The Shocking Truth About Your Financial Information

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Posted by The Savvy Retiree on January 18, 2017 in Money Saving Strategies, Personal Finances

Tom Kerr writing on financial freedom

If there is anything I value more than freedom from debt, it’s my right to privacy.

But as crazy as it sounds, I have simultaneously forfeited both of those willingly…hundreds of times in my life.

That’s because the moment you use your credit card (or take out other forms of consumer loans), you not only incur a debt you’ll need to repay…you also hand over confidential data about yourself to your bank.

They, in turn, routinely pass that information along to the various credit bureaus…and continue to do so, for as long as you remain their customer.

Naturally, I assume that they protect my privacy…but is that a flawed assumption?

A few months ago, Experian – one of the “Big Three” credit reporting agencies – experienced a data breach. Fifteen million people had their personal information exposed…and that included names, addresses, birthdates, and juicier bits such as drivers’ license and/or Social Security numbers.

That’s enough to shake my faith in them. But it also occurs to me that they may have an inherent conflict of interest…because Experian is also one of the biggest data brokers in the USA.

They earn huge profits by gathering consumer data and then reselling it. Why should I entrust my financial history to a company that is also in the business of curating, dissecting, slicing and dicing, swapping, trading, buying, and selling consumer data?

At first, I thought maybe I was just overthinking it and being paranoid.

Then I learned about the history of credit-reporting agencies in the U.S., which began with an outfit called Retail Credit Company. That’s when I realized that the industry is not just a powerful and secretive society…but also has a very sketchy background.

Retail Credit Company opened its doors in 1899, in Atlanta, Georgia, and began to amass all kinds of information about Americans like you and me. They kept track of how timely we were about repaying loans at the local bank or mercantile store.

They noted how many capital assets we had, and what kind of job or community service we did.

If we opened a savings account or got married, they recorded that event…and simultaneously kept tabs on our political leanings, social contacts, and what others around town had to say about our moral character.

Retail Credit Company made a fortune in that creepily invasive way, despite the controversy it generated.

Then computers came into existence, and Retail Credit Company proudly advertised that it was going to computerize that mountain of highly sensitive data. People across the nation flipped-out, and demanded that Congress intervene to protect their civil liberties and right to privacy.

I bet you can already guess how that turned out. There were long-winded congressional discussions, full of sound and fury and basically signifying nothing. There was a lengthy investigation involving high-priced lawyers, expert consultants, and other hacks whose services were paid for by you, the taxpayer.

Congress took its sweet time, and eventually, in 1970, passed the Fair Credit Reporting Act, which requires credit bureaus to do some rudimentary things like expunge data related to race and sexuality.

But Retail Credit Company was on the verge of greatness. Since its name had been besmirched by those allegations of impropriety, eavesdropping, and gossip-mongering, the sleazy outfit changed its name to Equifax…which continues to this day to profit from keeping a close eye on marketable details related to your personal and financial life.

The first time I peeked into my file I was astonished at how detailed the timeline was. They had a record of dozens of my credit cards and loans, plus addresses of buildings and houses where I had lived…and I myself had forgotten all of that.

If you are writing your memoirs and need a memory jog, the credit bureaus are there to help.

Experian, the company that lost all those Social Security numbers, recently attracted the attention of Congress when it purchased a huge cache of files that contained salary information on more than 30% of all working adults living in the U.S. There is about a one-in-three chance that how much money you bring home is in there.

A worried and alarmed congressman wrote them a stern letter, and Experian wrote back to reassure him that they wouldn’t misuse or abuse that data. End of story.

The credit reporting agencies do, of course, admonish you to protect your financial identity from hackers and thieves. Experian, for example, markets its very own proprietary identify theft protection product called ProtectMyID.

They want your data to remain a closely guarded secret…one that only you (and they) know.

But is that because they respect and value your privacy and want to safeguard your personal data? The history of credit bureaus indicates otherwise.

Could it be that they are trying to protect their own most valuable asset – namely, inside knowledge about you that they have worked so hard to accumulate – so that they can turn around and sell it for a fat profit to banks, lenders, landlords, and even your potential employers?

I can’t say for sure, but I do have my suspicions…and every time I use my credit card my sense of privacy cringes.

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Image: © iStock.com/vm 

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