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Tempest in Topeka May Not Be Unique

Dispute Over Consumer Credit Data Illustrates Security Risks

By Martin H. Bosworth
ConsumerAffairs.com

June 27, 2005
The odd story of the Topeka Credit Bureau's dissolution and the abandonment of thousands of individual consumer records provides a glance into the changes sweeping through the credit-reporting industry and the new risks those changes entail for consumers.

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As we reported earlier, Kansas political consultant Augie Bogina bought what he thought was a vacant building in downtown Topeka, only to find it contained thousands of consumer credit reports -- information he thought should have been securely disposed of by the building's former occupant, the Topeka Credit Bureau and its business affiliate, the national credit agency Experian.

The details of the affair quickly become murky as its principals try to shift responsibility to others.

Kansas collection lawyer H. Kent Hollins, for example, disputes Bogina's claim, calling it an "absolute and total misrepresentation."

According to Hollins, he bought the building in question circa November of 2003, after the sudden dissolution of the Topeka Credit Bureau, which collapsed after Experian terminated its contract with the local company.

This is a story presumably being repeated throughout the nation, as the credit-reporting business centralizes its operations and moves to a Web-based model, leaving traditional "mom-and-pop" credit bureaus high and dry.

"There's no incentive for Experian to work with local bureaus when they can do it all from their site." Hollins said. "Local agencies present a huge risk of information getting out or getting lost."

Jamie Eldinghoff, the real estate broker who negotiated the deal, concurred with Hollins' assessment.

"Thanks to modern-day automation and people going to Web sites for credit reports, no one uses local credit bureaus anymore….the Board of Directors shut the thing down and cashed out for a million dollars," he said.

Eldinghoff echoed Bogina's statement that the end of the bureau happened abruptly.

"There were tenured employees who'd worked there for decades, and never saw it coming. They had maybe one day's notice to get out of there, and they left tons of stuff behind…hats, glasses with Coke in 'em, and personal belongings," Eldinghoff said.

Hollins insisted that all negotiations for the building and its contents were done through lawyers, his own as well as Benoit Swinnen, attorney for the defunct Topeka Credit Bureau.

"We didn't know that there were any documents left behind…we weren't aware of it," Hollins said.

Hollins believes that there were only a few documents involved, and no computers or hard drives with data on them. He also contends that he has never been inside the office or seen it since he sold it to Bogina.

According to Eldinghoff, the building was full of "tons of junk" and "thousands of papers," as well as several computers.

Hollins also claims to have had "no conversations at any time with Experian." "Everything was done through [my lawyer]." Hollins denied telling Bogina to take the records "out back and throw them in the trash."

Benoit Swinnen, for his part, states only that the Topeka Credit Bureau is in liquidation, and that he helped broker the deal to "sell the business in two parts," with Experian receiving the credit assets and the "collection assets" going to Hollins.

When asked if that meant Experian received the data and equipment used to generate credit reports, Swinnen would not comment.

"I do believe that the Topeka Credit Bureau has acted responsibly in this matter", he said. Swinnen claimed to have made an offer to collect the data Bogina found and dispose of it, but he said Bogina refused.

Bogina admits to dismissing the offer as "insufficient to recoup our legal costs from all of this."

Experian has told ConsumerAffairs.com that it "acquired the assets" of the Topeka Credit Bureau and insists it has acted responsibly and has denied that any abandoned data was its property or responsibility.

The matter seems to have come to a resolution, as Experian has dispatched several representatives to Topeka to verify the data's contents and offer Bogina a settlement to help destroy them.

What may seem like a local issue between groups of warring businessmen does have resonance for the rest of the country. The centralizing of credit reports through the major bureaus and via the Web has spelled the end of local credit agencies, many of which were in business for decades or more.

The danger of these bureaus' dissolution lies in the loss of control over the data they gathered to provide consumer credit information. If abandoned data were to fall into the wrong hands, thousands of consumers could be at risk of identity theft and other forms of fraud.

What happened in Topeka may have happened elsewhere. There may be other abandoned offices, filled with drawers, shelves, and hard drives containing your name, address, date of birth, Social Security number, and complete credit record.

Many consumer advocates fear that the centralization and automation of credit reporting makes it more difficult for individuals to correct errors and dispute false entries, though Experian and the other big credit bureaus claim that their data is more accurate than ever and that consumers have never had more opportunities to verify and correct their data.

For now, at least, the little-noticed saga of the Topeka Credit Bureau seems to be winding down. Kent Hollins continues to insist that he was not responsible for disposing of data. Augie Bogina has incurred legal costs and spent a great deal of time trying to dispose of the data responsibly.

Jamie Eldinghoff, the real estate broker, laments the credit bureau building's current state as a pawn in a tug-of-war.

"It was a good ol' building in downtown Topeka…eventually, someone's gonna have to answer for this down the line."

Perhaps, but then again ...

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