texas. There is a post from last week which affects residents of every state, including Alabama.

This post concerns a settlement with Edward Jones securities firm with a deadline to "opt out" of the settlement by June 11, 2007, or the class members will receive about 18 dollars. As stated in the post,

Language in the proposed settlement indicates the Edward Jones firm may be seeking to exempt itself from ANY AND ALL CLAIMS which could have been asserted by over 5 million of its current and former clients. Although, none of these clients would have actually signed such an agreement themself, any pending or future lawsuit, arbitration action or other legal claim could potentially be prejudiced by the final language in the settlement agreement.

According to the Notice of Proposed Settlement forwarded to these clients and former clients, based on the information provided the Plaintiffs by Edward Jones, the estimate of recovery per Class Member is approximately 17.99 in cash per former client and $19.86 in "credit vouchers" per current client. However, the actual amount any class action member might receive would vary based a based on a large number of factors.

According to the Notice of Proposed Settlement, CLIENTS AND FORMER CLIENTS OF EDWARD JONES MUST TAKE IMMEDIATE ACTION BEFORE JUNE 11, 2007, to avoid being included in this settlement. In class actions, THOSE WHO TAKE NO ACTION prior to the "opt out" date almost always ARE PREVENTED FROM SEEKING ANY OTHER RECOVERY for claims which are ultimately exemped as part of the class action settlement agreement.

[NO INVESTOR SHOULD ACT TO OPT OUT OF A CLASS ACTION OR DECIDE TO REMAIN A PART OF THE ACTION WITHOUT LEGAL ADVICE REGARDING THEIR OWN SITUATION. THE INFORMATION PROVIDED HEREIN IS NOT INTENDED AS SUCH LEGAL ADVICE.]

If you are an Alabama resident who has done business recently with Edward Jones then you should investigate your options as that deadline is fast approaching.

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Christine at the always interesting "2007 Credit Suit" site has a nice article about Robert Brennan's recent verdict against Arrow Financial Services. This case dealt with problems that many Alabama residents are fighting - debt collectors who falsely put information on credit reports.

We fight this using several laws - the Fair Credit Reporting Act, Alabama state law (defamation, invasion of privacy, negligence, etc), and against debt collectors/debt buyers the Fair Debt Collection Practices Act which prohibits false entries on your credit report. We'll write more about this later but take a look at this article on Christine's site - it does us all good to see the good guys winning. We've met Robert at some consumer conferences and he definitely seems like a good guy....

Here's a brief excerpt:

Ms. Nelson previously sued Arrow in 2003 over the account, and part of the settlement of that case included a permanent removal from her credit reports. However, literally as she was signing the settlement agreement from the previous lawsuit, Arrow began re-reporting the account to Equifax, one of the “big three” credit bureaus, using a different account number. When Ms. Nelson later disputed the account’s re-appearance to Equifax, Equifax could not locate the account because it had been re-reported with a different account number. Ms. Nelson then brought the lawsuit.

You can't make this stuff up - what we see debt collectors doing just boggles the mind....

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Those of us in Alabama sometimes feel removed from terrorism but this reminds us of a sobering fact:

"Some folks may not think ID theft is a major crime until they remember that seven out of the nine hijacker terrorists on September 11 used illegal drivers licenses obtained by identity fraud to get on those planes," Thompson said.

Read the rest of this article which contains good news about a number of arrests of people who tried to commit Identity Theft by obtaining driver's licenses belonging to others in the Montgomery, Alabama area. Congratulations to Reba Thompson for doing such a good job fighting Identity Theft. This is needed in Montgomery as the article informs us that

Montgomery had more reported identity thefts last year than any other Alabama city.

Thanks to Kenneth Mullinax of the Montgomery Advertiser for this fine article.

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This article discusses a credit freeze and the possibility that Alabama may join other states in allowing a real solution to prevent identity theft:

Shredding sensitive documents, checking your credit often and being extra caution online are the easiest ways to avoid identity theft, but there's one way called credit freezing that's easier than all three put together.

"Credit freezing will stop people from actually opening up new accounts without your permission," says Williams.

Twenty five states have already adopted the service.

Unfortunately it's not offered in Alabama, but that soon may change.

In the last year a bill has been introduced into legislature that would "allow a consumer to place a security freeze on his or her credit report; to provide a method of releasing the freeze; and to provide for exceptions."

