jgd@rsiatl.UUCP (John G. DeArmond) (11/28/90)
I was going to address Peter Da Silva's blathering but Oreo gives me a much better context - Plus he's much more lucid. jim@piggy.ucsb.edu (Oreo Cat) writes: >Theres one important point in this debate which I haven't seen anyone >bring up yet. From what I read of John DeArmond's articles, one of the >reasons he is upset is because of some sort of credit dispute. I >sympathize with him, but banning or restricting databases will only >make things much much worse. Actually, my credit is spotless and had always been so, as anyone with half an interest could find out (no damn :-), my credit history like everyone else's is available to anyone who wants to get it.) My concern is as a result of working IN the credit industry, working with people who have been involved much deeper than me and observing the slimy and potentially destructive things that can be legally done with your personal information. Consider some things: * Your credit is available to anyone who wants it. If you don't believe me, just visit your local credit union and join as a business. Though you are legally supposed to get written permission from the victim, in practice, all you really need is the person's legal name and SSN. (address will work but not as accurately). * For the central credit database systems I've written software to interface to, none of the dialup lines have any security. You dialup, give a logid (which is trivial to guess since most key entry clerks are female and most use their first names.), no password and you are on. All you have to do is know how to format the transaction record. * If there is an error in your credit record (and the inside estimates run as high as 30%), nothing short of a suit will get it removed unless you can provide CONCLUSIVE proof to the contrary. In the overwhelming majority of the cases, the erroneous data remains and an explanation from you is attached. The credit grantor must then believe who he wants - and it is seldom you. * The IRS buys qualified databases and computer models your lifestyle and therefore your income from your buying habits. If you don't report what the computer thinks is enough income, instant audit. The tragic thing about this system is that it punishes the frugal person, in that a careful buyer/trader can live an apparent lifestyle much higher than his income would indicate. What the IRS does is impute income, assess you tax on it plus penalties and interest and then make you prove your innocence. * Your detail buying habits are increasingly being recorded and kept in databases. Stores now know not only what you bought (via UPC capture), they know the time you bought it and in what quantity. Soon insurance companies will be able to know the most intimate details about your lifestyle - and charge you for it. If you understand the concept of insurance spreading the risk and therefore the cost over a large body, you should be terrified of what this means. You eat too much red meat for the insurance man? Your rates go up. You buy too much booze? You suddenly end up in the SR-21 assigned risk pool for auto insurance. You buy some mountainclimbing equipment - even if you're using it as rigging in your shop - and suddenly you can't get life insurance. If you don't believe the severity of this aspect, look closely into the rash of so-called "preferred buyer" programs that will be springing forth in the next year. You'll be baited into participating with a few useless trinkets. * Even for such innocuous things as telephone saleslime, you will be increasingly targeted based on your personal information stored in databases. If you watched the Nova PBS program on the subject of direct marketing tonight (11/28), you will know what I mean. I've worked very hard to stay off these lists and still I get one or 2 slime calls each day. 1984 is upon us and it won't even take view screens. Your life will be modeled well enough that the computer will predict what you'll buy before you do it. From what I've seen in my work, this will happen in the next couple of years. >This may seem very elementary, but I want to make things clear... >Banks take a risk with each loan or line of credit they extend. They >take this risk because the payoffs for them can be very good if nothing >goes wrong. If things do go wrong, they could end up loosing money, >or having it tied up for a long time. So how do they know if a >particular person is worth taking the risk on? The best way currently >is to look at past performance. How much credit does the person >currently have, as compared with their current income? Do they have >a steady job which will be there in the future? How much in the hole >are they currently? Have they ever in the past made late payments? >etc... From this they can pretty much tell how you are going to >handle their money. >Now where do they get this information? From databases, of course. >What better way is there? You have a very complete set of fairly >accurate facts (at least most of the time). Consider what would >happen if these databases didn't exist. How would the banks know if >you are a good risk? The only way is to either get the applicant's >permission to collect information. Then they would have to do it >all themselves. This would cost a fortune! You don't think they >would take your word that you are a good, upstanding person? Can >you imagine how many would use this to their advantage? Just get >a few friends to say how good you are, and you have a bunch of money >to play with. First I'm going to address the fallacy of your argument and then explain (again) how my proposal addresses the issue. The plain truth is that credit databases tell you practically nothing about the creditworthiness of a person. All it shows is the HISTORY which has NOTHING AT ALL to do with your ability or