FTC Testifies on Identity Theft

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The Federal Trade Commission said today that features of certain legislation - some passed into law, some pending - could help the consumer victims of identity theft. In FTC testimony before the House Committee on Banking and Financial Services, Betsy Broder, Assistant Director of the Bureau of Consumer Protection told Committee members, "The Commission has made great strides in assisting consumers and law enforcement to combat identity theft, but recognizes that much remains to be done."

The testimony says "... common forms of identity theft include taking over an existing credit card account and making unauthorized charges on it (typically, the identity thief forestalls discovery by the victims by contacting the credit card issuer and changing the billing address on the account); taking out loans in another person's name; writing fraudulent checks using another person's name and/or account number; and opening a telephone or wireless service account in another person's name." The FTC says that identity theft may be undetectable for long periods of time. "In many instances, identity theft goes undetected by creditors, law enforcement and the victims for months and even years. One caller to the FTC's identity theft hotline reported that his wallet was stolen in 1992. This consumer was unaware that he was the victim of identity theft until seven years later, when, in the summer of 1999, he was arrested on an outstanding warrant for an offense committed by the identity thief in 1993. The consumer spent several nights in jail and was forced to post $15,000 bond. He was also shocked and dismayed to discover multiple outstanding criminal charges against him in several states as a result of the identity thief's activities. This example, while unusual, is not unique. The FTC has received numerous reports from consumers who were not aware that they had been victimized by an identity thief for four or more years from the time of the first fraudulent transaction," the testimony states.

Provisions of the Identity Theft Prevention Act of 2000, now under consideration in the House as HR 4311 would provide consumers with access to information that could reveal that someone else was using their identity, including providing consumers with a free copy of their credit report. "Providing for free annual credit reports and requiring that a credit card issuer advise a consumer of a request to change the address on a credit account will help consumers help themselves," the testimony says. "Further, requiring clear and conspicuous fraud alerts on credit reports will help to thwart the ability of identity thieves to commit ongoing fraud. The Commission is confident that these proposals will assist consumers ..."

The testimony says that provisions of the Gramm-Leach-Bliley Act (GLB Act) that prohibit obtaining or attempting to obtain customer information from a financial institution relating to another person by fraud or misrepresentation - a practice known in the industry as pretexting - will also help deter identity theft. As a result of that provision, a person who ". . . impersonates a victim and contacts the victim's bank in order to obtain account information to commit identity theft would violate the GLB Act in addition to potentially violating the Identity Theft Act."

The testimony states that the Identity Theft Data Clearinghouse - a database of detailed information from complaints received on the FTC's toll-free identity theft hotline - could serve to identity GLB violations. "The Identity Theft Data Clearinghouse collects information, if known to the complainant, as to how an identity thief obtained the complainant's personal information. This information is useful to law enforcement prosecuting identity theft under both statutes. Indeed, the Commission is beginning to receive complaints that identity thieves have accessed private information through pretext calling to financial institutions," the testimony notes.

"The Identity Theft Data Clearinghouse demonstrates that identity theft is a serious and growing problem, but it also reveals ways to halt this growth," the testimony says. The Clearinghouse, the toll-free hotline counselors and the consumer education campaign have begun to address the serious problems associated with identity theft. Heightened awareness by consumers and businesses will also help reduce the occurrences of this fraud. The Commission looks forward to continued collaboration and cooperation between government agencies, law enforcement and the private sector in these efforts."

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

Copies of the testimony and a free publication for consumers, "When Bad Things Happen To Your Good Name," 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.


Media Contact:

Claudia Bourne Farrell

Office of Public Affairs


Staff Contact:

Joanna Crane

Bureau of Consumer Protection


(FTC File No. P00 4305)

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