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Mortgage Broker Throws Consumer Credit Reports in Dumpster

As a whole, American consumers have become much more educated in the past few years about the threat of ID theft. We've really stepped it up to protect ourselves from this widespread crime - a crime that violates our privacy and can lead to serious financial problems through no real fault of our own.

Smart consumers know to protect themselves from identity theft by carefully guarding all private identifying information, being careful of who they disclose that personal information to, and locking up or destroying all documents that may contain private information such as social security numbers, bank account information, or tax statements.

But after taking such special care to protect your private information, how would you feel if you found out that a professional in the credit industry, with whom you've applied for credit, just dumped your personal information in the trash when they were done with it?

That's what a Las Vegas mortgage broker did, according to a Federal Trade Commission complaint.

The FTC charges that in December 2006, the broker threw approximately 40 boxes full of consumer records into a publicly-accessible dumpster. The boxes contained "tax returns, mortgage applications, bank statements, photocopies of credit cards and driver licenses, and at least 230 credit reports." Luckily, a good citizen noticed the documents and reported it to authorities.

Why would the broker just dispose of that personal information in such a careless manner? Well, he probably got tired of the stacks of boxes cluttering up his garage - the FTC alleges that's where he stored the documents before he dumped them.

Wow, an ID thief would have hit the jackpot if they also moonlighted as a burglar and hit that Las Vegas broker's house to find a garage full of valuable documents.

And the broker even had the nerve to supply his clients with a written statement claiming that his companies maintained "physical, electronic, and procedural safeguards that comply with federal standards to store and secure information about you from unauthorized access, alteration, and destruction."

The FTC's complaint maintains that the broker failed to: securely dispose of consumers' information, ensure that employees or third parties were properly trained and qualified to handle the disposal of sensitive information, instruct or alert them to the sensitive nature of the documents to ensure they took the necessary precautions, and oversee or confirm that the documents were safely disposed of.

Gregory Nevone, owner of First interstate Mortgage and Nevada One Corporation, was charged by the FTC for violating the Fair Credit Reporting Act by failing to abide by the rule regarding Disposal of Consumer Report Information and Records, and also with violating the FTC ACT by falsely claiming that his mortgage companies would take measures to protect the security of his client's personal information.

The Disposal Rule went into effect on June 1, 2005 to help protect consumers from the growing threat of fraud and identity theft.

The complaint was filed by the FTC on December 30, 2008. "The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law."

But he's not the only one who has treated his clients' privacy with such utter disrespect. In a separate charge by the FTC, American United Mortgage Company is alleged to have done the same thing back in early 2006. They were the first company to be charged with failure to abide by the Disposal Rule under the Fair Credit Reporting Act.

The Northbrook, Illinois-based mortgage company threw hundreds of consumer documents, including 36 credit reports, into a publicly-accessible dumpster. This was noticed on several occasions.

The FTC sent a written letter to the company about the situation, "and on at least two occasions afterward, more such documents were found in and around the same dumpster."

In and around? So some of the documents didn't even make it into the dumpster? Were they just laying on the ground to be tossed around by the wind, to be carried off to who-knows-where?

American United Mortgage Company settled the charges with a $50,000 penalty. From the FTC, "The stipulated order is for settlement purposes only and does not constitute an admission by the defendant of a law violation."

I know (or hope) that most creditors would want to protect the consumers that they rely on for their business. And I believe that the vast majority of them would just like to abide by the law, if for no other reason than to avoid charges and penalties.

But keep in mind that this law doesn't just apply to the big guys. "Any business or individual who uses a consumer report for a business purpose is subject to the requirements of the Disposal Rule. The rule requires the proper disposal of information in consumer reports and records to protect against unauthorized access to or use of the information."

The Disposal Rule specifically refers to credit reports and the information in them, but the FTC encourages that all sensitive private information is treated with the same care.

So be aware that the law requires the same precautions in guarding a person's credit report whether it's obtained by a lender, debt collector, insurance agent, landlord, employer, or an individual who obtains a credit report for a prospective nanny, contractor, or tenant.

The FTC is the nation's consumer protection agency against fraudulent, deceptive, or unfair business practices. File a complaint at or call 1-877-FTC-HELP.

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Tuesday, 14 July 2020

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