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How Equifax Became a Private IRS

mattstoller.substack.com

171–180 of 190 posts

Re: How Equifax Became a Private IRS

#171
post #141

Earlier quoted context omitted.

I feel like my parent's point about credit cards and college loans being bad were correct though. Like, I believe they're right that going to college on a full-ride scholarship was better than going to a more expensive one on a loan. I also believe they're right that credit cards are bad. Like, banks make money on credit cards by: 1. hoping you miss a payment, and collecting interest, and 2. charging merchants, thus…

I wish I had parents like yours. Overall, credit is not advantageous to most people that use it for consumerism. Credit should only be used for investments with a commensurate return above the interest rate.

100% this.

My parents were quite well off, and my dad often times tried to get me to use a credit card, not because it was free money (i was very well financially educated by them) but because things like credit scores do get checked by employers (sometimes) or housing companies to determine all sorts of things, so it would make sense to buy 1-2 small things (say, like a pack of gum or a sandwich) a month on the card to immediately pay it off, so the credit score would be good.

I protested, and to this day have never owned a credit card. I live within my means, don't splurge on stupid shit, and do money-saving things as much as I can. I don't own a car, and since I'm fortunate to live in a dense city in a warm environment, I can walk almost anywhere at any time of year. There's also free public transportation.

The only "credit" I have is a small amount of margin I have in my trading account, which I only use on topping up low-risk, dividend-paying investments that I also sell deep OTM calls against. It's a slight risk, yes, but it's as delta-neutral as I can get while still making consistent money.

Re: How Equifax Became a Private IRS

#172
post #117

Earlier quoted context omitted.

> And you can opt out. Don’t use credit at all. Nope. Whether you use credit or not, the credit bureaus collect information about you and share that with all manner of other companies, including employers. Also these systems have inherent racial biases. https://www.forbes.com/advisor/credit-cards/from-inherent-ra...

But if you don’t use credit the system any rating has no impact on your life? Again, this seems like people want low interest borrowing without the “icky” problem of having to answer for their past failure to pay debt. The world doesn’t work that way.

You seem concerned with a “moral failures” aspect of debt, which doesn’t make for an interesting discussion. If you’re not interested in the complex system of algorithmic finance and its intersection with poverty and generational wealth, I’m not sure there’s much of a discussion here.

I already mentioned that some well paying jobs (the kind that people stuck in debt traps would most benefit from) require an active credit score to obtain. So “not using credit” is not an option. As well, credit is a primary way that the people who hold generational wealth got that wealth. Oh, and they run the system.

You’ve created a straw “poor person” and insist on shadow boxing it. If you ever decide to confront the complex systems that these fellow humans face, I encourage you to read up on the modern credit system. Wikipedia has a good rundown with active sources.

Re: How Equifax Became a Private IRS

#173
post #130

Earlier quoted context omitted.

> You ready to get a mortgage at prime plus 5% instead of prime plus 1%? So then homes would become more affordable, as monthly payments are the limiting factor? Sounds like a win-win, if that actually were to happen. But it seems unlikely for secured credit.

No, why would homes be more affordable? Credit would tighten up immensely starting with those who don’t have sufficient income.

The main limit for people buying houses is the monthly payment. When interest rates go down, abstract asset prices go up to compensate. When interest rates go up, abstract asset prices go down. So your scenario of interest rates going up would actually make housing more affordable. Lower asset prices encourage things like making a larger downpayment (rather than suffering PMI), and making it reasonable to pay off a mortgage early.

But as I said, the change in interest rates is unlikely to be that large for secured credit like a mortgage, as the main thing guaranteeing the loan is the asset itself.

Re: How Equifax Became a Private IRS

#174
post #76

Earlier quoted context omitted.

That's a pretty disengenous argument. I think you understand that the point of taking this course of action is to prevent/reduce these kinds of abuses from happening. The goal isn't to enshrine abuse of authority in governmental agencies, but to prevent nongovernmental agencies from abusing that authority.

>The goal isn't to enshrine abuse of authority in governmental agencies, but to prevent nongovernmental agencies from abusing that authority. I would much rather just whack the big players with antitrust law than give their power to some government agency. A worthless mission statement of some bureaucracy is just that, worthless. If said bureaucracy is using the same information Equifax is using to provide the same s…

Antitrust law isn't a solution here. Many different surveillance companies keeping records on us creates the same problems (if not more) as a few companies. The fundamental problem is that we have no ability to choose which of these companies we want to associate with.

