CATHERINE SMITH got the surprise of her life when she was
rejected for a loan. Her credit record - information in a credit
reporting agency's computer files - showed more than 40 notices of
outstanding balances and delinquent accounts, but the charges were
for things she had never bought. Apparently someone had discovered
her Social Security number and used it to apply for credit in her
name, listing a post-office box in Texas. When the bills came in,
that person hadn't paid.
Privacy in the United States is increasingly being invaded in
today's world of computers and interconnected databanks. Never
before, experts say, has it been so easy to obtain detailed
information about a person and use that information for legitimate
or illegitimate ends.
Trying to correct the record, Ms. Smith learned that the Fair
Credit Reporting Act (FCRA), the 20-year-old law that regulates the
consumer-reporting industry and is supposed to protect victims of
credit fraud, doesn't work very well.
Under the terms of the FCRA, Smith asked CBI (now Equifax) and
TRW - two of the agencies that maintain credit files on most
Americans - to investigate the information in her file. The agencies
wrote letters to the creditors who had filed the reports. "The
creditors either didn't reply or simply confirmed that I'm the
culprit," Smith says.
Next she contacted more than 40 creditors herself. "They say,
`Thank you, we're putting the information in our fraud file,' but
despite my requests to remove the inquiries from my credit report,
they remain," she says.
Collection agencies started calling Smith at home and work,
demanding that she pay the outstanding balances. "This is a
nightmare," she says. "This will likely affect my credit - and who
knows what else - for the rest of my life."
Perhaps a lot else.
In the past, many employers used credit reports only to screen
job applicants who were to handle large amounts of cash, says
Jennifer Neu, a spokeswoman for TRW. Some now use them to verify
information on application forms. Credit reports are even used to
screen applicants for rental housing.
"The marketing strategy for credit reporting companies is to make
it available to anyone that they can sell the information to," says
David Dzernik, executive director of the Louisiana Consumers League.
Smith's case shows just how easily a person's financial affairs
can be plunged into shambles by an unscrupulous individual who has a
few key pieces of information: name, address, and Social Security
number. With those keys the nation's databanks open up.
Nor is this an isolated case: Robert Ellis Smith (no relation to
Catherine), editor of the Privacy Journal, has assembled more than
500 documented cases of people who have been victimized by invasions
of their privacy.
"Many people are never aware that they are the victims of an
invasion of privacy, as in the case of an inaccurate credit report
that they don't know about, or a wrongful disclosure of a credit
report that they never discover," says Mr. …