willingness to pay in the future. A classic example is mortgages. The mortgage companies claim to have a formula to determine whether or not you can make the payments. The problem is that this formula, which usually calculates a ratio of your debt load to your net income, is changed radically to meet business objectives. For many many years, the rule was 1/3 of your net income could go toward house payments. But when the market gets soft (as in Atlanta right now), they'll let you do maybe 50% of your net income. And in crazy areas like LA, some lenders will let you commit as much as 65% of your income to debt. Understand what is going on here. They clain out of one side of their mouth that a formula exists with which to evaluate your past history and predict your future performance while speaking a number seemingly at random from the other. Secondly, having had large holdings in the rental real estate business and having had a storefront business, I'm quite familiar with personal credit. What I got from the credit reporting agencies was useless. My collection percentages went UP when I trashed the reporting services and simply made a SWAG (scientific wild-assed guess). Here's why: * Most people who are stiffed by a deadbeat do NOT report the information to reporting agencies. Too much paperwork. The only people who do are the large companies who can deliver the information on tape and can employ collection agencies in bulk. Whether a person beat Sears out of a charge bill has nothing to do with whether he will pay his rent or honor a personal line of credit with a small business. My experience has been that people who stick it to large companies respect small business. * The information that IS in the database is usually wrong. The industry will admit something like 30% errors if you squeeze 'em. I'd guestimate more like 50%. * The records are invariably incomplete. Why? There are 4 major and many minor credit database collection companies and there is little to no sharing of information for competative reasons. Thus, a given deadbeat would have to be reported to all 4 in order to give a decent chance of showing up. Large companies can do this with computerized collection software and links to the databases; small companies cannot. * A vast portion of the adverse data that ends up in your credit history comes from collection agencies. This information is typically keyed in by very bored and abused women working in boiler rooms. There is typically NO error checking or validation of the data. More than one agency I know of still makes the entry clerks manually format raw transaction records on DecWriters running at 300 baud! As you can imagine, these women, who are likely paid on a piecework basis, don't give a tinker's damn about the accuracy of your data. The quality of the databases reflect this. Let me give you a personal example. I use credit cards as a convenient if expensive form of commercial credit in my business. It has high interest but it means I don't have to talk to my banker very often :-) I keep a stack of high limit credit cards in the safe and use them on a case advance basis to finance things like product development, accounts receivable and so on. Now consider what my credit record shows. It shows that I've repeatedly run up large balances and then paid them off in a few months. In other words, I'm an excellent credit risk (and the unsolicited credit cards prove it.). WRONG! At the time I'm maxing out these cards, I'm at my most vunerable. Especially when I'm financing new development, the risks are high. So what looks like excellent credit is actually high risk unsecured loans. One wrong move (knock on wood so far) and poof! Instant LARGE bad debt. By now it should be obvious that the credit databases that lenders tout so highly are worthless. >So banning or severely restricting databases would make it very >difficult to get credit. Is this what you want? It's not what I >want. I'd much rather have my mistakes on record for all to see. >It makes it more difficult to receive credit, but not impossible. >Credit is not something the banks owe anyone. It's a service >they offer to those who they beleive can handle the responsibility. I'll explain again. Ahem.... My proposal would ban the use of your personal information WITHOUT YOUR PERMISSION. Got that? You could give ANYONE permission to use your information as you see fit. Second, contrary to the ravings of some people in this group, it would NOT establish a police state of any fashion because it would NOT authorize ANY government action except that initiated by the injured party. NO IRS Nazis running around destroying some guy for using his Rolodex. And it would not affect the collection of data, only its use. You could drive around the city and key every name into your laptop and as long as you did not use it, no one would legally care. What it would do is establish the rules under which you as a data collector could use the information he has collected. Third, it would force the decoupling of the trading of data from the granting of services. Could a hospital require you to fill out a medical history (collection) before treatment? Sure. Could it make treatment contingent upon your allowing them to report that information to a medical database? Hell no. Could a bank require a credit history as a prerequisite for a loan? Yep. Could it force you to permit it to report the loan to the data collection agency? Hell no. Could an insurance company force you to allow them to report your medical claims history to a database in order to buy insurance? Hell no. This one aspect would work miracles toward getting insurance back to what is is intened to be - a risk sharing mechanism. An enhancement to my proposal could requre that a data collector get your permission and approval on EACH piece of data before