Do Credit Bureaus Enable Extortion Schemes?

In an article written by Cathy Moran, a California Bankruptcy Lawyer, the term “extortion” is again used. In her article, “Doesn’t this seem like extortion,” she talks about the June 2006 AARP magazine and the touting in that magazine about an AARP sponsored law enacted in Arizona that prevents theft of one’s identity for a fee. Arizonans will now be able to bar credit reporting agencies from releasing their personal financial information to banks and businesses for a fee of $ 5.00 per credit reporting agency. This sounds like the credit agencies are saying “We have personal financial information about you that might harm you. However, if you pay us, we won’t release it to anyone.” Cathy Moran, a lawyer, states that this seems like extortion to her. Cathy exclaims:”Why should that information be available in the first place and why does one have to pay to prevent misuse of the information? What am I missing here?”

Brian Nelson, writer for the Finance Gourmet, in his article, “Credit Monitoring Scam” exclaims:

“One of the biggest financial scams in America comes courtesy of the credit reporting industry and the three major credit reporting bureaus. In class Mafia-style extortion, a tough looking guy visits a local business. He says that bad things might happen to his business. In order to be safe, he should pay for “protection”. Of course, the only protection the business needs is from the crooks offering the protection. Credit reports and credit report monitoring work the same way.”

In his article, Brain goes on to say “The credit bureau’s extortion scheme works exactly the same way. You see, bad things might happen to your credit report. Someone might put false, damaging information on your file. The “smart” thing to do is to check your credit report often. To do that, you have to pay your protection money a credit monitoring service so that you can be informed when negative information goes on your credit report. Of course, the only thing you need “protection” from is the credit bureaus and their lackadaisical efforts to ensure that only accurate information is on your credit report. Not surprisingly, Transunion, Experian, and Equifax all gladly offer high-priced credit monitoring protection.”

There are big questions in the credit reporting industry. Example: If a porn service bills people who never used their services. Is that attempted fraud? If the porn service then turns over the charge to be collected to a collection agency, is the collection agency then an accomplice to attempted fraud? If the porn company phones the people, that supposedly owe for services, and threatens to put the charges on their credit report if they don’t pay, is that extortion? If the credit reporting agency adds this unfavorable item to the people’s credit report and they are denied a home or auto purchase due to this item, is this then extortion. Is it legal for the credit bureau to enable crooks to extort money from consumers? The idea for this example came from rip-off reports currently on the Internet.

John Smalley is owner at an Austin web design company and advocate for consumer rights. If you have had a bad experience with credit bureaus and would like your story published online to expose their dealings, e-mail me at franklinsmalley@yahoo.com or write to JF Smalley, 12343 Hunters Chase Dr., Apt. 1515, Austin, Texas 78729.