FTC Testifies on Identity Theft

The Federal Trade Commission today said that it continues to expand it efforts to stem the growing tide of identity theft. It has established a toll-free consumer hotline (1-877-ID-THEFT), to provide real-time consumer counseling for victims; it has built the federal government's central repository of identity theft complaints, the Identity Theft Data Clearinghouse, which starting this month is available through a secure Web site to law enforcers across the country; and it is expanding efforts to educate consumers and businesses about ID Theft prevention and deterrence. Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, delivered the agency's testimony before the Subcommittee on Technology, Terrorism and Government Information of the Senate Judiciary Committee. "The fear of identity theft has gripped the public as few consumer issues have," the testimony says. "Consumers fear the potential financial loss from someone's criminal use of their identity to obtain loans or open utility accounts. They also fear the long lasting impact on their lives that results from the denial of a mortgage, employment, credit, or an apartment lease when credit reports are littered with the fraudulently incurred debts of an identity thief."

Bernstein said the number of calls to the FTC's toll-free ID Theft hotline has doubled since March, and that the agency is now taking between 800 and 850 calls a week. Phone counselors, who have handled more than 20,000 calls in the last eight months, "provide victims of identity theft with specific information about how to try to prevent additional harm to their finances and credit histories.

The phone counselors advise callers to contact each of the three consumer reporting agencies to obtain copies of their credit report and request that a fraud alert be placed on their credit report." Counselors also explain consumers rights under the Fair Credit Reporting Act to have errors corrected on their credit reports; the limitation under the Fair Credit Billing Act to consumers' liability for charges they did not authorize; and the restrictions on debt collection practices consumers have under provisions of the Fair Debt Collection Practices Act.

"The Identity Theft Data Clearinghouse . . . provides specific investigative material for law enforcement and larger, trend-based information providing insight to both private and public sector partners on ways to reduce the incidence of identity theft," the testimony says. "Currently, the Clearinghouse contains the data from consumers who contact the FTC through the toll-free number or Web site. We are pursuing ways to collect complaint data from other agencies and private sector entities to allow Clearinghouse users from law enforcement agencies to see as much complaint data on identity theft as possible. . . . To maximize use of the data, we now provide law enforcement partners with direct access to the Clearinghouse through Consumer Sentinel, our secure Web site for sharing complaints and other information with consumer protection law enforcers. . . . This access enables them to readily and easily spot identity theft problems in their own backyards, and to coordinate with other law enforcement officers where the database reveals common schemes or perpetrators. The FTC will continue to comb through the data to spot cases for referral, but has also enabled others to use the data to ferret out the bad actors for prosecution."

"Our basic complaint data show that the most common forms of identity theft reported during the first seven months of operation were:

• Credit Card Fraud - Approximately 54 percent of consumers reported credit card fraud - i.e., a credit card account opened in their name or a "takeover" of their existing credit card account;
• Communications Services Fraud - Approximately 26 percent reported that the identity thief opened up telephone, cellular, or other utility service in their name;
• Bank Fraud - Approximately 16 percent reported that a checking or saving account had been opened in their name, and/or that fraudulent checks had been written; and
• Fraudulent Loans - Approximately 11 percent reported that the identity thief obtained a loan, such as a car loan, in their name," the testimony notes.

The states with the largest populations - California, New York, Florida, Texas and Illinois - account for the largest numbers of complaints and suspects.

"The data also reveal information about the perpetrators. Almost 60 percent of the caller-complainants provided some identifying information about the identity thief, such as a name, address, or phone number. More than one-quarter of those victims reported that they personally knew the suspect," the testimony says. "We also are assessing the data on the monetary impact of this theft.

Some complainants provided estimates of the dollar amounts obtained by the thief, because they have received the resulting bills or have been notified of the resulting bad debts. The range of dollar amounts reported varies widely, with approximately 34 percent of complainants reporting theft of under $1,000; approximately 35 percent of complainants reporting theft totaling between $1,000 and $5,000, approximately 13 percent of complainants reporting theft totaling between $5,000 and $10,000, and approximately 18 percent of complainants reporting theft of over $10,000."

The testimony notes that, "The FTC's ID Theft Web Site, www.consumer.gov/idtheft gives tips on how consumers can guard against identity theft, warns consumers about the latest identity theft schemes and trends, and provides access to consumer education materials on identity theft. This Web site has received more than 108,000 page views since November 1999. The FTC has distributed more than 83,000 copies of a comprehensive consumer guide, "ID Theft: When Bad Things Happen to Your Good Name," and the Social Security Administration has printed and distributed an additional 115,000.

Bernstein said the Commission wants to work with the private sector to streamline the process consumers must follow to report incidences of ID Theft. "Currently, a victim of identity theft must notify each of the three national consumer reporting agencies separately, and then typically make additional calls to the FTC and to all creditors. The Commission looks forward to working with the three major national consumer reporting agencies to develop a complementary process to allow identity theft victims to share the details of their complaints simultaneously with the FTC and the national consumer reporting agencies."

The testimony says that the FTC will soon begin sharing certain limited information from its database ". . . with businesses whose practices are frequently associated with identity theft." In conjunction with the Department of Treasury and the other federal agencies who participated in the Identity Theft Summit, the FTC will convene a workshop for law enforcement, consumer groups, and industry on Identity Theft Victim Assistance in the fall of 2000. "Heightened awareness by consumers and businesses will . . . help reduce the occurrences of this fraud," the testimony says.

The Commission vote to approve the testimony was 5-0.

Copies of the testimony are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Claudia Bourne

Farrell Office of Public Affairs

202-326-2181

Betsy Broder or Joanna Crane

Bureau of Consumer Protection

202-326-2968 or 202-326-3258