We suggest you read this entire story by an excellent reporter named Robyn Mcglohn of the Huntsville station WAFF 48.

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Though we think it will never happen to us, you are no safer here in Alabama from identity theft than any where else. It can happen to anyone. The unfortunate victim of this identity theft lived in a small town in Georgia.

We thought we'd heard it all until we ran across a story from MSNBC titled "Grave robbery: Stop identity theft of the dead". This article reminds us that no one, not children, nor careful adults, not even those who have died are safe from identity theft.

Shortly after Johnny Salter died, his identifying information was obtained by the thieves and sold to the highest bidder. Within a few weeks, they had done their damage. Mr. Salter's sister was interviewed about what happened. “A new car and about $10,000 had been charged,” says Crane, 73. “It's bad enough to steal someone's identity and ruin their credit history. To do it to a dead man, and to his family so shortly after his death, it's just terrible.”

To protect your self, the article provides some good advice:

* Don't include details such as day and month of birth (use only the year) or addresses in obituaries. (Aside from preventing identity theft, “you don't want thieves to visit the house, helping themselves while you're interring a loved one,” Foley says.)
* Promptly notify the Social Security Administration of the death at 800-772-1213 between 7 a.m. and 7 p.m. on business days. For the hearing impaired, the number is 800-325-0778.
* Mail copies of the death certificate to all three credit-reporting bureaus — Equifax, Experian and TransUnion — and all credit issuers to cancel accounts right after the person dies. The credit bureau addresses are:

Equifax Office of Fraud Assistance
PO Box 105069
Atlanta, GA 30348

Experian
PO Box 9530
Allen, TX 75013

TransUnion
PO Box 6790
Fullerton, CA 92834

* Contact your state department of motor vehicles to cancel any driver's license and prevent duplicates from being issued.
* By law, you are entitled a free credit report from all three main bureaus every year. Several weeks following the death, use this service — at www.annualcreditreport.com — to run a credit report on the deceased to ensure there's no suspicious activity.

Remember to always be careful with your identity and take every precaution to protect it. If you want to read this article, click here.

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We ran across a website that was just recently launched. It is run by a non-profit organization called the Identity Theft Resource Center and describes itself as follows:

Identity Theft Resource Center (ITRC) is, a nonprofit, nationally respected organization dedicated exclusively to the understanding and prevention of identity theft. The ITRC provides consumer and victim support as well as public education. The ITRC also advises governmental agencies, legislators, law enforcement, and businesses about the evolving and growing problem of identity theft.

The site also provides a fairly accurate description of identity theft, which may be helpful to you as well:

Identity Theft is a crime in which an imposter obtains key pieces of personal identifying information (PII) such as Social Security numbers and driver's license numbers and uses them for their own personal gain. This is called ID Theft. It can start with lost or stolen wallets, pilfered mail, a data breach, computer virus, phishing, a scam, or paper documents thrown out by you or a business (dumpster diving). This crime varies widely, and can include check fraud, credit card fraud, financial identity theft, criminal identity theft, governmental identity theft, and identity fraud.

You can be access the website by clicking here.

Though we have only studied the site briefly, it appears to be an in depth resource for addressing identity theft issues. The "ITRC Corporate Overview" portrays two particularly compelling stories about how drastically and dramatically identity theft can affect one's life. The first is a story about how a young boy's identity was stolen after his estranged father came back into his life. It was only after he began applying to college and was repeatedly turned town for admission and school loans, that he learned what had happened.

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Continue reading "New Identity Theft Website" »

We are constantly telling people not to allow a default judgment to be entered. This is where you get sued and do not answer the complaint. When this happens, the judge will normally declare the plaintiff (debt collector or debt buyer) to be the winner and a judgment will be entered against you.

This means several things. First, you owe the money regardless of whether you actually did owe the money. Since you defaulted, the court determined you owe the money. Second, you have a judgment on your credit report that will stay there for many years. Third, garnishment can happen.

Read this riveting post about garnishment in Minnesota where it apparently can happen even before a lawsuit:

A bank gets a garnishment summons, and locks down funds. Public assistance like Social Security Income is technically exempt from garnishment, but a debtor has to file exemption papers to get their money back. The bank takes the money, and the debtor has to fight to get it back.

That’s how the system works.

