Though it wasn’t heavily publicized, credit reporting company Equifax came to a settlement this week over accusations that it was selling data on delinquent homeowners to third parties. That information, once it left Equifax was sometimes sold and resold numerous times. The Federal Trade Commission has been investigating these claims for some time now and only recently announced a settlement in these cases.
The FTC’s agreements with both the credit reporting firm Equifax and a company known as Direct Lending Source includes fines of $1.2 million to be paid by Direct Lending Source and another $393,000 that Equifax has been ordered to pay.
Pre Screened Lists
Many may recall several years ago accusations that one of the most respected names in the credit reporting industry had been collecting information, sorting it and then selling those reports that met certain criteria. Known as ‘pre screened lists’, consumers who were behind in their mortgage payments found themselves on these numerous lists. The information found in these reports included their personal identification information, credit scores, present and former addresses and payment history on their mortgages.
These actions, of course, are violations against both FTC Act and the Fair Credit Reporting Act. The companies were said to have engaged in these practices for three years. Reports were that between 2008 and 2010, Equifax sold Direct Lending and any of its affiliate companies carefully compiled lists of people who matched specific criteria. In those lists of course, was the information mentioned above. The names also included information on how late those people were in their mortgages – whether they were 30, 60, or 90 days behind on their home loan bills.
Differing Fines
Many are questioning why Direct Lending’s fine is considerably larger than Equifax’s. The report revealed that in some instances, Direct Lending re-sold the information on the lists provided by the credit bureau. Those third parties collected the information they were looking for and were then free to sell the information yet again. There’s no certainty into how many times the lists were sold, who they were ultimately sold to or the kind of information being harvested from those multiple sales. It’s believed those consumers were soon contacted with offers of loan modifications, debt relief options and even higher APR loans that included a cash out of any equity.
The terms of the settlement include both companies having to revamp their policies regarding the way the buy and sell data. Not only that but they must also ensure those companies aren’t using the information in a nefarious manner. Further, neither company will be allowed to sell, lease or give away what’s known as “pre screened” lists of consumer information to any company that they believe do not have a permissible purpose to use them.
For the past several years, the federal government as taken consistent steps in ensuring sensitive information different agencies handle aren’t left vulnerable. If it can affect a consumer’s credit rating or history, there must be better guidelines put into place. Still, it’s not illegal to sell information. Recommendations are made – not laws. Not at this time anyway.
In fact, it’s actually a loophole in the law that allows the credit bureaus to sell your personal and private financial data to lenders. This information includes your name, address, phone number – yes, even if it’s unlimited – your credit scores, age, gender and even income if it’s available. Despite this latest ruling, there are no laws being considered to cease this type of information selling. There is, however, a way for you to prevent it from happening.
Under the Fair Credit Reporting Act, you have the right to “opt-out”. This is the only way to prevent your information from landing in anyone’s hands. It can be a bit frustrating, but it’s worth that time to protect your identity and other information, especially in an increasingly technology-driven society.
You have a few more choices, too. You can opt out of any kind of credit card or other loan offers for five years or you can opt out from ever receiving offers for credit cards or other offers. You can do it online, too. You can also opt back in. If you do opt out, you will no longer be included in any kind of offers provided by the consumer credit reporting companies. More importantly, these agencies will no longer be allowed to sell your personal and private information.
If you opt out, this won’t affect your ability to apply for future credit. In fact, there won’t be any notation at all on your credit report. It won’t have any affect at all one way or the other.
Have you opted out? If so, was it because you didn’t want your personal information compromised or were you simply frustrated with the number of pre approved offers you were receiving? Let us know and share your experience.
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