SC Bankruptcy & Consumer Law Blog » Identity Theft

Are Companies in Bankruptcy Throwing Away Your Personal Info?

Sheryl — Wed, 12 Mar 2008 17:26:57 +0000

We’ll get back to the “Back to Basics” series later, but first, a bit of news on the intersection of bankruptcy and consumer privacy rights.

This article from MSNBC.com suggests the answer is “yes” and the privacy implications are alarming, to say the least:

As recently as August, First Magnus Financial Corp. was the subject of a magazine feature hailing it as a “technological powerhouse” ready for the future thanks to its “tech-savvy management team.”

Just two weeks later, First Magnus, one of the nation’s largest mortgage lenders, whose headquarters was one of the biggest employers in Tucson, Ariz., was out of business, another victim of the disintegration of the U.S. mortgage industry.

Among the revelations about Magnus was that it wasn’t quite as technologically advanced as had been billed. Most of its borrowers’ records were still on paper, as Floridians learned when thousands of loan documents were discovered in boxes in an unlocked trash Dumpster in Fort Lauderdale.

Read the rest of the article here. It correctly points out the shortcomings of the federal law applicable to such conduct (FACTA, or the Fair and Accurate Credit Transactions Act — you can read more about FACTA here from the Privacy Rights Clearinghouse) as well as the somewhat disinterested response from the Federal Trade Commission (FTC, charged with enforcement and administration of many consumer laws).

Fourth Circuit to Equifax: FCRA Means What It Says About Stolen & Mishandled Information

Sheryl — Thu, 03 Jan 2008 17:01:54 +0000

Pay up: that’s the Fourth Circuit panel’s bottom line to CRA (credit reporting agency) Equifax in Sloane v. Equifax, No. 06-2044 (Dec. 27, 2007), a Fair Credit Reporting Act (”FCRA”) case decided late last month. You can read the case for yourself here (PDF Format): Sloane v. Equifax decision.

Facts of Sloane Case

Ms. Sloane, the plaintiff, lost a lot during what should have been a joyous time for her and her husband - her hospital stay for the birth of her baby. Instead, a nurse with a similar last name noticed an opportunity, and stole Ms. Sloane’s personal information. Based on that info, the ID thief went on a spree, opening accounts in Ms. Sloane’s name and racking up thousands of dollars in debt — and, of course, not paying it back.

When Ms. Sloane discovered the problem, she did what every ID theft victim is advised to do — report it to the CRAs, get copies of the credit reports, call all the creditors, and keep really good records. While most of the creditors did exactly what they were supposed to do under the law (i.e., not hold her liable for the theft and correct their own internal records), a few didn’t — but most egregious of all was Equifax’s response. Instead of correcting the erroneous info and removing the accounts that weren’t hers, Equifax went so far as to add a contested account back in to her record!

The struggle with Equifax, which is far too detailed to recount verbatim here, dragged on in mind-boggling ways; you really have to read the opinion (which recounts the whole sordid tale) to get the full impact of just how devastating something like this can be to a person. Suffice to say, Ms. Sloane’s marriage was endangered, she suffered horrendous amounts of stress, and the impact on her credit and financial dealings was, predictably, disastrous.

Equifax’s Response

While Equifax wasn’t the only bad actor here (the thief is obviously to blame for the initial loss, and some of the creditors didn’t behave much better, at least initially), its response was pretty jaw-droppingly blase. Reading the opinion, it strikes one that the general attitude was pretty much a yawning “So?”

The legal arguments weren’t much better; the Court observed that Equifax wasn’t really pointing to any authority for its proposition that it shouldn’t have to pay attorney’s fees (even though FCRA specifically calls for fees to be borne by the CRA if it loses, as Equifax did) and that the emotional damages award was too high (picking a far lower number “out of the air,” in the words of Equifax’s own attorney, instead of the one the trial produced after verdict). It simply said, in essence: “Trust us. We can’t tell you why, but we’re right.”

Needless to say, the Court didn’t really buy that argument.

The Bottom Line: ID Theft Hurts. A LOT.

As the court correctly spotted, ID theft’s damages are not a one-time, one-shot thing. They continue on and on, as the injuries mount up day after day.

Nor is there just one injury (i.e., the theft itself). Instead, there’s a fresh new injury anytime the victim’s incorrect credit information is accessed and/or relied upon. Even when there is no immediate denial of credit due to the inaccurate information, victims still suffer from the threat of the harsh consequences.

The lessons to plaintiffs and ID theft victims are threefold, and simple:

Know your rights.
Never, never, never give up.
And keep really good records.

Identity Theft Resources

Sheryl — Wed, 20 Jun 2007 13:04:26 +0000

Jim Calloway’s Law Practice Tips Blog has some resources collected in this post to assist consumers dealing with identity theft.

ID theft seems to have dropped off the media’s radar lately - we don’t hear as much about it as we used to. I guess they’ve moved on to the subprime/foreclosure crisis. But it’s still going on. As long as the crime is perceived as bringing a substantial payday, and criminals seek easy money, it’ll persist. Just look at this news item on a new twist on the old trick of stealing Social Security numbers - using real numbers under different names.