it is added to the database. That way you'd have veto power over any data you did not want to have added. Sure this would kill adverse databases such as credit but so what? They are worthless anyway. >I will concede that it is difficult to remove bogus information from >the records. I still claim that this is good. Keeps the crooks >from driving up the fees and interest rates even higher. This is specifically false. The really bad crooks practically never show up in the databases. The ones that get reported are people like you and I who get shafted by American Express and in exasperation say "F*uck you! You'll have to come and get it." So a dispute of perhaps a couple hundred dollars ends up spoiling your credit record for years. If you believe your statement, perhaps you could explain how such a dispute could possibly have anything to do with your ability or willingness to make your house payment? At present, such a "problem" would likely keep you from getting that mortgage. Explain the connection. >John DeArmond should look at his article regarding playing the >system when getting pulled over for speeding for some good pointers >he should keep in mind. While we're on the subject, perhaps you could explain why it is right for the insurance company to raise your rate based on your falling victim to the random revenue collection process called speeding tickets? Why should they be allowed to profit from the state's dubious taxation system? Secondly, why should I be forced to play the system? I'll not bitch so much about playing cops'n'speeders, as the competition is pretty lopsided in my favor. But why the hell should I have to jump through hoops in order to maintain my privacy or to enjoy my phone service that I've paid for? >And don't let the marketers get you all worked up! It's easy to >hang up the phone or toss the envelope in the trash. Why cannot I not work at night and sleep in the day and still have a phone without an answering machine to screen out the trash that solicits me all day long? Why can't I leave it open in case there is a family emergency and not be awakened all morning long? Why the hell does the system allow the bastards to start calling at 8:00 am and continue through 10:00 pm as they did today? Why can't I post my phone and mailbox the same way I can post my property against intruders? And why do I have to live in fear of the IRS gestapo trashing my life because some computer said they should? Perhaps ignorance really is bliss. Why can't we use a bit of our tax money to facilitate our sueing these SOBs into oblivion? When you can answer those questions, I'll no longer get worked up. John -- John De Armond, WD4OQC | "Purveyors of speed to the Trade" (tm) Rapid Deployment System, Inc. | Home of the Nidgets (tm) Marietta, Ga | {emory,uunet}!rsiatl!jgd | "Vote early, Vote often"
steve@Advansoft.COM (Steve Savitzky) (11/29/90)
Hmm. Only one thing seems to be needed to give control over our data back to us: a determination that a person owns the copyright to the data collected about him or her. Bingo! instant control. Wonder if a class-action suit against Lotus would work, asking for royalties... Maybe not; it would probably take new legislation declaring a database entry to be a derived work. Tempting, though. -- \ --Steve Savitzky-- \ ADVANsoft Research Corp \ REAL hackers use an AXE! \ \ steve@advansoft.COM \ 4301 Great America Pkwy \ #include<disclaimer.h> \ \ arc!steve@apple.COM \ Santa Clara, CA 95954 \ 408-727-3357 \ \__ steve@arc.UUCP _________________________________________________________
howell@grover.llnl.gov (Louis Howell) (11/29/90)
In article <STEVE.90Nov28134613@pluto.Advansoft.COM>, steve@Advansoft.COM (Steve Savitzky) writes: |> Hmm. Only one thing seems to be needed to give control over our data |> back to us: a determination that a person owns the copyright to the |> data collected about him or her. Bingo! instant control. I don't think I'd like the implications if copyright were extended to this point. The basic idea behind copyright is that the arrangement of information, not the information itself, is protected. The exceptions to this are really pretty minor. The "derived works" idea is most broadly interpreted when dealing with some of the world building aspects of fiction, particularly characters, where the emphasis is still clearly on material created in the mind of the artist. The current fuss over look-and-feel copyrights is more of the same---it is still a question of just what elements of a created work deserve protection. Copyrighting INFORMATION, however, is another can of worms entirely. I am not in any sense the author of my income, my credit rating, or my age. I did have a role in determining my address and the ages of my children, but many other factors were also involved. I did not decide my own SSN, or my telephone number, or even my name. What right, then, should I have to copyright these things? I'd have a better chance copyrighting the boiling point of some new organic solvent, if I were the only person to have measured it directly! I'm sorry, I can't tell you my phone number, Pac Bell has the copyright! This does not rule out other protections for personal information, but I don't think copyright is the tool for the job. Another thought: Could a regulation forbidding companies from publishing personal data be considered an infringement of the freedom of the press? I can see it now---a convicted murderer is running for office, and the newspapers can't tell us because that's his own personal information! -- Louis Howell "A few sums!" retorted Martens, with a trace of his old spirit. "A major navigational change, like the one needed to break us away from the comet and put us on an orbit to Earth, involves about a hundred thousand separate calculations. Even the computer needs several minutes for the job."
