The Borrowers
Keeping ID thieves at bay
Identity theft can be both frustrating and costly for the victims. Reporter Stacey Vanek-Smith visits one couple who is still trying to put their credit back together after eight years of identity theft.
Susan and David Litchfield in their home in Norwell, Mass. (Susan and David Litchfield)
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TEXT OF STORY
TESS VIGELAND: One thing I'm confident no one imagined in the buildup to a culture of borrowers is that one day a stranger would be able to convince debt issuers that they are you, with a simple computer keystroke. The wide availability of credit has made it easy for thieves to perfect the criminal art of identity theft. And that means you could be on the hook for bank loans, car loans and credit cards you don't even own. ID theft costs businesses, banks and consumers more than $50 billion a year. And once your credit is destroyed, fixing it comes at a high price of its own. Stacey Vanek-Smith reports.
Stacey Vanek-Smith: David Litchfield is a metal fabricator in Norwell, Mass. David Leighton is a repairman in Florida. They've never met, but they know a whole lot about each other. Eight years ago a man named David Leighton started using David Litchfield's social security number.
David Litchfield: He got a whole pile of credit cards. He'd use one, maxed it out and then go to another one.
Litchfield and his wife, Susan, didn't discover the problem until months later, when their daughter's student loan was refused. By then, they were sitting on thousands of dollars in overdue bills and David's credit score was in ruins. It took more than two years to repair David's credit. But it looked like the identity thief had been stopped until...
Susan Litchfield: We went to refinance the house and the bank called me. And I just started crying and I said, don't tell me he's done it again? And he goes, "Oh Sue it's a mess. Wait until you see it."
Susan Litchfield produces a stack of settlement offers, collection notices and credit reports, all linked to David Leighton. He had racked up more than $200,000 in debt, and it was all there, on the Litchfield's credit report.
Susan Litchfield: Credit cards, Capital One, Chase, student loans. He had a $98,000 debt for, what we believe was child support.
ID thieves often strike the same victim more than once says Jay Foley, Executive Director of the ID Theft Resource Center. He says ID theft is hard to prove, the cases almost never got to court and the criminals know this.
Jay Foley: At the same time that we're dealing with issue A and B. The bad guys over here are creating E, F and G for us.
The Litchfield's have put a stop on their credit, but they're worried David Leighton might be sitting on a stockpile credit cards tied to their accounts -- cards he got back when credit was easy. In the meantime, they're still trying to clean up their credit score. And that can be an epic undertaking, says Foley, of the ID Theft Resource Center. He says every company where a fraudulent purchase was made has to be contacted via certified mail, each one has to call off its collections agency, ask the credit bureaus to remove the black mark, and open its accounts to police. Companies often push back so they don't have to cover the damages. Foley says victims should prepare for a fight.
Foley: Well they can expect to be grilled repeatedly, and if there's anything that you say during that process that is ambiguous, they are going to jump on that as the excuse for holding you responsible for the account.
Foley says it usually takes between six months and two years to correct problems on a credit report. Susan Litchfield says the mess is so big this time, she and her husband have basically given up.
Susan Litchfield: They just bounce you around until, after an hour of waiting on the phone, you just hang up. Then I get into bed, my head's spinning, I want to cry, I just get so angry. I got to the point where my blood pressure was sky-high, my doctor was afraid I was going to have a stroke. I just put it all away. I just couldn't deal with it.
The credit bureaus don't make things any easier, says Bob Sullivan, author of "Your Evil Twin: Behind the ID Theft Epidemic." He says the three agencies that determine your credit score have no incentive to move quickly.
Bob Sullivan: The credit bureaus have one customer and one customer only, and it ain't us. It's the banks. It's the people who lend money.
And lenders are in no rush to see your credit score improve -- the lower your score, the more they can charge you to borrow. The Litchfields have seen the interest rates on their credit cards jump and the premium rise for their homeowner's insurance. And now David's credit score is so low, he can't even get a card on his own.
David Litchfield: I have a credit card I share with my daughter. Somehow she got me a credit card. It has my name on it but it, but it's hers and mine.
About ten million Americans have their identities stolen every year. But there are ways to minimize the damage says Lucy Duni. She's with TransUnion, one of the three major credit agencies.
Lucy Duni: Place a fraud alert on your credit report. You could also place a credit freeze, so no new accounts can be opened in your name.
Duni recommends being stingy with your social security number and shredding personal documents. ID theft is getting harder, thanks in part to the credit crisis, which has made banks put stricter lending standards in place, says author Bob Sullivan. He blames the era of easy credit for the ID theft boom. He says banks were more than happy to hand out plastic to almost anyone, with very little verification.
Sullivan: A couple of years ago, you could walk into a Circuit City and walk out with a $3,000 television set five minutes later, even if you had nothing in your pockets. That's the reality of where we were and we created this system that made things very easy for identity thieves.
