Fred Clark of Slacktivist writes one of those blogs that I just love. He's smart, compassionate and very, very perceptive. This piece on the credit report industry is timely -- go read the rest:

Kevin Drum makes a helpful comparison between your credit history and your medical history:

In the same way that medical records are available only to people with a legitimate medical need, I think that credit records should be available only to those who actually extend credit. Beyond that, they're private. Employers don't get them, the FBI doesn't get them, journalists don't get them and my neighborhood association doesn't get them. I don't care how much each of these people really, reallythinks it would be handy to have a peek at them. Short of a subpoena or a court order, my financial records are my business. You can't have them.... The credit reporting agencies [have] been placed in a privileged position where they're allowed to collect sensitive private information — just as doctors and banks and census takers are. That privileged position means they have a heightened responsibility for maintaining privacy, not a license to use their databases for anything that can make them an extra buck or two.

I think that's exactly right.It also seems to be exactly the opposite of the current relationship between citizens and credit reporting agencies.

Right now, the credit reporting agencies are permitted to collect and evaluate sensitive private information about anyone and everyone. (Although, again, "evaluate" may be too elevated a term for the crude reductionist number-crunching of their secret "scoring" formulas.) Almost no information about you and your money and how it is spent is off-limits to them. They are further permitted to sell this information to anyone to whom they wish to sell it, repackaging and marketing your private financial information for sale to insurance companies, your boss or your prospective employer.

Fred goes on to describe the carelessness with which those agencies treat your information, and why protecting consumers from the consequences is a political winner:

There are at the moment Democratic attorneys general in 31 states. Of those, I'm guessing, about 31 are hoping some day to be governors or senators. Advocating for their constituents against the costly and predatory negligence of credit-reporting agencies seems like a promising step toward fulfilling such ambitions. (I forget who it was who first observed that some seek power in order to enact policies while others seek policies in order to attain power, but I think this should appeal to those in either category.)

The Federal Trade Commission estimates that about 9 million Americans are victims of identity theft every year, so it's a safe bet that each of these AGs (or A's G) has thousands of constituents whose credit histories are scarred by such theft and who are therefore being forced to pay premium rates for everything from mortgages to consumer loans to insurance and utilities. Some of these constituents may have been denied employment or promotion on the basis of these lucratively inaccurate and uncorrected credit scores.

These costs are real and therefore they can be measured and quantified and added up into a single Very Large Dollar Amount -- the amount that constituents have been inaccurately and unfairly overcharged due to the negligence and irresponsibility of others. That VLDA is the basis for the class-action lawsuits that these attorneys general ought to be filing on behalf of their constituents.

Whether or not such lawsuits can succeed in achieving restitution for the millions of citizens who have paid dearly for the carelessness of the credit-reporting agencies, the lawsuits ought to be able to achieve at least a bit more of what is desperately needed and sorely lacking in the current system: accountability and transparency.

Without transparency and accountability, the power that credit agencies have will be abused and expanded and extended until its abusive presence is felt, as Matt Lauer put it, in "all portions of your life."

State lawsuits will allow AGs to subpoena information on the calculations and variables that go into the credit-reporting agencies secret-formula scores. Such information would empower consumers to improve those scores beyond what is currently knowable from the best-guesses of hack finance writers and "credit-monitoring" scams.

More importantly, the state lawsuits would allow the AGs to subpoena information on the marketing of citizens private financial information -- to gauge the full scope of the credit-reporting agencies' plans for the use of this private information beyond the realm of actual credit. Informed attention to the misuse of this information for employment decisions or by insurers or utilities would likely lead to the sort of outcry that would make limits on such misuse a legislative priority.

And that could lead to a situation in which the misuse or sale of private financial records is as obviously illegal -- and unthinkable -- as the misuse or sale of private medical records.

Remember the CEO of LifeLock who always gave out his Social Security number in their ads? Surprise, surprise - his identity has been stolen at least 12 times over the past few years! From Wired:

Apparently, when you publish your Social Security number prominently on your website and billboards, people take it as an invitation to steal your identity.

LifeLock CEO Todd Davis, whose number is displayed in the company’s ubiquitous advertisements, has by now learned that lesson. He’s been a victim of identity theft at least 13 times, according to the Phoenix New Times.

Buyer beware. Open thread below...

Ben Stein was axed by the New York Times last year for ethics violations when he appeared in a commercial for a bait and switch credit report scam. The ad claimed that consumers could get a free credit report, but in reality, they had to pay to see the real numbers.

Well, the FTC is now getting into the act and going after similar companies with some catchy commercials intended to emulate those of a popular advertising campaign by a similar bait and switch scam:

AnnualCreditReport.com is the ONLY authorized source to get your free annual credit report under federal law. The Fair Credit Reporting Act guarantees you access to a free credit report from each of the three nationwide reporting agencies — Experian, Equifax, and TransUnion — every twelve months. The Federal Trade Commission has received complaints from consumers who thought they were ordering their free annual credit report, but instead paid hidden fees or agreed to unwanted services. Don’t be fooled by TV ads, email offers, or online search results. Go to the authorized source when you request your free report. Read on...

Ok, so the ad is a little hokey, but the message is clear. I'm all for steering people to better alternatives and pointing out hackery when I can.