brad@looking.on.ca (Brad Templeton) (11/29/90)
The fact that you can prove that the credit databases are worthless and erroneous doesn't change the fact that big organizations want them and pay big bucks for them. Fact is that these big outfits, procedure and rule oriented as they are, *need* some sort of security, even if it is false security. They would never tolerate giving ordinary employees the right to grant credit on their own intuitive appraisals of a debtor's credit worth. Here are some possible ideas I will throw out... a) A simplified law of database libel. Pre-set, straightforward fines for database errors. Fines are fixed unless malice or criminal negligence can be shown. Fines would range from the miniscule for getting spelling wrong, to a serious fine for invalid credit information to a very serious fine for invalid criminal conviction info, etc. For the basic fine, no proof of damage need be shown (ie. nobody need have accessed the data -- this is a preventantive fine, like many other that exist.) Plaintiff can also get real damages, but that needs a trial. For basic fine, conviction is summary unless contested. ie. plaintiff shows database record, demonstrates falsehood of record, defendant makes no defence, pays fine. Defendent can, of course, offer a defence that the information is true. Fine is split by court and Plaintiff. With such a law, people who are poor or had nothing better to do would run around snooping for database errors to get their share of the fine. In fact, whole firms would exist to seek out the info from anybody selling or giving away info on other people. b) Tagged information. All records must be tagged and digitally signed as to their origin. Author of bad record is jointly liable for fine (or liable as arranged in contract between database vendor and information supplier) Information tagged with date as well for expiry. Any database with unsigned information makes the database owner liable for such libel. c) Standard contract of confidentiality: Definet the law so that there is an implicit contract of basic confidentiality of information in certain transactions, such as purchases, subscriptions, trade show attendance, mail order, video rental, credit card, banking etc. Naturally the party giving the information may explicitly waive that implied contract. If all information must be tagged as to its sources, it's easy to catch violators of that sort of confidentiality. I'm not talking about the full secrecy of a non-disclosure agreement here, just a basic agreement not to give the information out except as necessary for the business at hand. Implied contract must be transitive. Magazine gets name for subscription, hands it over to circulation house -- they must also be bound. -- Brad Templeton, ClariNet Communications Corp. -- Waterloo, Ontario 519/884-7473
peter@ficc.ferranti.com (Peter da Silva) (11/29/90)
At the risk of having John categorise what I'm saying as blathering again, I'd like to note that the majority of the problems you cite would be best dealt with by regulating the content of these databases rather than trying to outlaw them. You would end up in a situation like you are with illegal drugs: the majority of the damage is caused because the good involved is illegal, simply because an illegal good is an unregulated good. -- Peter da Silva. `-_-' +1 713 274 5180. 'U` peter@ferranti.com
jxxl@huxley.cs.nps.navy.mil (John Locke) (11/30/90)
In article <> jgd@rsiatl.UUCP (John G. DeArmond) writes: > While we're on the subject, perhaps you could explain why it is > right for the insurance company to raise your rate based on > your falling victim to the random revenue collection process called > speeding tickets? Why should they be allowed to profit from the > state's dubious taxation system? An underlying principle here seems to be that data collection serves multiple purposes, not all of which are apparent. In this example, you are stopped for speeding, the data that identifies you and your vehicle serve as input to the process which has the ostensible purpose of controlling speed on the roads. As you point out, John, the process has the secondary purpose of collecting revenue. In this state, at least, you are submitting to yet another hidden purpose. Whenever you are pulled over for an infraction, no matter how minor, the officer calls in your data to the state capital and a database search is done to determine whether you have any outstanding arrest warrants. In effect, you are part of a random spot check of the population for wanted criminals. Contrast this with another kind of spot check, one in which you are stopped as you enter a shopping mall and forced to wait while your data is phoned in. You are outraged. The procedure is challenged in court at the first opportunity. The difference between the two methods is that in the first you are just the slightest bit guilty and so you submit to their procedure rather than make things worse for yourself. Guilt is an instrument of control on the side of the road, as debt is an instrument of control in the financial world. Once you accept their procedures, you belong to them. --
