From April 27, 2008, “Puffy shirt“:
Identity theft is, at best, an enormous hassle for the victim. At worst it can be devastating. Victims’ “credit rating” can be destroyed, forcing them to pay the PPR (poor person’s rate) for everything from credit cards to insurance.
For the life of me, though, I can’t imagine a circumstance in which being the victim of identity theft would force one to don a pirate costume and sing for tourists in a bad theme restaurant. That’s not how it works.
For those readers fortunate enough or wise enough not to be acquainted with American television, I’m referring to this Freecreditreport.com ad. The song is catchy, the premise is puzzling. (But at least not inhuman, like the similar ad in which our singing pirate advocates checking your beloved’s credit rating and, if it is low, breaking up with them. True love, apparently, must first consult the opinions of Transunion, Equifax and Experian.)
I suppose the idea is that our troubadour’s low credit rating has forced him to take a second job in order to pay the premium prices of the PPR, and that the only second job available to him was the pirate gig. Or something like that.
While I applaud the revival of jingle-based advertising, FreeCreditReport.com’s campaign is based on an absurd lie: the idea that you are responsible, in any way, for fraud committed against a third party by criminals pretending to be you.
Imagine that I put on a pair of glasses and some fake bushy eyebrows and I walked into Warren Buffet’s bank. “Why hello there Mr. Teller at Warren Buffet’s Bank,” I would say. “As you can see from my glasses and bushy eyebrows, I am Mr. Warren Buffet. Please withdraw $20 million from Mr. Buffet’s, which is to say my, account, and give it to me, Mr. Warren Buffet.”
That, in its simplest form, is what “identity theft” means. The above scheme is unlikely to succeed, but a related scam — a kind of protection racket based on that scheme — has proved immensely successful in extorting money from consumers every day.
This secondary scam isn’t run to defraud money from banks, it’s run by banks to defraud money from their customers. The name of this racket is “Identity Theft Protection.”
In this scam, Warren Buffet’s bank tells Mr. B. that they are liable, at any moment, to hand over all of his money to the next person who walks into their lobby wearing glasses and fake bushy eyebrows. The bank, they explain, would be helpless to prevent such an occurrence. However, for a small fee — say $20 or $30 a month — the bank would be willing to offer him Identity Theft Protection. In exchange for this fee, the bank explains, they won’t give Warren Buffet’s money to anyone who can’t prove he really is Warren Buffet. Otherwise, it seems, they can’t be expected to distrust or double-check anyone who makes such a claim. So the bank is trying to charge an additional $240 or $360 a year to do what it’s supposed to be doing anyway.
The bottom line here is, as Kevin Drum put it, “You Own You“: “When identity thieves open an account in your name it should be the bank’s problem — not yours.” Kevin neatly summarizes the ID-theft protection racket:
For their part, the major credit-reporting bureaus — Experian, Equifax and TransUnion — don’t seem to care much about the accuracy of their credit reports. In fact, they actually have a positive incentive to let ID theft flourish. Like mobsters offering “protection” to frightened store owners, credit-reporting agencies have recently begun taking advantage of the identity-theft boom to offer information age protection to frightened consumers. For $9.95 a month, Equifax offers “Credit Watch Gold,” a service that alerts you whenever changes are made to your credit report. Experian and TransUnion offer similar services. In effect, customers are being asked to pay credit agencies to protect them from the negligence of those same agencies.
One way to cut down on identity theft would be to require commercial credit-reporting bureaus to offer services like this to all their consumers for free. After all, the credit-reporting agencies are the ones who are failing to ensure that their reports don’t unfairly penalize victims of ID theft.
That whole article is worth reading for a sane corrective to the bizarre, upside-down view relentlessly promoted by the moneylenders and credit reporting agencies desperate to blame the victims and to put all of the responsibility for preventing identity theft on consumers. That view — the official one, not Kevin’s — is simply insane. It makes no more sense than arguing that Ronald Reagan was responsible for the bank robberies in Point Break just because Patrick Swayze was wearing a Reagan mask when he committed them.
One more level down, the infectious jingles sung by FreeCreditReport.com’s Beck impersonator are also based on another, even more insidious lie — the notion that one’s “credit score” is a worthwhile, accurate or reliable measure of trustworthiness. Failure to make timely payments is one possible reason for a lower “score,” but so is the failure to have large amounts of disposable income. By confusing and falsely equating those two things — being untrustworthy and being poor — our current obsession with credit scoring feeds into the mythology that the poor are poor because they are less deserving, less moral, less worthy than the rest of us.
A credit score, in other words, is not just an inaccurate and misleading metric; it’s also an evil one.
Linkrot, alas, means that Kevin Drum’s post is no longer online. On the other hand, the original links to those once-unavoidable Freecreditreport.com ads are both dead, too, and that’s a happier development.
The one thing that hasn’t gone away over the past 14 years, though, is the perverse logic this post was complaining about back in 2008. The credit rating agencies are still profiting from subcontracting responsibility for the accuracy of their reporting to the consumers they’re reporting on, then charging those consumers for the privilege of doing their job for them.
The credit rating agencies shouldn’t exist at all. But if we’re going to allow them to exist, we should at least require them to do their own work and do it right, rather than enriching themselves by deliberately doing it wrong.