Agency Outlines New Schemes of Identity Thieves
In testimony today before two House subcommittees, the Federal Trade Commission outlined its role in addressing the problem of identity theft, as well as the steps the Commission is taking to aid consumers who become identity theft victims. According to the Commission's testimony, "identity theft occurs when someone uses the identifying information of another person to commit fraud or engage in other unlawful activities." Identity thieves can use personal information to open a new credit card account under someone else's name, take over an existing credit card account, take out loans in another person's name, and write fraudulent checks or transfer money from another person's bank or brokerage account. All of these illegal activities can have dire financial consequences for the identity theft victim, the agency said.
Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, delivered the Commission testimony at a joint hearing before the House Subcommittee on Telecommunications, Trade, and Consumer Protection, and the House Subcommittee on Finance and Hazardous Materials. Bernstein said that "historically, identity thieves have been able to get the personal information they need to operate through simple, 'low-tech' methods: intercepting orders of new checks in the mail or tricking others into giving up this information." She testified that identity thieves now have developed new methods of obtaining personal information, such as calling banks or other financial institutions under false pretenses. And, in another ruse, "fraud artists have reportedly been preying on consumers' fears about Year 2000 computer bugs; a caller, for example, represents that he or she is from the consumer's bank and tells the consumer that the caller needs certain information about the consumer's account (or needs to transfer money to a special account) in order to ensure the bank can comply with Year 2000 requirements," Bernstein said.
Bernstein described the costs to the victims of identity theft, and reported an increase in consumer inquiries about the problem. She further noted increased investigations of Social Security misuse by the Social Security Administration's Office of the Inspector General. "Financial identity theft clearly continues to present a significant threat to consumers," Bernstein said.
The testimony also reviews the FTC's authority to investigate alleged violations of federal statutes that regulate the financial services industry. In addition, it outlines FTC activities that have addressed consumer protection in this area, particularly the issue of identity theft.
Bernstein spoke about the agency's role under the Identity Theft and Assumption Deterrence Act of 1998. According to the testimony, the FTC is responsible for "managing information sharing among public and private entities" in support of the criminal aspects of the law and "aiding victims by serving as a central, federal source of information." The Commission will soon provide a toll-free telephone number so that consumers can report identity theft and receive help to resolve problems, Bernstein said. In addition, the Commission "is developing a database to track the identity theft complaints received by the FTC and other entities."
The testimony concludes with a commitment to combat the harmful practice of obtaining personal financial information under false pretenses. This practice, the Commission said may harm consumers in two related ways. First, there may be significant invasion of the consumer's privacy resulting from the disclosure of private financial information ... and second, it "also may increase the risk of identity theft, resulting in serious economic harm."
The Commission vote to authorize the testimony was 4-0.
Copies of the Commission 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; 202-FTC-HELP (202-382-4357); 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.
(File File No. 994320)
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