[Senate Hearing 106-1025]
[From the U.S. Government Publishing Office]
S. Hrg. 106-1025
IDENTITY THEFT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TECHNOLOGY, TERRORISM,
AND GOVERNMENT INFORMATION
of the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
AUGUST 30, 2000
__________
MONTEREY, CA
__________
Serial No. J-106-103
__________
Printed for the use of the Committee on the Judiciary
__________
U.S. GOVERNMENT PRINTING OFFICE
73-465 WASHINGTON : 2001
COMMITTEE ON THE JUDICIARY
ORRIN G. HATCH, Utah, Chairman
STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire
Manus Cooney, Chief Counsel and Staff Director
Bruce A. Cohen, Minority Chief Counsel
------
Subcommittee on Technology, Terrorism, and Government Information
JON KYL, Arizona, Chairman
ORRIN G. HATCH, Utah DIANNE FEINSTEIN, California
CHARLES E. GRASSLEY, Iowa JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin
Stephen Higgins, Chief Counsel
Neil Quinter, Minority Chief Counsel and Staff Director
C O N T E N T S
----------
STATEMENT OF COMMITTEE MEMBER
Page
Feinstein, Hon. Dianne, a U.S. Senator from the State of
California..................................................... 1
WITNESSES
Ahern, Michael E., Deputy Chief Inspector, Field Operations West,
U.S. Postal Inspection Service, prepared statement............. 58
Baca, Leroy D., Los Angeles County Sheriff, prepared statement
and attachments................................................ 4
Frank, Mari, identity theft victim, prepared statement and
attachments.................................................... 29
Kassin, Selene, identity theft victim, prepared statement........ 26
Klurfeld, Jeffrey A., Director of Western Regional Office,
Federal Trade Commission, prepared statement and attachments... 43
Vezeris, Jane, Deputy Inspector General, Social Security
Administration, prepared statement............................. 55
IDENTITY THEFT
----------
WEDNESDAY, AUGUST 30, 2000
U.S. Senate,
Subcommittee on Technology, Terrorism,
and Government Information,
Committee on the Judiciary,
Monterey Park, CA.
The subcommittee met, pursuant to notice, at 9:06 a.m., at
the Sherman Block Sheriff's Headquarters Bureau, 4700 Ramona
Boulevard, Monterey Park, CA, the Hon. Dianne Feinstein
presiding.
OPENING STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM
THE STATE OF CALIFORNIA
Senator Feinstein. I'd like to welcome all of you here,
this morning, to the field hearing of the Senate Judiciary
Subcommittee on Technology, Terrorism and Government
Information. I'm the ranking member of that committee.
The topic of this hearing is local and Federal response to
identity theft.
In particular, I want to thank Sheriff Baca for joining me
in hosting this hearing at the Los Angeles County Sheriff
Headquarters, and Sheriff Baca will begin our testimony in just
a moment, with an announcement that he has to make.
I'd also like to thank the impressive roster of witnesses,
Jeffrey Klurfeld, who's director of the Western Regional Office
of the FTC, Jane Vezeris, the Deputy Inspector General of the
Social Security Administration, Michael Ahern, the Deputy Chief
Inspector of Western Field Operations of the U.S. Postal
Inspection Services, and also, two identity theft victims,
Selene Kassin, and Mari Frank.
Identity theft is perhaps the signature crime of this new
economy. Modern technology has made vast amounts of personal
information obtainable at the click of a keyboard, or at the
acquisition of a public document, leaving our personal
information vulnerable to interception and misuse.
Now, what is identity theft? Identity theft occurs when one
person assumes another's identity, and fraudulently uses their
personal financial data, to acquire credit or products, again
fraudulently, and to hide from their own true identity.
The documents can be a Social Security number, a birth
date, a driver's license number, or other identifying
information that enables them to obtain your credit cards, and
then go out and use those credit cards.
Identity thieves can get personal information in a myriad
of ways, stealing wallets and purses, containing identification
cards, using personal information found on the Internet,
stealing mail (including pre-approved credit offers and credit
statements), fraudulently obtaining credit reports, or getting
personal records at work.
An identity is stolen today every 60 seconds. As many as
seven hundred thousand incidents of identity theft will occur
this year.
The heaviest area in the United States for identity theft
is right here, Los Angeles, and that's why we're holding this
hearing here today, and to bring this information back to the
Judiciary Committee.
The hearing is being recorded, and all of this will be
included in the official transcripts of the hearings on this
subject.
From 1997 to 1999, there was a 380-percent increase in the
reporting of Social Security number misuse.
In a survey of a thousand Americans, by Impulse Research of
Los Angeles, 42 percent of the respondents reported a member of
their household had their personal identity or credit card
information stolen.
Identity theft causes up to $3 billion in losses annually,
from credit card fraud, alone.
We're going to hear from two victims today, who will
describe the havoc to their lives caused by identity theft.
Now, identity theft, unlike other crimes, is an ongoing
crime that can last for years.
The typical victim learns about the identity theft 14
months after it's occurred, sustains $18,000 in fraudulent
charges, and spends a 175 hours over 2 years, restoring their
clean credit and good name.
I'd like to tell you just about the one case of one person
who is not testifying here today, but I happened to have met
her before.
She was a victim of identity theft. Her name is Lynn
Klinenberg. Her late husband, James Klinenberg, Dr. James
Klinenberg was the chief of medicine and vice-president of
professional services at Cedars-Sinai in Los Angeles.
If you're here, Lynn, would you stand, so people might be
able to see you? Thank you, very much.
Her husband's Social Security number and mother's maiden
name were obtained through a death certificate. Her husband
died suddenly in December. His obituary was in the Los Angeles
Times, as well as other places.
The thief went and got the death certificate, which looks
like this, which is a public record. On that death certificate,
was her husband's Social Security number and her mother's
maiden name.
Mrs. Klinenberg didn't fill out that death certificate,
others did. But this information was then used to access Mrs.
Klinenberg's bank account, and receive credit cards in her late
husband's name.
Shortly after her husband's death, these criminals
attempted to wire transfer thousands of dollars from her
family's bank account to banks in New York and Pittsburgh.
Her husband's name appeared on a credit card in Denmark and
was used to order $25,000 in diamonds and Rolex watches,
fraudulently.
Now, that's one example. Another example that wewill hear
about, are people using this information to go out and stalk a victim
by locating their home address and finding out where they are.
I have also found that the Social Security number has
become a prime source for obtaining information, to go ahead
with a crime of identity theft.
So, our goal today to see how the Federal Government might
be able to help, to put the clamps on identity theft, to make
it harder to traffic in personally identifiable information,
how law enforcement can increase the prosecution and
investigation of identity theft, and how individuals can take
preventive steps to protect themselves from identity thieves.
First, we can cut down on the widespread trafficking, and
use of Social Security numbers, and I have a bill to do just
that.
Social Security numbers have become the prime tool, used by
identity thieves, to capture victims' personal information, and
to set up fraudulent credit card accounts.
Today, on the Internet, an identity thief can buy another
person's social security number for as little as twenty-five
dollars ($25), no questions asked. This is simply wrong.
I have introduced the Social Security Number Protection
Act, which is endorsed by the Clinton-Gore administration.
This bill would prohibit the sale of a person's Social
Security number, without their consent, except for a narrow
number of circumstances, such as law enforcement, national
security, or public health purposes.
I've also introduced the Identity Theft Prevention Act.
This bill, which is endorsed by the Federal Trade Commission
and my Senate colleagues, John Kyl and Charles Grassley, offer
a number of concrete practical measures, to cut down criminal
access to personal information, and assist victims.
For example, identity thieves often intercept bank
statement or credit card statements, and then redirect the
account to another address.
This bill would require credit issuers to notify the
original card holders of their original address of any address
change request.
Therefore, cardholders would know right away, any time a
thief is trying to shift the address of their account.
In addition, the bill would develop standardized forms for
victims to report identity theft to bank credit bureaus and
retail stores.
Right now, identity theft victims typically have to fill
out a new fraud report for each store with a fraudulent charge.
Creating a standardized form could save many victims
literally hundreds of hours of time of filling out what are
redundant reports.
Sheriff Baca will head off the hearing today, with
testimony about a new project, an innovative and ground-
breaking Los Angeles County Identity Theft Strike Force.
I will leave it to him to describe the program, but I think
he has developed a model that's worth emulating around the
country, and when Congress convenes, I'm giving serious
consideration to introducing legislation, authorizing $15
million to create identity theft strike force pilot projects,
around the country.
So, I look forward to this hearing today, and I'd like to
introduce the first panel.
Let me begin with Sheriff Baca. He is the thirtieth Sheriff
of Los Angeles County.
He commands the largest Sheriff's Department in the world,
supervising more than thirteen thousand sworn civilian
personnel.
He's had an extraordinarily successful career in the Los
Angeles Sheriff's Department, where he started as a Deputy
Sheriff Trainee in 1965, rising to Captain in 1981 and Chief in
1992. He was sworn in as Sheriff in 1998.
His record is one of effective innovation. As a Chief of
the Court Services Division, he directed the strategy that led
to the merger of the Sheriff's Department and the Marshal's
Department.
The merger saved the taxpayers of Los Angeles $14 million a
year.
With the Sheriff Department's identity theft team, Sheriff
Baca is again showing leadership. I look forward to his
testimony in this area.
And the remaining two speakers of the first panel are
identity theft victims, Mari Frank and Selene Kassin.
Let me just quickly tell you a little bit about them.
Selene will describe in her testimony her personal encounter
with identity theft.
She had her identity stolen by a thief who had just her
Social Security number, who used her identity to obtain
numerous credit cards.
Selene only found someone was living as her from a letter
from a credit card company, asking if she tried to open up a
new account.
And the second person is Mari Frank. Mari is an Orange
County attorney, who has been a victim of identity theft on two
separate occasions.
Since her first traumatic encounter in 1996, she's devoted
much of her time and energy, teaching others how to protect
themselves.
She is a co-author of the ``Identity Theft Survival Kit,''
and is an Orange County, California Sheriff Reserve, for the
High Tech Crime Unit.
So, let's begin right now with the first panel, and I'd
like to present Sheriff Baca of Los Angeles County.
PANEL CONSISTING OF LEROY D. BACA, LOS ANGELES COUNTY SHERIFF,
LOS ANGELES, CA, MARI FRANK, IDENTITY THEFT VICTIM; AND SELENE
KASSIN, IDENTITY THEFT VICTIM
STATEMENT OF LEROY D. BACA
Sheriff Baca. Thank you very much Senator, and good
morning. Welcome to the Los Angeles County Sheriff's Department
Headquarters Unit, Sherman Block Administration Building.
I would like to open my remarks by piggybacking on the
things that you've described earlier, Senator, and I appreciate
the thoroughness under which you have approached this problem.
Prior to your testimony here, in opening up for our
testimony, the Los Angeles County Sheriff's Department was well
aware that there was an identity theft problem that needed to
be addressed in a more concerted fashion.
So, in order to do this, approximately a year and a half
ago, we researched this issue in depth, and implemented the
best ideas from victim advocates, the public and private
sector.
We trained our department as to the needs of the victims,
and established a cutting-edge reporting procedure, that would
centralize the tracking.
As you identified earlier, there's apparently a reporting
deficiency, in terms of how we can get victims who are multiple
targets from various suspects.
How can we get them to report things in a fashion that
doesn't cause the victim any more agony than they already have
by virtue of being a victim?
So, what we did, is we put together a guide for law
enforcement officers to follow, when they're dealing with
victims of this type of crime.
Furthermore, we put together a----
Senator Feinstein. I'd like to ask that that be made part
of the record.
Sheriff Baca. Yes, and I will present you with a complete
packet, that will include this information.
Senator Feinstein. Thank you.
Sheriff Baca. Second, the idea of how the department would
respond to an identity theft report, what are the actual things
that we will do, in order to ensure that the victim's
circumstances are fully investigated?
We developed an informational brochure for victims of
identity theft, as well.
Now, in producing this information, the logical outgrowth
is that the public now is more informed, as to what they can
do, and what will law enforcement do for them.
Consequently, we have seen a dramatic increase in this type
of offense being reported to us.
For example, we have encountered, when we started this
program, two hundred and seventy-three victims.
This was in 1999, and we started the program around July.
So, at about a 6-month period of time.
Just opening up the first 4 months of this year, the year
2000, we have already 645 cases reported to us, which is a net
increase of approximately 136 percent.
Recognizing these numbers and these statistics are, are the
early reporting of what our experiences have been, it still
clearly indicates that this is a problem that will only grow.
The encouraging part of what is going on with your inquiry
to local law enforcement about the problem, is that the State
of California recognizes that there is a need for more things
to be done, as well.
For example, when we talked about training and public
awareness, and then of course prevention, it's key to identify
a central tracking mechanism and that, therein the Los Angeles
County Sheriff's Department created the unit that is
responsible for identity theft investigations.
There, there, there, it's a team approach. There are four
investigators and a supervising lieutenant, that are
responsible for this highly specialized task force.
Undoubtedly, procedures had to be established, and I have
copies of that data for you.
Not only do we have to have internal departmental
procedures, but the State of California's peace officer and
standards and training offices now have a 40-hour course to
train law enforcement officers on how to do these type of
investigations.