What is sorely needed is privacy legislation that says that data about an individual is fundamentally the property of that individual, and that the license for commercially storing/processing an individual's data can be revoked at any time. Having choices is the requisite first step to having competition.

Re: How Equifax Became a Private IRS

#175
post #47

One detail the blog leaves out is that this employment and income collection extends to both Canada and Australia. Much of the data is noisy and I won't even get into the gory details of data ingestion. I was wondering the other day why hedge funds and etc. aren't using them as an early indicator and I can speculate why. On the other side of the spectrum, your average Joe is at times inconvenienced by Equifax's inacc…

Is there a way to opt out of them too?

Re: How Equifax Became a Private IRS

#176
post #59
post #4

Earlier quoted context omitted.

I see where you're coming from, but on the other hand, the biggest rules are well known and quite simple: If you take a loan and pay it back on time, you'll have high credit. If you fail to meet your obligations, you won't. The existence of an underclass which is constantly on the edge of not being able to pay their bills is true though.

> If you take a loan and pay it back on time, you'll have high credit. Unless you're on the Equifax blacklist. Journalists who wrote anti-equifax articles tend to find their way there, as do ex-girlfriends of upper management. And conversely women who do NSA hookups with a VP or above tend to find their way onto a whitelist that boosts your credit score by 150 or so - it's considered an unwritten perk of the job. (Th…

This is a good reason for most finance companies to take the middle of the 3 scores.

Re: How Equifax Became a Private IRS

#177

Earlier quoted context omitted.

> Your information is not broadcasted to all companies in existence only those who you've authorized Famously, Experian ("freecreditreport.com") sold partially filled form information. This is before submission and up to 9 times. Feel free to go to the site signup today and watch the information being streamed (in a hashed form) from your developer console.

This seems a great opportunity. Fill in false information, don't submit it, and watch your credit score raise?

Filling out a form has no bearing on your credit score. This mechanism is leveraged to monetize someone's information independent of that person's credit score or the accuracy of the information.

Re: How Equifax Became a Private IRS

#178
post #77

Earlier quoted context omitted.

Outside of state laws and HIPAA, what national laws in the United States limit information sharing from a private party?

I believe there are a number of siloed categories: - HIPPA is for health care providers and their vendors - Traditional wired telecom has long been protected. And fraud over telecom has a special wire fraud statute. - Mail thru the USPS - COPPA for PII of under 13 data - Federal election law prevents election records used for commercial purposes - basically all of the government classified data system

- FERPA for data held by colleges/unis.

Re: How Equifax Became a Private IRS

#179
post #76

Earlier quoted context omitted.

That's a pretty disengenous argument. I think you understand that the point of taking this course of action is to prevent/reduce these kinds of abuses from happening. The goal isn't to enshrine abuse of authority in governmental agencies, but to prevent nongovernmental agencies from abusing that authority.

>The goal isn't to enshrine abuse of authority in governmental agencies, but to prevent nongovernmental agencies from abusing that authority. I would much rather just whack the big players with antitrust law than give their power to some government agency. A worthless mission statement of some bureaucracy is just that, worthless. If said bureaucracy is using the same information Equifax is using to provide the same s…

I don't see why a market based solution is needed here.

What will having a market of providers for this service do for me that having a crown corporation or federal ministry won't?

Let's look at it the other way. Could you imagine privatizing the IRS. Why would I want that?

Re: How Equifax Became a Private IRS

#180

Just the other day, I tried to sign up for a monthly rolling account with Sky TV so that I could watch The Last Of Us. About 20 minutes after I signed up, they cancelled my account due to a failed non-credit "identity check" with Experian. They won't tell me any information about what the issue is due to "data protection" other than to say there's nothing that I or anyone else can do. My credit report looks fine but…

