Monday, August 07, 2006

Identity Theft Leads to Credit Bureau Damages

Identity-Theft-Leads-to-Credit-Bureau-Damages audio post - click to play

In what may yet become an opening salvo
of consumer litigation
in the continuing war
against identity theft, one of the three
credit bureaus has been ordered by a federal
judge to
pay over $350,000 in damages to a
Virginia woman.

The woman's lawsuit was originally filed against all three
major credit bureaus: Equifax, TransUnion, & Experian as
well as her creditor, CitiFinancial for the total of $45

This whole sad episode, for all parties involved, started
in June, 2003 with the birth of the Virginia woman's son
at a local area hospital. That hospital stay resulted in
her social security number (ssn) becoming stolen
by an identity thief masquerading as an temporary worker
within the billing department.

The identity thief used the woman's stolen social security
number to open several credit accounts generating
of dollars" in fraudulent debt
responsible for the victim to

The appalling part of the hospital's hiring was the staffing
agency who supplied the temporary billing person evidently
did not conduct a thorough background check. The temporary
worker was later exposed to have had prior convictions for
identity theft and was on probabition at the time she was
placed within the hospital's billing department.

Although the identity thief was arrested and sentenced to
two years in prison, the identity theft victim was left
with several more years of harassment by debt
companies as her credit reports continued
to show non-payment.

Note, this was after the identity theft victim attempted to
clear her credit record for over a year. This was even
after she initially reported the crime to all three credit bureaus.

Although all three credit bureaus filed written denials
against the lawsuit's allegations, the federal court saw things
differently with the judgement against Equifax.

More importantly, though, the lawsuit claimed the credit bureaus
lack a mechanism to repair the damage identity theft
to a person's credit report.

In other words, you are on your own to clean up the
financial wreakage caused by identity theft based credit fraud.

So, our tip for today is to learn wisely from this identity theft
victim's tragic painful story. The credit bureaus, while mostly
diligent in their data protection and accuracy efforts, are reliant
upon the quality of the data reported to them. The fact
in this case that you've learned was a proven identity thief was
actually hired in a highly sensitive personal data rich information
was a mistake you can never control against.

However, there is a better way to seek a solution to the control
you deserve for your financial safety and well being.

Your best option to avoid this problem is to institute your very
own burgular alarm to warn you when you have fallen victim
to identity theft. By adopting a quality account and credit monitoring
system, you can avoid the severity and lengthy amount of harassment
you will face from debt collectors like this Virginia woman.


At 11:31 AM, Blogger Nathan said...

Hiring employees has become a sticky situation these days because you have no idea what these people will do with the data that they have. In one of your previous posts you claimed that a gym employee simply took the data from the gym database and used it for fraudulant reasons. So the big question today is Who can you trust in a company that contains customer data?

Background checks only go so far because more and more people are seeing the benefits of stealing data and becoming first time offenders. Company databases are jackpots for data-hungry employees, maybe companies need to be even more selective when hiring employees.

At 8:01 PM, Blogger agent99 said...

Nathan, to answer your question bluntly of "who can you trust?", the answer is employer's simply have too much liability to not trust anyone.

As a result, several layers of protection are required just to protect the firm from the small minority of dishonest employees and/or security lapses.

With federal laws already such as FACTA, GLB, & Sarbanes - Oxley it is no longer an option to decide whether or not to protect consumer data. The only question which may be subject to some degree of debate is to what degree of data security is "reasonable".

Companies large and small merely exist to render a profit or better still to increase shareholder equity. By enforcing tough data security practices, we submit that shareholder equity will be protected against class action lawsuits or merely sudden market share losses due to negative publicity as a result of sloppy handling of consumer data.

So far as whether to conduct background checks, given the choice of whether or not companies should submit all of their new employees to screening for any past criminal offenses which would open the firm up to employee related identity theft or fraud, again we believe it would be considered reckless and irresponsible for any organization to not do so.

Furthermore, it seems to make sense that new employees, especially those who would come in contact with any confidential consumer data, to be bondable and undergo period security checks as part of their employment contract.

Anyone not able to pass those hurdles simply would not be eligible for employment.

At 10:54 AM, Blogger Nathan said...

I think you've hit the nail on the head with that last statement about potentially having periodic security checks because if they are on constnat supervision, they will feel too confined, but if we give them too much freedom it could come back to bite us. SMBs do exist to create a profit/increase shares, but if you are not trusted by your own clients/customers then your business will suffer.

It's a double edged sword for these companies and I think that in order for them to fix these issues they should consider a new way to keep the data private, even if it means keeping it secured from their own employees in certain situations.

At 1:13 AM, Blogger strive4impact said...


I completely agree with you that employees who come in contact with any confidential consumer data should undergo period security checks as part of their employment contract.

With many small to medium-sized businesses barely able to make ends meet as it is (with all the insurances and overhead they already have), do you have any suggestions for how these businesses should acquire the funds to pay for the additional security screenings and background checks?

Learn more about FACTA employer liability

At 6:48 AM, Blogger Farmer Joe said...

It's funny, we recently entitled a blog entry, "Honesty - It Really is the Best Policy" that relays the anecdote of an employee who was caught in his ethical frailty during a job interview. We caught this one in his lies before we hired him on, but the nature of the offense really causes one to wonder just how pathetic some employees can get. Dishonesty is out there - perhaps more so than ever before, so thanks for the information that helps to teach how to avoid hiring dishonesty. FYI, the blog post mentioned above is at:


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