barmar@think.com (Barry Margolin) (11/30/90)
In article <5140@rsiatl.UUCP> jgd@rsiatl.UUCP (John G. DeArmond) writes: >* The IRS buys qualified databases and computer models your lifestyle > and therefore your income from your buying habits. ... >* Your detail buying habits are increasingly being recorded and kept > in databases. ... >* Even for such innocuous things as telephone saleslime, you will be > increasingly targeted based on your personal information stored > in databases. If you watched the Nova PBS program on the subject > of direct marketing tonight (11/28), you will know what I mean. > I've worked very hard to stay off these lists and still I get one > or 2 slime calls each day. I watched the Nova program last night, and the most surprising part (to me) was not the detailed personal information, but the detailed IMpersonal information. All the stuff they are able to discern about neighborhoods and block groups, allowing them to target people without actually having individual profiles. What this means is that the direct marketing agencies, and other interested parties, may be able to infer correctly quite a bit about you without ever looking at information with your name on it. For instance, neighborhood purchasing profile databases can be built even if everyone pays cash at the local stores. The insurance industry has been using this method for a long time. Rather than looking at individual history, they define broad categories (male-under-25, etc.). In the auto insurance industry your accident rate is dependent mostly on your category and the value of the car model, your theft rate is based on the car model and the town you live in. What we've got is a two-edged sword. Many people object to being lumped into categories, being punished because they happen to be in the same category as many bad risks (but does anyone in the good risk category complain about being tagged?). On the other hand, we don't want all the companies we do business with knowing all the details of our lives. I admit that it's a hard problem to solve. >1984 is upon us and it won't even take view screens. Your life will be >modeled well enough that the computer will predict what you'll buy >before you do it. From what I've seen in my work, this will happen >in the next couple of years. The Nova show suggests that it is already happening. "They" know when your baby was born, so "they" know when you'll be reading bedtime stories, when you'll be interested in a preschool, etc. >truth is that credit databases tell you practically nothing about the >creditworthiness of a person. All it shows is the HISTORY which >has NOTHING AT ALL to do with your ability or willingness to pay in >the future. Ah, the old "past history is no indication of future performance" paradox. Unfortunately, past history is frequently the only objective information available. Credit purchasers are generally not willing to wait the length of time it would take for the provider to get to know the purchaser well enough to decide based on other information. > A classic example is mortgages. The mortgage companies >claim to have a formula to determine whether or not you can make the >payments. The problem is that this formula, which usually calculates >a ratio of your debt load to your net income, is changed radically >to meet business objectives. For many many years, the rule was >1/3 of your net income could go toward house payments. But when >the market gets soft (as in Atlanta right now), they'll let you >do maybe 50% of your net income. And in crazy areas like LA, some >lenders will let you commit as much as 65% of your income to debt. >Understand what is going on here. They clain out of one side of their >mouth that a formula exists with which to evaluate your past history >and predict your future performance while speaking a number seemingly >at random from the other. I don't see it quite as badly. The output of the formula is presumably a probability of default, not a yes/no. In a soft market the banks are willing to take bigger risks, so they change the probability cutoff. >Secondly, having had large holdings in the rental real estate business >and having had a storefront business, I'm quite familiar with personal >credit. What I got from the credit reporting agencies was useless. >My collection percentages went UP when I trashed the reporting services >and simply made a SWAG (scientific wild-assed guess). Here's why: There are two conclusions that can be reached from the inaccuracy of the credit (and other) databases: 1) they shouldn't be used, or 2) they should be made more accurate. The pessimist in me doesn't see these databases going away, but the optimist believes that as society comes to rely on these databases more there will be incentive to improve the accuracy. >Now consider what my credit record shows. It shows that I've repeatedly >run up large balances and then paid them off in a few months. In other >words, I'm an excellent credit risk (and the unsolicited credit cards >prove it.). WRONG! At the time I'm maxing out these cards, I'm at my >most