This rest of this post describes a frightening practice of debt collectors routinely taking exempt social security funds from the elderly. We recommend you read this and the other articles on the fine blog by Sam Glover entitled Caveat Emptor.

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The USPIRG blog has a disturbing post about how the government has continued to post thousands of social security numbers for anyone in the public to use, including Identity Thieves.

Now, in today's New York Times, Ron Nixon reports in U.S. Database Exposed Social Security Numbers that two different agencies, the Agricultural Department and its aider and abettor, the Census Bureau, have been posting SSNS on the Internet. An "unaware:"

Agriculture Department for years publicly listed Social Security numbers of tens of thousands of people who received financial aid from two of its agencies, raising concerns about identity theft and other privacy violations. [...]The problem was reported to the government last week by a farmer in Illinois who stumbled across the data on the Internet.

That's dumber than dirt, a gold mine for identity thieves, and as our privacy colleague Marc Rotenberg of EPIC points out in the story, "might have violated the Federal Privacy Act, which restricts the release of such personal information." In the Washington Post, Ellen Nakashima has some more details in her story: U.S. Exposed Personal Data:

Teuber said the USDA had been using Social Security numbers as part of a 15-digit federal contract identifier number. The practice dates back more than 25 years, she said, to when Social Security numbers were printed on checks. She said the USDA's information-security division was not aware of this continuing practice until last week.
The loans database was part of a larger public Web site run by the Census Bureau, which collects all federal loan and grant data. The site has been up since 1996.

We recommend that you monitor and read this excellent blog and we appreciate the good work the folks at USPIRG are doing.

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Kenneth R. Harney of the Washington Post has written a disturbing article about what happens when consumers work out a new deal with their mortgage company that involves forgiveness of principal. Here is the introduction to his fine article:

For homeowners who are seriously delinquent on their mortgages and hoping for relief, the Internal Revenue Service has bad news: If your lender agrees to modify your loan and forgive any of your debt, you could owe federal income tax on the amount forgiven.

Think of it as the tax code's "kick 'em while they're down" rule.

We think the conclusion of his article (which you should read in its entirety) is excellent:

Proponents of the debt-relief bill argue that short sales, mortgage delinquencies and foreclosures are painful situations for most homeowners and that there's no public policy purpose served by smacking them with tax penalties that make things even worse. In the case of below-market short sales, for example, most homeowners have already suffered sizable capital losses that are not tax-deductible. They've lost thousands of dollars in equity.

Why pile on?

The outlook for the bill: It's currently before the House Ways and Means Committee, Congress's primary tax legislation body. Because most of the majority-Democratic housing and banking committee leaders have called on banks and mortgage companies to work out solutions to keep troubled homeowners out of foreclosure, a bipartisan tax fairness bill like this one should have a reasonable chance of passage.

Well said. Given the possible tax implications, we suggest you consult with an experienced attorney or tax advisor before making any modification to your loan so you fully understand the true value of cost of the modification.

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We are not huge fans of paying the credit bureaus money every month to monitor your credit but it certainly is an option if you use the service regularly to watch your credit report and the inquiries from creditors. In fact, if you are going through a divorce, it may be a good option as we mentioned in a recent post on Identity Theft and Divorce.

A news station (Channel 10 out of Columbus, Ohio) recently posted this article which questions the value of these monitoring services. According to the article,

Three major credit bureaus - Equifax, Experian and TransUnion sell services that promise to protect against identity theft for $60 to $180 a year, Landers reported.

Consumer Reports recently assessed 16 services and found they are not worth the money.

"Our analysis shows that these services, as they're currently designed, are often overpriced, oversold and overrated," said Consumer Reports money advisor Greg Daugherty.

Give this article a read then make your own decision. If you purchase it, make sure you fully use it to justify the monthly expense.

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We recently met with a client who reminded us of the importance of protecting your identity when going through a divorce. The client came to us after having received several calls from a debt collector for a credit card he had never owned. After some investigation, the client realized that his now ex-wife had opened a credit card in his name, had run up the balance and was not making any payments.

He is now being harassed by debt collectors. And, after pulling his credit report has confirmed that the credit card company is reporting the delinquency on his credit reports. This negative information on his credit reports has damaged his hard earned credit making it more difficult to obtain a loan at the interest rate he deserves. He has contacted the creditor repeatedly and they refuse to rectify the situation insisting that he owes them the money.

