The crackdown on identity theft is catching more than crooks.
Some innocent consumers are facing credit denials and delays as companies adopt new computer safeguards against financial fraud.
Just ask Margaret DeMattio. Her credit card company, convinced she was an impostor, canceled her card, putting a black mark on her credit report.
The reason DeMattio aroused suspicion: She had changed her spending patterns after recovering from a long bout with breast cancer and getting her life back on track.
"I am just flaming mad," said DeMattio, who refused to fax copies of her tax return, Social Security card and driver's license across the country to prove that she was really herself.
"In the name of trying to protect themselves from identity theft, they've become interrogators," she said of her credit issuer. "It's some sort of weird reverse discrimination."
DeMattio's experience is unusual but not unique, financial experts said. Combating identity theft has become a high priority in the financial services world ever since the Federal Trade Commission came out with an eye- popping study this year showing the growing prevalence of the crime.
That study found that nearly 10 million Americans were victimized by identity theft in 2002 and that the crime costs consumers and businesses about $50 billion annually. The report has served as a catalyst, encouraging credit grantors, credit bureaus and law enforcement agencies to pay greater attention to the crime.
"There are a number of companies that are looking to new software approaches for verification," said Jay Foley, co-executive director of the Identity Theft Resource Center in San Diego. "They're checking applications more closely and investing more in detection and monitoring."
The most serious type of identity theft involves a criminal stealing enough information -- such as driver's license data or a Social Security number -- to take out new credit in another person's name. Victims usually find out about the crime when collection agents start harassing them for charges made on credit cards the victims didn't even know existed.
A less serious but more common type of identity theft involves the misuse of a consumer's existing credit by a criminal using a purloined credit card or credit card number.
The credit industry's recent efforts to get tough with ID thieves -- limited though they may be -- are generally beneficial to consumers, who can spend countless hours and hundreds of dollars to repair the damage caused by an identity thief.
But the added protection doesn't come without a few glitches.
Consumers such as DeMattio are complaining that they're being denied access to their credit when card companies think a charge is suspicious. Others are being grilled about whether they're really who they say they are. In some cases, combating suspicion of identity theft can be almost as troublesome as fighting real identity theft.
In DeMattio's case, the Woodland Hills resident, recovering from her extended battle with cancer, opted to replace her old credit cards with so-called rewards cards, which give cardholders a rebate on their charges. She got rewards cards from both BankOne and American Express last summer.
Only a few months into using the new cards, she triggered fraud alarms at both companies. DeMattio wasn't surprised by the inquiries. After her illness, she had started traveling a lot as she tried to launch a seminar business. She went to three different cities in a month -- unusual for most people, but especially for someone who hadn't been traveling at all recently.
DeMattio offered to verify her recent purchases. That was enough for BankOne, but American Express wasn't satisfied.
American Express security demanded that DeMattio fax copies of her driver's license, Social Security card and utility bills, she said. Not wanting to risk faxing sensitive personal information, she had her banker verify the data and write a notarized letter confirming her identity.
Not enough, said AmEx. The security officer demanded pay stubs, a copy of her most recent tax return and a notarized statement from her mother confirming that she'd been living at home.
When DeMattio refused, AmEx closed her account, creating a black mark on her credit report.
"If they're so worried about identity theft, why didn't they ask for this stuff when they took my application?" DeMattio asked.
AmEx spokeswoman Judy Tenzer said the company doesn't comment about individual customers. However, she acknowledged that American Express has tightened credit card security.
"We have been actively trying to prevent fraud for years in a variety of ways," Tenzer said. "But we are using more techniques than before. There's no question that identity theft is something that we are all very serious about trying to prevent now."
Avivah Litan, an identity theft expert with Gartner Inc. in Washington, said that even she has run into trouble. When she went to Europe recently, her credit card accounts were frozen.
The card companies, recognizing that she didn't live in London, wouldn't approve her request for a cash advance. That's not uncommon anymore, said Foley of the Identity Theft Resource Center. Foley said he's increasingly hearing the same complaint, although some callers say they appreciate the scrutiny once they realize that it's done to prevent misuse of their cards.
Later, Litan said, her credit card company told her that she'd have to call ahead if she wanted to use her cards overseas.
"Whenever you start using new programs to clamp down on fraud, you get some false positives," she said. "Creditors are clamping down very hard right now, so there are going to be a lot of false positives over the next couple of years.
"There are going to be a lot of times that credit card companies stop good transactions."
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 phone calls. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail firstname.lastname@example.org. For past Personal Finance columns, visit The Times' Web site at www.latimes.com/perfin.