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PIRG Identity Theft II: C. CREDIT INDUSTRY BLOCKS EFFORTS TO HELP IDENTITY THEFT VICTIMS
In Their Own Words
Victims of identity theft continue to be turned down for loans, credit and jobs and spend countless hours writing letters and making phone calls to restore their credit reports. They are constantly made to feel like they are guilty, not the victims of a menacing crime. Here are some comments from identity theft victims about their experiences in dealing with banks and retail creditors and the three major credit reporting agencies:
"You are guilty unless YOU can prove otherwise. The assumption is that it is not fraud since the thief had given the correct information. The burden of proof is on the consumer."
- Jennifer Bloom, Hyannis MA
"Stores where checks were accepted didn't stop harassing me for payment even after I sent them lists of our bad checks, copy of police report and whatever was requested."
- Shirley A. Dillon, Cameron Park, CA
"...very difficult--did not respond to letters....a nightmare--did not want to supply applications or billing statements."
- Mari Frank, Laguna Niguel, CA
"It has been the ultimate frustration! Dealing with voice mail, trying to convince people that this was not me that rented the apartment (or cosigned for anyone else). I have lived at my home for 31 years."
- A. Diane Ryan, Eureka, CA
"I was furious with the department store and closed my account for good."
- Betty Norden, Culver City, CA
"None [credit bureaus] were any help."
- Jackie Fitzgibbons, Palo Alto, CA
"They will not talk to you - you call and get into voice mail "jail" and can only communicate through the US Mail - they say they CANNOT DO ANYTHING unless the bank or other credit grantor tells them to. They say to have a fraud statement put on my report. I DID THAT AND STILL the person gained credit."
While creditors and the credit bureaus continue to give individual victims the runaround, they have also attacked key reforms that would help prevent identity theft and give consumers the much needed tools to clear up their credit. Following release of our 1996 "X-files" report, several PIRGs were contacted by state legislators to lead the fight for tougher privacy reforms in the credit industry to help curb identity theft fraud.
Credit industry blocks identity theft protections in California state legislature, 1997
CALPIRG was contacted by State Senator Herschel Rosenthal (D-Van Nuys) to sponsor identity theft legislation in California. CALPIRG developed many of the recommendations included in the 1996 PIRG report into a bill aimed at alerting consumers early to fraudulent credit accounts and to prevent new fraudulent accounts from being opened. The bill, SB 930, which was introduced in the California legislature in February of 1997, aimed to do the following:
1) provide all consumers with one free credit report per year upon request to check for fraud or mistakes and clear up any problems early;
2) give consumers the right to block access to their credit report to anyone who does not obtain the permission of the consumer in writing;
3) require creditors to notify consumers when an additional credit card is requested on an existing credit account within 10 days of an a change of address request.
While recognizing that identity theft is a huge problem in California, the credit and banking industry heavily opposed SB 930. Instead of working to give consumers protection from problems that they largely created, the credit industry spent tremendous resources lobbying to stop any significant identity theft protections from being enacted in California in 1997. Lobbyists for Experian, Equifax, Trans Union, and the Associated Credit Bureaus of California worked the hardest to defeat the identity theft bills. Joined by the California Bankers Association, Household Finance, Beneficial Finance, and the California Retailers Association, the credit industry succeeded not only in preventing a number of legislators from supporting the bills, but also in getting two of them, Senator Bruce McPherson (R-Santa Cruz) and Assemblyman Mike Machado (D-Stockton), to drop their names as original co-authors of the tougher SB 930 and instead vote against it.
SB 930 passed through the Senate and the Assembly Consumer Protection Committee, but was weakened and finally defeated for the year by credit industry lobbyists in the Assembly Banking and Finance Committee. Even following the horror stories of a parade of identity theft victims testifying in support of the bill, the members of the Assembly Banking Committee decided to vote down the legislation because its provisions were deemed "unnecessary" and "too burdensome" for credit bureaus to implement.
Despite the defeat of SB 930, California consumers will receive some protection against identity theft, in the form of another CALPIRG-supported bill, AB 156, sponsored by Consumers Union and introduced by Assemblyman Kevin Murray (D-Los Angeles). AB 156 makes identity theft officially a crime against the consumer and requires creditors offering mail solicitations for credit cards to only mail credit cards to the same address to which they mailed the solicitation, unless they verify an address change, and it also requires retail stores to see more detailed identification before offering "instant in-store credit."
CALPIRG, the American Association of Retired Persons (AARP), and others are working to build support for Senator Rosenthal's legislation in 1998, as well as to find other members of the legislature who believe identity theft is an important consumer problem and want to author legislation to prevent it. Although credit bureaus, banks, retailers, and other members of the credit industry show no signs of dropping their opposition to identity theft protections, the rising toll identity theft is taking on more and more Californian is building the pressure on state legislators to act.
Victory in Colorado
An important victory for Colorado consumers came in the form of a credit reporting bill supported by COPIRG which, in spite of heavy opposition by the credit industry, passed into law in April granting several important privacy protections. The new law, which took effect on August 1, 1997, requires credit bureaus to provide Colorado consumers with one free copy of their credit report per year, upon request. For the first time in any state, the bill also requires the credit bureaus to send consumers a notice of their right to obtain a free credit report whenever, in a twelve month period, there are three or more inquiries pertaining to the consumer or a report is received that would add negative information to a consumer's file.
This will allow many victims of identity theft to catch fraud accounts early as well as give all consumers the opportunity to monitor their reports for inaccuracies. The new Colorado law will also increase fines for credit reporting agencies that fail to correct false information within 30 days.
New Jersey consumers get free credit report
NJPIRG, along with Margaret McCarthy, an identity theft victim whose experience profiled in the 1996 PIRG report prompted Steven Corodemus (R-Monmouth) to sponsor the bill, battled industry lobbyists, including the powerful Retail Merchants Association, New Jersey Bankers, New Jersey Mortgagors, and the credit bureaus to secure the right for New Jerseyans to obtain one free copy of their credit report annually upon request, effective January 1998.
New Jersey becomes the sixth state--joining Vermont, Georgia (2 each year), Massachusetts, Colorado and Maryland--to offer consumers this important reform which allows them to check their reports for fraud and inaccuracies. Further, the new law makes it a crime to steal someone's identity, punishable by 18 months in prison, and gives the New Jersey Consumer Affair's Division under the state Attorney General's office the power to enforce the federal Fair Credit Reporting Act.