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I'm not one to defend the CRAs, but if their job is to make a note when a credit file is opened, and not to do the heavy lifting of verify identities, I will co

by yebyen 9y ago

I'm not one to defend the CRAs, but if their job is to make a note when a credit file is opened, and not to do the heavy lifting of verify identities, I will concede that actually it's really not always the CRAs that are in the wrong here. The banks are their customers, and I would think that market forces would drive banks to choose the CRA that will enable this workflow, but I know that market forces don't always work out the way you'd expect. Banks should be driven (by the cost of fraud) to ensure that they don't open fraudulent accounts, where CRAs probably just report on it when it happens (whether or not it is fraud.) If none of the CRAs will do this, the banking companies don't really have a choice, other than to choose not to participate (AKA to choose to go out of business...) Those banks are all heavily insured too, so they are probably not really incentivized to make waves in order to lower the fraud rates. This is really where my informed opinion ends, but ultimately we, the consumers, are the paying customers of the system. The debt system cannot exist without debtors.

emiliobumachar 9y ago
Seconded. We're not their paying customers, but their paying customers should be very interested in detecting fraud early, since they're often on the hook for the fraud, as much as it might seem otherwise.
- yebyen 9y ago
  Yes, ultimately the banks are going to be on the hook one way or another for fraud, even if it's based on rising insurance premiums that come when they are identified as a statistically good target for fraudsters, because of poor KYC practice or other reasons. It does seem a bit baffling that this major secondary industry springs up to service the other major industry of lenders and credit services, and then so many actors are in a position to grant or deny credit based on hidden calculations, ... but there's just no way for the consumer to come in, step up and self-identify, and become a willing participant and part of that process (so I could simply receive, and optionally deny, a request for credit to be established in my name.) Maybe it wouldn't actually scale, or maybe it would invite fraudsters. How many businesses are going to risk losing the sale by deferring to close the deal, until after this loop has been completed? I could sign up, meet a bad actor, and coordinate attacks with them. There are probably some ways this system could go wrong. (It would certainly be expensive to find out how, and we are not their customers.)

by yebyen 9y ago

emiliobumachar 9y ago

Seconded. We're not their paying customers, but their paying customers should be very interested in detecting fraud early, since they're often on the hook for the fraud, as much as it might seem otherwise.

yebyen 9y ago
Yes, ultimately the banks are going to be on the hook one way or another for fraud, even if it's based on rising insurance premiums that come when they are identified as a statistically good target for fraudsters, because of poor KYC practice or other reasons. It does seem a bit baffling that this major secondary industry springs up to service the other major industry of lenders and credit services, and then so many actors are in a position to grant or deny credit based on hidden calculations, ... but there's just no way for the consumer to come in, step up and self-identify, and become a willing participant and part of that process (so I could simply receive, and optionally deny, a request for credit to be established in my name.) Maybe it wouldn't actually scale, or maybe it would invite fraudsters. How many businesses are going to risk losing the sale by deferring to close the deal, until after this loop has been completed? I could sign up, meet a bad actor, and coordinate attacks with them. There are probably some ways this system could go wrong. (It would certainly be expensive to find out how, and we are not their customers.)