Privacy Issue Caught in Credit Network Information Stored in Computer Databanks May Be Incorrect and Can Be Misused Series: Privacy in the Computer Age. First in a Four-Part Weekly Series
Simson L. Garfinkel, Monitor, The Christian Science Monitor
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. …