• Credit
• Data Breach
• Fraud
• Identity Theft
• Other News
• Privacy
• Reviews
• Scams
• Tips
• Truston

« Previous Post | Blog Home | Next Post »

Suze Orman makes dangerous ID theft proposal

Posted on Jul 22, 2006 by Tom Fragala

Suze Orman, the TV personal finance guru has an article in today’s Wall Street Journal entitled Worried About Identity Theft?.  As I read through it I found my self nodding my head in agreement. Then at the end I found myself shaking my head in amazement at a bizarre proposal that I feel hurts her credibility.

She starts by criticizing Congress as it grows closer to passing a law that will seriously harm the fight against identity theft.

…industry groups have lobbied in favor of a bill authored by Ohio's Republican Rep. Steve LaTourette to supersede the existing state credit freeze statutes and, instead, places the credit bureaus in charge. His proposal, deceptively titled the Financial Data Protection Act of 2006 (H.R. 3997), would actually revoke the access to credit freeze now enjoyed by nearly 130 million Americans. The result: Only victims who produce a police report after their personal information is stolen would be able to put a credit freeze on their accounts.

She says that Congress should let states alone because they are actually doing something about the problem of ID theft. I generally agree. If Congress must act, she says, she proposes that they at least follow “sensible guidelines.” Her proposed guidelines start off well: (1) that everyone can place a proactive credit freeze at any time, (2) that credit bureaus act quickly to turn a freeze on or off, (3) that the cost of credit freezes be reasonable. Ok, nothing new, but good so far.

Then Suze throws in (from left field) the nutty idea that “federal legislation should never cede control over the credit freeze to the credit bureaus alone.” Allow me to translate: she wants Federal law to allow third party companies to set a credit freeze for you. Hold on a second. The credit bureaus are the ones that own the credit file. Why do we need some new industry to crop up that can control the freeze for you? Wait, you’re thinking, competition is good, right? Usually it is. But this is a really bad idea. Why? Because any company that does this credit freeze business will need your sensitive personal information!! Imagine dozens of these companies pitching this service to unsuspecting consumers. And why would Suze Orman suddenly come up with this idea? She tells us: she consults for a company that plans to do this!

Disclosure: I advise one company, TrustedID, that is building new options for consumers to protect themselves against identity theft, including easy-to-use credit freezes.

I can see it now, hundreds of shady outfits with banner ads and creepy web sites all over the web, telling people they can freeze their credit for “FREE.” Only to take their sensitive data, store it in un-encrypted databases, with weak security, and given carte blanche to share it with God knows who. Hey Suze, thanks but no thanks. I like my data to stay at the credit bureaus, where the FTC, Congress and the rest of us can keep an eye on it.

Hey, we can beat up on the credit reporting agencies all day, but at least they have thousands of people dedicated to information security and spent hundreds of millions of dollars on it each year. And they are highly regulated and closely watched. We don’t need the competition in this case: it just ain’t worth it.

Update: The TrustedID blog, no surprise, has a post on her article (sorry, they don’t allow comments on their blog.)