There is little doubt that Elliot Spitzer has done some good on behalf of the little guy. Determinably anti-establishment, Spitzer has attacked the mutual fund industry and the insurance industry, on top of spending a little time on spamming (he is partially responsible for outing OptInRealBig, and exacerbating its bankruptcy).
But we all know the guy is about politics first and foremost (meaning there is something in it for him too). So when I hear about some new initiative out the New York AG’s office that sounds a bit off, I first wonder whether the traditional news media just got it wrong again. Once I rule that out, I then wonder what else our “friend” in New York is thinking.
Mr. Spitzer has introduced a series of bills to the New York legislature which will attempt to put a clamp on some the the recent data theft issues we have seen. The prospective laws include providing notice to consumers of data broker security breaches, increased compliance of those brokers, and several ways for consumers to access records of those looking at their files as well as access to profiles compiled by different reporting agencies.
Now some of this makes sense, in particular the notice rules (as long as they are not required days, not months, after a breach). But there is a lot of access available to consumers already. Not only can they obtain copies of their reports for a nominal fee, but that access is usually free if someone has been denied credit. In essence, much of this is “nothing new.” However, there is one “new” idea that has been thrown in, and it is one that will cause some trouble. That is the proposed “do not report” list.
Mr. Spitzer’s office has recommended that New York State adopt a practice similar to the FTC’s “Do Not Call” registry, for consumer credit records. If someone requests inclusion on the list, data brokers will be restricted from distributing their information.
A lot of people are going to sign up for this list, thinking it is a great way to protect themselves from “identity theft.” Instead, these folks are going to find themselves in credit hell. They apply for a credit card – declined due to lack of information. Make an offer on that new home – loan declined for lack of credit history. New cell phone account needed – sorry, no credit. And if the state’s bureaucracy is anything but special, getting off this “list” is going to be a big pain in the ass.
In summary, I think some of these proposals are “image builders,” designed to comfort voters prior to the next gubernatorial elections, and some have been poorly thought through.
Maybe Elliot Spitzer should listen a little closer to what Bruce Schneier is saying.