'Identity Fraud' Law Reviewed

WASHINGTON (03/07/2000) - Somehow, someone got credit-card numbers and the social security number of Maureen Mitchell's husband. She first learned about the problem when a bank called her to report unusual credit-card activity. But the problems didn't stop for the Madison, Ohio, family. A department store and car dealers were issuing credit to people claiming to be Mitchell's husband.

Before the thieves were caught when they applied for large loans at a number of banks, some $111,000 in fraudulent charges and loans were issued for auto loans and store credit-card charges. Mitchell told her story this afternoon before the U.S. Senate Subcommittee on Technology, Terrorism and Government Information.

Committee Chairman U.S. Senator John Kyle (Republican, Arizona) held the hearing Tuesday to examine the effectiveness of a 1998 federal law that can send identity thieves to jail for 15 years and give the U.S. Secret Service and other federal authorities the ability to investigate the crimes.

But despite the new law, identity theft is on the rise, according to the U.S.

Federal Trade Commission (FTC). The information is anecdotal, but the trend is clear, the FTC said. The commission says it gets more than 400 calls a week to its newly installed identity theft hotline (1-877-IDTHEFT or the agency's Web site) and expects to receive 200,000 or more each year. The Social Security Administration last year received more than 39,000 reports of misuse in credit-card numbers - a figure that is also increasing.

Part of the problem may rest with the private sector. Although banks were able to identify suspicious activity and cut off credit, one department store issued a credit card and didn't become aware of thefts until it tried to have the bill delivered. Car loans were issued despite mistakes on the applications, including a fictitious telephone number that used an area code that didn't exist.

Credit reporting agencies, which potentially have the ability to alert businesses to a problem, did not do so, at least in Mitchell's case. Addresses were changed and credit inquires into her credit record mushroomed, but the illegal activity persisted.

Trying to report the problem to businesses also became an endless source of frustration for Mitchell. She frequently encountered automated messaging systems that made no provision for reporting fraud.

Ironically, when car loan payments were not received, Mitchell received telephone calls at home. "Too bad you didn't find the real Mr. and Mrs.

Mitchell before you loaned the money," she told the bill collectors.

The U.S. Treasury Department is holding a conference next week on identity fraud, and Jodie Bernstein, the director of the FTC's Bureau of Consumer Protection, said she will be seeking ways to work with the private sector in combating the problem.

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