The Sheriff's Department was privileged to participate in
the, President Clinton's National Summit on Identity Theft, in
Washington, DC, and at this point, the Federal Trade Commission
has been working closely with the Los Angeles County Sheriff's
Department, in a regional identity theft effort.
Cases that are reported to us, undoubtedly can affect the
Federal Trade Commission, as well.
We have a new office facility in the city of Bellflower,
that is capable of receiving additional investigative resources
from the Federal Government.
Moreover Senator, excuse me, moreover Assembly Member and
Speaker, Robert Hertzberg, has authored an Assembly Bill 1949,
to fund a multiple agency task force team in the State of
California.
I support wholeheartedly your bill, Senate Bill 2328, which
is the Identity Theft Prevention Act, as well as your Senate
Bill 2699, the Social Security Number Protection Act.
Your effort in ensuring that these privileged and
confidential pieces of information are not available in such a
open fashion, as through the Internet, is a step in the right
direction, to guarantee that victims can be protected properly,
sought out victims, that is by very, very highly skilled
offenders who will prey on information, and then from the
information, prey on the victims themselves.
I think that what I believe is necessary for us to go
forward in Southern California is that we need to combine more
Federal, State and local resources together.
You will hear testimony from representatives of other
agencies.
As I close, I would like to recommend to you that a full-
time investigator from the following federal agencies be
assigned to the Sheriff's Department Task Force: a member of
the U.S. Postal Inspection Service; a member of the U.S. Secret
Service; a member of the Office of Inspector General for Social
Security and a member of the U.S. Treasury Department, Office
of Tax Enforcement.
I will also be recommending to the Governor and State
officials that the California Department of Health Services,
Offices of Vital Records, be assigned to this task force, and a
member of the California Department of Justice.
Thank you, very much.
[The prepared statement and attachments of Mr. Baca
follow:]
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Senator Feinstein. Thanks, very much, Sheriff. I'll hold my
questions, and give an opportunity for the two victims to
testify.
Let's begin with Selene, would you----
Ms. Kassin. OK, sure, thanks.
Senator Feinstein [continuing]. Begin your testimony,
please?
STATEMENT OF SELENE KASSIN
Ms. Kassin. Thank you, Senator.
I produced a documentary called ``Stolen Identity, Crime of
the Millennium,'' which was inspired by my own experience of
having my identity stolen.
The person who stole my identity did not know me. They did
not know my age or my mother's maiden name. They did not know
my driver's license number. They did not even know what I
looked like.
In fact, she changed all these statistics to match her own.
All this person knew that stole my identity was my Social
Security number.
Having my identity stolen and recovering my identity was
traumatic, scary and surreal.
I felt I was victimized once by a perpetrator, and again by
the system.
I found out someone was living as me, from a letter from a
credit card company, asking if I tried to open up a new
account.
When I called the credit bureaus, I found a new address,
phone number, driver's license number and numerous new credit
cards.
I called and I went to several police stations, and I was
refused help.
The police told me they would take a courtesy report, but
not to expect an investigation, and the burden of proof was on
me.
I called the police to see if they could tell me whom the
phone line belonged to, that was listed on my credit report.
They said they couldn't. I found out it belonged to me.
So, I called the phone company to have them disconnect the
phone line. They said they would have to notify the other
Selene in writing first.
The other Selene, the person who stole my identity, called
them and was more convincing than I was, in proving my own
identity.
They believed her and didn't believe me, and subsequently
closed the fraud file.
I called the credit, I'm sorry, I called the credit card
companies and I begged them to send me the documents that were
forged in my name, and they did send them, but they sent them
to her.
As quickly as I would close the accounts, she would open
new ones. I called the credit bureaus to ask why they opened
new accounts when I had it flagged. They had no answer.
My story is not typical, because I was fortunate enough to
finally receive help from police.
After several months of persistence, I was able to get
enough evidence by myself that Detective Edholm of the Beverly
Hills Police Department arrested her.
She had a prior criminal record. I was told she would not
be released on bail, but she was. I was notified several weeks
later, that someone tried to take out a loan, in my name.
The identity thief was sentenced to 18 months. She served 9
months, and is now out on parole. The parole officer warned me
that she could do it, all over again.
The shocking thing about being a victim of stolen identity
is you're often met with disbelief. People think stealing your
identity cannot be that easy, that the police could not refuse
to help you, and that if your identity was stolen, there has to
be a remedy, to not only get it back, but also to prevent it
from happening again.
Because many of these aspects are not easy to digest as
true, I was inspired to produce a documentary to give a voice
to the victims that were often silenced by the current laws.
The documentary ``Stolen Identity, Crime of the
Millennium'' provides candid testimony from the victims
themselves, that this crime exists and to what extent.
It's currently being distributed by Aames Multimedia,
Chatsworth to schools, universities, and law enforcement
agencies, nationwide.
While producing the documentary, I was astonished to learn
that identities were being stolen, not only to obtain cash and
credit cards, but to commit serious crimes in the name of an
unsuspecting victim.
I want to share some of their devastating stories, as
they've tried to recover their identity and clear their names.
One victim best described his battle in just a few words.
It's war, and I'm the enemy.
It's hard to believe that the crime of stolen identity
exists, because it's nearly invisible to its victims.
You don't see it happening to you, you wake up one day and
all of the sudden you could be facing jail time.
Rochelle, the school teacher, finds out she's been denied
car insurance. When she calls to find out why, she finds out
she has three driver's licenses that had been, that have been
made out in her name. She also finds out she has an arrest
warrant out for her.
When she inquires with the DMV, they're suspicious, but
they're suspicious of her. When she goes to the police, they
refuse to help her.
So, she goes to court with documents proving her identity,
but the judge doesn't believe her.
The story is typical. The first response that most victims
face, when confronting the law is, you're guilty, and the
burden of proof is on the victim.
Victims generally have the responsibility of retrieving
their identity, on their own, even if law enforcement is
contacted.
The victims also have to endure an emotionally-draining,
costly, and time-consuming experience, of clearing their own
name.
I met Linda, a college student over many months, as she
tried to prove her identity.
She found, found out her identity was stolen, when the
police showed up at her door with a bench warrant. She was
charged with being under the influence of PCP.
She had to live with the terror of going to jail, as she
endured months of court appearances. She tried to prove her
innocence, with her fingerprints. She had to have her
fingerprints done 5 times, and they still did not prove her
innocence.
Finally, months later, in yet another court proceeding, she
is told to undress, so that she could be examined for a
distinguished tattoo, in the end, which would clear her name.
She now carries the wrong person's certificate for the rest
of her life, and she has to worry about a police officer
knocking on her door, for something she didn't do, because the
identity thief and her now share the same name.
Stolen identity is an epidemic that attacks silently and
indiscriminately. It's just a matter of time before you, or
someone you know, will have their identity stolen.
The crime of stolen identity is in dire need of a solution,
and I support both of your bills, and I think it's a very
important step.
Senator Feinstein. Thanks, very much, Selene.
Ms. Kassin. Sure.
[The prepared statement of Selene Kassin follows:]
Prepared Statement of Selene Kassin
I produced a documentary called Stolen Identity: Crime of the
Millennium inspired by my own experience of having my identity stolen.
The person who stole my identity did not know me. They did not know my
age or mother's maiden name. They did not know my driver's license
number. They did not even know what I looked like. (In fact she changed
all these statistics to match her own.) All this person knew that stole
my identity was my social security number. Having my identity stolen
and recovering my identity was traumatic, scary and surreal. I felt I
was victimized once by the perpetrator and again by the system.
I found out Someone was living as me from a letter from a credit
card company asking if I tried to open up a new account. When I called
the credit bureaus, I found a new address, phone number, driver's
license number and numerous new credit cards. I called and went to
several police stations and I was refused help. The police told me they
would take a courtesy report--but not to expect any investigation--and
the burden of proof was on me.
I called the police to see if they could tell me whom the phone
line belonged to that was listed on my credit report. They said they
couldn't. I found out it belonged to me. So, I called the phone company
to have them disconnect the phone line. They said they would have to
notify the other ``Selene'' in writing first. The ``other selene'' the
person who stole my identity called them and was more convincing than I
was in proving my own identity.
They believed her and didn't believe me. And Subsequently closed
the fraud file. I called the credit card companies and begged them to
send me the documents that were forged in my name. . . . And they did
send them. But they sent them to her. As quickly as I would close the
accounts she would open new ones. I called the credit bureaus to ask
why they opened new accounts when I had it flagged. They had no answer.
My story is not typical, because I was fortunate enough to finally
receive help from the police. After several months of persistence, I
was able to get enough evidence by myself that Detective Edholm of the
Beverly Hills Police Dept. arrested her. She had a prior criminal
record. I was told she would not be released on bail. But, She was. I
was notified several weeks later that someone tried to take out a loan
in my name. The identity thief was sentenced to 18 months. She served 9
months and is now out on parole. The parole officer warned me that she
could do it all over again.
The shocking thing about being a victim of stolen identity is you
are often met with disbelief. People think stealing your identity
cannot be that easy. That the police could not refuse to help you. And
that if your identity was stolen, there has to be a remedy to not only
get it back but also prevent if from ever happening again.
Because many aspects of the crime are not easy to digest as true, I
was inspired to produce a documentary to give a voice to the victims
that were often silenced by the current laws. The documentary: Stolen
Identity: Crime of the Millennium provides candid testimony from the
victims themselves that this crime exists and to what extent. It is
currently being distributed by Aims Multi-Media in Chatsworth to
schools, universities and law enforcement agencies nation-wide.
While producing the documentary, I was astonished to learn that
identities were being stolen to not only obtain cash and credit cards,
but to commit serious crimes in the name of an unsuspecting victim.
I want to share some of their devastating stories as they tried to
recover their identity and clear their names. One victim best described
his battle in just a few words. ``It is war, and I am the enemy.''
It is hard to believe the crime of stolen identity exists because
it is nearly invisible to its victims. You don't see it happening to
you. You wake up one day and all of a sudden you could be facing jail
time.
Rochelle, a schoolteacher finds out she has been denied car
insurance. When she calls to find out why--she finds out her driver's
license has been revoked for a year. She owes an outstanding fine and
there is a warrant out for her arrest. She also finds out there are
three driver's licenses being used with her name and someone else's
picture on it. When she inquires with the DMV, they are suspicious . .
. of her. When she goes to the police--they refuse to help her. So she
goes to court with documents proving her identity. But the judge
doesn't believe her.
This story is typical. The first response that most victims face
when confronting the law is ``you're guilty.'' And the burden of proof
is on the victim. Victims generally have the responsibility of
retrieving their identity on their own, even if law enforcement is
contacted. The victims also have to endure an emotionally draining,
costly and time-consuming experience of clearing their own name.
I met Linda, a college student over many months as she tried to
prove her identity. She found out her identity was stolen when the
police showed up at her door with a bench warrant. She was charged with
being under the influence of PCP. She had to live with the terror of
going to jail as she endured months of court appearances. She tried to
prove her innocence with her fingerprints. She had to have her
fingerprints done five times. And they still did not prove her
innocence. Finally, months later in yet another court proceeding. She
is told to undress so that she could be examined for a distinguished
tattoo that in the end would clear her name. She now has to carry a
wrong person's certificate for the rest of her life. And she still has
to worry about a police officer knocking on her door for something she
didn't do because the identity thief and her now share the same name.
Stolen identity is an epidemic that attacks silently and
indiscriminately. It is just a matter of time before you or someone you
know will have their identity stolen. The crime of stolen identity is
in dire needs of a solution. This hearing is an important step in
resolving this problem.
Senator Feinstein. Appreciate the testimony.
Mari Frank.
STATEMENT OF MARI FRANK
Ms. Frank. Senator Feinstein, I thank you so much for
allowing me to come and address you today.
In May 1998, I appeared before this distinguished
committee, when you were considering the Identity Theft and
Assumption Deterrence Act of 1998.
I especially applaud you and Senator Kyl, for the work that
you did in having that law passed and signed by the President,
in 1998.
At that, when I was a victim, there was only one State in
the country that had an identity theft statute, and that was
Arizona.
And now, because of the, the new identity theft Federal
bill that makes identity theft a crime, we have almost forty
States that have identity theft statutes, and I, I really
applaud you, for taking the lead on that.
When that bill was passed, it also established a central
clearinghouse for the identity theft complaints within the
Federal Trade Commission, and it was a very, very good positive
step.
However, that, that bill only dealt with victims after they
had been victimized. The two bills that you have are clearly
for prevention, which is what we need right now.
I want to tell you a little bit about my story, and I'm
also gonna go, after I tell my two stories, which I was just a
victim again, last month, I will also tell you then some of the
important aspects of your bill, and how they will affect
victims in the future.
I'm an attorney, and the author of the ``Identity Theft
Survival Kit.'' I'm also the co-author of ``Privacy Piracy,''
which I just gave to you. As you remember, I gave you the, the
kit when I was in Washington.
I'm also an Orange County Sheriff Reserve, and I sit on the
High Tech Crime Task Force, with several of the Los Angeles
Sheriff's Department's people.
And I want to applaud you for Joe Dulla, and all the people
that you have, who have done so much, to really foster help for
victims.
My expertise in identity theft was acquired by necessity.
In restoring my own life, I was compelled to assist in the
passage of State and Federal legislation, and create materials
to help other victims.
