How Accurate is Bank Debt Info?

Story first appeared in USA Today.

Every hour, trillions of pieces of data are managed, transferred and handled by U.S. banks. Our country's financial health depends on the trust of bank customers in the accuracy of bank transactions. Federal consumer protection laws forbid the acceptance of unreliable credit data and penalize entities that provide defective credit information.

When banks sell portfolios containing thousands of accounts, it's standard practice not to warrant the accuracy of 100% of the data. Like a flowing stream, data change from moment to moment: People move, change phone numbers, make payments or file bankruptcy. This makes a strict warranty impossible.

The critical pieces — the customer's identity and payment history — are already required by law to be accurate. A warranty is not needed when the law already demands complete accuracy. As for data that change constantly, a demand that banks guarantee 100% accuracy at the instant of sale is simply unrealistic.

Debt buyers and collection agencies use sophisticated procedures and technology to ensure the accuracy of a bank's data. Ethical debt buyers and collectors work hard to have the right data every single time, not altruistically, but because they face suits and regulatory consequences when they are wrong.

State and federal laws empower consumers to require debt buyers and their collectors to validate a debt as a condition of collection. Credit reporting agencies have automated procedures to let consumers dispute inaccurate credit reports. It takes just seconds on the Internet to find one of the many consumer attorneys who are glad to sue lenders, debt buyers and other collectors who step out of line.

As long as human beings are involved, it is certain that mistakes will happen, but effective remedies exist to correct them. Just as most consumers are honest and intended to pay their bills, most of their transactions are accurately recorded by the banks. Losing faith in that proposition means losing faith in our entire credit system, with potentially incalculable impact.


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Zappos Was Hacked, 24 Million Customers Affected

First appeared in Forbes

Twenty-four million Zappos customers are getting an unpleasant Sunday-evening surprise.

The Amazon-owned e-commerce firm has revealed that it was the target of a cyber-attack that gained access to its internal network, including the accounts of 24 million of its users. Though the company says that no complete credit card numbers were revealed in the breach, the intruders may have accessed customers’ names, e-mail addresses, phone numbers, addresses, the last four digits of their credit card numbers, and encrypted passwords. Zappos says it’s taken the precaution of resetting the passwords of all its customers and directing them to set a new password upon visiting the site.

“We were recently the victim of a cyber-attack by a criminal who gained access to parts of our internal network and systems through one of our servers in Kentucky,” the chief executive wrote to Zappos employees in an email posted to the site, declining to offer more information about the breach. ”We are cooperating with law enforcement to undergo an exhaustive investigation.”

Even after choosing a new Zappos password, users should be careful to also change their passwords on any site where they’ve used a similar or identical password, in case Zappos’ intruders are able to decrypt the scrambled passwords they’ve stolen. Zappos is also warning affected customers to watch out for phishing emails that will use their stolen email addresses to spoof official Zappos emails and ask for account credentials or financial details.

The chief executive wrote in his all-hands email that every employee at Zappos’ Henderson, Nevada headquarters will be assisting in the customer response to the breach, and that the company will only be responding to emails rather than phone calls in its effort to answer the massive number of queries that it expects to receive.  ”We’ve spent over 12 years building our reputation, brand, and trust with our customers. It’s painful to see us take so many steps back due to a single incident,” he wrote in the email. “I suppose the one saving grace is that the database that stores our customers’ critical credit card and other payment data was not affected or accessed.”

Zappos customers can change their passwords.