What the Data Breach Prevention and Compensation Act Could Mean for You

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The big Equifax hack of 2017 created a mess for a lot of American consumers. In fact, it’s estimated that about 143 million Americans were victimized in the hack, and the hack has the potential to be very detrimental in the long-term should the hackers take the confidential information that they swiped and put it to use. As if the hack wasn’t bad enough, Equifax was widely criticized for how it handled the matter and its lack of transparency with consumers. Bottom line: The hack was a raw deal, especially for American consumers. Equifax, while subject to bad publicity, might end up making money off of it in the long run.

There could be hope moving forward, however. A new bill introduced by U.S. Senators Elizabeth Warren (D-Massachusetts) and Mark Warner (D-Virginia) would penalize the credit reporting agencies in the event of any future data breaches. The thinking behind the bill is that any future data hacks wouldn’t just spell bad news for American consumers, but for the agencies that left consumer data susceptible too. The bill is a direct response to the perception that credit bureaus aren’t doing enough to protect the data they collect.

What this bill would mean:

There’s no word on whether the bill will be going to a vote, but here’s a closer look at what the bill would mean should it pass:

  • Credit reporting bureaus would be subject to regular inspection by the Federal Trade Commission (FTC) to ensure that they’re taking the proper measures to protect confidential consumer data.
  • Should a data breach occur, the FTC would be authorized to fine the credit reporting agencies $100 per consumer affected. The bill calls for half of the amount collected for such purposes to go to the consumers that were impacted. Think about that for a moment. If this bill were in effect when the Equifax hack occurred, the FTC could have collected up to $14.3 billion in penalties, with over $7 billion getting kicked back to the consumers who were victimized.
  • Senator Warren hasn’t been a stranger to proposing credit-related legislation. Following the 2017 Equifax hack, she proposed a pair of bills. One would have prohibited employers from making hiring decisions based on a person’s credit. The other would have allowed consumers to indefinitely freeze and unfreeze their credit any time they wished for free. Neither bill made it out of committee and to vote, however.
  • The Consumer Industry Data Association opposes the proposed bill, stating that the reporting bureaus already follow stringent enough standards. In a statement to CNET, its president and CEO said the bureaus would, however, like to work with Congress to make credit reporting safer and more secure.

The 2017 Equifax hack was blamed on a pair of issues – human error and a technical mishap. With that in mind, it’s enough to wonder if just one of the issues were to have been removed if the data breach would have occurred at all. For some, the proposed bill may be viewed as even more red tape in an already highly regulated field. But when it comes to data as confidential as social security numbers and credit information, can you really be too careful?

Many elderly Americans scammed with Hundreds of thousands of Americans have received phone calls from people purporting to be either debt collectors or police pursuing delinquent debt. The callers contact people at work and at home. Many calls come in the middle of the night. The victims are threatened with harassment or imprisonment. The scammers have collected at least $5 million from people who did not owe them money.

These scams are persuasive because the callers usually have a great deal of personal information about the victims. They often know when a loan was made, the loan amount and other details. Because of the amount of information they have and in an effort to avoid trouble, many people pay up.

Phantom debt is debt that is old, defaulted, paid or otherwise not owed by the debtor. While phantom debt can sometimes appear on credit reports as an error, the current case involves individuals deliberately trying to collect money that is no longer owed.

The Federal Trade Commission has frozen the bank accounts of Kirit Patel, a front man who set up the California company behind the scam. The FTC and the state of Illinois are suing six companies and three people who have used a number of business names in the scam, including Stark Recovery, Stark Law and Capital Harris Miller and Associates. While the calls originate in India, the scam is supported by the participation of people in the U.S. American corporations are set up to collect the information that is used when calling the alleged debtors.

This is not the first case of widespread phantom debt fraud. In November 2015, the FTC reported on a company called Delaware Solutions or Clear Credit Solutions that allegedly purchased payday loan debts. The debts were not valid, but, the company proceeded to call and harass people to intimidate them into paying.

What should you do if you are contacted about phantom debt?

There are a number of laws that protect people from unfair pursuit of debts. Knowing your legal rights can help protect you against scammers. If someone contacts you about a debt that you do not think you owe:

  • Ask for a validation notice. This is a document that confirms, in writing, how much you owe and what the debt is for. By law, it must be sent to you within five days of contacting you.
  • Remember that it is illegal for a debt collector to threaten or harass you.
  • Know that a debt collector cannot put you in jail.
  • Know that you can tell a debt collector must, if you ask, only contact you in writing.
  • If a debt collector does not validate a debt or threatens or harasses you, report them to the FTC and your state’s Attorney General’s office.

Knowledge of your rights can help protect you and preserve your good credit. Do you need help improving your credit score and erasing phantom debt? Contact Key Credit Repair today.

What Exactly Is A Charge-Off?

Debt Collectors Can’t Pay Their Own Debt

Debt Collectors Can't Pay Their Own DebtWhat happens if you miss a payment? Default on a loan? Can no longer afford to make the payments required?

Simple – you’re taken to task. The bill can go to collections, debt collectors can come after you and the mishap will be reflected in a negative credit score, forcing you to put debt management and credit repair plans into place to save face. In more dire situations, you might have to declare bankruptcy or seize some of your assets.

Yes, not being able to pay off debt according to the policy you originally agreed on can have dire consequences for your credit score and overall finances. But what happens when debt collectors can’t pay off their own debt? We ask that in lieu of two recent incidents where debt collection agencies have been handed hefty fines that they can’t pay, yet are allowed to remain in business. Here’s a closer look:

  • RBT Enterprises was handed a $4 million fine from the Federal Trade Commission for a series of deceptive collection practices that are believed to have cost consumers over $1.3 in unethical fees. RBT Enterprises can’t pony up the $4 million, but the FTC is allowing it to stay in business, pending it pays a $100,000 fee to suspend the judgment and the owner turns over his assets. The FTC is also allowing RBT to stay in business pending suspension of its unethical collection practices.
  • The second example involves ACE Cash Express, a payday advance loan company. The Consumer Financial Protection Bureau (CFPB) alleges that ACE used illegal tactics to force overdue borrowers into taking out more loans. As a result, the CFPB is ordering ACE to pony up $10 million – $5 million in customer refunds and another $5 million in penalties – to make amends, as well as discontinue their illegal tactics.

It seems a little odd and unfair that unethical debt collectors are allowed to stay in business after breaking so many rules and are given leeway when they can’t pay up as a result of their actions, especially when individuals faced with similar financial issues are judged so harshly and may have to spend years following a series of credit tips to repair credit in order to become a “good” borrower again.

But the aforementioned examples should highlight how careful you should be if collectors are coming after you. Remember, debt collectors can’t lie to you – that’s illegal. But apparently if they do lie and deceive consumers, they can still stay in business after a smack on the wrist…

For additional information on how to deal with debt collectors, please contact our office at 617-265-7900, or request a free consultation below.