Because the epidemic was growing so rapidly, those of us
who had some understanding of the crime and its causes have
been called upon to speak to the media, assist governmental
agencies, and provide education to law enforcement and the
financial industry.
I was greatly honored to speak at the White House on, in
May 1999, to discuss consumer privacy and identity theft.
In August 1996, I received a call from a bank that I'd
never heard of, asking me why I had not paid my $11,000 bill.
At first, I wanted to get off the phone and tell them they
were crazy, but the woman then told me my, asked me if that was
my Social Security number and if it was my proper birth date.
When my heart jumped into my throat, I answered, where did
you send the bills? Where did you send the credit card?
And I was told that, after much arguing with the person,
exactly where the bills were, the bills and the statements were
sent, and it was sent to Ventura, CA, which is about 3\1/2\
hours away from my home.
I told her that it was fraud. She told me at that time,
that she would erase it from fraud. However, it was then sent
to collections, by the way.
I found out that my imposter had used my credit to obtain
new credit cards, credit lines, services and cash advances, all
over $50,000.
She also got a red convertible Mustang in my name. She had
driven almost 3 hours to get my business cards, and parade as
an attorney, up in Ventura, CA.
She had rented a car and had totaled it, and I was being
sued by Thrifty Rental Car Agency.
My impersonator was assuming my entire identity, not only
my personal identity, but my professional identity, as well,
and I was afraid I was going to be disbarred from the State of
California.
It took me over 500 hours, and more than 10 frustrating
months, to regain my credit. I have over five boxes of,
overstuffed banker's boxes, filled with correspondence from
credit reporting agencies, credit card agencies, the IRS, the
Social Security Administration, the Postal authorities, the
State Bar of California, on and on, and on.
In 1996, according to State and Federal law, I wasn't
considered the victim, until I found a peace officer who,
himself, had been a peace officer for over 20 years, and he was
a victim of identity theft.
He sent a Lieutenant out to the home and this woman, indeed
had said that she knew me, although she did not, and she said
that I used to live with her, and she was getting mail to me
there, and she always sent it back.
We found out that this woman was on probation for
shoplifting, she was arrested, let out on bail, and continued
to accept fraudulent cards, and pre-approved offers.
And I just want to show everybody, what exactly happened
here, because it will show how the financial industry
facilitated this crime.
I've got handouts for you, and if you'll look, this is a
copy of the original application that, by the way, it took me
pulling teeth to get from the Bank of New York, Delaware.
If you'll look where it says, ``Tracy Lloyd.'' Tracy Lloyd
is my imposter who was convicted. She put, as you notice here,
she'd crossed out one line through her name, put my name, and
she did put my Social Security number, although I did erase it
for you, while here today.
Senator Feinstein. Good.
Ms. Frank. Unfortunately, you see how old I am, because
that was my proper birth date, and she had the spelling of my
address of my office spelled wrong. She said, she had other
things on here that were wrong, but notice she had her proper
address.
Now, she has a much nicer handwriting than I do, she sent
this card in, and she sent this application in, which you
notice was not even a pre-approved offer, and she got a $10,000
credit card. She used this to get other credit cards.
Now, the important thing to note is that when she got this
credit card, you have to question, who was processing this
credit card with the credit card company?
Why did they not question the fact that she just crossed
off a name? When they pulled my credit report, to see if they
were going to issue a credit line of $10,000, they would have
looked at my creditreport, and if they were cautious, they
would have compared and seen that there was a different address on
there.
That should have been some kind of clue. They did nothing
about that. Instead, Senator Feinstein, they sent her a credit
card.
Immediately after that, when that credit card was sent in,
and I don't know if all of you notice, but when your credit
card, a new credit card is sent in to the credit reporting
agencies, then what they do, is they consider themselves
reporting agencies, and what they do, is they just change the
address to the new address on the new card.
So, if you'll turn the paper over, you will then see what
happened. Once, she got that first card, it started the whole
craziness, and what she did, what happened then was the credit
reporting agencies, which I don't know if all of you know this,
but they sell your name and your financial information and your
profile on promotion. At that time, I didn't know that.
So, because I had pristine credit, and a new credit card
was just issued, they sold my name on promotion to many, many
different credit card companies.
This is an example of a pre-approved offer. If you look at
this, now she says she's making $300,000 a year. I wish.
By the time she did this, she was not only doing this to
me, but to other people, and she probably was making $300,000 a
year.
Notice she says she's an attorney with Steve Kuhn and
Associates. That's not true. I have my own law office. So, that
was a mistake.
She has an address now. Now, she's being sent Mari Frank in
Ventura, CA, when in fact, Mari Frank lives in Laguna Niguel,
CA.
So now, the pre-approved offer is going to her. Not only
was there this pre-approved offer, but there were dozens and
dozens like candy, coming to her door.
Also, if you'll notice, she wants to use this as a credit
line. She got a $15,000 credit line from this.
If you notice, on the bottom, she says she wants to use it
right away to pay off her Capital One account.
So, what she did was, for a period of 10 months, she was
using credit line to pay off different credit cards.
So, because she didn't have any of my own credit cards, I
had no idea this was going on. I'm getting my different credit
card bills every month, and there's no fraud. So, there was no
way for me to know.
So, this is an example of the kinds of things you're
addressing in your bill, about address changes, and the less
than cautious approach. So----
Senator Feinstein. Mari, I'm going to, I neglected to tell
everyone, if they could really confine their initial remarks to
5 minutes.
Because, before the Sheriff has to leave----
Ms. Frank. OK.
Senator Feinstein [continuing]. I'd really like some of the
Federal officials to be able to testify as well.
Ms. Frank. OK.
Senator Feinstein. And I need to ask him some questions.
Ms. Frank. Okay, I just want to briefly tell my second
identity theft victimization, that happened last month.
Senator Feinstein. OK.
Ms. Frank. I came back from a trip to New York, I had my
AmEx card in my wallet, and I had $9,000 worth of fraudulent
charges.
I was a victim of skimming. For those, if you don't know
what skimming is, skimming is when someone takes a credit card,
and slides it through a little skimmer, they may have it in
their pocket, when you go to a restaurant, and they download
that information, and have a new card.
And, in fact, the person who charged $9,000 at two
different dealerships, had a name of Michael Brown, supposedly.
So, I was the victim again. It took me, again, hours to
clean up, and the credit reporting agencies were very difficult
to work with, and Experian, for example, didn't even have a
human answering the phone, and didn't get me my credit report
for 20 days.
So, I have all of this in my testimony, and I can answer
questions, and I also reflect on here, all of the things that
you're doing, I am showing why it's so important.
So, I just want to tell you, I honor you, and thank you for
both of the bills, and I support them strongly.
[The prepared statement of Mari Frank follows:]
Prepared Statement of Mari J. Frank
Senator Feinstein and honorable members of this committee, thank
you for the opportunity to address you today. In May of 1998, I
appeared before this distinguished committee when you considered the
Identity theft and Assumption Deterrence Act of 1998. I especially
applaud Senator Kyl and Senator Feinstein for their leadership and
efforts in the passage of that law. By making Identity theft a federal
crime, it helped to educate states to also make Identity theft a crime.
We now have almost 40 states that have enacted statutes--only Arizona
had a statute when I became a victim. The federal legislation also
established a central clearinghouse for identity theft complaints
within the Federal Trade Commission. There is now a toll free number
for consumers to call (1-877-IDTHEFT) and a web site of information at
www.consumer.gov/idtheft. I am grateful that congress focussed on law
enforcement's role and allocated more resources, and I am pleased that
the Federal Trade Commission is providing education to victims after
they find out about their evil twin, but that Act did nothing to
prevent the crime from occuring.
When I testified on that bill, I brought to your attention how the
credit reporting agencies and the credit grantors were facilitating the
crime of identity theft. I demonstrated how certain practices in the
financial industry made the social security number easily accessible to
fraudsters (it is the key to identity theft), and continued with
procedures that failed to verify identity and address changes. Thank
you for listening to those concerns and addressing those issues in
Senate Bill S. 2328, The Identity Theft Protection Act of 2000, and in
Senate Bill S. 2699 The Social Security Number Protection Act of 2000.
In my testimony today, I will tell you about real life examples that
clarify the need for these bills that you are now considering.
My written testimony will give you a brief overview of my own
identity theft nightmares; provide you with insights that I have gained
after hearing from thousands of victims; indicate why the bills we are
considering today are so critical; share a few helpful tips for
consumers to protect themselves, and provide some measures to take if
one's identity is stolen.
I am an attorney, the author of the Identity Theft Survival Kit
(Porpoise Press, 1998), Privacy Piracy (Office Depot 1999--co-authored
with Beth Givens, the Director of the Privacy Rights Clearinghouse),
and an Orange County, California Sheriff Reserve for the High Tech
Crime Unit. My expertise in Identity Theft was acquired by necessity.
In restoring my own life, I was compelled to assist in the passage
of state and federal legislation, and create materials to help other
victims. Because this epidemic grew so rapidly, those of us who have an
understanding of the crime and its causes have been called upon to
speak to the media, assist governmental agencies, and provide education
to the financial industry and law enforcement. I was greatly honored to
address members of congress and the financial industry on May 4, 1999,
when I spoke at the White House on Consumer Privacy. I shared my story
and offered solutions.
In August 1996, I received a call from a bank that I had never
heard of asking me to pay an $11,000 bill to them. I was about to hang
up, when the woman asked if she had my correct social security number,
birth and other identifying information. Upon hearing her tell me my
personal and financial information, my heart leaped into my throat. I
asked where the company had sent the credit card and billing
statements.
She gave me an address four hours from my home in a city I had
never been. I found out that my impostor had used my credit to obtain
all new credit cards, credit lines, services, and cash advances of over
$50,000. She also had purchased a red convertible mustang using my
name, had rented a car and totaled it and I was being sued by the
rental car agency. My impersonator was also assuming my professional
identify by using my name on business cards indicating that she was a
licensed California attorney.
It took me over 500 hours and more than 10 frustrating months to
regain my credit--I have 5 overstuffed bankers boxes filled with
correspondence with credit reporting agencies, credit card companies,
the IRS, the Social Security Administration, the Postal Inspector, the
State Bar of California, and on and on. In 1996, according to state law
and federal law I was not considered the victim. Until I found a peace
officer that was victim himself, I could not get a police report. Even
though there are almost 40 states with Identity Theft statues, over
half of the victims who contact my office cannot get law enforcement to
issue a report.
Many law enforcement agencies are concerned that if a report is
issued, a full investigation will be needed, and there are just not
enough resources to investigate all the identity theft. Unfortunately,
without a police report--it is impossible to clean up the mess.
Although prior to my stolen identity, I had pristine credit, after
my evil twin abused my financial profile, I was considered a low life
that didn't want to pay my bills. I was hounded by creditors and
collection agencies and ignored by the Credit Reporting agencies.
Victims call me every day telling me the same story.
I found out that my ``identity clone''--who I never knew, had been
working as a contract secretary in several law offices. She was able to
access a copy of my credit report as well as those of other victims.
Many law offices as well as car dealerships, realtors, banks, etc. have
on line or fax subscriptions to order credit reports from the credit
reporting agencies and resellers. So my impostor accessed the system,
obtained my entire personal and financial profile, including my social
security number, and took over my identity. Because I was tenacious,
and the law enforcement agency in the city where she resided had
empathy, she was arrested. Soon after she was released on bail, she
continued to defraud others and me.
She stalked my family by phone; dumpster dived my garbage, stole my
mail, and still drove around in the red convertible mustang purchased
with my credit. A year later she was sentenced to a two month work
furlough program and probation (still driving that car). A few months
later she was apprehended committing identity theft again in a
different state. Unfortunately, although the police took the case
seriously, the district attorney and judge saw this as economic crime--
the stepchild of the criminal justice system. Very few of identity
theft cases are investigated--thus few impostors are prosecuted unless
there is a great loss or a crime ring is involved.
Although I was victimized, I chose not to succumb to victim-hood. I
created the kit that I wish I would have had--The Identity Theft
Survival Kit with pre-written legal letters on diskette and step by
step instructions.
I developed a web site with over 70 pages of free information to
help other victims. Because of this outreach to victims, I receive at
least 100 e-mails and calls a month from victims and frightened
consumers across the country. They are still experiencing the same
problems with financial industry as I did.
Before I go into those problems and how the two bills presented
help focus on those concerns, it is important to know that no one is
immune from this crime and that it can happen more than once to the
same person. I receive calls from lawyers, doctors, homemakers, retired
persons, teachers, students, judges, and even widows who tell me that
their loved one who has died is a victim after death.
In early July, 2000 (last month) I gave a presentation on Identity
Theft for Chase Manhattan Bank in New York City. I explained to them
how a customer can become a victim of identity theft from ``skimming''
when, for example, a waiter takes credit card at the end of the meal,
slides the card through a small 3'' by 5'' skimmer in his pocket, then
processes the card at the register and returns the card to the
cardholder smiling and gratefully accepting his tip. That evening, the
fraudster downloads the information that he obtained from the back of
the customer's card and sends it to make a new card with the duplicated
metal strip of the customer's card on the fraudulent card.
When I returned to California after the program, I opened my
American Express bill to find over $9,000 of fraudulent charges with my
credit card still in my wallet.