vunerable. Especially when I'm financing new development, the risks >are high. So what looks like excellent credit is actually high risk >unsecured loans. One wrong move (knock on wood so far) and poof! >Instant LARGE bad debt. Yes, the credit industry's method of defining "good credit history" is simplistic and flawed. But how could businesses with thousands of customers possibly understand the nuances of each one. Coming up with simple ratings based on complicated patterns is difficult. For example, the problem tracking database at my previous employer rated developers and departments based on the number of problems that took various lengths of time to fix. So if a developer went in and fixed all the old, low-priority problems that had been assigned to him for years his rating would go down because he would now have a large number of problems that took a long time to fix (the rating didn't count unfixed problems, because that wouldn't account for the fact that some are insoluble without major system redesign, and it would be inappropriate to penalize the developer for that). I also dispute your claim that you are a bad credit risk. You have repeatedly succeeded at the projects that required you to run up these debts. I would assume that the development projects you finance in this manner are generally successful. Since you seem like a financially savvy person, I assume the fruits of these projects have a better return than the exhorbitant interest rate the banks are charging you. Sure, the loans are unsecured, but are venture capital or stock offerings much safer? With your history, you should be able to >I'll explain again. Ahem.... My proposal would ban the use of your >personal information WITHOUT YOUR PERMISSION. Got that? You could >give ANYONE permission to use your information as you see fit. Wouldn't that add an intolerable bottleneck to many transactions? Someone who wants to look at information about you would first have to send you a letter. This would sit on your desk for a week or month before you mail it back with your signature. It would be streamlined in many industries, I'm sure (I think that when I applied for my mortgage I signed something giving them the right to look at my credit history). >An enhancement to my proposal could requre that a data collector get >your permission and approval on EACH piece of data before it is >added to the database. That way you'd have veto power over any >data you did not want to have added. Sure this would kill adverse >databases such as credit but so what? They are worthless anyway. Hmm. What would this mean for things like supermarket databases? Would I have a line-item veto for each purchase (i.e. yes, I bought the meat, but don't list the Penthouse magazine)? What would the logistics of this be? Would I veto the items right there on the checkout line, or would the store send me a checklist in the mail every month? Of course, you can't remove all vestiges of the database entry. The fact that someone purchased a Penthouse magazine has to be recorded for inventory purposes, and has to be used for planning purposes. >While we're on the subject, perhaps you could explain why it is >right for the insurance company to raise your rate based on >your falling victim to the random revenue collection process called >speeding tickets? Why should they be allowed to profit from the >state's dubious taxation system? If the process is truly random, then statistically it is expected to catch the chronic offenders more than the rare cases. Also, since you consider speeding tickets merely a taxation system, would you be less offended by the insurance industry's use of this data if the punishment were non-monetary (or do you think speeding tickets would be abolished if they didn't produce revenue)? >Why cannot I not work at night and sleep in the day and still have a >phone without an answering machine to screen out the trash that solicits >me all day long? Why can't I leave it open in case there is a family >emergency and not be awakened all morning long? Why the hell does the >system allow the bastards to start calling at 8:00 am and continue >through 10:00 pm as they did today? Why can't I post my phone and >mailbox the same way I can post my property against intruders? The Nova program featured a group of people who have told telemarketers that they would be charged for the use of their phone as part of the caller's business. -- Barry Margolin, Thinking Machines Corp. barmar@think.com {uunet,harvard}!think!barmar
jgd@Dixie.Com (John G. DeArmond) (11/30/90)
