Rep. Leach Proposes Plan to Combat Identity Theft

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Following up on a recent House Banking and Financial Services Committee hearing, Chairman James A. Leach, R-IA, proposed a four-point initiative this week designed to crack down on identify theft nationwide.

In a letter to Attorney General Janet Reno, and in copies sent to all U.S. attorneys, state attorneys general and banking associations, Leach proposed that:

• Each U.S. attorney's office and state attorney general's office designate an individual or group to serve as a liaison for identity theft complaints from the public and the financial services industry. This person or group would ensure that identity theft crimes are no longer given short shrift and would assist law enforcement authorities in identifying patterns in unrelated cases that could lead to the detection and prosecution of identity theft rings.

• Law enforcement policies, including dollar threshold levels, that cause law enforcement officials to put identity theft of this nature on the back burner be reviewed.

• Congress should consider increased funding in the next appropriations cycle for the Secret Service's efforts to combat identity theft.

• Relevant financial industry trade associations appoint special task forces at each of their state chapters to focus on issues of identity theft prevention and detection.

Leach said that at last count, about 39 states had enacted laws relating to identity theft, including 22 that have criminalized it. But he said that despite this profusion of federal and state statutory authority and the exponential increase in reported cases of identity theft, there is little evidence that law enforcement agencies have made combating this crime a priority.

"Without a greater commitment by federal, state and local law enforcement agencies, and a stronger partnership with the affected industry groups, identity thieves ... will only become further emboldened," Leach said.

Indeed, the crime of identity theft has become one of the major law-enforcement challenges of the new economy, as vast quantities of sensitive, personal information are now vulnerable to criminal interception and misuse. The U.S. Postal Inspection Service estimates that 500,000 people a year have become victims of identity theft since the mid-1990s.

Leach's hearing, which took place Sept. 13, focused on H.R. 4311, the Identity Theft Prevention Act of 2000, and also on identity theft and pretext calling, a practice closely related to identity theft involving the use of false and deceptive methods to obtain personal financial information. Pretext callers often pose as law enforcement agents, social workers, potential employers and other authority figures to obtain individuals' private data from banks and other financial institutions. Some perpetrators use telemarketing scams to trick consumers into revealing personal data.

H.R. 4311 goes beyond provisions that Leach sponsored in 1998 and that were incorporated into last year's Gramm-Leach-Bliley financial modernization legislation. The Gramm-Leach-Bliley Act, which went into effect Nov. 12, 1999, made it a federal crime to obtain or attempt to obtain customer information from a financial institution by false pretenses.

However, H.R. 4311 addresses credit-reporting agencies, saying they also have an obligation to handle such information responsibly and should take affirmative steps to prevent identity criminals from intercepting such information.

Among other stipulations, the bill would require credit card companies to send a confirmation to a consumer's old address as well as to his new address upon receipt of a change-of-address form; to include a "fraud alert" in the consumer's file at the consumer's request; and to investigate discrepancies between personal or identifying information contained in the file maintained by the agency, and information supplied to the agency by the user of the consumer report.

At the hearing, Leach said that in the 10 months since the Gramm-Leach-Bliley Act went into effect, the committee received sporadic reports that federal regulators have not adequately heeded the strictures of the legislation. To determine whether it remains possible to find someone willing to break the law to obtain an individual's private financial information, committee staff conducted an informal survey during the recently concluded August recess.

Staff identified and contacted businesses advertising their ability to locate bank accounts, determine bank account balances and find other financial assets assumed by most consumers to be confidential. Of calls placed to 26 companies during an uninterrupted three-hour period, 11 companies were reached by the committee. All 11 were "eager to sell bank account information of a private citizen, with few, if any, questions asked," Leach said.

"In short, bank account information and other aspects of consumers' financial profiles apparently remain freely available to anybody willing to pay for them," Leach said.

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