Category Archives: Consumer Financial Protection Bureau (CFPB)

“Synthetic identity theft” is when a fraudster combines real information about someone—such as a Social Security number—and information they’ve created about an entirely fake person. They then use these  “Frankenstein IDs” to commit theft. Some analysts have concluded that synthetic identity theft is the fastest-growing financial crime in the United States. At the same time, “Synthetic identity theft is one of the most difficult types of fraud to detect—and protect against.”

One challenge with detecting synthetic identity theft is that the victims don’t necessarily know that it has occurred because only a portion of their information is being used. It isn’t linked to the rest of their identity (e.g., their names). So the normal red flags won’t necessarily go off as quickly as they might otherwise.

Another issue is that traditional identity theft is usually committed in a short period. For example, someone might steal a credit card and then purchase items with it until the card has been discovered as compromised.

By contrast, synthetic identity thieves are much more sophisticated. Some even use artificial intelligence to create deep-fake personas and other credit profiles. They may take months—even years—to slowly establish real accounts, building credit for their false identity before they start stealing funds.

And they’re using these fake identities for more than just a shopping spree. They’re applying for government benefits, opening bank accounts to launder money from illegal enterprises, and more.

“Fraudsters typically wait three- to five years to ‘warehouse’ the stolen information before they start using it to apply for accounts. We expect a lot of the PIIs (personally identifiable information) that were stolen in early 2020, when the pandemic started, to surface in 2023-24,” said Carol Lu, an Alloy fraud analytics manager, in a recent interview.

Given that timeline, consumers should be asking credit bureaus for their credit reports, and then they should closely analyze the information for any errors or transactions they don’t recognize. Errors could result from a mixed file, blending two people’s reports, which is a problem on its own—but they could signal synthetic identity theft, a far more serious problem.

Consumers should also monitor the credit of others, such as children, who aren’t active financially. They can be a prime target for identity theft because they won’t have any competing transactions that will highlight the fraud.

If you see any issues on your credit report and suspect you’re the victim of identity theft, contact an attorney who specializes in these matters. Attorneys can help you repair your record. And they’ll help you receive compensation for the damage you’ve suffered due to reporting mistakes. Call today.

The Consumer Financial Protection Bureau (CFPB) recently issued an analysis of debt collection appearing on consumers’ credit reports. On the one hand, the findings are a positive sign: Consumers’ financial well-being seems to be improving. But on the other hand, the analysis shows that false and inaccurate information on credit reports continues to be a real problem impacting consumers’ lives.

In its report, the CFPB examined collection tradelines (i.e., the information about a debt collection) contained on consumers’ credit reports. The CFPB concluded that debt collection tradelines have declined since 2018. There were fewer people who had collections tradelines on their reports (down 20 percent) and fewer collection tradelines overall (down 33 percent).

CFPB Director Rohit Chopra said, “Our analysis of credit reports provides yet another indicator that, due to a strong labor market and emergency programs during the pandemic, household financial distress reduced over the last two years.”

Collections relating to medical debt are still the most common tradelines on consumers’ reports. In the coming months, the national credit bureaus will remove small medical debts (under $500) and other related collections efforts. Therefore, the number of trade collections should continue to decline, but even with those reporting changes, half of American consumers will still have medical debt on their credit reports.

Here’s where the bad news of the report comes in.

The report also found that debt collection tradelines still frequently contain inaccurate information. Further, medical debt (again, the majority of debt reports) is particularly likely to be incorrect because of the difficulty of updating information from varied providers.

The data is so unreliable that contingency fee-based debt collectors are reducing their reporting to the bureaus. The debt collectors are concerned that they cannot comply with the Fair Credit Reporting Act’s requirements for accuracy, nor are they equipped to resolve complaints about errant reports.

This is, again, both good and bad news. If fewer collectors are reporting information, fewer collection tradelines (both accurate and inaccurate) will appear on people’s reports. But they’re also admitting their data is often inaccurate, and they don’t have the systems in place to deal with wrong information.

