Making identity theft a crime

Kiplinger's Personal Finance Magazine, Nov, 1998 by Kristin Davis

No one listens, no one cares," wrote Charlotte, N.C., reader Lisa Lippincott in response to our July cover story, "The Bonnie and Clyde of Credit Card Fraud." It is a common refrain among the identity-theft victims we heard from in the wake of that story, many of whom found it difficult to persuade creditors and credit bureaus that they were victims, not deadbeats. "It is unbelievable how fast banks and other creditors are willing to change addresses and issue new credit cards, but it's totally up to the victims to prove their innocence," Lippincott wrote.

Equally disturbing, victims report that it's often impossible to interest law-enforcement agencies in an identity-theft crime because it is a bank or business that takes the direct financial loss. "I was not considered a victim under the law," says Bob Hartle of Phoenix. "I had to get the financial institution to report a crime." And financial institutions are not always keen on making it known that they are vulnerable to fraud.

But while a bank can write off losses from fraud--and may even be insured against them--consumers repair the damage so easily. Hartle spent nearly four years and $15,000 to restore his good name after an identity thief borrowed more than $100,000 in his name and then filed for bankruptcy. The impostor had also obtained five driver's licenses (and a speeding ticket) in

Hartle's name, opened bank accounts, was hired and fired as Bob Hartle, and failed to pay state and federal taxes. The real Hartle says he contacted more than 100 people in his quest to repair the damage, including local law-enforcement agencies, the FBI and the U.S. Secret Service's financial-crimes division.

But it was largely because of Hartle's persistence that the perpetrator was finally caught. Hartle s efforts--including an appeal to Arizona's governor--finally persuaded local police to list his driver's license as fraudulent in a national crime database. The thief was arrested when he tried to exchange the Arizona license for one from New Hampshire and authorities checked the database.

As we went to press, Congress was considering legislation that may help future victims. Although current law prohibits the use of false identification documents, simply using someone else's name, social security number, date of birth or other identifying information is not a crime. "Law enforcement must wait for an overt fraudulent act or creation of a fraudulent document before it can intercede in a case solely involving identity fraud," James Bauer, deputy assistant director of the Secret Service, recently told Congress.

But the Identity Theft and Assumption Deterrence Act of 1998 would make it a federal crime--punishable by a sentence of up to 15 years in prison--to assume another person's identity. It would also recognize individuals whose identities have been stolen as victims, and allow them to seek restitution for expenses related to clearing their names. A handful of states, including Arizona, California, Colorado, Georgia, Mississippi, West Virginia and Wisconsin, have already passed laws making identity theft a felony.

New protection is sorely needed to combat a surging wave of identity fraud. Statistics are hard to come by because identify-theft cases are often lumped with other crimes--such as bank fraud, credit fraud and tax fraud--over which the Secret Service, FBI, Postal Inspection Service, Social Security Administration or IRS may have jurisdiction. But according to a recent report by Congress's General Accounting Office, all those agencies say that the identity-theft crime rate is rising. In 1997 the Secret Service investigated cases involving a total of $745 million, compared with $442 million in 1995. The Postal Inspection Service reports that organized-crime rings are behind much of the increased activity related to mail theft and credit card fraud, and that proceeds from those crimes frequently support drug trafficking.

For his part, Hartle is putting his four-year crash course in identity theft to use. He has become an advocate for other victims--testifying before the Arizona legislature and the U.S. Congress, and taking his message to the media (he has been the subject of stories in Parade magazine and on 48 Hours and America's Most Wanted). He has also assisted dozens of fellow victims. "The first thing most people say is, `Nobody will help.'" Hartle says. "They have no idea where to go or where to start."

The proposed federal law would help on that score, too. It would make the Federal Trade Commission the central clearinghouse for tracking and reporting identity-theft crimes and for referring cases to the appropriate law-enforcement and credit-reporting agencies.