And very hard for people like the Litchfields, who are still dealing with David Leighton's debts.
Message machine: Beep...You have one old message: Good afternoon, David Leighton, just calling about your structured settlement...
I'm Stacey Vanek-Smith, for Marketplace Money.
Comments
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From Phoenix, AZ, 04/23/2009
I salute C. Blackburn for what is an extremely well-written, just, and reasonable solution to this problem that creates such misery in our society.
Mr/Ms Blackburn, I hope you will petition your senators and Congressman to create a bill calling for exactly the steps you propose, and also that you visit the President's website to urge that he support such a move (I think he would be supportive of this fundamental change).
Thank you again, C. Blackburn, for a blueprint for how our government should be protecting us...but haven't yet begun to do so.
From Louisville, KY, 04/23/2009
I went to annualCreditReport.com to get a free credit report. I answered all the questions, but was still informed that the report could not be delivered online. One thing strange about the questions is that it told me that I had a mortgage initiated in Oct, 2004 and asked me from which lender it is. I am totally unaware of the mortgage and I have never applied for a mortgage before, nor did I receive any mails regarding mortgage payment. Do they ask this question to everyone no matter whether they have a mortgage or not? I am very confused. How do I know whether I have been a victim of ID theft? Besides my credit report, what other things can tell me whether someone else has been using my indentity? Thank you and I look forward to the reply.
From Beverly Hills, CA, 04/19/2009
This story has absolutely nothing to do with structured settlements-- so why try to tar structures by this red herring at the end of the story?
A structured settlement-- if Leighton had one-- would be PAYING him money, not be an indebtedness.
04/18/2009
It is enshrined in our legal system that a person is innocent until proven guilty. Through lobbying by the banking and credit industry, the law has been restructured to protect those who are culpable at the expense of those who are innocent. It should astonish and outrage listeners to hear that just because a lender was given a person’s name and social security number that that person could be held responsible for a debt. The fact that a bank or credit company could send a claim letter to you based on their mistakes, and that you would be responsible for proving otherwise, is Orwellian.
It is the responsibility of a lender to verify the identity and credit worthiness of a borrower. If they accept a fraudulent application it is no ones responsibility but their own. It is certainly not the responsibility of someone whose only connection is that the applicant used his or her name and social security number.
A false claim is only one offense, but unfortunately not a crime, against the victim. A second offense comes from their having to prove their innocence to the credit rating agencies. Again the law is turned on its head. Rather than the credit agency having to prove a slanderous claim, the victim must prove their innocence.
The following reforms would correct this imbalance and would greatly reduce the identity theft problem.
Place the burden of proof on the creditor in any claim of debt. A creditor that believes they have a claim against the Litchfields should have to present what evidence they have to a court. If they can convince a judge or jury that the Litchfields are responsible, they would be permitted to pursue their claim and would be able to add court costs. If all the evidence of a $200,000 debt is some mailed in applications with the Litchfields name and social security numbers on them, I would say the creditors need to compensate the Licthfields for the trouble they have caused.
Prior to a court ruling, the creditor should not report a claim to a credit agency. Any creditor or credit agency that made or accepted an un-adjudicated report would be liable for damages should they not be able to prove their claim.
If a person contests a claim made by a creditor on their credit report, the credit agency would have to decide if they had sufficient confidence in the validity of the claim to risk a possible damage judgment. The person contesting a claim would have to prove nothing. The entire burden of proof would rest with the credit agency. Though if the claim was proven, the credit agency could recover court costs and the person contesting should face fraud charges as well.
I know the banking industry and credit rating agencies will wail that this will mean an end to consumer credit. However that would not be the case. It will mean a reduction in irresponsible consumer credit and a corresponding reduction in large and easy profits for some. The consumer and the economy as a whole will benefit. Lenders will be far more careful about verifying the identity of applicants and easy identity theft and the related costs will become a thing of the past.
From Somerset, WI, 04/18/2009
As regarding Identity Theft. why wouldn't you put a credit freeze so no more credit cards etc could be taken out before the event happens? It would seem this would be the smart thing to do especially if you are like us and only need to change credit cards or get a loan once a year or less?
thanks,
Bill
From HI, 04/18/2009
Reporter Stacey Vanek-Smith should be thanked by readers for her human approach towards America's problem, our problem of containing The Mob.
Thanks, Stacey
A
From tulsa, OK, 04/18/2009
An X-husband used my social security card to open a credit card in my name the month after I divorced him. He has used the card for over 5 years, has made late payments and damaged my credit- but has paid off the card (I believe because he wanted to keep using it)- therefore the police / chase manhattan bank or not interested in pursuing this problem. I asked if I could get a new social security card and was told no, I am supposed to just wait for him to do more damage-maybe get into my 401K or my one and only annuity. Where is the justice here?
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