Tuesday, December 12, 2006

Credit protectors gain profits - NY Times story

Eric Dash has a major story on page A1 of the December 12, 2006 The New York Times, "Protectors, Too, Gather Profits From ID Theft." Although new laws now require the three major companies to provide any consumer one free consolidated reports a year, the three major companies are making money selling consumers their own reports, as are other monitoring services. Some states, such as California, are passing laws allowing consumers to freeze their files, and about one-sixth of consumers do this. There are new problems when existing social security numbers are used with wrong names (as with illegal immigrants).

Again, a due diligence system based on NCOA or identification intelligence (like Idology -- next post) could prevent a lot of this. But there are questions as to whether credit grantors have sufficient incentive to perform the diligence. There would be concerns if the requirements extended to smaller businesses.

The three major reporting companies are Trans-Union, Equifax, and Experian. Experian is a spin-off from TRW, which had acquired Chilton; Equifax had acquired Pinger. There was considerable consolidation in the credit reporting business at the end of the 1980s (Chilton was bought by Borg-Warner in a leveraged buyout through Merrill Lynch Capital Partners; and then sold to TRW for cash after corporate raider Irwin Jacobs threatened Borg-Warner with a hostile takeover. I remember this well; I worked for Chilton in Dallas, on Fitzhugh in Oak Lawn, from 1981-1988, as a computer

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