Cleaning this mess only took me 7 hours. Amex promptly opened an
investigation, but told me that they would not notify me of the
results. They gave me the telephone numbers of the two car dealerships
(where most of the fraud occurred) located in a California city that I
had not visited. Upon calling the dealerships, I learned that the man
who used my ``card'' was named Michael Brown and he lived at an address
near the dealerships several hours from my residence.
So here I was victimized again. I called the fraud department of
the three credit reporting agencies. After at least twenty minutes of
pushing buttons and waiting, I finally was able to reach a human at
Equifax and TransUnion. They told me to write to them concerning the
fraud enclosing copies of my license and a utility statement. Within a
week I received my credit reports--the fraud departments of those
agencies provided no further referrals, assistance or suggestions. I
fortunately knew what steps to take; however, most victims haven't a
clue of what to do!
When I called Experian, even after pushing every button on my
phone, I could not reach a live person. I was told by recorded message
that I was to send a letter referring to my fraud and I would receive a
report within 10 days. After 20 days I received a form letter--just
last week, stating that I needed to send $8.00--when in fact a credit
report is free for victims of fraud. I had sent my mortgage statement,
a copy of my driver's license and a utility bill. After a call to the
number of the form letter, I waited 30 minutes until I relieved a live,
but rude person who told me that I needed to send a recent phone bill
to get my report and place a fraud alert on my file for more than 90
days--up to seven years. After demanding to speak to a supervisor, I
was allowed to fax the phone bill, and he agreed to send my credit
report by overnight mail once he found out I was to testify at this
hearing. Most victims are overwhelmed when they call the credit
bureaus. They don't know what to ask and receive virtually no
assistance or reassurance from the credit reporting agencies. Although
the Credit Bureaus claim that they have improved their assistance, my
experience just this month, and the e-mails and phone calls I receive,
tell me otherwise.
When I became a victim the first time, it was a total identity take
over, obviously much worse then this recent skimming incident. My evil
twin took advantage of a very easy system, which is illustrated by the
attachments to this written testimony. My convicted impostor, Tracey
Lloyd had received a promotional offer sent to her residence by The
Bank of New York, Delaware. This started the ``identity cloning''
process. You can see from this document, that she crossed one line
through her name, inserted mine, wrote in my social security number
(which I have erased for obvious reasons) and added some other
identifying information, much of which was not correct, and within two
weeks she received a credit card at her address with my name with a
credit limit of $10,000.
Whose fault was it that Tracey Lloyd was able to commit fraud? Why
didn't the bank's personnel question the fact that the name associated
with the address was crossed out and changed to an entirely different
name on the application? Clearly the bank pulled my credit profile
before issuing a card with such a $10,000 credit limit. Why did the
bank issue the credit card to an address that was different from the
address on the my credit report? Why didn't the bank question the fact
that the name of the law office and the address on the application did
not match the information on my credit report? If the bank had taken
just a moment to verify and match, they would not have issued the card
without further investigation. Because of their faulty procedures, I
experienced identity theft hell!
Once the credit reporting agencies get news of a new credit card
and a new address, they report the new address as the ``current
address'' even though it may be a fraud address. In my case--and this
still happens to thousands of victims each day--the new address was
reported to the three agencies. This activity of a new card prompted
the agencies to sell my name with the new address on promotion (I have
since removed my name from the promotional lists by calling 1-888-5-
OPTOUT). Then as you can see in exhibit two attached, my impostor
received dozens of pre-approval offers (like candy to her door!) This
offer from Security Pacific enabled her to get checks with a $15,000
credit line. The more credit cards she received, the more credible she
was, and the more she could apply for. With my business cards and a
false driver's license with her picture, she was transformed into a
credit worthy professional with instant credit, while my reputation was
being destroyed without my knowledge. She had been impersonating me for
11 months before I received that fateful call demanding money. Most
victims don't find out about the identity fraud until they are denied
credit or employment or a service. Other times they learn about the
fraud when they receive a call from a bank or collection agency.
Because of the insidious nature of this crime and the less than careful
procedures of the credit grantors and credit reporting agencies, there
is little a savvy consumer can do to avoid if an impostor wants to
strike. For that reason, the Identity Theft Protection Act of 2000--S.
2328 provides some important safeguards.
ADDRESS CHANGES
In almost every case in which there is an identity takeover (not
skimming or the use of a stolen valid credit card), there is always a
change of address by the impostor, Holding creditors and credit
reporting agencies accountable for verifying address changes is
necessary to prevent fraud. The Act requires verification of address
for:
1. Impostors who try to change the addresses for valid cards held
by the victim or for potential impostors who try addressing their names
as additional cardholders at a different address.
2. Potential new accounts by persons who apply for cards at a
different address than the address listed for the consumer on his
credit report.
FRAUD ALERTS
A fraud alert provides notice to creditors that the consumer must
be called before credit is issued. It is a protection from
impersonators opening new accounts without thee victim's knowledge. In
many cases, even with a fraud alert, credit is issued--especially
instant credit where a creditor only receives a credit score and does
not see the alert. Also, hundreds of victims have told me that
apartments, cell phones, and mortgages were issued in their names after
a fraud alert is on file with the credit reporting agencies.
Credit reporting agencies will place a fraud alert on for 7 years.
I believe it should be kept on permanently if the victim so wishes;
however that is not permitted by the Credit Reporting Agencies.
S. 2325 by Senators Feinstein, Kyle and Grassley allows a consumer
to place a fraud alert on a file, and requires that this alert be
provided to all users who access the credit report. More importantly it
provides penalties for creditors who extend credit without contacting
the consumer to verify if credit was requested. If an impostor obtains
credit after a fraud alert is on the file there would be sanctions
allowable
DUTY TO INVESTIGATE AND THE ISSUANCE OF FREE CREDIT REPORTS
Identity theft victims and non-victims who are harmed by merged and
mixed files (one consumer's bad credit appears on that of another with
a similar name), there are disastrous results and ruined reputations.
The best way to ascertain stolen identity (or other errors reducing a
consumer's credit reputation) is to see one's credit report. Several
states have already enacted laws to provide one free credit per year to
consumers. All consumers should be able to review their credit reports
at no cost once a year to reduce the cost of fraud.
SELLING PERSONAL INFORMATION INCLUDING SOCIAL SECURITY NUMBERS
Presently Credit Reporting Agencies are selling the credit header
information to information brokers. The information includes personal
identifying information such as the social security number. This number
is the only identifier an impostor needs to steal your identity. We
know of consumers who became victims when only their social security
number was used--not even their correct name. Consumers right now do
not have the right to opt-out of this information being sold. They only
have the right to limit their financial profile form being sold without
their permission. With no control over the sale of that personal
information, on-line brokers are selling the social security number for
as little as $20. This is a small investment for criminals who intend
to use the information to defraud someone of thousands of dollars.
INDIVIDUAL REFERENCE SERVICE--DISCLOSURES
We are seeing a dramatic rise in cases of criminal identity theft.
This occurs when an impersonator is arrested or convicted of a crime in
the name of a victim. A victim of criminal identity theft often doesn't
even friend out about the fraud until he is arrested or denied some
benefit. We have helped victims who were denied employment due to
criminal records that did not belong to them. Victims have been
terminated from their jobs, lost custody of their children, been
deported, lost their professional license, etc. Even when we finally
ascertain the records and provide fingerprints and mug shots to clean
up the criminal records, the information brokers have sold that
information dozens of times to entities--so the information continues
to proliferate. Presently, many of these victims cannot find out what
information was sold, to whom it was sold, who to correct it and how to
stop it from being sold erroneously again by others. This type of
identify theft can last a lifetime and destroy a person's reputation
forever.
S. 2328 addresses the need to hold the Individual Reference
Services accountable. This bill would ensure that consumers could
access the information compiled by the various information brokers to
see if the information is correct. I suggest that the bill be amended
to clarify the correction procedure and provide penalties for failure
to correct in a timely manner. Presently I am helping a victim who has
cleared his criminal records, yet the Individual Reference Service
company claims it cannot provide a list of who purchased and received
the erroneous information so that we can correct the file. This victim
was unable to get employment until his story was told on Dateline NBC
this past April, 2000.
SUMMARY OF PROBLEM
We are living in an easy credit society (11 billion pre-approved
offers were sent out in 1999), where information is readily transferred
in a nano-second on the Internet and that information is worth more
than currency. In a matter of a few minutes, an impostor can purchase
your social security number and apply for numerous credit cards on-line
without your knowledge. The impersonator can get medical care, become a
legal citizen, take over your professional status, steal money from
your accounts, buy life insurance in your name, purchase a home and
even be arrested with your identity. Anything you can do, your
impersonator can do. We have even had victims tell us that ex-spouses
have had friends assume their identity just to ruin their reputation.
So on a local and federal level; we need to work collaboratively. A
victim in California may have an impostor in New York City who then
sells the data to another criminal in Miami. The impostor could be part
of a fraud ring using the mails, selling social security numbers,
stealing identities in the workplace through the human resource
departments or payroll departments. The crime is complex after it
occurs. However if all businesses were more conscientious concerning
the proper handling of our personal information, and were held
accountable to safeguard that data with monetary sanctions, perhaps the
situation would change. If the financial and governmental entities were
required to verify and authenticate identities (before issuing credit
or providing services, or booking criminals) our identity theft problem
would be greatly reduced.
PROTECTING YOURSELF
No one can assure you that you won't become a victim since your
information and the issuing of credit is beyond your control, however
you can minimize your risk by:
1. Ordering your three credit reports from Equifax, TransUnion, and
Experian twice a year to look for fraud accounts and inquiries, and
mixed files with errors. Immediately correct anything suspicious and
place a fraud alert on your file.
2. Shredding or disposing of all of your confidential information
offline and online. Also shred confidential information in your
computer and by using shredding software.
3. Don't give out personal information over the Internet or by
filling out warranty information. Your personal information is the key,
especially your social security number. Don't give out your social
security number unless it is for some tax purpose. Ask for an
alternative number. Presently companies can ask for your social
security number, but you don't have to give it--they may deny you
service.
For more free information go to www.identitytheft.org;
www.privacyrightrs.org; and www.consumer.gov/idtheft.
DEALING WITH IDENTITY THEFT IF IT HAPPENS TO YOU
If you become a victim, go to the above web sites for specific
guidelines, but here are the top three things to do:
1. Immediately contact the fraud department of the three credit
reporting agencies to place a fraud alert and obtain your full reports
at no charge. Carefully read these reports and identify false names,
fraud addresses, fraud inquiries, and fraudulent account. (See the free
form letter at www.identitytheft.org)
2. Once you receive your credit reports, make a police report
listing all the fraud found on the credit reports and send a copy of
the police report with a cover letter to each of the credit reporting
agencies requesting that all the fraud accounts listed on the police
report be removed within thirty days.
3. Write to all the fraudulent credit grantors (get the addresses
from the Credit Reporting Agencies), your own credit grantors and banks
to inform them of the fraud and get new passwords (never use your
mother's maiden name), write the IRS, the Social Security
Administration, the Postal Inspector, etc. (see the list of letters to
write at www.identitytheft.org--The Identity Theft Survival Kit has all
the letters on diskette and includes step by step instructions for who
to call, what to say, and how to get what you need to regain your life.
Thank you all for the opportunity to testify about the multifaceted
issues of identity theft. California is leading the states in number of
identity theft reports and has also taken a lead in dealing with
proposing solutions. As a former victim and an advocate, I am grateful
for your legislative proposals and will be happy to provide you further
information and assistance.
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[GRAPHIC] [TIFF OMITTED] T3465A.021
Senator Feinstein. Thank you, thank you. Well, thank both
of you, very much.
The testimony is very compelling, and I think everybody can
see how it can happen to them.
As a matter of fact, you'd be interested to know, Mari,
that my chief of staff in Washington was the victim one
weekend. So it, it is happening.
Sheriff, let me, quickly ask you some questions, because I
know you're busy, and I thank you very much for this, and being
here.
This is the first strike force in the Nation, as far as I
know. How many people are dedicated to it? How does it work?
How much time does an investigation take?
Sheriff Baca. Let me introduce you to Lieutenant Jordan, if
I may, Senator. He's the lead of that task force.
And would you please, as quickly as you can----
Senator Feinstein. Lieutenant, welcome.
Lieutenant Jordan. Good morning, Senator.
Sheriff Baca [continuing]. Answer her question.
Lieutenant Jordan. There's four deputies assigned to the
task force. There's a Lieutenant, me, and the way it works, is
we work together with other law enforcement agencies.
We work together with the Highway Patrol, we work together
with the Los Angeles Police Department.
Senator Feinstein. And, now obviously, you cover the
County, not the City.
But if, if someone has an identity theft, and they live in
the county, they would then report it to the Sheriff's
Department? And report it to your task force?
Lieutenant Jordan. Yes. Sheriff Baca made a decision, about
a year and a half ago, to assist the victim, so that they could
report their theft of identity to the local sheriff's
department substation.
Whether the crime occurred in Connecticut, they could go to
a sheriff's station, say, in the city of Temple, report the
crime and begin the process of recovering their identity.
Senator Feinstein. Now I, I guess people from the city of
L.A., still would go to the police department to report the
crime, right?
Lieutenant Jordan. Yes, based on, based on what the Sheriff
did, then Gil Garcetti, the District Attorney, made a policy
decision that the Los Angeles Police Department, and the Los
Angeles County Sheriff's Department, would take those first
reports.
