Privacy Expert on Feds' Identity Theft Recs

As noted earlier today, a federal task force recommended some changes to how the federal government, states and the law deal with the growing problem of identity theft and identity fraud.

What does Beth Givens, the head of the Privacy Rights Clearinghouse which works to help identity theft victims, think of the suggestions?

The recommendations are as fine as far as they go. Some are quite good, for example the uniform police report, I think that's quite excellent.

But there are some things missing. I was surprised they didn't touch specifically on the whole matter of the Medicare card having the SSN printed on it and the military id number being your SSN, We see a great deal of identity theft that is caused because millions and millions of Americans are forced to carry these cards in their pockets.

And when those wallets are stolen, they don't have their SSN card in there but they certainly have their Social Security number in there.

The other thing they missed the biggest issue of all which is prevention.

Identity theft is at epidemic proportions because credit issuers are giving credit to crooks. Now why aren't credit issuers doing a better job of identifying illegitimate applications?

Givens points to some complicated rulemaking that was left to the Federal Trade Commission and the Federal Reserve Board when Congress passed the Fair and Accurate Credit Transactions Act in 2003. That bill contained a number of consumer protections, such as free annual credit reports (get yours here).

One of the rules still being developed is known as the "Red Flag" rulemaking, which details the kinds of data discrepancies that credit issuers would be required to look for.

The Red Flag rules say, "Hey, credit issuers, if there is an address discrepancy (between what is on an application and what is in your credit file) maybe that's a red flag. So it's the rulemaking that requires credit issuers to pay attention to the anomalies and discrepancies that could be an indicator of fraud. And it has taken so long for even the agencies to issue the rules.

What they need to do is issue the regulations and not let it drag on anymore because that's where the rubber meets the road in terms of identity theft prevention.

Givens says if a credit issuer were to ignore the most prominent red flags on an ongoing basis, then the FTC could have reason to investigate or punish the company.

Given that credit issuers currently are liable and pay for most credit fraud, why haven't they stopped identity theft by tightening the loose standards of an instant credit society, say by requiring a phone call or email to your contact information on record?

Apparently, they are still making more money by extending credit to lots and lots people with minimal evaluation of the applications, than they are losing from the small percentage of those that are fraudulent.

I suppose the algebra is still on the plus side

Photo: Brett L.