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PIRG Identity Theft II: SECTION I: THE Problem Worsens
"I was phoned at work 2 years ago by a company trying to "give ME" a loan, asking me to verify my employment since they had a Chicago address on a loan application, and I live in Massachusetts. I said it is NOT me and they said - well, we have an application in your name here - I said what to do? [sic] They replied I should notify the three credit reporting agencies and have a fraud statement put on my credit report. I did that."
"Fast forward to today . . . EVEN THOUGH I had the fraud statement, this person or person tried and succeeded to get [sic] a VISA card in my name and charged up about $5,400 - so this Summer when I applied for a Student Loan I was denied because of a CHARGE OFF and had to prove that it was not me. . . . The address on my credit report that is CURRENT is not mine, they did a change of address to the three credit bureaus and gave MY REAL address as a former address thus establishing a new address as a real address. . . . Davis [the First USA Bank Fraud Department Rep.] made me feel like it was my fault, dodging my phone calls - telling me "oh, it happens to everyone." They granted a credit card to someone who had everything EXCEPT my correct address!!!"
-- Jennifer Bloom, identity theft victim, Hyannis, MA
Tracking of Identity Theft Cases Remains Poor While fraud departments of law enforcement agencies, credit bureaus, and creditors--the places victims must report to in the long and frustrating process to clear their credit and good name--all indicate that better efforts are being undertaken to track the problem, there is still difficulty in obtaining any concrete statistics on the scope of the problem.
According to law enforcement agencies, the problem of identity theft has not improved in the last year, and is only getting worse. We interviewed fraud investigators with local police departments, U.S. Postal Inspectors, and U.S. Secret Service agents who receive criminal reports involving identity theft. These agencies are often criticized for not doing enough to help victims, but increasingly, law enforcement agencies are putting resources into investigating the burgeoning crime of identity theft. Still, it is difficult to get a grasp on the actual number of identity theft cases reported to law enforcement because they do not track it as one category of crime and are not able to gather enough evidence in many cases to even pursue them.
- Randy DeGasperin, U.S. Postal Inspector in Los Angeles, said they are receiving more complaints now than a year ago involving account takeovers and true name fraud with credit cards received through the mail and have now teamed up with the Secret Service and the FBI in investigating these crimes. In a new twist, identity thieves are using empty apartments they rent in low-income areas and vacant houses as mail drops rather than post office boxes which may arouse suspicion.
- Jim Bauer, Special Agent for the U.S. Secret Service in Los Angeles, reports that their office has been educated on the issue of identity theft just in the past year to the point where victims are now routinely referred to their office. They are restructuring to work with police departments to encourage the police to accept reports and to refer to the Secret Service to investigate for patterns. Mr. Bauer stated that the problem will only get worse and that there needs to be a change in the way an individual's identifying information is valued.
- Tom Lang, San Francisco Police detective, could provide no numbers but stated that identity theft crimes are "still very prevalent." He mentioned credit card issuers that will process accounts over the phone as being a big contributor to the problem.
- Gene Bardot, detective in the Financial Crimes Unit of the San Diego Police Department reports that the number of inquiries their office receives is large, but the number of cases they are able to pursue is small in part because of the unwillingness of retail stores and other creditors to release documents and prosecute the thieves.
Many of the law enforcement agencies we interviewed recommended that the big three credit bureaus should be tracking the number of identity theft cases.
- Dennis Rice, of Experian's (formerly TRW) fraud department, said they are currently compiling statistics on the types of fraud complaints they receive which will be ready in early October.
According to recent news reports, the number of calls to the two other major credit bureau fraud lines continues to rise:
- Trans Union reports receiving 1200 calls per day with most coming from identity fraud victims.
- Equifax also is receiving about 1200 calls per day, more than double the daily number of calls they reported receiving in 1996, and more than quadruple the number the number of calls they were receiving per day in 1995. ("Identity Theft is growing. Victims learn the hard way when thieves get credit with Social Security numbers." by Benita Williams, Kansas City Star, May 28, 1997.)
Credit card issuers remain reluctant to report fraud numbers and continue to downplay the problem of identity theft. Industry trade papers generally report identity theft is the "fastest growing category" of credit card fraud, but that it still remains a small portion of the credit card industry's overall fraud losses:
- MasterCard International, Inc. reports that credit card losses from identity theft in 1996 were four times greater than in 1995, but amounted to less than 1% of their $498 million in total fraud losses. ("Alleged Spree Highlights Danger of Identity Theft," by Jennifer Bloom, American Banker, June 3, 1997.)
Even the Federal Reserve, bastion of numerical data, recognizes the problem in quantifying identity theft. In a recent report to Congress it found that "While some financial institutions distinguish between losses due to fraud and overall losses, many do not. As a result, there are little data on aggregate losses to insured depository institutions due to fraud." (Report to the Congress Concerning the Availability of Consumer Identifying Information and Financial Fraud, page 19, March 1997, Federal Reserve Board). The report notes however, that in 1995, gross fraud losses for Visa and Mastercard totalled $790 million, up from $721 million in 1994. In 1995, check fraud totaled $615 million, the board found. However, the board also manages to conclude, based on limited information, that identity theft losses to the financial system are "small" although "losses due to identity theft (that is fraud using sensitive identifying information) is often not tracked separately from other types of fraud." (Board, page 20). Unfortunately, the board has never tasked itself, and did not in this report, with measuring the human cost to the actual depositors and accountholders who were victimized by thieves taking advantage of shoddy controls by regulated banks.