In order to protect yourself when getting divorced, you should consider pulling your credit report frequently during this process. All of the credit reporting agencies offer some sort of credit monitoring program where you can pay a monthly fee to be able to monitor you credit report. You may also want to consider attaching a fraud alert with the credit reporting agencies, which will require you to be contacted before a new credit card or loan can be taken out in your name.

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The Michican Collection Law Blog is an interesting blog written by what we have heard is an excellent lawyer, Gary Nitzkin. His even handed posts support this belief.

This particular blog post discusses some of the "internet" solutions to debt collections and Nitzkin's opinion about whether they work.

We recommend reading this post and his other posts if you are dealing with collection issues.

As per our recent post on taking all collection matters seriously, particularly from collection attorneys who know the law, protect yourself and do not allow a default judgment to be entered against you.

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There is an intereting blog by a Collection Attorney called simply Debt Collection Lawyer that is interesting to read. In particular is an article entitled "Tools of the Debt Collection Lawyer".

Of particular note is the statement that

If the debtor does not file a formal written answer, a default judgment can be taken. Most debtors, upwards of eighty five percent, are simply unequipped to deal with the complexities and requirements of the Court system. Those attempting to represent themselves simply do not stand a chance. Therefore, judgments are taken without dispute in approximately eighty five percent of the suits I file. Of the remaining fifteen percent, approximately ten percent result in judgments following a futile attempt by a pro se (no attorney) debtor to fight the system, and only five percent result in true contests where the outcome is not certain.

So, should you take a debt collection attorney seriously? Absolutely. Should you take a lawsuit seriously? Without a doubt. We will post more on this subject in our blog but on our website we do have a page that deals with being sued that might be of interest to you.

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We have several clients who received a bankruptcy discharge (from a Chapter Seven) but yet the discharged creditor continue to call or write letters demanding payment. What should you do if this happens to you? We suggest you give them a choice - either stop or get sued.

First, make sure the debt was listed in your bankruptcy petition. If you don't have your petition, call your bankruptcy lawyer. If it was not listed, at least in Alabama (and most other places), the debt is discharged but you need to let the creditor know about this.

Second, send the creditor a letter by certified mail, return receipt requested. Keep a signed copy (not just a word document on your computer). The letter can tell the creditor to leave you alone, the debt was discharged (give the case number and where it was filed), and that if they bother you again you will hold them accountable.

Normally this works but occasionally it does not. We just received a call from a bankruptcy lawyer who has a client still being harassed by a collection agency that knows the debt was discharged. This type of arrogance of collectors and creditors in trying to illegally collect debts must be challenged. We will make this expensive for them by suing them...

(Click here to read more information on our website about this illegal practice of harassing you after discharge).

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One of the most frequent questions/complaints we receive in our practice is related to debts that are over seven years of age being sold to a collector or debt buyer and then the new collector/debt buyer puts the date of the account as six months ago. This means it will stay on the client's credit report for another six or seven years. In the collection business this is known as "re-aging" the account.

Why would a collector do this? Because they think this is accuarate? Not a chance. It is simply done out of malice in an attempt to force the consumer to pay the bill to get it off the credit report. Credit scoring typically gives more meaning to recent events than events five years ago. So, if you suddenly get a $300 collection account from say AFNI dated last month, this will normally be devastating to your credit score. Having a recent open collection account can prevent you from closing certain types of mortgage loans. The solution - pay it off. Wait a minute - that's what they want you to do! So....

Dispute it through the credit bureaus and send a copy to the collector saying I dispute this account and they way you are reporting it as it is over seven years old. Send everything certified mail keeping a signed copy.

If it gets removed, then great. If not, contact a lawyer about suing the responsible parties. The only way for collectors who follow this unethical business practice to be encouraged to stop is to inflict pain on them through federal and state law. If a business does this intentionally, they certainly aren't going to stop just because they are nice guys - they aren't!

Update - click here for a summary of the largest fine for violating the Fair Credit Reporting Act. It was several years ago against NCO for re aging accounts.

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Identity Theft does not just happen to poor or middle class people. It can happen to the wealthy and famous. This story may be a little extreme but it does show how something as innocent as taking your computer in to be repaired can cause you to end up losing control over your financial information. According to a report out of San Antonio,

Bruce Bowen is crying foul — off the court. He and his wife are suing a local computer repair shop for nearly $2 million after a hard drive with their personal information ended up in a stranger's hands.

