A step in the right direction away from credit abuse

I’m writing this just before Thanksgiving, and one of the many things I’m thankful for is that the major credit-reporting agencies finally understand they were a major part of the identity-theft problem.

One of the clear and present dangers of life in the United States (and maybe elsewhere) in recent years has been the ever-increasing flood of “preapproved” credit card applications showing up in our physical mailboxes. Merely discarding them leaves you open to exploit by crooks picking through your trash. Tearing them up does not help reduce the risk.

A year or so ago one of the local TV consumer-advocate reporters ripped up a number of the preapproved forms then taped them together and filled them out with inaccurate information (incorrect postal addresses, for example). She then returned the forms. Most of the banks sent her cards. When asked about the obvious risk in granting a credit card to someone who sent in a taped together application, the banks said they were satisfied that their verification process was just fine (for another example of the same thing, click here).

I’ve tried to use the credit-industry process for opting out of these offers -- twice. The first time was about two years ago, and the second about nine months ago. I do not recall for sure, but I think I used both the Web site and the phone number (1-888-567-8688). I will not claim that these are ways for the people pushing credit cards to find more victims, but I have not seen any reduction in the number of offers. If anything, the number has gone up. I now average about one a day, six days a week. Getting five offers in the same mail delivery the other day prompted me to write this column.

At least 39 states have passed laws that require credit bureaus to offer individuals the ability to place a security freeze on their credit records that will block such preapproved offers and generally block people from getting credit cards in your name. It took a long time to get that far -- with the bureaus fighting against the idea every step of the way. But finally, even the credit bureaus began to get the message, and now the three major ones have “voluntarily” agreed to offer this ability in all states.

Naturally, they charge money to stop violating your ability to safeguard yourself, but at least everyone can now get a little protection from credit-card companies that sent more than five billion offers in 2005 and would gladly send a card in your name to the three-year-old golden retriever down the street (for more information, click here). 

I may have to wait until Feb 3, 2008, for the Massachusetts law to take effect -- I’m checking that out now. But if that is the case, the credit bureaus will receive letters from me on Feb. 4 (the 3rd is a Sunday) exercising my right to not have them risk my financial future in order to get richer.

Disclaimer: Harvard, as a nonperson, faces different threats and has not commented on this topic, so the above is my own expression of limited thankfulness.

Learn more about this topic

Credit card thieves donate to charity

07/06/07

TJX breach may spur greater adoption of credit card security standards

03/29/07

Prepaid credit cards: Future of finance? 02/19/07

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