Senator Feinstein. Ah-hah. So, can someone from L.A. City
go into a sheriff's department, and report it?
Sheriff Baca. Yes, we can cover each other's jurisdictions,
to start the process.
So, a city resident can come to a sheriff's station and
start a process, or a county resident go to a police station
and start the process.
Ideally, it would be that if you reside in the City of Los
Angeles, you can go to a police station. If you reside in
sheriff's territory, you go to a sheriff's station.
But we are combining our effort, through this task force
endeavor, and we believe that more can be done, if the staffs
of both these departments were combined under one roof.
And of course, we're at the early stages of this task force
effort, and that's why I'm recommending to you that we further
increase the staffing, by bringing in these Federal agencies,
as well.
This is not unprecedented. We do this with Asian crimes
that we investigate, we do this with narcotics cases that we
investigate, and there are even other specialty offenses, that
occur in the jewelry business, that require us to have this
collaboration between Federal, State and local municipal law
enforcement.
And how long does it take for one of these cases to be
investigated, by the way? The Senator asked that question.
Lieutenant Jordan. They can take as little as 60 hours, and
as much as a 1,000 hours.
Primarily, because that they cross jurisdictional lines,
they cross county lines, State lines and Federal lines. We've
even investigated cases that are crossing international
borders.
Once you get into it, you see that it's like a spider web.
It just keeps growing and growing.
Senator Feinstein. Right, right. Now, and that's the
interstate aspect of this. I think makes your request a
legitimate request, Sheriff.
And we have Social Security here, and we have Postal
Services here, and perhaps they can comment in their testimony,
on this request.
Does LAPD assign officers to the strike force? Or are the
four, you have four Sheriff's deputies.
Sheriff Baca. Sheriff's deputies. Currently, they're
working independent of our team.
However, there is communication back and forth between the
two offices. So, in effect, although we're not housed together,
we are operating in a collaborative effort.
Senator Feinstein. How many cases do you have at present,
under investigation?
Lieutenant Jordan. Currently, we have, as of today,
approximately eighteen hundred and fifty cases, so far reported
this year, to the L.A. County Sheriff's Department, alone.
Senator Feinstein. How many, or I don't know if you have
this broken down, but how many of them would you say are fraud,
in terms of money, and how many of them are aimed at things
like stalking and violence?
Lieutenant Jordan. The majority of the ones that we
receive, Senator, are the frauds, for money.
Senator Feinstein. My finding is also that fraud represents
the majority of cases right now. That's not to say that stolen
personal information can't be used for a violent crime, but
generally it's in this area of money fraud.
Lieutenant Jordan. Exactly.
Senator Feinstein. Right, OK.
Lieutenant Jordan. Also, to piggyback, Senator, on one of
the questions you asked earlier, one of the things that we're
going to propose to the International Associationof Chiefs of
Police meeting at San Diego, later this year, is that all the chiefs of
police, across the Nation, develop the same policy that Sheriff Baca
started and that Gil Garcetti furthered, and that is to have the
individual citizen that lives in that jurisdiction, be able to walk
into that local police station or sheriff's station and initiate that
first report.
Senator Feinstein. Right. Because, it's very difficult.
All, all of the testimony that I've received, it's very
difficult for people to get law enforcement to take them
seriously.
And then second, it's difficult for people to really regain
their identity. The Senate Judiciary Committee that received
testimony in Washington from a young woman in San Diego County,
who had her identity stolen. A year after she reported the
theft, she went to Mexico on a vacation, and Customs wouldn't
let her back into the United States.
And she was alone and she had to prove that she wasn't who
Customs said she was, because the person committing this
identity theft had a criminal record, and therefore, she was
accused of having that criminal record.
So, a critical step in how government can, from a law
enforcement point of view, really restore somebody's legitimate
identity, across all of the lines that it has to be restored.
Identity theft is not only local.
A victim has problems with events, like coming back into
the country, if one's name happens to get on a list, because
they think you're someone else.
Sheriff Baca. Well, exactly, and the testimony from the two
victims that we heard addresses that point more succinctly, and
that is they're like a football, where they're being moved one
part of the field to the next part of the field.
And at some point, somebody has to say, we'll start it
right here, and we were not gonna pass this off to another
agency, because the victim, in terms of the dollar amount lost
was in a bank out of State.
And that's the problem here. It's an international,
national scope of the problem itself.
Senator Feinstein. Sheriff, I hope you can say a little
bit, for this testimony.
So, I'm going to not ask Selene and Mari questions right
now, but move along, because I think it's important that this
record be intact.
And let me just now welcome the second panel of witnesses.
Jerry Klurfeld represents the Federal Trade Commission (FTC).
He's an independent law--well FTC is an independent law
enforcement agency, charged by Congress with protecting
American consumers from unfair methods of competition, and
unfair and deceptive acts and practices in the marketplace.
Pursuant to the Identity Theft Assumption and Deterrence
Act, the FTC is today the Federal Government's central
repository, for identity theft complaints, and is charged with
providing victim assistance.
Mr. Klurfeld is Regional Director of the Western Region of
the FTC. He was appointed to this position, which embraces
California, Arizona and Nevada, Hawaii, Colorado and Utah, in
1990.
Mr. Klurfeld, we'd like to hear from you, if you would.
PANEL CONSISTING OF JEFFREY A. KLURFELD, DIRECTOR OF WESTERN
REGIONAL OFFICE, FEDERAL TRADE COMMISSION, JANE VEZERIS, DEPUTY
INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION; AND MICHAEL
E. AHERN, DEPUTY CHIEF INSPECTOR, FIELD OPERATIONS WEST, U.S.
POSTAL INSPECTION SERVICE
STATEMENT OF JEFFREY A. KLURFELD
Mr. Klurfeld. Thank you, Senator.
I appreciate the opportunity to present the Federal Trade
Commission's views on the important issue of identity theft,
and describe to you the commission's efforts to help victims,
alert industry and equip law enforcement, to deal with this
heart-rending crime.
Senator, we applaud your efforts to combat this serious
problem that injures so many consumers, and we also endorse
your determined legislative efforts to protect the public
against this pernicious problem.
As you aptly noted, this type of fraud, like so many types
of fraud, is really opportunistic.
In my remarks today, I will discuss the growing phenomenon
of identity theft, briefly, and the measures the commission has
taken, to meet the goals of the Identity Theft Act.
The fear of identity theft has gripped the public as few
commission, consumer issues have. This is in part because it
seems to be widespread, and in part, because the consequences
can be so devastating.
Consumers feel particularly vulnerable, knowing that no
matter how careful they are, they may nonetheless become
identity theft victims.
The Identity Theft Act addressed these concerns in several
concrete ways. As, Senator you noted, it directed the Federal
Trade Commission to establish the Federal Government's central
repository for identity theft complaints, and to provide victim
assistance and consumer education.
The identity theft clearinghouse, our toll-free hotline
phone counselors and our consumer education campaign have
helped the FTC begin to address the serious problems associated
with identity theft.
As the commission staff has strived to meet the
responsibilities of this act, we have learned much about the
crime, its victims and its perpetrators.
Let me now address what our clearinghouse tells us about
identity theft in California.
The Identity Theft Act recognized the importance of
creating a single repository for identity theft complaints.
Accordingly, we established this clearinghouse to collect
and consolidate these complaints. We are already seeing the
fruits of this effort.
The data from these complaints are illuminating. The basic
complaint data showed that the most common forms of identity
theft reported by California consumers, during the first 9
months of operation were credit card fraud, approximately 50
percent of consumers reported this type of fraud, and this is
where an account is opened in their name, or there is a
takeover of their existing credit card account.
Communication services and 28 percent reported this where
the identity thief opened up telephone, cellular or other
utility services in their name.
Bank fraud, approximately 17 percent reported that a
checking or savings account had been opened in their name.
Fraudulent loans, representing about 10 percent, the
victims and government documents or benefits, approximately 8
percent reported that the identity theft had obtained
government documents, or benefits, such as a driver's license,
or file documents, such as a tax return in their name.
Not surprisingly, the States with the largest populations
account for the largest numbers of complainantsand suspects,
and Senator as you noted correctly, California is the State with the
highest number of complainants.
About 60 percent of California victims calling us identify
their age, and I can report that data to you later, if you
wish.
Commission staff is also assessing the data on the monetary
impact of this theft.
Some complainants provided estimates of the dollar amounts
obtained by the thief, because they have received the resulting
bills, or had been notified of the resulting bad debts.
California consumers reported a total monetary loss of
approximately $18 million, and the range of dollar amounts
reported by these consumers in California varies widely.
For example, 12 percent of complainants reported theft,
totaling between $5,000 and $10,000, 16 percent of complainants
reported theft of over $10,000.
The data also reveal information about the perpetrators.
Almost 60 percent of the complainants provided some identifying
information about the identity thief, such as a name, address
or even a phone number.
Los Angeles was the most common location for suspects,
reported by California consumers.
It was reported more than 3 times more often than the next
most common location, which is Oakland.
Consumers also report the harm to their reputation or daily
life.
The most common, non-monetary harm reported by consumers is
damage to their credit report through derogatory, inaccurate
information.
Forty-nine percent of California consumers reported that
they were harmed in this matter. This negative credit
information leads to the other problems, most commonly reported
by victims, including loan denials, bounced checks, rejection
of credit cards.
Identity theft victims also report repeated contacts by
debt collectors for the bad debt incurred by the identity
thief.
Many consumers reported that they have to spend significant
amounts of time resolving the problems caused by identity
theft.
The commission has made great strides in assisting
consumers and law enforcement to combat identity theft, but
recognizes that much remains to be done.
Earlier this year, the Identity Theft Prevention Act of
2000 was introduced in the Senate, and this would effectively
address many areas of identity theft vulnerability, and protect
many consumers from becoming victims of this very serious
crime.
The Federal Trade Commission strongly supports this
legislation, and we'd like to thank you for the opportunity to
participate in this important hearing. Thank you.
[The prepared statement of Jeffrey A. Klurfeld follows:]
Prepared Statement of Jeffrey A. Klurfeld
Senator Feinstein, I am Jeffrey Klurfeld, Director of the Weston
Regional Office of the Federal Trade Commission (``FTC'' or
``Commission'').\1\ I appreciate the opportunity to present the
Commission's views on the important issue of identity theft and
describe to you the Commission's efforts to help victims, alert
industry, and equip law enforcement to deal with this harrowing crime.
In my remarks today, I will discuss the growing phenomenon of identity
theft, the measures the Commission has taken to meet the goals of the
Identity Theft and Assumption Deterrence Act (``the Identity Theft
Act''),\2\ and what we see as the major challenge for the coming year
in combating identity theft.
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\1\ The views expressed in this statement represent the views of
the Commission. My oral presentation and responses to questions are my
own and do not necessarily represent the views of the Commission or any
Commissioner.
\2\ Pub. L. No. 105-318, 112 Stat. 3007 (1998) (codified at 18
U.S.C. Sec. 1028).
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The fear of identity theft has gripped the public as few consumer
issues have. This is in part because it seems to be widespread and in
part because the consequences can be devastating. Consumers feel
particularly vulnerable knowing that no matter how careful they are,
they may nonetheless become identity theft victims.\3\
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\3\ Data from the Identity Theft Clearinghouse, our central
repository of identity theft complaints, bear out these fears. See
discussion at pp.7-10.
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The Identity Theft Act addressed these concerns in several concrete
ways. It directed the Commission to establish the federal government's
central repository for identity theft complaint, and to provide victim
assistance and consumer education. As the Commission staff have strived
to meet the responsibilities of the Identity Theft Act, we have learned
much about the crime, its victims and its perpetrators.
I. MEETING THE GOALS OF THE IDENTITY THEFT ACT
In earlier testimony before this Committee, the Commission describe
the ways in which we have carried out our responsibilities under the
1998 Identity Theft Act.\4\ We have continued to build on these
achievements.
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\4\ The Commission testified before this subcommittee on March 7,
2000. We also testified before this subcommittee in May 1998 in support
of the Act. Following the passage of the Act the Commission testified
again, in April 1999, before the House Subcommittee on
Telecommunications, Trade and Consumer Protection and the Subcommittee
on Finance and Hazardous Materials of the Commerce Committee. That
testimony focused on identity theft in the financial services industry.
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A. Centralized Complaint Handling--877 ID THEFT
The Commission established its toll-free telephone number, 1-877-ID
THEFT (438-4338) to help consumers avoid or resolve identity theft
problem. In addition to advising consumers, counselors enter consumer
complaint information into the centralized Identity Theft Data
Clearinghouse used to aid law enforcement and prevent identity theft.
The identity Theft hotline has been in operation since November 1,
1999. Calls answered have more than tripled in the last six months.\5\
About two thirds of the calls are from victims, with the remaining
calls coming from consumers who are looking for information on ways to
minimize their risk of identity fraud.
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\5\ The hotline received an averaged of more than 1000 calls per
week in the month of July.
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The telephone counselors provide victims of identity theft with
specific information about how to try to prevent additional harm to
their finances and credit histories. Callers are advised to contact
each of the three national consumer reporting agencies to obtain copies
of their credit.reports and request that a fraud alert be placed on
their credit reports.\6\ Fraud alerts request that the consumer be
contacted when new credit is applied for in that consumer's name.\7\
The phone counselors also explain how to review carefully the
information on credit reports to detect any additional evidence of
identity theft. The counselors also inform callers of their rights
under the Fair Credit Reporting Act,\8\ and provide them with the
procedures for correcting their credit reports. The counselors advise
consumers to contact each of the creditors or service providers where
the identity thief has established or accessed an account, and to
follow up in writing by certified mail, return receipt requested.