. . .

The hard drive allegedly contained Bruce Bowen's financial and legal documents, pictures of his family, and pictures from one of the team's NBA championships. All this ended up in the hands of Joy Roan, who just wanted her computer fixed.

. . .

The Bowens are now suing Computer Nerdz, the business they hired to fix their computer in August 2006. According to the lawsuit, the Bowens were told their hard drive was damaged and needed to be replace. It goes on to say the business then sold the hard drive to Roan.

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Ronald Miller has a great post in his Maryland Injury Lawyer Blog about protecting plaintiffs in depositions. He makes the excellent point that a plaintiff or consumer "caught lying" can destroy the case. It may be as innocent as simply not remembering a car wreck or two from some years back.

Two observations - first, in a car wreck case Ronald's point about obtaining a AISG report on the client is well made. This will help the lawyer and the client make sure nothing is said (or not said) about prior wrecks that the insurance company lawyer can take advantage of.

The second observation is that whatever the case involves (car wreck, identity theft, etc) if the plaintiff lies, the case is usually over. I remember a case which should have been a six figure verdict completely go down the drain in about two minutes during trial when the plaintiff "exaggerated" the impact in the wreck. We need to stress to our clients to always tell the truth and never stretch or exaggerate - not only is it morally wrong, it will come back to bite them at trial.

By the way, Ronald's (and his partner Laura Zois) blog is one of the best injury blogs and one that we certainly keep in our Google Reader - check it out, you'll enjoy it.

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On the Consumer Law and Policy Blog there is an interesting reference to an paper being prepared by Mark Cohen of Vanderbilt. This caught my eye for two reasons:

First, the paper points out the problems of auto dealers getting a quote for say, eight percent, but telling the customer the bank approved them for ten percent. The dealer keeps the spread. Professor Cohen argues this impacts minorities in particular.

Secondly, we have hired Professor Cohen in several multi million dollar truck wreck cases as an economist and he is perhaps the most credible and knowledgeable expert witness we have ever used. He truly knows his stuff.

When his paper comes out we will post a link to it as I'm sure it will be very well written and possbily expose this unsavory practice of lying to customers about what the interest rate they were approved for.

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Today the Seventh Circuit Court of Appeals issued a decision styled Gillespie v. Equifax which held that the way that Equifax reports the "Date of Last Activity" potentially violates the Fair Credit Reporting Act.

The plaintiffs defaulted on some debts and they were sold to a debt buyer collection agency. The issue in the case concerned the date of last activity and the rule against keeping negative items for more than seven years (actually seven and a half years - we'll address this in another post). The way Equifax reports the information, if a consumer makes a payment after an account becomes delinquent, then the date of last activity is the date the last payment was made. This could extend the seven year period in violation of the law.

As the court put it,

More troubling is the concern that Equifax’s
exclusive use of the Date of Last Activity could effectively
allow Equifax the opportunity to keep delinquent accounts
in the credit file past the seven and one-half year limitation
of § 1681c(c)(1). The Date of Last Activity that previously
listed the date of delinquency in the account will be
replaced should the consumer make an intervening
payment on the account. The date of the intervening
payment would become the new Date of Last Activity used
in the seven and one-half year calculation. However, the
negative credit history relating to the prior delinquency
would presumably remain within the consumer’s credit
file despite the fact that the consumer faces a new seven
and one-half year period before the information is removed
from her file.
Equifax has not provided an explanation for why it posts
both positive payment information and negative delinquency
data within the Date of Last Activity field. Even
more damning to Equifax is the fact that the field immediately
next to the Date of Last Activity is a field
labeled “Date Maj. Dlqu. Rptd.” Equifax defines the Date
Maj. Dlqu. Rptd. field as “the date the first major delinquency
was reported.” Although the Date Maj. Dlqu. Rptd.
field appears to be available for use on Equifax’s form, it
remains blank on the disclosures provided to the plaintiffs
pursuant to § 1681g(a)(1).

The firm that handled this case for the consumers was Pietz Law Office out of Pittsburgh, PA. Congratulations to James Pietz for bringing this important case!

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This is a story reported last year but it could easily be reported any day in any city in the country.

