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February 2009 Archives

Virginia General Assembly Advances Privacy Legislation in 2009

user-pic By Garrett on February 28, 2009 8:27 AM | No Comments | No TrackBacks

In its 2009 session, the Virginia General Assembly gave consideration to a number of pieces of legislation that extended privacy protections for the Commonwealth's consumers. The majority of that legislation passed. Of particular note are the following examples:


1.  Credit reports; consumer reporting agency's duty to place a security freeze thereon within one business day after receiving such a request. Amending § 59.1-444.2. (Patron-Nixon, HB 1884 (P)).  See my February 9 post.


2.  Freedom of Information Act; disclosure of names of individual teachers is not required thereunder in response to a request for official salary of employees of local school board. Amending § 2.2-3705.8. (Patron-Hugo, HB 2471 (F))


3.  Freedom of Information Act; exempts certain records of Department of Veterans Services Care Centers and Veterans Services Foundation. Amending §§ 2.2-3705.7 and 2.2-3711. (Patron-Jones, HB 2639 (P))


4.  Law-Enforcement Officers' Privacy Protection Act; law-enforcement officer may request personal information withheld from disclosure on public records. Adding §§ 9.1-1400, 9.1-1401, and 9.1-1402. (Patron-Crockett-Stark, HB 2630 (F).  This is an example of the General Assembly refusing to create a loophole through which private information may be obtained in the course of a law enforcement investigation.


5.  Protection of Social Security Numbers Act; first five digits shall be confidential and exempt from disclosure by State agencies under Freedom of Information Act. Adding §§ 2.2-3815 and 2.2-3816.  (Patron-May, HB 2427 (P)). House Bill 2427 provides that the first five digits of a social security number contained in a public record shall be confidential and exempt from disclosure under the Freedom of Information Act. The Act allows release of a social security number under certain limited circumstances, including proper judicial order; to federal, state or local law-enforcement or correctional personnel; by one agency to another agency in Virginia or to an agency in another state, district, or territory; and to any data subject exercising his rights under the Government Data Collection and Dissemination Practices Act. The bill provides for enforcement by injunction or mandamus and attorneys fees for a prevailing party. 


REAL ID Act; Virginia will not comply with any provision of teh 2005 Act that would compromise economic privacy, etc., of resident of State. (Patron-Marshall, R.G., HB 1587 (P)).  The REAL ID Act of 2005 is federal law that imposes certain security, authentication and issuance procedures standards for the state driver's licenses and state ID cards, in order for them to be accepted by the U.S. government for "official purposes", as defined by the Secretary of Homeland Security. Currently, the Secretary of Homeland Security has defined "official purposes" as presenting state driver's licenses and identification cards for boarding commercially operated airline flights, entering federal buildings and nuclear power plants. With several other states having approved resolutions not to participate in the program and Obama's selection of Janet Napolitano a prominent critic of the program, to head Homeland Security, the future of the law is uncertain.

Third Party and Creditor Debt Collection Tops Virginia Consumer Complaints to CSN

user-pic By Garrett on February 27, 2009 5:48 PM | No Comments | No TrackBacks
My last post (Scams Use Email As First Contact Over Half the Time According to Top Ten Frauds Report) about the FTC Consumer Sentinel Network's (CSN) publication of its 2008 Databook focussed on the catagories of fraud and nationwide prevalence of the categories. In this post, I'm looking at the prevalence in Virginia of scam categories.


All told, Virginians reported 16,114 fraud claims to CSN agencies. For the 85% of these reports that included information about the amount of their payments, the grand total was $31,066,922, resulting in an average payment (or loss) based on fraud of $2,276.


Topping all reports, whether identity-theft or other types of fraud, were 3,091complaints concerning third-party or creditor debt collection activities. Given our national propensity for debt, and the hyper-stressed economy, the prevalence of these claims is not at all surprising, and I would expect to see these numbers go up as banks seek to improve their balance sheets and collect "bad" debts before consumers bankrupt or are foreclosed upon.


