The Myth That Your Salary Information Is Private Has Been Officially Debunked

Flickr/proimosThink your salary is private? You may need to think again.

A detailed report by CNBC's Bob Sullivan reveals that The Work Number, an Equifax-owned company, is making bank off your hard-earned dollars.

The company sells personal information from its database, including employment and salary records, to financial service companies and debt collectors.

And it's not hard to guess where the company is getting its data –– your employer.

The Work Number's database is filled with employment records for one-third of U.S. adults, which it sells to third parties when a person applies for credit. Its records include pay stubs, human resources information and unemployment claims, which it receives from willing companies, government agencies and schools, the story reports.

One woman interviewed by CNBC had a Work Number report that was a whopping 22 pages long, complete with a copy of all of her paychecks over the years.

If it all sounds a little too close to home for you, that's because it is. We asked John Ulzheimer, CEO of Smartcredit.com, for his take.

"We're inching closer and closer to a complete absence of financial privacy," Ulzheimer said. "The common understanding that your salary information may not be disclosed by your employer seems to be a giant myth."

As it stands, employment information is sold to debt collectors to determine if the applicant has the ability to pay back a debt. For example, if a person claims to be unable to pay back a debt but data from The Work Number shows they are, in fact, gainfully employed, the collection agency is unlikely to accept a low settlement offer.

"What's not mentioned in the [CNBC] story is the fact that collectors can also pull your full credit files to help them collect debts, so not only do they know if you're working but they also know if you have credit lines available that can be used to pay back collections," Ulzheimer said.

And businesses are willing to fork over their employment and HR records to The Work Number because it cuts out the middle man and means they won't have to field a bunch of employment verification calls from collectors, CNBC reports. It also gives consumers a faster way to verify their employment when renting a new home or apartment, says CNBC.

While it's unsettling to imagine a third-party sniffing around your employment records, it's all legal. Under the Fair Credit Reporting Act, debt collection agencies have "permissible purpose" to access employment records.

In fact, when used by lenders to determine creditworthiness, this kind of clearance could be good for both lenders and consumers, he added:

"It doesn't do the consumer any good to saddle them with a loan that they cannot pay back."

In the end, there's not much consumers can do about it anyway.

"You can be angry about it, which would be understandable," Ulzheimer said. "Or, you can be apathetic, which is probably healthier since you can't do anything about your data being shared by big business."

––Mandi Woodruff contributed to this report.

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