AS THE DIRECTOR of finance at a Brooksville, Fla., auto dealership, Marvin Hendrick, 52, reviews consumer credit reports on a daily basis to determine his customers' auto loan rates. So it was a sore day back in 2004 when, amid scores of 0% APR financing promotions, he had to grant himself a car loan at a whopping 13.74%.

He didn't have a choice. Because of a serious mistake in his credit report, Hendrick's credit score was 445 out of a possible 850: a score low enough that most lenders would refuse to grant him any credit at all. "I had to pull strings with the banks I'm associated with to get myself a car loan," he explains.

The entire post is interesting but the concluding paragraphs show the problems when there are errors on your credit report -

This is little consolation 33-year-old Samantha Murphy of Blackwood, N.J., who is suing Experian for reporting six negative accounts that are not hers. When American Express pulled her report in a routine account review, they decided to cut her credit limits in half, bringing her to 100% of credit utilization on one of her AmEx cards. When the change is reported to the bureaus, her credit score will drop and likely cause her other creditors to hike their interest rates. With a seven-week-old baby, that's the last thing Murphy needs. And although she sent the court documents to American Express, along with copies of her Equifax and TransUnion reports that show no fraudulent accounts, "[AmEx] said they were going with Experian and 'to us, that's the true stuff,'" Murphy says. (American Express does not comment on individual cases, but a company spokeswoman confirmed: "Once a cardmember works with the bureau to correct any inaccuracies and we receive a corrected version, we are able to re-evaluate any decisions that may have been impacted by erroneous information.")

As someone who grants consumer credit, Hendrick grudgingly agrees. "In the credit reporting world, if it's on your credit report and it's bad, you're guilty until you prove yourself innocent," he says. "I know it because I deal with it every day, and I give credit to people based on their credit file. And to me, if it's in there, it's the truth."

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We read an interesting post by a well respected consumer and bankruptcy lawyer Jay Fleischman where he argues that he can help his bankruptcy clients by avoiding arbitration of claims with creditors after bankruptcy. Here's the gist of what he does:

I typically put a clause in my Chapter 13 plans that specifically rejects the arbitration provisions contained in any consumer credit agreements.

Read the full post here in Jay's blog.

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When an Alabama consumer has received a bankruptcy discharge, this means the debts included in bankruptcy must NOT show a balance. (Click here to read the FTC commentary - excerpt included below). Studies show that approximately 70% of all accounts which should show a zero balance actually show a balance as owing. This means that a potential lender, apartment complex, employer, etc. looking at the credit report will think that the consumer not only filed bankruptcy but now also owes all of this additional money. This violates the Fair Credit Reporting Act and also state law.

The reason creditors do this may be simply negligence in updating the credit reports but given the level of violations, it sure looks like the real reason this is done is to extort the consumer into paying this debt. Here's how this scam works -- the account has a balance and is "parked" on your credit report. You go to refinance your house, get an apartment, get insurance, apply for a job involving credit checks, etc. and you get turned down because of this account balance. Or the mortgage broker says you have to pay off this balance before you can get the loan.

What do you do? Most people will be forced to pay this balance off even though it was discharged. Otherwise, they won't get the loan, the job, the apartment, etc. What do the creditors say when you pay this off even though you don't owe it? Extortion? No - they say it was "voluntary" payment.

The solution is if you have filed for bankruptcy and received a discharge, pull your credit reports and then dispute the items that show a balance. We have updated this post to show the link to one way that we recommend disputing discharged items - click here to read this new post.

In the meantime, if you have received a discharge in the last 7 years or so, pull your credit reports to see if balances are showing up on accounts that you discharged.

The full quote from the FTC commentary is:

6. Content of Report

A consumer report need not be tailored to the user's needs. It may contain any information that is complete, accurate, and not obsolete on the consumer who is the subject of the report. A consumer report may include an account that was discharged in bankruptcy (as well as the bankruptcy itself), as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt. A consumer report may include a list of recipients of reports on the consumer who is the subject of the report.

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While most of us have heard of the Big 3 credit reporting agencies (Equifax, Experian and Trans Union), few of us have heard of ChoicePoint. ChoicePoint is a credit reporting agency that was spun off of Equifax a few years ago. However, instead of focusing on financial information, Choicepoint provides your personal information of potential employers and insurance companies.

