Mark was getting ready for bed last October when a disturbing notification arrived in his email – there had been a “change” in his credit information, a credit monitoring service warned. Filled with dread, he logged in and found the trouble: a black mark on his credit report, claiming he owed DirecTV $615. The account had just been sent to collections.
Mark had never been a DirecTV subscriber.
There must be some simple mistake, he thought, as he clicked to get more details. That’s when his head nearly exploded.
That $615 alleged debt had knocked his once-stellar credit score down nearly 150 points. The drop essentially meant that Mark had gone from a prime borrower to a subprime borrower overnight. Had he applied for a car loan, the rate would have been about 11%, rather than about 4.5%.
(As a victim of identity theft, Mark requested that his last name not be published in this story)
The scant details he could obtain about the debt showed that service had been opened in Riverside, Calif., during October 2016. Mark lives in Washington D.C. The account stayed active, and debt accumulated, for about five months.
As Mark set out on the journey to fix the underlying collection report so his credit score could be restored, he entered an underworld that a record number of Americans fell into last year — there were an estimated 16.7 million identity theft victims in 2017, according to Javelin Strategy & Research, which publishes an annual survey about the crime. Worse yet, the report shows that ID thieves have moved from simple credit card fraud into more complex kinds of crimes which often have far more devastating impacts on consumers and their credit. As many victims learn, there are a lot of surprises on the bumpy road to recovery.
For starters, how could an unpaid account ding his credit when the account itself had never appeared on his credit report?
That’s not unusual, says Al Pascual, author of the Javelin report. Some providers, such as payday lenders, don’t necessarily check a consumers’ credit before opening an account. So the existence of the account never appears on a credit report. On the other hand, collections accounts usually do. So if a criminal opens an account and doesn’t pay the bill, when that unpaid debt is sent to collections, it quickly appears on the victim’s credit report and drags down credit scores. Such a report can also end up on a consumer’s National Consumer Telecom & Utilities Exchange report and impact their ability to sign up for other services, such as telephone service .
Apparently, fraudulent accounts at DirecTV aren’t unusual. The firm did not respond to a request for comment on this story, but the problem is common enough that there’s a portal on DirecTV’s website for identity theft victims called “Not My Account.” The firm must occasionally check new customers’ credit, because there’s also a portal called “Not My Credit Inquiry.”
In Mark’s case, DirecTV actually did a “hard pull” on his credit report, at around the time when his imposter opened the account. His credit monitoring service flagged that, too, so he visited the Not My Credit Inquiry page and filled out a report. He received a letter stating that there was no DirecTV account associated with his name or SSN.
This is not the first time DirecTV has been accused of trying to collect on debts stemming from identity theft. In February 2017, an Illinois consumer named Mary Arnold alleged that DirecTV ruined her credit over an account opened by someone in Indiana. She didn’t learn about the account until she was denied a car loan, and DirecTV was unresponsive to her complaints, Arnold alleged in the lawsuit, which sought class-action status. The lawsuit was dismissed with prejudice in June 2017, and no costs or disbursements were awarded to either party, according to court filings. Arnold’s lawyer, Shannon M. Geier, said she couldn’t comment about the case.
Mark used his credit monitoring service to dispute the fraudulent account.. For the most part, the system worked as it should. After a few weeks, the collections account was removed from each of his credit reports. Still, his credit score didn’t recover until late January. Had he needed to borrow money during that span — or had he not noticed the fraud — he would have been in serious trouble
It might not seem fair that report of a single unpaid debt of $600 could so quickly wreck an otherwise creditworthy consumer’s ability to get a decent loan, but that’s how the system works. To borrow a phrase, the better your credit score, the harder it falls. When the Consumer Financial Protection Bureau studied the impact of unpaid medical debts on credit, it found that an unpaid bill of at least $100 reduced a score of 680 by about 40 points, but a score of 780 by over 100 points.
FICO, the firm behind the FICO score formula, described this in a blog post several years ago.
“The magnitude of FICO Score impact is highly dependent on the starting score,” the firm wrote.
For example, a consumer with a 780 score would drop to between 670 and 690 after being reported 30 days late on a mortgage, and wouldn’t return to 780 for three years, all other things being equal. A consumer with a 680 score, on the edge of prime, would be dropped to 600-620, landing in potential subprime status. The recovery time for that consumer could be only nine months, however.
How was the criminal able to open the account in Mark’s name? There’s no way to know without an explanation from DirecTV. There are other claims from consumers about criminals opening accounts with a bare minimum of personal information — with just a name and address, for example.
Mark had lived at the California address where the DirecTV service was active, but that was over a decade ago. Still, Mark suspects his impostor received an advertisement for service — addressed to Mark — and just filled it out. He can’t be sure, however. He remains surprised that a criminal could open service in his name so easily.
“I want my time back that I spent resolving and worrying about this issue. I want them to have stronger practices for authenticating an individual’s identity,” he said. “After this experience I would never use ATT or DirecTV and I can’t stand to watch their ads on TV.”