Consumers are also advised on how to take advantage of their rights
under the Fair Credit Billing Act,\9\ and the Truth in Lending Act,\10\
which, among other things, limits their responsibility for unauthorized
charges to fifty dollars in most instances. Consumers who have been
contacted by a debt collector concerning debts incurred by the identity
thief are advised of their rights under the Fair Debt Collection
Practices Act,\11\ which limits debt collectors' practices in the
collection of debts.
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\6\ The three national consumer reporting agencies are Equifax
Credit Information Services, Inc., Experian Information Solutions,
Inc., and Trans Union, LLC.
\7\ In addition to fraudulently acquiring accounts or loans, the
identity thieves also may register a change of address in the victim's
name, routing bills and other correspondence to a different address. In
that way, it may take months for the victim to realize that their
identity has been hijacked.
\8\ 15 U.S.C. Sec. Sec. 1681 et seq.
\9\ 15 U.S.C. Sec. 1666. The Fair Credit Billing Act generally
applies to ``open end'' credit accounts, such as credit cards,
revolving charge accounts, and overdraft checking accounts. It does not
cover installment contracts, such as loans or extensions of credit that
are repaid on a fixed schedule.
\10\ 15 U.S.C. Sec. 1601 et seq.
\11\ 15 U.S.C. Sec. Sec. 1692 et seq.
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In addition, the FTC phone counselors advise consumers to notify
their local police departments, both because local law enforcement may
be in the best position to catch and bring the perpetrator to justice
and because a police report is among the best means of demonstrating to
would-be creditors and debt collectors that a consumer is a genuine
victim of identity theft. More than half the states have enacted their
own identity theft laws, and our counselors, in appropriate
circumstances, will refer consumers to other state and local
authorities for potential criminal investigation or prosecution.
B. Outreach and Consumer Education
The FTC also reaches consumers through the Internet. The FTC's
identity theft website--www.consumer.gov/idtheft--gives tips on how
consumers can guard against identity theft, warns consumers about the
latest identity theft schemes and trends, and provides access to
consumer education materials on identity theft. This website has
received more than 139,000 hits from November, 1999 through July, 2000.
The site also links to a secure complaint form on which identity theft
victims can enter the details of their complaints online, allowing
consumers to contact the Commission at all times. After review by FTC
staff, these complaints are entered into the Clearinghouse. To date we
have received more than 1900 complaints through this electronic form.
Further, the Federal Trade Commission has distributed nearly 100,000
copies of the comprehensive consumer guide: ID Theft: When Bad
ThingsHappen to Your Good Name. Developed in consultation with more
than a dozen federal agencies,\12\ this booklet provides consumers with
practical tips on how best to protect their personal information from
identity thieves, summarizes the various federal statutes that protect
consumer victims of identity theft, and details the victim assistance
mechanisms available.\13\
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\12\ These include: Department of Justice; Federal Bureau of
Investigation; Federal Communications Commission; Federal Deposit
Insurance Corporation; Federal Reserve Board; Internal Revenue Service;
National Credit Union Administration; Office of the Comptroller of the
Currency; Office of Thrift Supervision; Social Security Administration;
United States Postal Inspection Service; United States Secret Service;
United States Securities and Exchange Commission; and United States
Trustee.
\13\ The Federal Trade Commission expects to receive a second, and
larger, printing of the booklet shortly. The Social Security
Administration and the Federal Deposit Insurance Corporation have also
printed and distributed When Bad Things Happen. The FTC has provided
the booklet on zip disk to other agencies who are interested in
printing additional copies.
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C. Identity Theft Clearinghouse--Launched Online
The Identity Theft Act authorized the Commission to establish a
central repository of consumer complaints about identity theft, and to
refer appropriate cases to law enforcement for prosecution. The
Identity Theft Complaint Database, which was activated in November
1999, provides law enforcement with specific investigative material and
also allows our public and private sector partners to examine larger,
trend-based information to determine ways to reduce the incidence of
identity theft. Currently, the Clearinghouse contains data from
consumers who contact the FTC through the toll free number or website.
We are pursuing ways to collect complaint data from other agencies and
private sector entities to allow Clearinghouse users to see as much
identity theft complaint data as possible.\14\
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\14\ Our Consumer Sentinel database, which houses consumer fraud
complaints, receives complaint data from Better Business Bureaus,
consumer outreach organizations and others. The Commission is looking
to replicate this approach with identity theft complaints.
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With a database as rich as the Clearinghouse should become,
Commission staff can and do refer cases for potential prosecution. To
maximize use of the data, the Commission now provides law enforcement
partners with direct access to the Clearinghouse through Consumer
Sentinel, a secure website for sharing complaints and other information
with consumer protection law enforcers. Starting this month, law
enforcement and appropriate regulatory offices can access the
Clearinghouse through their desktop computers. This access will enable
them to readily and easily spot identity theft problems in their own
backyards and to coordinate with other law enforcement officers when
the database reveals common schemes or perpetrators. The FTC staff will
continue to comb through the data to spot cases for referral, but has
also enabled others to use the data to ferret out the bad actors for
prosecution.
The Identity Theft Act also authorized the Commission to share
complaint data with ``appropriate entities,'' \15\ including the three
national consumer reporting agencies and others in the financial
services industry. The Commission does not envision providing access to
the complete database for these private sector entities because
unfettered access could interfere with law enforcement efforts. FTC
data analysts can, however, identify patterns that reveal a business or
business practice that exposes consumers to a high risk of identity
theft. Commission staff will forward appropriate information about
these complaints to the entities involved so they can evaluate and
revise those practices. Similarly, staff plans to share complaint data
with a business if data reveal that business fails to respond to
legitimate consumer complaints about identity theft or frustrates
consumers' efforts to correct misinformation on their credit reports.
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\15\ The Identity Theft Assumption and Deterrence Act provides, in
pertinent part, ``the Federal Trade Commission shall establish
procedures to . . . refer [identity theft] complaints . . . to
appropriate entities, which may include referral to . . . the 3 major
national consumer reporting agencies.'' 18 U.S.C. Sec. 1028 (note).
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II. WHAT THE CLEARINGHOUSE TELLS US ABOUT IDENTITY THEFT IN CALIFORNIA
We are already seeing the fruits of collecting and analyzing
identity theft complaints in a single repository. The basic complaint
data show that the most common forms of identity theft reported by
California consumers during the first nine months \16\ of operation
were:\17\
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\16\ The data analysis covers the period from November 1, 1999
through July 31, 2000.
\17\ Many consumers experience more than one type of identity
theft. Therefore, the percentages represent the number of consumers who
reported each type of identity theft.
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Credit Card Fraud--Approximately 50% of consumers
reported credit card fraud--i.e., a credit card account opened
in their name or a ``takeover'' of their existing credit card
account;
Communications Services--Approximately 28% reported
that the identity thief opened up telephone, cellular, or other
utility service in their name;
Bank Fraud--Approximately 17% reported that a
checking or savings account had been opened in their name, and/
or that fraudulent checks had been written;
Fraudulent Loans--Approximately 10% reported that
the identity thief obtained a loan, such as a car loan, in
their name; and
Government Documents or Benefits--Approximately 8%
of consumers reported that the identity thief had obtained
government documents or benefits (such as a driver's license)
or filed documents (such as a tax return) in their name.\18\
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\18\ These statistics reflect complaints made by California
consumers. However, nationwide statistics are similar: 54% Credit Card
Fraud; 26% Communications Services; 17% Bank Fraud; 11% Fraudulent
Loans; and 8% Government Documents or Benefits.
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Not surprisingly, the states with the largest populations account
for the largest numbers of complainants and suspects. California, New
York, and Florida, in descending order, represent the states with the
highest number of complainants. About 60% of California victims calling
the identity theft hotline report their age. Of these, approximately
41% fall between 30 and 44 years of age. Approximately 24% are between
age 45 and 64, and 25% are between age 19 and 29. About 7% of those
reporting their ages are 65 and over; and slightly over 2% are age 18
and under.
The data also reveal information about the perpetrators. Almost 60%
of the caller-complainants provided some identifying information about
the identity thief, such as a name, address, or phone number. Los
Angeles was the most common location for suspects reported by
California consumers; it was reported more than three times more often
than Oakland, the next most common location.
Commission staff also are assessing the data on the monetary impact
of identity theft.Some complainants provided estimates of the dollar
amounts obtained by the thief, because they have received the resulting
bills or been notified of the resulting bad debts. The range of dollar
amounts reported by California consumers varies widely, with
approximately 30% of complainants reporting theft of under $1,000;
approximately 31% of complainants reporting theft totaling between
$1,000 and $5,000; approximately 12% of complainants reporting theft
totaling between $5,000 and $10,000; and approximately 16% of
complainants reporting theft of over $10,000. California consumers
reported a total monetary loss of nearly $18 million.
Consumers also report the harm to their reputation or daily life.
The most common nonmonentary harm reported by consumers is damage to
their credit report through derogatory, inaccurate information. Forty-
nine percent of California consumers reported that they were harmed in
this manner. This negative credit information leads to the other
problems most commonly reported by victims, including loan denials,
bounced checks, and rejection of credit cards. Identity theft victims
also report repeated contacts by debt collectors for the bad debt
incurred by the identity thief. Many consumers report that they have to
spend significant amounts of time resolving these problems.
Consumers also report problems with the institutions that provided
the credit, goods, or services to the identity thief in the consumer's
name. These institutions often attempt to collect the bad debt from the
victim, or report the bad debt to a consumer reporting agency, even
after the victim believes that he or she has shown that the debt is
fraudulent. Consumers further complain that these institutions'
inadequate or lax security procedures failed to prevent the identity
theft in the first place; that customer service or fraud departments
were not responsive; or that the companies refused to close or correct
the unauthorized accounts after notification by the consumer.
III. NEXT STEPS
A. The Identity Theft Prevention Act of 2000, S. 2328
The Commission has made great strides in assisting consumers and
law enforcement to combat identity theft, but recognizes that much
remains to be done. Earlier this year, the Identity Theft Prevention
Act of 2000, S. 2328, was introduced in the Senate. This Act would
effectively address many areas of identity theft vulnerability and
would protect many consumers from becoming victims of this very serious
crime. Under S. 2328, consumers will have access to information that
may reveal indicia of identity theft or the source of erroneous
information resulting from identity theft. These measures will enable
consumers to better protect themselves against identity theft and avoid
some of the frustrations that often accompany their efforts to undo the
harm inflicted by the identity thief. Providing for free annual credit
reports and requiring that credit card issuers advise consumers of
requests for changes of address to credit accounts will help consumers
help themselves. Further, requiring clear and conspicuous fraud alerts
on credit reports will help to thwart the ability of identity thieves
to commit ongoing fraud. The Commission is confident that these
proposals will assist consumers who contact the Commission's Identity
Theft Data Clearinghouse to describe the problems they encounter
attempting to prevent and remedy identity theft.
B. Victim Assistance Workshop
The Commission will soon begin sharing certain limited information
from its Identity Theft Clearinghouse with banks, creditors and other
businesses whose practices are frequently associated with identity
theft complaints. The goal is to encourage and enable industry and
individual companies to develop better fraud prevention practices and
consumer assistance techniques. To that end, the Commission will
convene a workshop for industry, consumer groups, the public, and law
enforcement on Identity Theft victim assistance, prevention, and
prosecution on October 23-24, 2000. This workshop follows the National
Summit on Identity Theft of March, 2000, which initiated a dialogue
between the public and private sectors on identity theft. The Social
Security Administration, the Department of Justice and the U.S. Secret
Service will convene later workshops on identity theft prevention and
prosecution.
IV. CONCLUSION
The Identity Theft Clearinghouse, the toll free hotline phone
counselors, and the consumer education campaign have helped the FTC
begin to address the serious problems associated with identity theft.
While more work remains to be done, the Commissions is optimistic that
heightened awareness by consumers and businesses will help reduce the
occurrences of this fraud. The FTC looks forword to working with the
Subcommittee to find additional ways to prevent this crime and to
assist its victims.
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Senator Feinstein. Thanks very much, Mr. Klurfeld.
I'd like to introduce Jane Vezeris, the Deputy Inspector
General of the Social Security Administration.
She has served as Deputy Inspector General since January 3
of this year.
Prior to this position, she had a distinguished career with
the U.S. Secret Service.
She held a number of supervisory positions in the service,
including Special Agent, in charge of the Intelligence
Division, and Deputy Assistant Director in the Office of Public
Affairs, and the Office of Investigations.
Her last position at the Secret Service was as Assistant
Director, Office of Administration, and as such, she served as
the Chief Financial Officer.
Welcome, I look forward to your comments.
STATEMENT OF JANE VEZERIS
Ms. Vezeris. Thank you, good morning.
Senator Feinstein. Good morning.
Ms. Vezeris. Thank you for the opportunity to be here
today, and discuss our office's continuing fight against
identity theft.
Your interest in the issue has already been instrumental in
reducing identity theft, and your continuing commitment gives
us reason to be optimistic that our ongoing efforts will be
even more successful, so thank you.
