Monday, March 21, 2005
Identity theft grows rampant
Sadly, it's estimated that up to 70 percent of identity theft begins with dishonest employees in businesses who steal customers' personal information.
In other words, short of living a cash-only existence, you're vulnerable to crimes against your credit if you're a typical plastic-packing American consumer no matter how religiously you shred your bank statements and credit card bills.
The admission last week by ChoicePoint Inc., a California-based information broker, that personal data for nearly 150,000 people nationwide, including 1,122 from Massachusetts, may have fallen into the hands of identity thieves was a chilling warning. Identity theft using black-market databases may be looming on the horizon as a monster problem.
As a pre-emptive strike against identity thieves, Massachusetts is considering giving consumers final approval about who can see their credit reports, a measure consumer advocates say will prevent many of the credit abuses that can arise from stolen data.
"It stops identity thieves in their tracks and puts consumers in control of their personal information," said Kerry E. Smith, the consumer attorney for the Massachusetts Public Interest Research Group, which is pushing for passage of the so-called "security freeze" legislation.
"For instance, if a thief has your name and Social Security number and goes to a department store to try to get a credit card in your name, with the security freeze in place, when the department store tries to pull your credit report before they approve the account, they wouldn't be able to get to it (which would tip them a crime is in progress). You would have had to call to free up the report," she said.
In the last year, nearly 10 million consumers were victims of identity theft, according to estimates of the Federal Trade Commission. One study found victims had to spend an average of 175 hours cleaning up their besmirched credit and had to pay $808 out of their own pockets in the process. For most consumers, the greater concern is the loss of the time rather than the money.
In Massachusetts in 2003, the most common type of identity theft involved new fraudulent credit card accounts, comprising 24 percent of the crimes.
The security freeze Massachusetts legislators are considering is modeled after a California law. A consumer would pay about $10 to place the freeze on a report with each of the three credit agencies, or about $30 total. Unfreezing the report for a period of time, in order to establish a line of credit or for some other honest purpose, might cost $5 to $10 per agency.
The security freeze bill, which is expected to be taken up by the Legislature this spring, is backed by the Massachusetts Attorney General's office. However, the freeze will not prevent all identity theft crimes, said Jesse M. Caplan, chief of the Consumer Protection and Antitrust Division for the office.
"There are other ways thieves steal people's identity, such as going through someone's garbage to pull out credit card statements or sending fraudulent e-mails to them claiming to be from their bank and seeking personal information. But this would address one of the most important ways," he said.
Smith, of MassPIRG, said that despite the security freeze's benefit to consumers, there are those who oppose it and will lobby in Boston against it.
"Certainly credit bureaus do not like the security freeze because they make money by selling people your credit report and credit scores. A big opponent has also been car dealers and others who want to give out fast or easy credit," she said.
Sadly, it's estimated that up to 70 percent of identity theft begins with dishonest employees in businesses who steal customers' personal information.
In other words, short of living a cash-only existence, you're vulnerable to crimes against your credit if you're a typical plastic-packing American consumer no matter how religiously you shred your bank statements and credit card bills.
The admission last week by ChoicePoint Inc., a California-based information broker, that personal data for nearly 150,000 people nationwide, including 1,122 from Massachusetts, may have fallen into the hands of identity thieves was a chilling warning. Identity theft using black-market databases may be looming on the horizon as a monster problem.
As a pre-emptive strike against identity thieves, Massachusetts is considering giving consumers final approval about who can see their credit reports, a measure consumer advocates say will prevent many of the credit abuses that can arise from stolen data.
"It stops identity thieves in their tracks and puts consumers in control of their personal information," said Kerry E. Smith, the consumer attorney for the Massachusetts Public Interest Research Group, which is pushing for passage of the so-called "security freeze" legislation.
"For instance, if a thief has your name and Social Security number and goes to a department store to try to get a credit card in your name, with the security freeze in place, when the department store tries to pull your credit report before they approve the account, they wouldn't be able to get to it (which would tip them a crime is in progress). You would have had to call to free up the report," she said.
In the last year, nearly 10 million consumers were victims of identity theft, according to estimates of the Federal Trade Commission. One study found victims had to spend an average of 175 hours cleaning up their besmirched credit and had to pay $808 out of their own pockets in the process. For most consumers, the greater concern is the loss of the time rather than the money.
In Massachusetts in 2003, the most common type of identity theft involved new fraudulent credit card accounts, comprising 24 percent of the crimes.
The security freeze Massachusetts legislators are considering is modeled after a California law. A consumer would pay about $10 to place the freeze on a report with each of the three credit agencies, or about $30 total. Unfreezing the report for a period of time, in order to establish a line of credit or for some other honest purpose, might cost $5 to $10 per agency.
The security freeze bill, which is expected to be taken up by the Legislature this spring, is backed by the Massachusetts Attorney General's office. However, the freeze will not prevent all identity theft crimes, said Jesse M. Caplan, chief of the Consumer Protection and Antitrust Division for the office.
"There are other ways thieves steal people's identity, such as going through someone's garbage to pull out credit card statements or sending fraudulent e-mails to them claiming to be from their bank and seeking personal information. But this would address one of the most important ways," he said.
Smith, of MassPIRG, said that despite the security freeze's benefit to consumers, there are those who oppose it and will lobby in Boston against it.
"Certainly credit bureaus do not like the security freeze because they make money by selling people your credit report and credit scores. A big opponent has also been car dealers and others who want to give out fast or easy credit," she said.
