What Identity Theft Taught Me About Consumer Protection

Capital One was hacked in late March, exposing the information of over 100 million applicants and cardholders. While Capital One has insisted that the amount of information that was accessed is minimal compared to the scope of the hack, this is the latest in a troubling line of cybersecurity breaches that have plagued corporations from banks like Capital One to hotel chains like Marriott and retailers like Target. In each case, millions of emails, passwords, credit card numbers and even social security numbers were leaked onto the internet. Just two years ago, Equifax revealed that almost 150 million people were affected by a data breach that released sensitive credit and bank information to hackers after keeping the news under wraps for months. The damage these data breaches cause is severe, especially for low-income and young people who may just be starting to build their credit.

Credit Building – A Cautionary Tale

I got my first credit card a year ago after my parents urged me to start building up my credit score. Good credit unlocks a world of possibilities, they said, giving me the ability to buy a house or take out loans to pay for higher education. I remember applying for a Capital One card, enticed by the rewards and the cashback opportunities, only to be denied for lack of credit history. After a few more attempts, I was eventually able to get my first credit card with another company.

Then, a couple of weeks ago, I got a notification early in the morning about a purchase made on my credit card. While I was asleep in Washington, DC, someone had faked my identity and charged my credit card in Nebraska. My card company reacted immediately, freezing my card and sending me a new one right away. It was just $5, but the implications were serious. The entire ordeal made me wonder: how much information about me is out there?

I don’t know if my application information was in the Capital One data hack, but that is what scares me. My credit is vulnerable, being so new, and any new account opened in my name could have a drastic impact on my credit score. While my situation was resolved quickly with no lasting damage this time, there’s no guarantee that my social security number and other sensitive data isn't already out there or that it won’t be breached in the future. By the time I’d even suspect foul play, the damage would be done.

Credit Scores Affect More Than Credit  

Good credit is increasingly becoming a pathway to building wealth but it’s also too often out of reach for people with low-income and young people. According to data from our 2019 Scorecard, over 25% of consumers do not have access to a revolving line of credit, like a credit card or a home equity line of credit. Almost half of consumers who do have access to credit do not have a “prime” credit score, meaning a score that can grant them favorable rates on borrowing money for a purchase.

These factors alone can cause serious financial hardships but even more important is the fact consumers with sub-prime credit scores are more likely to be passed over for a job, denied insurance and become subject to predatory loans that are harder to pay off. In fact, the Credit Builders Alliance estimates that consumers with subprime or nonexistent credit scores could pay up to $200,000 more throughout their lives for financial lending services than consumers with prime credit. 

The Future of Credit Scores

Our policymakers need to do more to make sure that the accessibility of credit is not a barrier to creating wealth. The proposed Credit Access and Inclusion Act (CAIA) will compel credit reporting companies to use more inclusive sources of data to produce their credit scores by allowing landlords and utility companies to report payment data. With this bill, low-income communities and youth like me will be able to build a credit history before even getting a credit card, making it harder for fraud to wreck vulnerable credit scores. We can also urge policymakers to take data security seriously and work to pass one of numerous bills introduced in both chambers of Congress to revamp the out-of-date regulations around data and privacy.

I am lucky my credit score has not been impacted by the fraud I experienced but we can’t take chances when it comes to credit scores. As members of Congress head back to into their districts throughout the month of August, now is the perfect time to advocate for credit fairness and data security. Check out the Prosperity Now Advocacy Center and our Consumer Protection Campaign to get more information and resources on how to meet with your state and federal legislators and talk about these critical issues. Protecting our credit isn’t merely an issue of privacy, it’s a matter of livelihood, and we should do everything we can to keep it secure.

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