As you know, the enactment of the Identity Theft Act of
1998, introduced by your subcommittee was the first piece of
comprehensive legislation, aimed at what is rapidly becoming
the most popular and insidious crime of the new century.
In the 2 years since, we've learned that the problem is
larger than anyone realized and that additional legislation
must be enacted, if law enforcement is to keep pace with
identity thieves.
Two bills introduced by you and the subcommittee are
important steps in the right direction, and we look forward to
working with you, to make both Senate Bills 2328 and 2699
important laws in this crusade.
The need for such legislation cannot be understated. The
stories of the victims of identity theft, such as those that
have testified here today, are heart-rending.
The stories of the perpetrators themselves can sometimes be
absolutely shocking. And perhaps one of the most enterprising
identity thieves we've come across recently hails from Southern
California.
Our agents in San Diego were alerted, when a local law
enforcement individual became suspicious, as to the validity of
a Social Security number presented by a man they were
questioning.
Our query of Social Security Administration records
revealed that the number actually was assigned to a seventy
year old woman in South Dakota.
Our agents quickly discovered that this man had been a
fugitive felon for 17 years, with four prior felony
convictions, including prison escape.
He had created through the use of fraudulently obtained or
counterfeited identification documents, 33 separate and
distinct identities.
Some of these were stolen, while others were entirely
fictitious. Either way, he was able to use them, not only to
avoid capture, but to, excuse me, to obtain employment as the
Chief of a Fire Department, the Security Chief for a County
Fair, and other significant positions of trust.
He was also able to commit bank fraud, by obtaining credit
cards and loans under his assumed aliases, while receiving
Social Security benefits under three of his identities.
This individual was recently the subject of a 14-count
Grand Jury Indictment, and further criminal proceedings remain
pending.
He illustrates the extent to which one individual can steal
and create identities, capable of fooling banks, employers and
even government agencies.
While most of our identity theft cases are not this
extraordinary, this man's exploits certainly are not isolated
occurrences.
In California alone, we've opened 42 identity theft
investigations, since last October, and we've obtained 20
convictions.
These represent only the most egregious cases, those that
we chose to investigate, based on our limited resources.
In fiscal year 1999, 62,000 of the 75,000 allegations that
we receive involve some form of Social Security number misuse.
These numbers led us to launch Social Security number
misuse pilot projects, in five cities across the country, in
which our agents work jointly with Federal, State, and State
local law enforcement agencies, to target perpetrators of
identity crimes and Social Security number misuse.
Already, these pilots have been successful, and we've
opened 197 investigations, resulting in 61 convictions, and
clearly I can add that our experience supports Chief Baca's
enthusiasm for having a comprehensive approach, a team approach
in, in tackling this issue.
The ever-increasing number of identity theft incidents has
exploded, as the Internet has offered new and easier ways for
individuals to obtain false identification documents, including
Social Security numbers.
To combat this, we've expanded the scope of these pilots to
include undercover sale and purchase of Social Security cards,
over the Internet.
Hopefully, this will enable us, for the first time, to
determine the scope of the Internet trafficking of false
identification documents.
As considerable as our efforts have been, much remains to
be done.
Senate Bills 2328 and 2699 are important steps, in that
they provide law enforcement with additional tools.
I am particularly pleased with the additional civil
monetary penalty provisions, contained in S. 2328.
Civil monetary penalties have proven to be a highly
effective tool, in the many cases that are not accepted for
criminal or civil, criminal prosecution or civil action.
I am also pleased to see that Senate Bill 2699 recognizes
the importance of formally distinguishing between valid and
invalid transfers of Social Security number information.
While we have some concerns, with respect to certain
enforcement mechanisms in the current draft, we stand ready to
work with your staff, to make both bills more effective in the
war against identity theft, and to protect consumers on the
front end.
Congress should take an aggressive approach, by providing
comprehensive criminal, civil and administrative sanctions, for
the sale, purchase and misuse of Social Security numbers, which
are quite often at the core of identity theft crimes.
I thank you for commitment to doing so, and offer the
Inspector General's assistance, in reaching our common goal.
[The prepared statement Jane E. Vezeris follows:]
Prepared Statement of Jane E. Vezeris
Good morning, Senator. Thank you for the opportunity to appear
today and discuss the Social Security Administration, Office of the
Inspector General's continuing fight against Identity Theft. Your
interest in the issue has already been instrumental in reducing
identity theft, and your continuing commitment gives us reason to be
optimistic that our ongoing efforts will be even more successful.
As you know, the enactment of the Identity Theft Assumption and
Deterrence Act of 1998, introduced by your Subcommittee on Technology,
Terrorism and Government Information, was the first piece of
comprehensive legislation aimed at what is rapidly becoming the most
popular and most insidious crime of the new century. In the 2 years
since, we've learned that the problem is larger than anyone realized,
and that additional legislation must be enacted if law enforcement is
to keep pace with identity thieves. Two bills introduced by you and the
subcommittee are important steps in the right direction. We look
forward to working with you to make Senate Bills 2328 and 2699
important laws in their crusade.
The need for such legislation cannot be understated. The stories of
victims of identity theft, such as those that testified here today, are
heart-rending. The stories of the perpetrators themselves can be
absolutely shocking. Perhaps one of the most enterprising identity
thieves we've come across hails from southern California.
Our agents in San Diego were alerted when local law enforcement
became suspicious as to the validity of a Social Security number
presented by a man they were questioning. Our query of the Social
Security Administration's records revealed that the Social Security
number was actually assigned to a 70-year-old woman from South Dakota.
Our agents quickly discovered that this man had been a fugitive
felon for 17 years, with four prior felony convictions including prison
escape. He had created, through the use of fraudulently obtained or
counterfeited identification documents, 33 separate and distinct
identities. Some of these were stolen, while others were entirely
fictitious. Either way, he was able to use them not only to avoid
capture, but to obtain employment as the chief of a fire department,
the security chief for a county fair, and other positions of trust. He
was also able to commit bank fraud by obtaining credit cards and loans
under his assumed identities while receiving Social Security benefits
under three of his identities.
This individual was recently the subject of a 14-count grant jury
indictment, and further criminal proceedings remain pending. He
illustrates the extent to which one individual can both steal and
create identities capable of fooling banks, employers, and even
government agencies.
While most of our identity theft cases are not this extraordinary,
this man's exploits certainly are not isolated occurrences. In
California alone, we've opened 42 identity theft investigations since
last October, and have obtained 20 convictions. These represent only
the most egregious cases-those that we chose to use our limited
resources to investigate.
In Fiscal Year 1999, 62,000 of the 75,000 allegations we received
involved some form of Social Security number misuse. These numbers led
us to launch Social Security number misuse pilot projects in five
cities across the nation, in which our agents work jointly with Federal
and State law enforcement agencies to target perpetrators of identity
crimes and Social Security number misuse. Already, these pilots have
achieved an unparalleled success, opening 197 investigations resulting
in 61 convictions in the first year.
The ever-increasing number of identity theft incidents has exploded
as the Internet has offered new and easier ways for individuals to
obtain false identification documents, including Social Security cards.
To combat this, we've expanded the scope of these pilots to include the
undercover sale and purchase of Social Security cards over the
Internet. This will enable us, for the first time, to determine the
scope of Internet trafficking in false identification documents.
As considerable as our efforts have been, much remains to be done.
Senate Bills 2328 and 2699 are important steps in that they provide law
enforcement with additional tools. I am particularly pleased with the
additional Civil Monetary Penalty provisions contained in Senate Bill
2328. Civil Monetary Penalties have proven to be a highly effective
tool in the many cases that are not accepted for criminal prosecution
or civil action. I am also pleased to see that Senate Bill 2699
recognizes the importance of formally distinguishing between valid and
invalid transfers of Social Security number information. While we have
some significant concerns with respect to certain enforcement
mechanisms in the current draft of the Bill, we stand ready to work
with your staff to make both Bills more effective in the war against
identity theft.
Congress should take an aggressive approach by providing
comprehensive criminal, civil, and administrative sanctions for the
sale, purchase, and misuse of Social Security numbers, which are quite
often the starting point for identity theft crimes. I thank you for
your commitment to doing so. and offer the Inspector General's
assistance in reaching our common goal. Thank you.
Senator Feinstein. Thank you very much. At the appropriate
time, I'll ask you about what enforcement provisions you have
concerns about. So, we'll get to that.
I'd now like to introduce our last witness, Mr. Michael
Ahern, U.S. Postal Inspection Service.
Mr. Ahern represents the Postal Inspection Service. He's
been with the U.S. Postal Service for 27 years. He began his
inspection career as a U.S. Postal Inspector in Detroit.
He progressed through a series of management positions in
Washington. He was promoted to Assistant Inspector in charge,
in the Los Angeles Division, then to Postal Inspector in
charge, in the Boston Division.
He became Deputy Chief for Western Field Operations, this
year.
Welcome, Mr. Ahern.
STATEMENT OF MICHAEL E. AHERN
Mr. Ahern. Thank you Senator, and good morning.
It's a pleasure to appear here this morning before you, and
the Subcommittee on Terrorism--Technology, Terrorism and
General Government.
On behalf of the Chief Postal Inspector, I want to thank
you for holding these hearings on identity fraud, the fastest
growing crime in America.
It's also a pleasure to appear here, to discuss the role of
the Postal Inspection Service in these endeavors, and I'd also
like to let you know that the Postal Inspection Service is very
supportive of your Senate Bill 2328 and Senate Bill 2699 that
addressed the identity theft issues.
Many of the crimes connected with, connected with identity
theft, involve mail fraud or mail theft.
To give you kind of an overview nationally, postal
inspectors make approximately ten thousand, three hundred
arrests.
Approximately five thousand of those arrests are related to
mail theft, and about twenty-four hundred, excuse me, fifteen
hundred arrests relate directly to mail fraud.
Our last fiscal year, these statistics are from fiscal year
1999, we've also obtained an, approximately $606 million in
court order and voluntary restitution in these cases.
One of the things that was addressed earlier by, I believe,
the victims, and some of the prior testimony, is that how easy
it is to obtain personal information.
Pre-approved credit card applications, pre-approved credit
card forms that are discarded in the mail, are targeted by
these identity thieves.
Armed with this information, of course, the criminals try
to activate credit cards, and use it without the victim's
knowledge.
The successful identity thieves ensure that steps are
taken, that the victim is unaware that her, his or her identity
is taken over.
In those types of cases, where a change of address is used,
or, I believe, Mari Frank gave an example how an address was
used, with her name at a different location, the victim becomes
unaware of the damage that is being done to their credit,
reputation and assets.
Over the past 5 years, the Inspection Service has started a
data base, to try to track some identity theft investigations.
In fiscal year 1995, we had a 165 investigations. This
fiscal year today, we can see that there's more than a 300-
percent increase. We have open investigations, involving
identity theft.
So, how do we address the fundamentals of identity theft?
The Inspection Service has partnered and worked with different
law enforcement agencies, the financial community, credit card
companies.
We've established the Credit Card Mail Security Working
Group. This group meets at least twice a year to discuss
prevention initiatives, security initiatives, share
intelligence and discuss best practices.
Inter-agency cooperation, I think, is very important. In
June of this year, the Southern California Division assigned
two postal inspectors, to work with Lee Baca, Sheriff Lee
Baca's strike force on identity theft, and we welcome the
opportunity to strengthen our relationship with the Sheriff's
Office, and I'd like to commend and applaud Sheriff Baca for
showing the initiative and leadership in this effort, and as
you mentioned, it's the first identity theft strike force, in
the country, and we will continue to work with the Sheriff's
Department.
Since 1998, the credit card team of postal inspectors
located in Los Angeles, have worked on ATM fraudulent use,
which involves identity theft take-overs.
In 1998, the industry, in the Los Angeles area, would incur
$106,000 in daily, that's daily fraudulent transactions.
Today, we're down to less than $25,000 in daily
transactions that are fraudulent, reported to the Postal
Inspection Service.
So, we're not completely, we haven't completely eliminated
that problem, but we have had a lot of success. Some of it, of
course, is working with this Credit Card Mail Security Group.
There are a number of statutes, historically, there are two
statutes that are 125 years old. This is the mail fraud
statute, and the civil false representation and lottery
statutes.
The public policy behind these statutes, is simply that the
postal system, created by Congress to serve the American
public, should not, should not be used to conduct schemes that
seek to cheat the public.
I believe you're aware of, I know you're aware of the
recent legislation work you've done on that Identity Theft and
Assumption Deterrence Act of 1998.
The Postal Inspection Service was one of the primary law
enforcement agencies behind that initiative, simply because of
the impact on the postal service and the mail.
The Postal Inspection Service supports the additional
legislative efforts that you have taken, regardingthese
identity theft schemes.
The Identity Theft Prevention Act of 2000, which you
introduced on March 30, 2000, contains several key provisions,
designed to prevent identity-related fraud in credit
transactions and credit reports.
And of course the Social Security Number Protection Act of
2000, which you introduced, Senator, on June 8, 2000, grants
the Federal Government the authority to limit the sale and
purchase of Social Security, Social Security account numbers,
in circumstances that could result in fraudulent transactions.
One of the things the Postal Inspection Service thinks, we
think is very important is just not going out, arresting
people. That's very important, but we think prevention plays a
real key role.
