Federal News Service Transcript - The Growing Problem of Identity Theft and Its Relationship to the Fair Credit Reporting Act

Federal News Service

June 19, 2003 Thursday

HEADLINE: HEARING OF SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
 
SUBJECT: THE GROWING PROBLEM OF IDENTITY THEFT AND ITS RELATIONSHIP TO THE FAIR CREDIT REPORTING ACT
 
CHAIRED BY: SENATOR RICHARD C. SHELBY (R-AL)
 
LOCATION: 538 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C.

SEN. CHARLES E. SCHUMER (D-NY): Thank you, Mr. Chairman, and I want to thank you for holding this hearing. Again, this is a really important issue, I've been concerned and involved in it for over a year, and there's nothing worse, than when your identity is stolen through no fault of your own, and then it takes you years and years and years to restore your credit rating. It's an impossible situation, and it used to be sort of a small situation, you know this was not done en masse, before the days of computers, somebody might reach into a garbage can and find somebody's credit card number and do it, but now, they can—we've had instances in New York where whole databases were stolen by employees, selling each identity for 30 bucks an identity, or something like that, and making huge amounts of money.

Our U.S. attorney, Mr. Colmey (ph), had a major indictment of this, so I certainly agree with what some of my colleagues have said, I think Mike Crapo, that our credit system and this new digital age have brought huge benefits, it also brings some liabilities. And it's our job to focus on those liabilities and I think FCRA is an appropriate place to do it. As I mentioned, Mr. Chairman, this issue is of specific concern to New York. My city, where I live, my home town, has the unfortunate distinction of being the identity theft capital of the United States. We suffer more identity theft than any other place.

My state, New York, has the second highest amount, and this is mushrooming. Last year, the FTC nationally received twice as many complaints about identity theft as in 2001. Many people predict that by 2006, there will be half a million to 700,000 Americans victimized. And this is not just a casual thing. It changes your life. You can't get credit, some people hound you, and it's a huge mess, so I think we have to move, and I think we have to move quickly. When you destroy a person's credit rating, you jeopardize an honest person's ability to get a credit card, receive approval for a loan obviously, but also to get a job, to buy a house. Those are ones that go to the core of who each of us are and what matters to us in our lives.

And so I think we should do a number of things, and like some others here, I have a proposal that I've been floating and circulating. Before I do that, I do want to mention, a couple of other people have had, Senator Cantwell has a bill that I've cosponsored that makes it easier to restore your rating once it's been stolen. And in the Judiciary Committee, we're working together with Senator Feinstein, in terms of toughening up the penalties. But there are five or six things I'd commend to this committee to look at.

One is to make sure that the credit databases are much more secure. You do that in a few ways. One, you make sure that the people who have access to those credit databases, are bona fide people, make sure they don't have a criminal record, make sure they've had no other bad histories in the past, all too many companies don't do that now. And second, let people go into those, even the employees, go into those credit databases on a need-to-know basis. Most of the companies we found, including the big case in New York, which affected people throughout the company, any employee could just punch in and get the whole database, whether they needed it for their job or not.

And so the credit companies ought to do this on a need-to-know basis, let the employees go in there on a need-to-know basis. Then—so that is really, those two things are important. At the core of the proposal I've made, is credit account notification. Credit reporting agencies should notify a consumer when a new credit account is opened in his or her name. Because we know what happens. They take your name, they take your birth date, they take your Social Security number and they just put in a different address.

Well, if the minute, you know Chuck Schumer, 05 -- I shouldn't say my Social Security number loudly, Chuck Schumer, 123456789 Social Security number, birth date 11 2001, make myself a little younger, but the minute that happens, they should send—and someone opens up a credit card at a new address, they should immediately send a notification to my old address, where I really live, and I'd say, hey I didn't move to Evanston, Illinois. And you could stop a whole lot of identity theft, with that simple notification provision. So, I think we ought to do that.

And two other things, Mr. Chairman, I'm sorry to—appreciate the indulgence. We ought to truncate credit card receipts, some companies do this, in other words the receipt, the part you discard doesn't show the whole number on there, so people can't go into the garbage can, pick it up and duplicate your credit card number. That's easy to do, some companies have it and some don't. And finally, as I mentioned earlier, Senator Cantwell's worked on this, make it easier, if once you're—it's proven bona fide that you're a victim of identity theft, make it easier to get your financial life back, because that's a real hard thing to do.

So, I'd like to work with you, Mr. Chairman, and others in this committee, and try to get these changes, and maybe put them in the Fair Credit Reporting Act. I really thank you for having a hearing on a very much needed topic.