The total number of identity theft, fraud and other consumer complaints filed by Virginians was 31,044. Of those, 6,349 involved identify theft in some form. Here are how the categories break down:


Top 10 Fraud and Other Complaint Categories Reported by Virginia Consumers


Rank Identity Theft Type Complaints *Percentage
1 Third Party and Creditor Debt Collection 3,091 13%
2 Shop-at-Home and Catalog Sales 1,533 6%
3 Internet Services 1,385 6%
4 Credit Bureaus, Information Furnishers and Report Users 1,056 4%
5 Foreign Money Offers and Counterfeit Check Scams 1,038 4%
6 Prizes, Sweepstakes and Lotteries 965 4%
7 Banks and Lenders 700 3%
8 Auto Related Complaints 601 2%
9 Television and Electronic Media 563 2%
10 Computer Equipment and Software 553 2%


*Percentages are based on the total number of CSN fraud and other complaints from Virginia consumers (24,695).


Top 8 Identity Theft Categories Reported by Virginia Consumers


Rank Identity Theft Type Complaints Percentage
1 Credit Card Fraud 1,475 23%
2 Phone or Utilities Fraud 996 16%
3 Government Documents or Benefits Fraud 683 11%
4 Bank Fraud 673 11%
5 Employment-Related Fraud 480 8%
6 Loan Fraud 287 5%
7 Other 1,674 26%
8 Attempted Identity Theft 429 7%

Scams Use Email As First Contact Over Half the Time According to Top Ten Frauds Report

user-pic By Garrett on February 26, 2009 2:14 PM | No Comments | No TrackBacks
In February, the FTC's Consumer Sentinel Network (CSN) published its annual Data Book for January-December 2008, identifying the top ten fraud complaints, identity theft complaints and other complaints that plagued this nation in 2008. This year for the first time, the report includes "other complaints" in addition to fraud and identity theft. It is based on over 1.2 million complaints collected by the Network during calendar year 2008: 52% fraud complaints; 26% identity theft complaints; and 22% other types of complaints. Of those complaints reporting the initial means of contact, fifty-two percent (52%) said that method was email. The Internet was reported as the initial means of contact only eleven (11%) of the time and telephone only seven percent (7%).


After Identity Theft, the complaint categories by broke down as follows nationally Third Party and Creditor Debt Collection (9%); Shop-at-Home and Catalog Sales (4%); Internet Services (4%); Foreign Money Offers and Counterfeit Check Scams (3%); Credit Bureaus, Information Furnishers and Report Users (3%); Prizes, Sweepstakes and Lotteries (3%); Television and Electronic Media (2%); Banks and Lenders (2%); and Telecom Equipment and Mobile Services (2%).


Credit card fraud was the most common form of reported identity theft at twenty percent (20%), followed by government documents/benefits fraud (15%), employment fraud (15%), and phone or utilities fraud (13%). Other major categories of identity theft reported by victims were bank fraud (11%) and loan fraud (4%).


Credit cards were also the principal form of payment (35%) for whatever it was that consumers purchased in reported scams. Wire transfers (24%), bank account debits (19%) and checks (10%) were other preferred means used by consumers to pay their losses.
 

The FTC's CSN gathers complaints provided directly to the Federal Trade Commission, state and local law enforcement agencies and other data contributors, who include: particpating Better Business Bureaus, the Internet Crime Complaint Center, Phonebusters, the U.S. Postal Inspection Service, the National Fraud Information Center, and the Identity Theft Assistance Center.  All told, the network consists of 91 Federal agencies, 1,572 state and local agencies, three Canadian, and 26 other internationalgencies representing 23 countries.


For detail on Virginia numbers, see my next post (Third Party and Creditor Debt Collection Tops Virginia Consumer Complaints to CSN).


