Public, Private Sectors Must Act Aggressively to Deter Identity Theft FTC Says

The Federal Trade Commission today said that newly implemented provisions of the Fair and Accurate Credit Transactions Act and cooperative efforts of the FTC, other law enforcement agencies, and the private sector can help reduce identity theft and help victims recover. In testimony before the Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and Commerce, Commissioner Thomas B. Leary said a 2003 FTC survey of identity theft "demonstrates the need for a concerted effort between the public and private sectors to act aggressively to reduce identity theft."

"Social Security numbers play a pivotal role in identity theft," the testimony states. "Preventing identity thieves from obtaining Social Security numbers will help to protect consumers from this pernicious crime." The testimony notes that Social Security numbers are used to match consumers to their credit histories and are a critical piece of information when consumers apply for such things as credit cards, car loans, and mortgages. The FTC is studying whether it would be more effective to require consumer reporting agencies to match more data points before releasing a consumer report to a user. "This study, to be completed by December, 2004, should greatly increase our knowledge of the importance of Social Security numbers in the matching process."

The testimony says that recently enacted amendments to the Fair Credit Reporting Act will provide new and important measures to prevent identity theft and facilitate identity theft victims' recovery. "Some of those measures will take effect his year. They will codify many of the voluntary measures initiated by the private sector and improve other recovery procedures already in place," the testimony says.

The measures include:

• A national fraud alert system that will allow consumers who have reason to suspect they have been or may be victimized by identity theft, or who are military personnel on active duty away from home, to place an alert on their credit files to signal potential creditors to proceed with caution when granting credit in the consumer's name;
• A requirement that credit card numbers on receipts be truncated so that thieves who have access to the receipts would not have access to the entire account number;
• Red flag indicators of identity theft that will be developed jointly by banking regulators and the FTC to allow financial institutions and creditors to analyze identity theft patterns and practices so that they can take appropriate action to prevent identity theft;
• Regulations coordinated by banking regulators and the FTC to require proper disposal of consumer information derived from consumer reports;
• A requirement that credit reporting agencies immediately cease reporting allegedly fraudulent account information on consumer reports when consumers submit identity theft reports unless there is reason to believe the report is false;
• A requirement that creditors or other businesses give victims copies of applications and business records relating to the theft of their identity; and
• A provision to allow consumers to provide identity theft reports directly to creditors to prevent them from continuing to furnish fraudulent information resulting from identity theft to the credit reporting agencies.

"When fully implemented, these provisions should help to reduce the incidence of identity theft, and help victims recover when the problem does occur," the testimony says.

The FTC has been extensively involved in educating consumers, assisting identity theft victims, maintaining a database of identity theft victims complaints that is shared with more than 1042 law enforcement agencies, and training law enforcers on how to investigate identity theft. More than 1,800 law enforcement officers representing more than 680 different agencies have attended FTC training, and future seminars are planned. The FTC also works with the private sector to help institutions that maintain personal information identify ways to keep that information safe from identity theft.

"The Commission looks forward to working with business on better ways for them to protect the valuable information of consumers with which they are entrusted as well as other means of preventing identity theft. The Commission anticipates that as the new provisions of FACTA take effect, they will further help to reduce identity theft as well as its impact on victims," the testimony says.

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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. p03 4806)