According to its own website, ChoicePoint "it helps speed and facilitate the insurance underwriting functions by providing quick and easy access to up-to-date information." ChoicePoint provides information to insurance companies about you and your driving history and also provides underwriting services "decision systems" and 24 hour access to agents to evaluate whether to insure you and at what rate.

Unfortunately, if they provide false information, you could be denied a job, insurance coverage or pay significantly higher rates then you should be paying if your correct information was reported. A recent client of ours found this out the hard way, when she noticed that her insurance rates were increasing dramatically. However, she hadn't gotten any speeding tickets and hadn't been in a wreck. It turned out that ChoicePoint was reporting to her insurance company someone else's wreck on her credit report. Despite her disputes, ChoicePoint refused to remove the information until they were served with a lawsuit. To see a copy of the lawsuit, click here.

If you haven't already checked your Choicepoint report, you can go to their website at http://www.choicepoint.com/index.html to pull your report. If you seen any inaccurate information, you need to dispute that information in writing with ChoicePoint, remembering to keep a copy of your signed dispute letter sent the dispute by certified mail.

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An excellent resource for anyone interested in consumer law is http://pubcit.typepad.com/clpblog/ which is the Consumer Law and Policy Blog. A recent article addressed the amazing question of whether the victim of Identity Theft can be forced by the credit card company to arbitrate disputes - when the victim never agreed to arbtiration or anything else about the account.

The bottom line from this excellent article by Jeff Sovern is that the courts are somewhat split on this issue. Read the article in its entirety here - http://pubcit.typepad.com/clpblog/2007/04/arbitration_and.html

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Last month an article appeared about the unfortunate problem of rising foreclosures leading to all sorts of scams that cheat struggling homeowners out of money. Here is an excerpt:

Soaring foreclosure rates are sending states scrambling.

Their goal: to protect homeowners from a new crop of scam artists who claim they will "rescue" borrowers. At the same time, some states are forming funds that could provide affordable fixed-rate mortgages to those on the precipice of losing their homes.

The stakes are high: As many as 130,000 homeowners – the most in 30 years – are going into foreclosure each month. Experts worry that entire neighborhoods will decline – similar to what happened in the 1960s and '70s – as abandoned foreclosed homes cause property values to drop. Some elected officials are calling for federal legislation to prevent predatory lending and asking lenders to voluntarily hold off on raising mortgage rates for those most in trouble.

You can read the rest of the article at this link - http://www.csmonitor.com/2007/0405/p01s03-usec.htm

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We read with interest an article by a mortgage company president who stated:

Of interest is the fact that these three major credit bureaus are not government-owned. They are huge multimillion-dollar corporations reporting primarily to, and mostly for the benefit of, creditors.

They are virtually unregulated and have no obligation to ensure that what they report about your credit history is either accurate or up to date. They are in business to make money and they do this when you apply for credit and your credit history is researched by a potential lender.

The fact is, the bureaus would rather you have less than perfect credit because the likelihood of you applying for credit increases tenfold when your credit is less than solid. Again, the bureaus make money when your credit is pulled.

A study by consumer activist Ralph Nader showed that 70 percent of credit reports in this country contained errors, and 50 percent of these errors caused loans to be denied, or at best caused the borrower a higher interest rate.

Well said. You can read the rest of this article by visiting http://www.timescommunity.com/site/tab2.cfm?newsid=18256580&BRD=2553&PAG=461&dept_id=506073&rfi=6

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Robert Duff is a consumer attorney in Indiana with an informative website (http://www.indianaconsumerlawgroup.com/index.html) and blog(http://www.indianaconsumerlawgroup.com/index.html). He has a recent post on a strange story that does appear to be out of a Seinfeld episode:

Haven't you ever wished the bank would make a mistake and through some glitch deposit about a hundred thousand dollars in your account? And then never find out? Tell me you've never thought about that! Anyway, that happened to George Costanza, oops, I mean George J. Costa of La Vista, Nebraska. More than $106,000 was deposited in his account between August 2006 and February 2007 after a bank employee mixed up account numbers. What did Mr. Costa do? He spent most of it. What's happening to Mr. Costa now? He's being charged with felony theft.

Read the rest of this amusing post here - http://www.indianaconsumerlawyerblog.com/2007/04/he_thought_they_just_wouldnt_n_1.html

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While sometimes the government likes to do a lot of studying and very little action, still this report is interesting:

A presidential task force on identity theft from 17 federal agencies and departments labored for 11 months to determine the obvious: Both the public and private sectors need to do a better job of protecting personal information and helping victims.

