I'm Mad As Heck and I'm Going to Write About It!

Here's another angle on Social Security privatization--want to bet that the credit-reporting agencies wind up interfacing with you about your "personal" account?

These agencies are a classic example of an economic externality. There's no upside for a credit reporting company having good customer services for consumers or spending money on data security. We don't purchase their services; we don't have any say over which service any merchant with whom we do business chooses to use. Any money they spend on us raises their costs and lowers their profits.

When I talked with the nice lady at Social Security, I complemented her and said that I'd been treated miserably by the credit reporting agencies. She said that well, they were the only game in town so no wonder you got bad customer service. I had to tell her that no, she was the only game in town; there were three different reporting agencies that compete with each other and the government gave much better service because the government, in this case, actually cares what service citizens get, while the economic incentives are exactly the opposite for the private sector entities.

GOVERNMENT'S SERVICE BEATS CREDIT-REPORTING FIRMS'
East Valley Tribune, Feb. 27, 2005

If I hadn’t already thought Social Security privatization -- oops, personalization -- was a bad idea for policy reasons (plus, after the Medicare drug benefit debacle, why would anyone take a Bush administration fiscal projection seriously?), my personal experience with the private -- oops, personal -- sector this past week would have converted me.

I’m trying to open a mutual fund account for our youngest child. Thanks to the PATRIOT Act -- don’t get me started on that -- the fund company must go through a verification process for every customer’s identity, even kids. They sent an inquiry to the three big credit registries. Thus began my descent into the lower circles of private-sector database purgatory.

Two of the companies -- I reached a real live person at TransUnion, who confirmed that it wasn’t them, so the evildoers here are Equifax and Experion -- sent a report about a different individual tied to my kid’s Social Security number. But the companies don’t keep records on minors, who can’t get credit. Having my kid’s number call up a stranger’s credit history was clearly a typo; the stranger’s number was miscoded in their records. This is apparently not the first time this has happened.

Unfortunately, it’s a mistake that might cause future problems if this stranger’s record remained mixed up with our child’s. As the agencies keep data for seven years, our kid will turn 18 (and need a credit history) before this mistake disappears. The fund company representative recommended that I contact each credit reporting company and the Social Security Administration to fix the error.

So I did, and in this competition between Big, Bad Government (the Social Security Administration) and the Efficient, Miracle-of-the-Market Private Sector (Equifax and Experion), the private sector stunk.

Anybody who claims that private enterprise always gives better customer service than government should try to fix a mistake by a credit history company. (Again, TransUnion fixed their problem with a phone call. They are not nearly as dreadful, difficult, burdensome, and downright nasty as Equifax and Experion. No wonder they’re in third place.)

Social Security’s voice-mail system got me to a real, live person after only two menus; I had to wait on hold for a few minutes -- but it was still less time that it took me to keep getting back to the recording, buried deep in their system, where Experion listed the seven types of information and documents they required, plus the mailing address; I had to call three times to get all of the information because you can’t get the list of items repeated. It was also less time than I spent flailing around the Equifax web site, looking for any mailing address and information about what they needed to fix their error. Equifax shunts you to an online form, which took time (and several screens) to complete, only to have the form rejected because our kid’s birth date was too recent; only then would Equifax divulge a mailing address.

By contrast, Social Security provided a real person, who quickly confirmed my identity and that my kid’s Social Security number was correct, and that nobody else was working, paying taxes, or collecting benefits under that number. (As a bonus, the rep was downright nice; she even laughed at my jokes.)

This is on top of the ChoicePoint debacle, where the marketing-research company finally notified California residents of theft of personal information that occurred last October, only because California law required it. Everywhere else, the company wasn’t going to bother, until Arizona Attorney General Terry Goddard beat on them to do the right thing here. After all, spending money on data security hurts profits. These companies are happy to sell you stuff you don’t need, but will improve security and customer service and fix their mistakes only if forced by law. There’s no market pressure consumers can bring.

I’ve written both Equifax and Experion to try to fix their mistakes, but I’m not holding my breath. But anybody who wants to privatize Social Security -- well, I hope your private account is managed by Equifax, Experion, or ChoicePoint. You deserve that "posh" private sector treatment.