barmar@think.com (Barry Margolin) writes: >>1984 is upon us and it won't even take view screens. Your life will be >>modeled well enough that the computer will predict what you'll buy >>before you do it. From what I've seen in my work, this will happen >>in the next couple of years. >The Nova show suggests that it is already happening. "They" know when your >baby was born, so "they" know when you'll be reading bedtime stories, when >you'll be interested in a preschool, etc. Very true. I've had the recent unfortunate opportunity to design a computer system that will do just this kind of stuff. The project started off as a rather innocuous statistical collection project and was only evolved into the personal data collection functionality late in the project. I'm mad at myself for being involved, I'm very sorry and I hope to never have another such involvement. But it did let me see how our enemies work. Frightening. (NO, I won't reveal the names of the clients. I DO respect confidentiality.) >>truth is that credit databases tell you practically nothing about the >>creditworthiness of a person. All it shows is the HISTORY which >>has NOTHING AT ALL to do with your ability or willingness to pay in >>the future. >Ah, the old "past history is no indication of future performance" paradox. >Unfortunately, past history is frequently the only objective information >available. Objective or not, the information is nevertheless practically worthless and is almost always damaging to the individual. >Credit purchasers are generally not willing to wait the length >of time it would take for the provider to get to know the purchaser well >enough to decide based on other information. Unnecessary, as I'll explain below. >>Secondly, having had large holdings in the rental real estate business >>and having had a storefront business, I'm quite familiar with personal >>credit. What I got from the credit reporting agencies was useless. >>My collection percentages went UP when I trashed the reporting services >>and simply made a SWAG (scientific wild-assed guess). Here's why: >There are two conclusions that can be reached from the inaccuracy of the >credit (and other) databases: 1) they shouldn't be used, or 2) they should >be made more accurate. The pessimist in me doesn't see these databases >going away, but the optimist believes that as society comes to rely on >these databases more there will be incentive to improve the accuracy. These databases will NEVER be accurate as long as there is competition in the industry. And besides, as I noted before, you learn practically nothing about a person's ability, and more importantly, his willingness to pay. Here's what I used in my wholesale/retail operation. Most of my customers were small businessmen, typically sole proprietor welders and fabricators. I required the applicant to supply me proof of income. Typically a check stub if on salary or last year's tax return. He signed an affidavit that certified that his representation of his income was accurate. He also provided on the affidavit the names and phone numbers of three other creditors and authorized me to contact them. I verified the standard average and highest balance and payment reliability. Lastly, I had him sign a UCC-1 form. That was it! No credit reports and no background checks. I then established a credit line based on the credit lines reported from other similiar creditors or $500 (swag) if the applicant had no other related credit. If I had an uncomfortable feeling about the applicant from any of these investigations, I'd require a deposit equivalent to 1/2 his credit limit, which was refunded after a year of perfect payment. I used a set of heuristics (again, SWAGs) to evaluate special circumstances. For example, I'd never extend credit to transient companies regardless of their size. Too much bad experience. In all cases, I had my 'lil ole CP/M computer watch the accounts. I put anyone who went even a day over the standard net 30 on stict COD until the entire account balance was paid off. And I used VERY agressive collection techniques. You will note that my system is highly subjective. EXACTLY THE SAME AS WITH THE BIG COMPANIES. They just hide the fact with hand waving. Since credit is granted mostly on a hunch, why allow the databases which invariably only hurt people? The interesting thing to note is that my deadbeat frequency went DOWN markedly after ditching the credit union and instituting the SWAG system. Sure a few deadbeats got by me but so what? I kept it low enough to not impact my bottom line and my collection attorney made their lives miserable. >I also dispute your claim that you are a bad credit risk. You have >repeatedly succeeded at the projects that required you to run up these >debts. I would assume that the development projects you finance in this >manner are generally successful. Since you seem like a financially savvy >person, I assume the fruits of these projects have a better return than the >exhorbitant interest rate the banks are charging you. Sure, the loans are >unsecured, but are venture capital or stock offerings much safer? With >your history, you should be able to Generally successful but not always. I've had the circumstances that would support a corporate bankrupcy more than once. Because of my personal conviction that debts should be paid, I DID pay them and avoided credit problems. BUT These ventures were and are some of the highest risk ones going. There is no effective collateral. New development is by definition, risky and each one is uniquely risky with the risks unrelated to the previous ones. An example is right now. Nowhere in my credit history is there any indication