That’s why, if you see any errors or other issues on your credit report or if you’re being harassed by debt collectors, contact an attorney who specializes in these matters. Attorneys can help you work with debt collectors to reduce real debt while also helping you repair your record regarding incorrect debt tradelines. And they’ll help you receive compensation for the damage you’ve suffered due to reporting mistakes. Call today.

Recently, NBC News covered an incredible story of mistaken identity. Or, perhaps, to put it more accurately, it’s a story of “mixed identity.” Two women share the same name (Jieun Kim), age, and same date of birth. Both were born in South Korea and later emigrated to the U.S.—one woman moving to Los Angeles, the other to the Chicago area. Both women applied for a Social Security card in the summer of 2018. And the Social Security Administration (SSA) gave both cards with the same Social Security number.

Both applied for COVID-pandemic loans, but only one received them. The other was confused to hear that she’d already gotten a grant. Both chose Chase for their banking and credit cards—and kept being told they already had accounts. They inadvertently took turns shutting down each other’s accounts. They both went to the police and reported identity theft.

This continued until, as a fluke, they ended up directly connecting by phone, and they realized their problems weren’t due to identity theft but to Social Security’s error.

Since then, the women have petitioned Social Security to fix the error, but progress has been slow. Social Security is reluctant to believe that the two women aren’t the same person.

While the sheer number of similarities between the two women is remarkable, the twist is that the SSA made a mistake. The agency rarely does make these errors. But the national credit bureaus are frequently making the same kind of mistakes. In fact, “mixed files,” when someone else’s credit information ends up on your report, are some of the most common consumer complaints to the reporting bureaus.

Mixed files can be the result of identity theft, but they are often clerical errors. In many cases, family members have mixed files because they share things used to identify someone (e.g., name, home address, banking, or other accounts). That’s understandable, but it also means it can be challenging to separate the impacted family members’ records.

What’s significant here is that the women addressed their banking issues one at a time until they finally solved the mystery by directly contacting each other. While that worked out in this case, since they could have been the victims of professional identity thieves, directly contacting them could have been dangerous.

Instead of the piecemeal approach they took, the better course for others to take would be to get a credit report, review it for any errors, and place fraud alerts on impacted accounts. If there are any strange and unexplained issues with your credit, contact an attorney specializing in credit matters. Attorneys can safely contact law enforcement, investigate the issue, and help you repair your record. Further, they’ll be able to help you receive compensation for the damage you’ve suffered due to the bureaus’ mistakes.

On January 11, 2023, the Consumer Financial Protection Bureau (CFPB) announced that it is considering the creation of an online, public database of the form contracts being used by “nonbanks,” companies that aren’t banks but provide financial services to their customers (such as a car company that provides loans).

According to the CFPB, these nonbanks rely on a “take it or leave it” approach to customer contracts. When they force clients into signing them, they mislead customers into believing these contracts are legally enforceable. However, some of these contracts include unenforceable provisions, such as a waiver of the join a class action suit.

Of particular concern to the CFPB are form contracts by some companies that offer credit monitoring services. In the concerning agreements, these companies require that customers cannot pursue legal action to remedy violations of the Fair Credit Reporting Act. Such provisions would be unenforceable because private firms cannot use contracts to circumvent statutory requirements. But the consumers who sign these contracts might not know that, so they might fail to file suit if the companies fail to fulfill their responsibilities under the agreement.

For example, consumers might not complain if a credit monitoring company fails to sufficiently investigate errors on their credit report—such as those caused by a mixed file or identity theft—even though, under the law, the consumers would be entitled to report that failure or even file suit.

Under the CFPB’s new proposed rule, the agency would collect nonbanks’ form contracts and analyze these contracts for any terms and conditions that might seek to limit a consumer’s rights under the law. The CFPB would then post the contracts and their analysis on a publicly-available website. The agency would also track and publish if the companies had enforced those provisions and, if so, how they’d done so.

At this point, this is a proposed rule, and the public (including industry) has 60 days from publication to comment on the proposal.

If you have a credit monitoring service that’s failed you or see any errors (e.g., names, addresses,  or accounts that aren’t yours) on your credit report, you aren’t without recourse. No matter what a contract says. So contact an attorney who specializes in representing clients like you. A lawyer can not only help you repair your record, but they can also help you obtain compensation for any damages you sustained.