Technorati Tags: identity theft

SC Senator Takes on ID Theft Legislation After Wife is Victimized

Sheryl — Fri, 11 May 2007 13:00:59 +0000

It’s too bad it takes a personal impact like Lisa Cleary’s to generate interest in revisiting ID theft laws. But then again, Lisa’s husband, Senator Ray Cleary, from Murrells Inlet, isn’t your ordinary theft-victim’s husband, and he wasn’t about to sit back and let the opportunity pass to prevent others from experiencing the excruciating losses - over $58,000 - his wife endured at the hands of an employee who allegedly used her boss’s identity to obtain credit and her checking account to pay for it.

As The Sun News article, found here, recounts:

In the meantime, she could be unable to get credit if she needs it. Cleary said her husband’s position as a shareholder in a bank makes that a small concern for her. But she worries how a similar situation would affect single mothers and young people who are just barely getting by.

And the credit agencies don’t make it easy to fix the problem once it is discovered, Cleary said. At first she was locked out of the agencies because her address had been changed and the one she was giving was no longer accepted by them.

Senator Cleary is now working to refine recent legislation to require instant access to credit reporting agency information (they now require subpoenas) and make other changes to help victims resolve their issues more quickly.

Technorati Tags: identity theft, south carolina id theft laws, personal finance

Happy New Year from the SC Bankruptcy & Consumer Lawyer!

Sheryl — Wed, 03 Jan 2007 16:48:22 +0000

I love new years - so much opportunity to do things over, or in some cases “right”! I have a similar post today at the SC Employment Law Blog, and wanted to take this opportunity to share with you an incredibly helpful hint for one of my own consumer-related resolutions this year: Protecting myself from identity theft and bank theft! Here’s a post from a blog called Dark Roasted Blend (sounds good to me, too) with stunning photos captured from an Italian ATM, showing and explaining a theft in progress. Worse yet, the victim has no clue he’s being robbed.

New ID Theft Scam Alert: Jury Duty

Sheryl — Mon, 04 Dec 2006 22:15:58 +0000

Kudos to Freedman Consulting’s Law Practice Management blog for alerting me to this one: an Identity Theft scam that starts with a stern-sounding call from someone who identifies him- or herself as a “jury coordinator” and tells you that a warrant has been issued for your arrest due to your failure to appear for jury duty. When you protest you never received a summons, the caller requests your social security number and birthdate so s/he can cancel the arrest warrant. If you give out any of this information, that’s all the caller needs to steal your identity.

LPM reports that this has been confirmed by both Snopes.com and the FBI. From the Snopes page:

The scheme outlined in the message quoted above might be categorized as a “social engineering” scam — a technique which preys upon people’s unquestioning acceptance of authority and willingness to cooperate in order to extract from them sensitive information.

On 22 August 2005, the Minnesota Judicial Branch issued a warning about the bogus calls. The Minnesota Judicial Branch points out its courts always use the mail to send jury service summons, communicating by telephone only after prospective jurors have returned completed summons information forms.

In New Mexico, Rep. Tom Udall has been warning citizens about the scam. As he points out, Federal courts do not require anyone to provide any sensitive information over the telephone. Most contact between a federal court and a private citizen is conducted by mail.

The Superior Court of California has posted an alert on its web site, warning that identity thieves posing as court officials have been trying to get confidential information through phone calls about jury duty. Once again, callers have been telling potential victims they failed to report for jury duty, then demanding their Social Security numbers. While court personnel may occasionally call people at home, “We never ask for Social Security numbers or personal identifying information,” said Marita Ford, chief deputy executive officer for Riverside Superior Court.

In September 2005, in an effort to alert the public nationwide about the scam, the FBI issued a press release which explained that “the judicial system does not contact people telephonically and ask for personal information such as your Social Security number, date of birth or credit card numbers” and those so contacted should “not provide any personal or confidential information to these individuals.”

Snopes also reports that the scam isn’t new; reports of its use date back to 2001. Here are some tips to help you avoid getting taken by this or other scams:

Never give your social security number or other personal information over the telephone. Anyone with a legitimate interest in that information either (A) already has it or (B) will understand your refusal. Anyone getting upset over it needs to join the 21st century.
With any call that seems suspicious, but might be legitimate, try this ploy: tell the caller you will definitely cooperate and are interested in speaking with them further but … make up some emergency (your child was injured, there’s someone on the other line, you just got in and need to get some paper and pen for notes) and ask to call the office right back. Get the number, and hang up. Now, check the number the caller gave you against your caller ID and the phone book, or an internet phone directory. If there’s a discrepancy, you can call back with a greater level of caution.
Jury service personnel will never call you - for just about anything. Almost all correspondence is accomplished through form letters sent via US mail.
Keep a sharp eye on your credit card and bank statements, and get a copy of your credit reports from each of the three major credit reporting agencies yearly (more frequently if you have reason to suspect suspicious activity). Contact the creditor or bank immediately if you discern any improprieties or errors.