Continue reading "Scams Use Email As First Contact Over Half the Time According to Top Ten Frauds Report" »

Virginia legislature narrows faster credit report security freeze

user-pic By Garrett on February 9, 2009 1:08 PM | No Comments | No TrackBacks
lock on credit card.jpg

The right to a credit report security freeze was created in Virginia in 2008 to prevent credit, loans, and services from being approved in consumers' names without their consent. A "security freeze" means a notice placed in a consumer's credit report, at the request of the consumer that subject to certain exceptions, prohibits the consumer reporting agency from releasing the consumer's credit report or score relating to the extension of credit. The new law passed last year provided that security freezes must be requested in writing by certified mail. Section 59.1-444.2 of the Code of Virginia gave credit reporting agencies  three days to act on a consumer's request to freeze their credit reports from July 1, 2008 through July 1, 2009, but required that security freezes be placed in effect within one day beginning July 1, 2009. In the 2009 session, the General Assembly modified this requirement by limiting it to cases in which consumers make the request electronically at an address designated by the consumer reporting agency to receive such requests. For requests not made electronically at that address, the current obligation that the freeze be imposed within three business days after receiving the consumer's request will continue to apply.  Consumers need to provide proper identification, and may be charged up to $10.00 for a security freeze.

Virginia's security freeze legislation is an extension of the Federal Fair Credit Reporting Act. 15 U.S.C. § 1681a et seq. The Fair Credit Reporting Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer. If you have questions about the Fair Credit Reporting Act or security freezes under Virginia law, consult with a Virginia attorney familiar with the Act.

Virginia's Consumer Real Estate Settlement Protections Act, Provisions Strengthened

user-pic By Garrett on February 4, 2009 9:17 AM | No Comments | No TrackBacks

This 2009 session, Virginia's General Assembly is poised to expand the Consumer Real Estate Settlement Protection Act.  Presently the Act requires that consumers be given a statement explaining the role of a settlement agent, and indicating that they have the right to select their own settlement agents.  This is true, of course, and being given notice is all good and well, but notice alone lacks the teeth to really protect consumers.  This is because some lenders who want to avoid the effect of the law do so by including contractual language in their loan documents whereby consumers voluntarily give up or "waive" the right make their own selection of a settlement agent in exchange for getting a loan.  These lenders then introduce their own settlement agents into the transaction, often at a greater expense to consumers than the consumer might pay to a local settlement agent.  Such lenders' choices of settlement agents are normally companies that want lenders' repeat business, and that are willing to overlook the duties they owe to consumers if needed to keep the real client--the lender-- happy.


It looks like this loophole will be closed with the passage of HB 2568, a provision that will say the provisions of the Act "may not be varied by Agreement, and rights conferred by this chapter may not be waived.  The seller may not require the use of a particular settlement agent as a condition of the sale of the property."


The General Assembly is to be commended for plugging this gap in the statute.

Virginia's Consumer Real Estate Settlement Protections Act, Provisions Strengthened

user-pic By Garrett on February 4, 2009 1:04 AM | No Comments | No TrackBacks

This 2009 session, Virginia's General Assembly is poised to expand the Consumer Real Estate Settlement Protection Act.  Presently the Act requires that consumers be given a statement explaining the role of a settlement agent, and indicating that they have the right to select their own settlement agents.  This is true, of course, and being given notice is all good and well, but notice alone lacks the teeth to really protect consumers.  This is because some lenders who want to avoid the effect of the law do so by including contractual language in their loan documents whereby consumers voluntarily give up or "waive" the right make their own selection of a settlement agent in exchange for getting a loan.  These lenders then introduce their own settlement agents into the transaction, often at a greater expense to consumers than the consumer might pay to a local settlement agent.  Such lenders' choices of settlement agents are normally companies that want lenders' repeat business, and that are willing to overlook the duties they owe to consumers if needed to keep the real client--the lender-- happy. 


It looks like this loophole will be closed with the passage of HB 2568, a provision that will say the provisions of the Act "may not be varied by Agreement, and rights conferred by this chapter may not be waived.  The seller may not require the use of a particular settlement agent as a condition of the sale of the property."


The General Assembly is to be commended for plugging this gap in the statute.

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