Although the conclusions are obvious, the task force has managed to produce some recommendations that could help provide this much-needed protection. They would put controls on the use of Social Security numbers as universal identifiers and establish some standards for responding to breaches of sensitive data.

The report, titled Combating Identity Theft: A Strategic Plan, would not eliminate identity theft and fraud, but would make a start if the administration follows through on the recommendations.

You can read the article here which also contains the pdf of the actual report - http://www.gcn.com/online/vol1_no1/43587-1.html

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We found an interesting article on Identity Theft insurance and similar products. In general we remain skeptical of these products but read this article and make your own decision. The conclusion of the article is as follows:

This is no small matter. Identity theft victims have reported feeling doubly victimized, first by the criminals who ruined their credit, and second by unresponsive credit bureaus, faceless representatives and Catch-22 situations as they tried to restore their good names.

The credit bureaus have improved their customer service, and they're gaining experience in dealing with identity theft victims.

Still, the prospect of dealing with something like this is what drives consumers to identity theft services.

Just be sure you know what you're buying, Foley says.

"What kind of support are they offering?" he urges consumers to ask.

"If there's a problem, how are they going to help, or are they going to toss you out there to swim on your own?"

We recommend you read the entire article which can be found here - http://news.postbulletin.com/newsmanager/templates/localnews_story.asp?z=7&a=292526

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We haven't checked out this site to know whether it is worthwhile, but we do admit that the post about James Bond being an Identity Thief is somewhat funny, particularly for those of us who have enjoyed watching the James Bond movies over the years.

You can read this amusing post here - http://www.creditlock.com/jamesbond007.html

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In this bizarre story, the victim of Identity Theft went to jail. Certainly a reminder that we all need to be careful with our personal information and if there is any hint of danger of Identity Theft we should act on it as soon as possible.

"I was booked, I was strip-searched, never had any conflict with the law before," she said.

The problem began at a gas station in Tacoma. Gosnell stepped out to pay, but left her car door unlocked. Two minutes later, she returned to find out her purse had been stolen. It contained every piece of her identity inside.

Gosnell admits she made a stupid mistake when she didn't lock her doors. But it wasn't until police stopped her for speeding that she learned a thief had gotten hold of her credit. The thief had opened fake accounts and had written bad checks.

When the police ran Gosnell's information, they found two warrants out for her arrest. And an innocent Gosnell had to spend a night behind bars.

You can read the rest of this story (and watch a video) by going here - http://www.komoradio.com/news/local/7232271.html

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We normally think that Identity Theft only applies to adults but this story should make all of us (especially those of us who are parents) more aggressive in dealing with Identity Theft.

Zach Friesen was the ripe age of 7 when he was the rightful owner of a houseboat and $40,000 in debt, thanks to his identity being stolen.

The houseboat, purchased with a loan taken out in Friesen's name by an identity thief, came to light 10 years later when he applied for his first job but was turned down because of his credit. He has no idea how his identity was stolen.
"It's really at first just shock, awe, sort of an overwhelming sense of confusion and disillusion, like, 'Are you serious?''' said the now-21-year-old Friesen, who spoke Friday to Fort Collins High School students. "I owe $40,000 for something I had no control over?"

You can read the full story by clicking here - http://www.coloradoan.com/apps/pbcs.dll/article?AID=/20070428/NEWS01/704280351/1002

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Considering we all just paid taxes, we are not huge fans of everything that comes out of a government office but there is a wonderful publication that explains a lot about avoiding and fighting Identity Theft. It is long (52 pages) but if you are suffering from Identity Theft of any type then this is a good starting place. We have put this pdf on our blog so you can download it directly by clicking here.

Let us know if you have any questions about this publication or with your particular situation involving Identity Theft.

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We knew from the number of clients we are seeing that Identity Theft in Alabama is a serious matter but then we reviewed a recent government report on Identity Theft which provided some actual numbers. We're sure this does not provide the real story as this is based only on those victims who actually take the time to notify the FTC.

In Alabama last year there were some 2,774 reported cases of Identity Theft. In Birmingham alone, there were 975 reported cases of Identity Theft. You can download this interesting report by clicking here.

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