It seems this newsgroup gets a lot of questions about identity theft, credit scores, and the "Big 3" credit bureaus. The article below has some interesting commentary about how the credit bureaus have helped create a lucrative industry (for them, of course) using so-called monitoring systems.
FWIW, you can get free monitoring if you have a (free) Paypal account.
This is the piece that I find very annoying about ID theft, that the responsibility isn't shifted to the financial institutions that grant credit. The law should put the onus on them to absolutely, positively, verify the identity of their customers, and take financial responsibility when they get it wrong. Add in something like "treble damages" - heck, $100k liquidated damages - benefitting the person whose ID was taken and the industry would shape up.
But under the current system they don't really lose. The person whose ID is taken has the responsibility for correcting it, and often bears financial losses as well. Any cost for the industry is shifted to other customers in the form of higher fees & interest rates.
And of course, freer credit means more cards in more hands which is how the business thrives. So there's no incentive to start a system where, say, every customer must pick up their card in person, and be photographed and fingerprinted. Or photo/print must accompany every transaction of a certain type (issue credit card, get mortgage, etc). I guess the ACLU might not like that but perhaps it could be a voluntary protection added to your credit record (flagged as "no credit extended without fingerprint verification"). Or something like this -- something substantially more than filling in a form, and seeing a credit card with a $18k limit land in your mailbox a week later.
The frustrating thing is that it's out of each of our control. The (to me, negligent) behavior is done by a third party so you can do everything right & still get nailed. And it's your responsibility to clean it up.
There have been proposed bills to shift more responsibility to financial institutions (eg one in CA in 05 I think) but they've lost vs. the industry lobby. If ID theft gets more common this type of legislation may become more feasible.
-Tad
The ACLU isn't giving out financial advice, last time I checked. It would be interesting to see how financial institutions would bear up under such stringent measures, not to mention customers. Photo ID is required for most banking transactions these days, anyway, so hasn't that already provided most of the security you seek? What would be the additional benefit to justify the additional cost?
"out of each of our control" ... as are many other aspects of financial planning. Is ID theft really the worst threat facing folks trying to anticipate their future financial needs? What about inflation, Social Security insolvency, Denial-of-Service (DOS) attacks on on-line logins, and so on?
-Mark Bole
I surprised there hasnt been a class action suit yet with all the suffering ID theft has cost. Maybe the credit agencies dont have deep pockets like other class targets like abestos, tobacco, fast food, etc.
Oh, I never said that. But I do think it's the principal "theft" risk to worry about because the numbers can get big. There's nothing quite like it really. I guess the next closest (for people who don't keep a Hope Diamond in the family safe) is car theft, which is not a huge deal when you're insured. What if you find out you are on the hook for a $50,000 debt from a house in Lake Tahoe, from someone who created an identity by intercepting your mail? True story! (not me, luckily) Or what if someone figures out how to hook into an investment account and siphon money out while you're away on vacation? (not too difficult to do). You think about this when a mail-fraud felon was caught with a hand reaching into your mailbox, fishing out mail (true story!! that one was me.)(no I was NOT the felon!)
A common thing I've seen with these is that the critical step involves a financial institution granting credit without truly verifying identity. It's not universal that even photo ID is required and only a few transactions require a fingerprint (eg cashing certain checks). And a photo ID can be faked convincingly enough to be useful for the cursory check they typically do.
If that step could be trapped then protecting SSNs and account numbers wouldn't be as important, because thieves couldn't do anything with them. It's almost a game-theory kind of problem...and my assumption is that it's impossible to truly protect SSNs & account numbers -- so why not try to trap it at the next step?
-Tad
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