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Comment by ryanlol | Hacker News Reader

>then the consumer can sue them

For what? The consumer isn’t responsible anyway if the lender gets defrauded.

Is the fraud in itself not enough of a punishment for the lender?

I’d argue that the real problem here are the regulators who have shaped this broken system. Not the lack of punishments for existing within it.

>Just having the SSN, name, address of the consumer, etc. shouldn't be enough to prove the lender entered into a contact with the consumer.

It isn’t. The lender enters into a contract with a fraudster and gets fucked. The lender is the victim, not the consumer.

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I had trouble getting an apartment because of credit fraud. Was I not a victim in the situation? I had to spend hours on the phone over months getting my credit report cleared. I guess I'm being entitled and poor ole Bank of America was the real victim here.

Customers shouldn’t have to be on the phone for days to solve a bank’s problem. Credit fraud (please don’t help banks by calling it identity theft) should be handled like American Express handles credit card fraud. I see a fraudulent charge on my bill, I call up AMEX one time and tell them this charge is fraud, and that’s it! They take it from there, restore the balance, do the investigation and charge back the vendor. They usually ask that you at least try to get in touch with the vendor first and that’s reasonable.

Maybe I’ve been lucky but every time I’ve had to do a chargeback it’s been this smooth.

Credit reporting should be the same. I should get a statement in the mail every month from these agencies showing all credit activity and inquiries, and have a simple and painless way to dispute fraudulent data.

I should also be able to opt out and not participate in the credit reporting system but that’s a topic for a different thread.

I agree with you in principle, but unfortunately the system has been so perverted that it's the consumer who inevitably suffers.

Here's a pretty entertaining peek (by Micheal Lewis) into what happens because of fraud that the consumer had literally nothing to do with and how the lender (bank) is able to put the onus on him to fix. It's not life or death, at least in this example, but it really shows how obviously unfair the system is. Apparently this happens quite a bit.

https://atrpodcast.com/episodes/the-seven-minute-rule-s1!1c9...

>I agree with you in principle, but unfortunately the system has been so perverted that it's the consumer who inevitably suffers.

Isn't that just the fault of the system, not the individual participant being defrauded?

Yup, the bank is defrauded and yet is able to push the consequences to the consumer.

Since they aren't lifting a finger to remedy the issue, we can assume that either the consequences are insignificant to them or they're just bad at business.

It seems to defy logic unless you look at the system as a whole.

>yet is able to push the consequences to the consumer.

The bank creates a separate set of consequences for the consumer, but does not transfer any consequences. The bank still suffers the costs of the fraud, the consumer suffers the costs of an inaccurate report.

>we can assume that either the consequences are insignificant to them or they're just bad at business.

It is just not possible for the banks to solve this problem. What do you think they could do?

Demand more from the credit bureaus. Work with authorities to chase down fraud instead of punishing the consumer. If the incentive (or consequences) were significant enough they'd already be doing this. The current situation is most likely caused by it being easier for the bank to punish the consumer, at least in the short term.

It's just a pita and an interesting story for Micheal Lewis, but this can have a pretty extreme impact on completely innocent law abiding working class families who depend on their credit for housing, groceries, etc. There's a real infuriating injustice to it.

> being easier for the bank to punish the consumer

The bank isn't trying to punish the consumer. This is just an unfortunate consequence of fraud that the bank is often entirely unaware of.

And big bad banks aren't the only victims of "identity theft", local small businesses are just as capable of messing up your credit.

If the regulators wanted to stop this they'd create a better ID system, but they don't want to do that.

I really don't think the banks who participate in this system are "unaware" of the consequences. Again it's really just that the incentives aren't there or aren't sufficient to make them care.

I also don't really like the language "big bad banks". I believe you have a bunch of self-interested people (aren't we all?) and a corrupt system. People who go home and kiss their kids. If regulators aren't doing something that's in societies best interest, we should be figuring out why (corporate capture perhaps?).

> For what? The consumer isn’t responsible anyway if the lender gets defrauded.

For the hours of phone calls over several weeks/months/years it takes to clear it all up?

The consumer is also the victim because their credit score is impacted by the fraud, which can prevent them from securing a loan (for car, home, apartment, school, etc)

>> then the consumer can sue them

> For what?

For sending a bad report about the consumer they claim to have entered into a contract with to the credit bureaus.

> The consumer isn’t responsible anyway if the lender gets defrauded.

That's true, but the lender is responsible for what they report to the credit bureaus.

> Is the fraud in itself not enough of a punishment for the lender?

If they don't involve the actual consumer in their lack of due diligence, then sure.

> It isn’t. The lender enters into a contract with a fraudster and gets fucked. The lender is the victim, not the consumer.

If the lender involves the consumer by sending a bad report to the bureaus, then they have harmed the consumer.

While you're right from basic legal principles, I've had it pointed out to me that the FCRA actually shields the surveillance bureaus from charges of libel/slander. So that kind of direct action has already been regulatory-captured away.

> FCRA actually shields the surveillance bureaus from charges of libel/slander.

That's true, but I was proposing holding the creditor/lender liable for filing a bad report with the credit bureaus, not the bureaus themselves.

The basic problem is that lenders/creditors are not exercising due diligence when extending credit or loaning money to an individual. While this is currently referred to as "identity theft", it's really a problem with the lender/creditor and they should be held accountable if they cause harm to the actual consumer by filing a bad report with the bureaus.

Nope, they have been excused from legal liability as well. The regulatory capture runs deep.

https://www.law.cornell.edu/uscode/text/15/1681h (e).

I wouldn't be surprised if this immunity were the primary cause of the current situation. Getting immunity from negligence means it makes sense to take advantage of being negligent.

That is unfortunate. I wonder how long has this been the case.

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