of how my company will perform if the economy goes on a war footing in January. I personally have no idea as to what will happen. And yet the unsolicited credit cards come rolling in. What is needed is some mystical magical test that measures a person's goodness. Since that will never happen, we're stuck with SWAGs. The databases do nothing to alter that fact, they only cloud the issue behind a storm of handwaving. >>I'll explain again. Ahem.... My proposal would ban the use of your >>personal information WITHOUT YOUR PERMISSION. Got that? You could >>give ANYONE permission to use your information as you see fit. >Wouldn't that add an intolerable bottleneck to many transactions? Someone >who wants to look at information about you would first have to send you a >letter. This would sit on your desk for a week or month before you mail it >back with your signature. It would be streamlined in many industries, I'm >sure (I think that when I applied for my mortgage I signed something giving >them the right to look at my credit history). NO. What would happen is that the database collectors would develop systems to guarantee that any person in their database HAS given his permission to use the data and for what. >>An enhancement to my proposal could requre that a data collector get >>your permission and approval on EACH piece of data before it is >>added to the database. That way you'd have veto power over any >>data you did not want to have added. Sure this would kill adverse >>databases such as credit but so what? They are worthless anyway. >Hmm. What would this mean for things like supermarket databases? Would I >have a line-item veto for each purchase (i.e. yes, I bought the meat, but >don't list the Penthouse magazine)? What would the logistics of this be? >Would I veto the items right there on the checkout line, or would the store >send me a checklist in the mail every month? Understand the difference between collecting demographic data and collecting personal data. The supermarket has every right to record what is in your "marketbasket". It can record when and where you bought the items and even your physical traits such as your age, race and so on if you choose to give that information to them or it is obvious from observation (sex and race, for instance). What it should NOT be allowed to do is associate your NAME or ADDRESS with that information. This association can happen in many ways now. It is quite common to match your name with your personal data from your check or credit card charge. I recently caught a local computer store doing that here in Atlanta. I was in their computer in great detail even though I had forbidden them from putting my information in the computer. They had matched me against my credit card. This is DEAD WRONG and should be illegal. >Of course, you can't remove all vestiges of the database entry. The fact >that someone purchased a Penthouse magazine has to be recorded for >inventory purposes, and has to be used for planning purposes. But >>>WHO<<< purchased that penthouse is NOT necessary business information. There is the key. >If the process is truly random, then statistically it is expected to catch >the chronic offenders more than the rare cases. Also, since you consider >speeding tickets merely a taxation system, would you be less offended by >the insurance industry's use of this data if the punishment were >non-monetary (or do you think speeding tickets would be abolished if they >didn't produce revenue)? Sure they would. No one other than the federal government seriously claims that randomly nuking someone from prevailing traffic has any positive effect on safety. It is revenue ehancement for the locality and a cheap sexual thrill for the cop. >>Why cannot I not work at night and sleep in the day and still have a >>phone without an answering machine to screen out the trash that solicits >>me all day long? Why can't I leave it open in case there is a family >>emergency and not be awakened all morning long? Why the hell does the >>system allow the bastards to start calling at 8:00 am and continue >>through 10:00 pm as they did today? Why can't I post my phone and >>mailbox the same way I can post my property against intruders? >The Nova program featured a group of people who have told telemarketers >that they would be charged for the use of their phone as part of the >caller's business. I've tried that approach and many others. None seem to work very well over the long haul. A freon boat horn is about as good as anything to settle the immediate score but it does not address the long term problem. If the phone company would allow me to put the equivalent of a 976 charge on my line, THEN I'd be glad to take all the slime solicitors' calls that they could afford - at about $500 a call, added to their phone bill. The more I think about the concept of extending the tresspassing laws to your phone and mailbox, the more I like it. John -- John De Armond, WD4OQC | "Purveyors of speed to the Trade" (tm) Rapid Deployment System, Inc. | Home of the Nidgets (tm) Marietta, Ga | {emory,uunet}!rsiatl!jgd | "Vote early, Vote often"