There's a lot of incorrect data floating around, but then again, that's not really a problem limited to Experian (I've seen it with all credit reporting agencies), and it's not even limited to private entities. I would even say that it's less of a concern when it comes to the ramifications. About 15 years ago the police showed up at my parents' house looking for "me", and as it was a Friday evening, it took until Tuesday before it transpired, after my mother went to the courthouse in befuddlement, that due to a clerical error of some sort, somehow the LA Sheriff's Office looking to serve a failure to appear warrant on someone whose name is similar to mine but otherwise did not match my age, SSN, or anything else ended up getting served to me, and out of sheer dumb luck it happened during winter break, whereas 49 out of 52 weeks of the year I'd be 3000 miles away at school or 6000 miles away doing fieldwork. The confusion was already apparent by Monday because I spent the whole day in a holding cell with 30 other people at the courthouse and was promptly shuttled back to the Twin Towers jail with zero explanation, and it took literally Tuesday night around 11:30pm, after 3 hours of sitting on a bench, handcuffed, in silence for no discernable reason except that they can. In the interim, I did not have access to medication that I needed and quickly fell into medical distress that was entirely ignored. Luckily I didn't have a seizure, but that easily could have happened. A little bit of due diligence would have prevented this, and if I had a seizure the lawyers I consulted at the time said that I may be able to bring a claim against the sheriffs, but since I didn't, it didn't matter.

Except that I did end up going to law school, and during my internships, which was extensive (your local public defender's office can absolutely use a law student who is tech/code literate, and attorneys and judges absolutely notice when you appear every afternoon if you treat the whole endeavor as less grad school but more trade school), it turned out that data error of some sort that resulted in some sort of loss of liberty, however temporary, is common enough that I'd say between 1-2% of bond hearings involved a case of mistaken identity. Bond hearing is the first opportunity for the defendant to face a judge and while the percentage is obviously low, misdemeanor bond hearing dockets are cattle-calls and a public defender and intern would be sorting and prepping between 30 to 100 individuals (higher after holiday weekends) usually in the span of 2 hours, every single day the court is in session. I didn't go to law school in CA and the demographics are pretty dissimilar, but the sort of error and the ramifications are striking in similarity. It adds up pretty quickly.

Then leveraging my experience and language skills, I ended up moving into immigration removal defense at a private firm a few years later and as it turned out, ICE had data errors that, at least during the mid-Obama years, was even more prevalent, except immigration enforcement is administrative law, not criminal law, and federal administrative law, by virtue of its non-inclusion in the Constitution (who knew Jefferson and Madison could not literally see into the future, eh?), allowed for far more shenanigans with far fewer tangible consequences and most importantly, no entitlement to counsel except very narrow and exceptional circumstances, and in 1 circuit only (9th Cir, cases where the detained had severe mental disabilities). And then I began to see cases of US citizens, who are not subject to immigration enforcement, getting detained on administrative grounds and unable to get themselves out of the situation because administrative agencies almost never act in the capacity that places someone in non-judicial detention, except immigration enforcement (ICE/CBP, basically). Since it was not a judicial matter, there's no allegation of a crime, and without protections afforded by the Constitution or access to counsel, ICE was removing US citizens who had paperwork (that they would regard as false) and an abbreviated version of due process in immigration "court". I still don't know how they determine where to remove US citizens to, since some are native-born and some derived their citizenship from parentage, both requiring no paperwork since it doesn't involve naturalization. The US does not have a national ID system that is mandatory (non-citizens can get SSNs of course and many Americans do not have passports, and almost nobody routinely carries their birth certificate on them, which ICE routinely ignores anyway even if you manage to produce one). Immigration court proceedings do catch a number of erroneous detention cases, but we really can only rely on limited datasets to determine how many US citizens get removed to god-knows-where. Generally you'd have to make it back into the country to even make your case known to attorneys. Catholic Charities is probably the largest immigration legal service provider in terms of size and scale in this country by virtue of them being present just about everywhere and colleagues there sharing anectodal experience say that the number is "higher than anybody should be comfortable with", but there's so little transparency or accountability that the only thing that's certain is that it happens often enough that if you practice in this niche it's likely that you'll see cases, and there's very little that could be done to hold the agency accountable.

Oh, and somehow my erroneous arrest ended up requiring me to explain to the state bar even though it is not linked to any actual case since it was an actual case of mistaken identity/lack of due diligence. It might still be in the system somewhere. Although it doesn't affect me today in any meaningful way, thanks to the kafkaesque system we have, having even an erroneous record of jumping an NYC turnstile, and afaik only an NYC turnstile (unless there's a subway system elsewhere in NY state), is sufficient for a legal non-citizen to face removal proceedings, thanks to careless wording and judicial deference and intentional congressional vagueness in statutory wording and New York State's shambolic legislative system unable or willing to alter the otherwise inconsequential nomenclature of the law. Small data errors can and have literally led to the upending of lives. I guess when there's a potential Sword of Damocles hanging over just about everyone, it's almost comforting to know that most of the time database errors only lead to small inconveniences in the grand scheme of things.

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