Experian Pulls Plug on Online Credit Reports

Credit report giant Experian Inc. shut down a new Internet service Friday morning after an undetermined number of consumer credit reports were electronically delivered to the wrong people.

The Orange-based company, which had been criticized by some consumer rights groups for launching the service earlier this week, said it was not a security violation but a software glitch that caused the problem.

But some say Friday’s problem proves there is no guaranteed privacy on the Internet and that it’s foolish to put confidential information about individuals online.

“We definitely have our concerns. It shows that they have not worked out all the problems,” said Pamela Pressley, an attorney with California Public Interest Research Group in Los Angeles. “We would hope they don’t reopen this program until they work things out. And we think they should have a system so people can opt out of having their information available electronically.”

Marty Abrams, Experian’s vice president for information policy, acknowledged Friday afternoon that the Federal Trade Commission already has asked for a report on the incident and said the company has replied in writing and in a telephone conversation. FTC officials could not be reached for comment.

Abrams also said Experian, formerly TRW Information Systems & Services, has voluntarily closed down the site while it reviews the operating software.

The reports were transmitted after more than 2,000 people requested copies of their personal credit files in an 11-hour period that ended at 9 a.m. Friday, Abrams said.

Only 213 reports were delivered online, he said, and the company is still trying to determine how many of them were sent to the wrong people. “We are calling everyone by telephone to see how many got the wrong file.”

The problem occurred when Experian’s newly developed software for managing the Internet request site failed to disperse reports in the order in which the requests had been taken.

“It’s like a fast-food restaurant with 20 lines,” said Abrams. “People place their order and step aside, so the next person in line can step up to the counter. If the order takers get overwhelmed, they can start giving the people waiting in line the wrong orders.”

Experian started the program after discussing it with consumer and privacy groups and the FTC, he said. The company designed a six-step security system that requires consumers to provide their name, address, Social Security number, birth date and two credit account numbers in order to receive an electronic copy of their credit reports.

The company also has had an electronic delivery system for business credit reports in place for months, Abrams said. The business reports don’t raise the privacy issues or pose the security problems that have accompanied the effort to put consumer reports online, he said.

Experian is one of the world’s largest credit information providers. The company was formed in 1996 when it was spun off by TRW and merged with CCN Group, Europe’s largest credit reference agency.

Experian launched its Internet site with no fanfare Wednesday evening. Abrams said the “soft launch” was ordered so the company could quickly find and fix any problems not identified in prelaunch testing before heavy volume created a nightmare.

But the nightmare came anyway. News reports about the new service apparently caught consumers’ attention and prompted the deluge of requests that caused Friday’s breakdown.

Before Experian launched the site, the company had received more than 20,000 consumer requests to provide credit reports on the Internet, Abrams said. Most of the messages arrived via e-mail.

“We are in a market driven by immediacy,” Abrams said. “We need to respond to that demand for immediacy in a secure and safe manner.”

Under Experian’s now-delayed program, consumers pay a fee--charged via the Internet to one of their credit cards--for an electronic report that provides information about their loans, payment patterns, past addresses and other details. Fees vary according to state law, ranging from $8 in most states to as low as $5.25 in Maryland.

The data transmission is encrypted to prevent Internet eavesdroppers from intercepting it.

Other large credit information providers, such as Equifax Inc. and Trans Union Corp., so far have not provided online service.

Experian, said Abrams, “will have to discuss” requests by consumer rights groups to increase online security measures and provide a way for consumers to have their files pulled from the Internet database.

Times wire services were used in compiling this report.