FTC Testifies: Identity Theft on the Rise

The Federal Trade Commission today told a Senate Committee that identity theft is on the rise and called for increased public and private efforts to combat the problem. Identity theft occurs when someone hijacks a consumer's personal identifying information -- name, address, credit card or Social Security number -- and uses the data to open new charge accounts, order merchandise, or borrow money. Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, told the Senate Judiciary Committee Subcommittee on Technology, Terrorism and Government Information that a newly-installed, toll-free FTC hotline to take identity theft calls is already logging 400 calls a week. The testimony says the FTC is anticipating that call volume will eventually grow to 200,000 a year. "Anecdotes and news stories provide one indication of the growth of identity theft," the testimony says. "Available statistics confirm this trend. The General Accounting Office, for example, reports that consumer inquiries to the Trans Union credit bureau's Fraud Victim Assistance Department increased from 35,235 in 1992 to 522,922 in 1997, and the Social Security Administration's Office of the Inspector

General conducted 1153 social security number misuse investigations in 1997 compared with 305 in 1996. In 1999, the telephone hotline established by the Social Security Administration Inspector General received reports of almost 39,000 incidents of misuse of Social Security Numbers." The testimony says that the availability of information on the Internet is adding to the challenge.

The testimony notes that as an outgrowth of the FTC's ongoing interest in consumers' financial privacy, it began looking into identity theft issues in 1996. It outlines a three-point program the FTC initiated to prevent identity theft, assist victims, and collect information about identity theft for use by law enforcement agencies. The FTC has installed a toll-free number, 1-877-IDTHEFT ( 877-438-4338) where consumers who have been victims of identity theft can report the crime and get advice from telephone counselors trained to provide assistance to ID theft victims. The agency also has developed an online consumer complaint form located at www.consumer.gov/idtheft. ID theft victims can enter their complaint data directly into the FTC's secure database from that site. The site also provides links to numerous consumer education materials, as well as state laws governing ID theft, articles, reports and testimony.

"The FTC has taken the lead in coordinating the efforts of government agencies and organizations to develop and disseminate comprehensive consumer education material for victims of identity theft, and those concerned with preventing identity theft," the testimony notes. "This collaborative consumer education effort is ongoing; we hope to lead a similar joint effort with many of the private sector financial institutions that have an interest in preventing and curing the effects of identity theft," the testimony adds. Two free consumer publications, "When Bad Things Happen To Your Good Name," and "Identity Crisis. . . What to Do If Your Identity Is Stolen," reinforce the FTC's toll-free hotline and the consumer complaint form. The testimony also stated that ". . .the Commission recognizes that the success of this effort hinges on the public's awareness of these resources," the testimony says.

"Notwithstanding our efforts and those of other law enforcement agencies, however, identity theft continues to pose significant problems for consumers," the testimony says. It says that there are two areas where further work should be done. "Although many bank, credit card issuers, and other companies have put into place extensive systems to guard against identity theft, there nonetheless remain a number of continuing practices that may contribute to the problem of identity theft. . . . Thus, one possible area for further action lies in bringing together creditors and credit reporting agencies (the group that is probably best placed to notice when there have been numerous credit applications or new accounts opened) to develop mechanisms for detecting such fraud -- and thus heading off identity theft."

In addition, the testimony notes, "Identity theft victims continue to face numerous obstacles to resolving the credit problems that frequently result from identity theft. For example, many consumers must contact and re-contact creditors, credit bureaus and debt collectors, often with frustrating results. . . .The FTC believes that, as a first step, it would benefit consumers if they could make a single phone call - - presumably, to any of the major credit bureaus or to the FTC's hotline -- and have a fraud alert placed on all three of their credit reports, and copies of each of their three reports sent to their home address. The success of such an effort depends on the cooperation of the major credit bureaus."

The testimony notes that the FTC has been working with the Department of Treasury on a National Summit on Identity Theft, scheduled for March 15 and 16. "The Commission, working closely with other federal agencies and the private sector, has already made strides towards identifying ways to reduce the incidence of identity theft. More focused law enforcement, greater consumer education and increased awareness by the private sector will all contribute to this effort," the testimony says.

Copies of the 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; toll free at 1-877-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
202-326-2161

 

Staff Contact:

Beth Grossman or Betsy Broder
Bureau of Consumer Protection
202-326-3019 or 202-326-2968

 

(FTC File No. P00 4305)