Tuesday, February 11, 2014

Do We Need Credit Reform?

The New York Times piece “A Line of Defense Against the Theft of Personal Data” is an attempt at a helpful piece to inform readers of steps they can take to protect themselves in a time of rampant ID theft. Reading it however, I can’t help but be shocked (and maybe a little angry) that this is the world we are living in. Yes, its terrible that certain retailers allowed there systems to be so easily breached and the thieves should be thoroughly punished for their actions, but to me the real crime here is that consumers are left in such a defenseless position to begin with. Given how critical personal credit has become a part of American society, I just cannot believe that we don’t have more simple protections in place.

Where to start? Well a few simple wins could include the following:

Access: To begin with, there should be a simple, free, and always available way to log in and see your credit score, recent credit information requests, and open lines of debt, and creditor comments. These for profit companies are profiting off the data they are collection on consumers and we should have a basic right to directly track and monitor this data. The fact that this information was a black box 20 years ago perhaps made sense given the economics of managing this kind of data, but in this day and age there is no reason that it would be prohibitively expensive to implement this when every retailer, bank and government agency does this already.

Ownership: We should recognize that individuals own their own personal information and they should have a right to remove their own personal information from at credit agency at their own discretion. This helps shift the power dynamic of the agencies relationship with consumers and encourages the agencies to consider the impact of their decisions on one of their key customer groups. Obviously the downside of a consumer removing their personal information from all agencies is that creditors will be unlikely to give out credit, but if the consumer can choose which agency to work with they gain an element of power that they lack currently.

Control: Consumers should be able to opt in to manually approve who is given access to their credit information as well as being able to easily freeze and unfreeze access requests broadly. When a consumer is not actively seeking credit, they should have the ability to lock down their account and rest assured that no identity thief will be able to use their data.

Validation: Consumers should be offered a service to approve all new credit accounts before they are granted. For example, if someone requests for a new Visa account to be opened using my personal information, the credit agency should send me a request for approval for the new credit account, and if I fail to approve the request Visa should not be able to grant the new account. This way you can always ensure that no credit accounts will be opened without your explicit approval.

These are just a couple ideas, but with a few simple changes the risk of having one’s personal data stole can be dramatically reduced. It’s simply unacceptable that we live in a world where people can be ruined by having their identity stolen when this is something we could easily fix. Hopefully someday we’ll do the American thing and put people in control of their own lives again.

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