Growing Push to Protect Targets of Identity Theft
Help is on the way for victims of the rapidly growing crime of identity theft.
A group representing the nation’s three largest credit reporting firms announced recently that they would make it easier for victims to repair the damage that identity fraud can do to their credit reports.
Meanwhile, members of Congress are pushing new laws that would require greater privacy protection for consumers and also provide help for the hundreds of thousands of Americans whose identities are stolen each year.
In cases of identity theft, con artists use a victim’s personal and financial information -- bank and credit card account numbers, Social Security number and so forth -- to apply for credit, drain bank accounts, even buy houses. Identity fraud can devastate a victim’s credit standing, making it impossible to take out a mortgage or qualify for a credit card until the damage is repaired -- and that can take years.
The Federal Trade Commission logged 161,819 complaints of identity fraud last year. That was nearly double the number of complaints from 2001 and made it the fastest-growing financial crime in the country.
One-Call Reporting
In the past, an identity theft victim had to report the fraud to each of the three credit bureaus and often needed to send separate letters to every department store, bank or other lender where the thief had opened a bogus account in the victim’s name.
Now, consumers can report the fraud to just one of the credit bureaus, and that bureau will notify the other agencies.
“With one phone call, victims will have contacted all of the national credit reporting companies,” said Stuart Pratt, president and chief executive of the Consumer Data Industry Assn., which represents 400 consumer data companies involved in credit reporting, check verification and tenant screening.
“Equally important, with a single call, victims can take the proactive step of reducing the chances that they will be further victimized because they can be confident that every lender will be sent a security alert notifying them of the circumstances of the crime.”
If the victim files a police report -- as is advisable -- any item specifically identified as fraudulent in the police report will be subject to immediate deletion under the new industry initiative. The consumer need only return the credit report, with a copy of the police report, noting the fraudulent accounts.
In addition, Visa last week agreed to join with Call for Action, a Maryland-based consumer group, to provide telephone counseling to victims of identity fraud and to distribute information about preventing and detecting the crime (see accompanying chart).
The moves, lauded by consumer advocates, are considered one of many steps the credit industry is likely to take this year to head off a potential avalanche of state and federal legislation aimed at combating identity fraud.
“I think we are going to see a flurry of these sorts of initiatives in the next several months,” said Beth Givens, executive director of the Privacy Rights Clearinghouse in San Diego.
“Identity theft has been going on unchecked for so long that Congress is in a mood to do something about it.”
California has taken the lead with laws now being considered national models, Givens said. Starting this year, for example, Californians have the right to block access to their credit reports, allowing access only by providing a special personal identification number when they apply for a loan. Several additional fraud-fighting initiatives are in the works.
U.S. Sen. Dianne Feinstein (D-Calif.) has introduced four bills aimed at restricting access to credit card and Social Security numbers and increasing the penalties for identity criminals. Although these bills usually face stiff opposition in Congress, Feinstein believes it is only a matter of time before tough national legislation is passed.
“Every year hundreds of thousands of Americans are victimized and lose millions to this massive and growing fraud,” she said. “Eventually, I believe a strong bill will pass because the people will demand it.”
Snipping Fraud’s Roots
Still, more could be done by retailers and the credit industry to prevent identity fraud in the first place, Givens said. For instance, identity thieves often misstate their victims’ personal information when filling out fraudulent credit applications, giving an incorrect address, for example, or the wrong birth date. If this information were checked more carefully, many bogus applications would be rejected, she said.
Additionally, credit bureaus should notify consumers when there is unusual activity in their accounts, such as frequent address changes or applications for credit, Givens said.
“If they were required to do that, most identity theft would be detected almost immediately,” Givens said. “The thief could be shut down early in the game.”
The credit bureaus are not at present considering such reforms, said Norm Magnuson, a spokesman for the Consumer Data Industry Assn.
“Never say never,” he added. “But from a cost and efficiency standpoint, those proposals cause us angst.”
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(BEGIN TEXT OF INFOBOX)
Fighting ID fraud
What should you do if you are victimized by identity fraud?
Report the fraud to any one of the major credit bureaus:
Equifax: (888) 766-0008.
Experian: (888) 397-3742.
TransUnion: (800) 680-7289.
* Expect to receive copies
of your credit report from all
three bureaus within a week. Immediately review the reports for inaccurate or fraudulent items.
* File a crime report with your local police department. Be sure
to specifically identify in the
police report all of the fraudulent accounts on your credit report. The credit bureaus will delete these items immediately and ensure that they don’t reappear.
* Call the Federal Trade Commission’s identity theft hotline: (877) 438-4338.
* Continue to monitor your credit report regularly to make sure new fraudulent items do not appear and that old bogus accounts don’t reappear.
* For further advice, call the new Visa/Call for Action hotline:
(866) ID-HOTLINE (434-6854).
Los Angeles Times
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Times staff writer Kathy M. Kristof, author of “Investing 101” and “Taming the Tuition Tiger,” welcomes your comments and suggestions but regrets that she cannot respond individually to letters or calls. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail kathy.kristof@latimes.com. For past Personal Finance columns, visit The Times’ Web site at www.latimes.com/perfin.
