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July, 2005

FREE ANNUAL CREDIT REPORTS
by LARRY

Identity theft is on the rise. Perhaps surprisingly, since this is the type identity theft we hear about most, illegal use of our credit card numbers and information has been dramatically declining, as the credit card companies themselves have put in place efficient software that culls out abnormal credit card holder behaviors and so flags many potentially fraudulent employments of our card data. In as little as two seconds, a credit card company can not only verify we have authorized credit to pay for each purchase proposed but also compare the current purchase with our purchase history to see if anything unusual seems to be occurring. In its simplest form, for example, this software could be employed if we made a mid-morning purchase in Austin and now, at 12:30 Central Time the same day, someone is trying to make another purchase with our card number in NYC, causing bells to metaphorically go off within the checking computer. But, in fact, the software is far more complex in its analyses than this and has one of a number of profiles it uses for each of us, a traveling salesman profile, for instance, an extroverted soldier's, a shy, conservative librarian's, a bookish teacher's, an impulsive but poor student's, an illegal alien's, and so on. (I wonder how the computers classify me? I would guess they might digitally "raise their eyebrows" if a credit card in my name were being used to purchase a large number of chips at a Las Vegas casino.)

What instead is increasing is an insidious and potentially more damaging kind of theft, using a combination of such info as one's Social Security Number, birthday, name, driver's license number, and home address to begin, develop, and then utilize a new line of credit with a stolen identity. Depending on how much potential credit we have at first, perhaps in home equity, other assets, or credit built up over time through good loan payback practices, this type theft may not be noticed for months or even years, if in the interim we do not have occasion to apply for new loans ourselves. Once identity theft is discovered, the hassles of restoring good credit ratings may be significant, and in the meantime we could be hearing from collection agencies and dealing with other unpleasantness for an extended period. Besides that, of course, some cheats will likely for some time have been living easily off our hard earned good name and borrowing limits.



Unfortunately, it is getting a lot easier for criminals to steal our identities. Not only are there any number of unscrupulous people (who may, for instance, work at motels, hospitals, real estate offices, brokerages, and so on) who collect bits of our identity info and sell it, but there are entire corporations that routinely, as their main business, gather all the information on us they can, using sophisticated supercomputer techniques as well as old-fashioned methods of sleuthing, compile this data by the scores of millions, and then make it available to customers that may range from insurance and credit companies to the federal government (ostensibly looking for terrorists and other criminals), and so on. Frequently, these data files are not kept properly secured and become available to hackers, who then may sell the files to the highest black market bidders. There is little other use they would have for the information than to steal and use our identities and credit.

While many may still see such discussions as paranoid (According to Money magazine recently, at least 21% of adults think there is no reason to be concerned about the theft of their identity - of course perhaps at least 21% of us have no credit to be stolen!), in the last five months alone there have already been over 49,000,000 illegal disclosures of personal identity information on US citizens from such data collection companies.

If we find a criminal use of identity has taken place, it is our responsibility, not that of the credit companies, to initiate corrective action to get our credit reports purged of the thieves' bad credit practices at our expense. It is true that, once we have eventually proven the fraudulent purchases, loans, or services were not ours, the credit companies are required to correct their records, but this may not be easily achieved or promptly done. It is said that, the sooner the identity theft is found, the better. When a long period of such fraud has gone by, the victim whose identity has been stolen may need to assume a new full-time job, filling out paperwork, keeping careful records, doing many follow-ups, and perhaps working through agencies and lawyers for several weeks or months before the problem has been resolved, sometimes at much expense.



There is, however, at least one tool we have in our favor: laws have been passed that permit us free credit company reports. On request, one must be provided to us free of charge each year by each of the three major credit rating companies. If we utilize this service once every four months, i.e. once a year per company, there is a good chance we'll early be able to spot illegal activity, yet not have to pay for any of the credit reports in question. So, I heartily encourage the reader to take advantage of this service.

One's free credit reports may be requested by regular mail, by phone, or through a secure web site, with the information needed for all these provided at the Annual Credit Report web site.

We shall be regular users of this valuable free credit report service and hope others will do the same. The sooner a majority of us are checking our credit reports frequently and taking corrective action if needed, the more readily the overall identity theft problem may be brought under better control.



DISCLAIMER

Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)



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