So, our agency has done a couple of things similar to what
Sheriff Lee Baca has. We have a nationwide identity theft
awareness pamphlet that tells people what identity theft is,
how to prevent becoming a victim, and if you are a victim, what
state you should, what steps you should take, and how to
contact credit, credit card companies.
A couple of other areas in prevention, we have a website.
It's usps.gov/postalinspectors, that issues fraud advisories
about different types of identity theft schemes, and how to
prevent that.
And earlier this year in March, Showtime released a movie,
called, ``Inspectors II'' and it was based on the investigative
files of the postal inspectors, specifically, identity theft
investigations.
Last Fall, every household in America received a postcard,
and it's called, ``Project No Fraud,'' is what it is. ``Project
No Fraud'' was to alert the public of telemarketing schemes.
How to protect yourself on telemarketing schemes.
This is, this involves delivery of a 120 million pieces of
mail to every address in America, to alert people.
Why do I bring this up? Because, next Spring, we're having
``Project No Fraud II,'' and in that particular project, we
will send out to every household in America, a 120 million
addresses, awareness of identity theft, and what you can do to
prevent identity theft, and if you are a victim, what you can
do about that, also.
The Postal Inspection Service is committed to working
together with Federal, State and local agencies in combating
this financially crippling crime.
You can be certain that postal inspectors will continue to
work with everybody to resolve this problem and prevent crime
from occurring.
Senator, the U.S. Postal Inspection Service applauds your
efforts in supporting law enforcement and protecting consumers
throughout the United States, and our agency fully supports
enactment of Senate Bill 2328 and Senate Bill 2699.
Thank you, and like the others, we'd be happy to answer any
questions you may have.
[The prepared statement of Michael E. Ahern follows:]
Prepared Statement of Michael E. Ahern
Good morning Senator Feinstein and members of the Senate Judiciary
Committee's Subcommittee on Technology, Terrorism and General
Government. I am Michael Ahern, Deputy Chief Postal Inspector, Western
Field Operations, U.S. Postal Inspection Service.
On behalf of the Chief Postal Inspector, I want to thank you for
holding this hearing on the topic of identity theft, America's fastest
growing crime. It is an honor to appear before you today to discuss the
subject of identity theft and related fraud, and the role of the Postal
Inspection Service in combating this rapidly growing category of crime.
I also appreciate this opportunity to show our support for the
legislation you have introduced, S. 2328 and S. 2699; both designed to
prevent identity related crimes.
As you know, the mission of the United States Postal Inspection
Service is to protect the U.S. Postal Service, its employees and its
customers from criminal attack, and to protect the nation's mail system
from criminal misuse. As one of the our country's oldest federal law
enforcement agencies, founded by Benjamin Franklin, the United States
Postal Inspection Service has a long, proud and successful history of
fighting criminals who attack our nation's postal system and misuse it
to defraud, endanger or otherwise threaten the American public. As the
primary law enforcement arm of the United States Postal Service, the
U.S. Postal Inspection Service is a highly specialized, professional
organization performing investigative and security functions essential
to a stable and sound postal system.
During fiscal year 1999, U.S. Postal Inspectors arrested 10,388
criminal suspects. Of those suspects identified, 5,051 were arrested on
charges related to mail theft. Postal Inspectors investigated 3,427
mail fraud cases in 1999 and responded to 70,000 consumer fraud
complaints. Mail fraud investigations resulted in 1,523 arrests,
approximately $606.2 million in court-ordered and voluntary
restitution, and 1,165 civil or administrative actions.
Among its varied duties, the Inspection Service works to rid the
mail of drug trafficking and money laundering; mail bombs; and, perhaps
one of the most despicable crimes, child exploitation. In combating
fraudulent practices involving the mail, the Inspection Service employs
a workforce of roughly 2000 Postal Inspectors, 1400 Postal Police
Officers and 900 professional, technical and support employees.
IDENTITY THEFT AND IDENTITY FRAUD
Identity theft and identity fraud are terms used to refer to all
types of crime in which someone wrongfully obtains and uses another
person's personal data in some way that involves fraud or deception,
typically for economic gain. All organized criminal groups appear to be
involved to various degrees in identity theft schemes. The traditional
reliance upon an individual'spersonal information by business and
financial organizations, an increased availability of identifying
information through the internet and other communications networks, and
a willingness by criminal groups to manipulate information unlawfully
obtained has led to an explosion in identity theft related crimes.
The August edition of the FBI Law Enforcement Bulletin reported
that true identity theft victims are estimated to number from 350,000
to 500,000 annually. Literally hundreds of millions of dollars are lost
annually to these insidious criminals, not to mention the frustration
and emotional scars felt by their victims who are forced to take
excruciating steps to regain their good credit. Of course, in the end
we will all pay, because the losses suffered by the financial
institutions are passed along to the American consumer in the form of
higher interest rates and fees.
Identity theft criminals have been increasingly successful in
obtaining personal data such as social security numbers, bank account
or credit card numbers, victim's telephone calling care numbers, as
well as other valuable identifying data. These criminals use the stolen
personal information to apply for credit cards; to open new bank
accounts; apply for loans; apply for apartment rentals, and to
establish services with utility and phone companies, just to mention a
few. In the United States and Canada, many people have reported that
unauthorized persons have taken funds out of their bank or financial
accounts, or in the worst cases, taken over their identities
altogether, running up vast debts and committing crimes while using the
victim's names. In many cases, a victim's losses may include not only
out-of-pocket financial losses, but substantial additional financial
costs associated with trying to restore his/her reputation in the
community and correcting erroneous information for which the criminal
is responsible.
It can sometimes take identity theft victims years to repair their
consumer credit file after becoming victimized. If the criminal takes
steps to ensure that bills for the falsely obtained credit cards or
bank statements showing the unauthorized withdrawal are sent to an
address other than the victim's, the victim may not become aware of
what is happening until the criminal has already inflicted substantial
damage on the victim's assets, credit and reputation.
The August edition of Security Management Magazine reported that a
survey of identity theft victims indicated most victims do not learn of
the theft of their identify until 14 months after it has occurred.
Those victims further reported an average of 175 hours actively trying
to clear their names.
IDENTITY RELATED CRIMES
Many people do not realize how easily criminals can obtain our
personal data without having to break into our homes. Some criminals
engage in ``dumpster diving''--going through potential victims' garbage
cans or a communal dumpster or trash bin--to obtain copies of checks,
credit card or bank statements, or other records that typically bear
names, addresses, and even telephone numbers. These types of records
make it easier for criminals to get control over accounts and assume
identities. ``Pre-approved'' credit cards received in the mail and
discarded without being torn-up are favored targets of the identity
thief. Armed with this information, criminals may try to activate
credit cards for their use without the victim's knowledge. If mail is
left unsecured, criminals may try to intercept it and redirect it to
another location; again to gain the personal financial information
contained within. Even in public places criminals may engage in
``shoulder surfing''--watching their intended victim from a nearby
location asthe victim punches in their telephone calling card number or
credit card number.
In recent years, the Internet has become an appealing place for
criminals to obtain identifying data, such as passwords or even banking
information. In their haste to explore the exciting features of the
Internet, many people respond to ``Spam''--unsolicited E-mail--which
promises them some benefit but requests identifying data. In some
cases, criminals reportedly have used this scheme to obtain large
amounts of personal data.
INVESTIGATIONS
Each of the Inspection Service's eighteen (18) field divisions
conducts fraud investigations relating to identity theft within their
respective boundaries. Identity theft investigations are reported,
categorized, and tracked in an Inspection Service national database
used by management to coordinate the appropriate investigative
response. The following chart illustrates the recent rise in identity
theft investigations conducted by postal inspectors nationwide:
Fiscal Year Investigations
1995.............................................................. 165
1996.............................................................. 178
1997.............................................................. 198
1998.............................................................. 371
1999.............................................................. 491
FYTD-2000......................................................... 626
As indicated above, identity theft activities have increased by
almost 300 percent during the last 5 years, with a corresponding
increase in the number of arrests and convictions. Although a national
concern, the Inspection Service has observed that the largest
metropolitan areas, including New York, Chicago and Los Angeles, have
been responsible for the majority of the increase in identity theft
activities.
To address the fundamentals of identity theft, the Inspection
Service works hard to improve communication between the credit card
industry, financial institutions and law enforcement. One initiative
undertaken by the Inspection Service in this regard has been its
sponsorship of the Credit Card Mail Security Working Group. This group,
comprised of various members of the financial and law enforcement
communities, meets semi-annually and offers insight and feedback
relating to current programs and practices, security concerns and
prevention initiatives.
INTERAGENCY COOPERATION
Postal Inspectors participate on multiple task force operations
throughout the nation. In June of this year, two Postal Inspectors from
the Southern California Division began working with the Los Angeles
County Sheriff's task force to combat identity theft. The Inspection
Service welcomes this opportunity to strengthen our working
relationship with the Los Angeles County Sheriff's Department, and
would like to thank Sheriff Lee Baca for his initiative and leadership
in directing this campaign.
Since 1998, the Los Angeles credit card team has been working with
credit card companies and local banks to reduce the losses from
fraudulent credit card cash advances. As a result of this team effort,
daily fraudulent cash advance activities were significantly reduced
during the period by 1999 through July 2000, from $106,000 to $23,000.
In January 2000, a federal grand jury at Oakland, California,
returned indictments on four individuals based on an identity theft
investigation conducted by the Inspection Service's Northern California
Division. This case involved mail theft in the California communities
of San Ramon,Livermore, Hayward, Pleasanton, Danville, Castro Valley,
Dublin, Newark, and San Leandro. The four suspects stole mail to obtain
checks, credit cards and identification documents. They then created
false identification documents for the purpose of cashing checks and
purchasing merchandise. Postal Inspectors recovered stolen mail, false
drivers licenses, altered passports and computer equipment.
In Pittsburgh, Pennsylvania, the Inspection Service leads the
Financial Crimes Task Force of Southwestern Pennsylvania. This task
force commenced its operation on January 17, 1995, and is housed at the
Pittsburgh office of the Postal Inspection Service. Members include the
United States Postal Inspection Service, the United States Secret
Service, the Allegheny County, PA, Police Department and District
Attorney's Office, the City of Pittsburgh, PA, Police Department, the
Federal Bureau of Investigation, the Westmoreland County, PA, District
Attorney's Office, the Greensburg, PA, Police Department and the
Pennsylvania State Police.
Originally, this task force was formed to target major credit card
fraud in the Pittsburgh area. However, with the cancer of identity
theft spreading rapidly throughout America, this task force has
directed most of its resources toward identity theft investigations. In
fact, many of their investigations have led them to criminal groups
victimizing communities and citizens around the country. The Financial
Crimes Task Force of Southwestern Pennsylvania is yet another
illustration of how the Inspection Service has effectively partnered
with other agencies in combating identity theft.
In a recent Inspection Service investigation based in Chicago,
Illinois, the destructive activities of an identity thief resulted in
the loss of thousands of dollars and the death of a primary victim. In
July 1999, the identity thief began dating the estranged wife of a
local Chicago resident. Without his knowledge, the wife assisted the
thief in stealing her former spouse's identity by providing the thief
with his personal information. In August of that same year, the thief
leased a sport utility vehicle (SUV) in the spouse's name using the
spouse's home address as his own information.
In January 2000, an associate of the thief opened a mailbox at a
commercial mail receiving agency (CMRA) using counterfeit driver's
license in the spouse's name. A Change of Address (COA) order was then
filed, directing the spouse's mail from his legitimate address to the
CMRA mailbox. This mailbox was used to obtain credit cards and cash
advances in the spouse's name. Later that month, the thief met with a
former girlfriend and provided her with a credit card in the name of
yet another former girlfriend. This second victim dated the thief when
she was a probation officer. She had ended the relationship and had no
knowledge the thief was misusing her personal information. The credit
card was used to obtain two cash advances totaling over $5000.
Also during January, the spouse had a dispute with his estranged
wife while she was parked in the leased SUV. He later learned the SUV
had been fraudulently leased in his name. The spouse filed a complaint
with the Chicago Police department after realizing that he was a victim
of identity theft with losses exceeding $220,000.
In February, the spouse received a package from the thief, wrapped
as a FedEx delivery. After holding the package for a few days, he
received a voice mail message on his cell phone indicating the package
was a gift from the thief. As he sat in his living room, he opened the
package, which exploded, killing him instantly.
The investigation into the identity theft and bombing incident
disclosed involvement on the part of another associate of the identity
thief. In May of this year, the individual who assisted in the
construction of the bomb was arrested. In a storage shed owned by the
suspect's girlfriend, Postal Inspectors found boxes containing numerous
fraudulent documents, computer equipment and $100,000 in counterfeit
20-dollar bills. Later that month, the identity thief himself was
arrested in Los Angeles, California, using the name and fraudulent
driver's license of yet another victim. He is currently being held
without bond and is scheduled to be indicted for the murder of the
victim's spouse.
GOVERNING STATUTES
A number of statutes enable us to take action against fraudulent
practices involving the use of the mail. Our priority weapons include
two statutes originally enacted over 125 years ago: the criminal mail
fraud statute and the civil false representations and lottery statute.
The public policy that underlies these statues remains valid today. The
postal system created by Congress to serve the American public should
not be used to conduct schemes that seek to cheat the public.
While some schemes may change, con artists take advantage of
economic trends and current events and plan their schemes accordingly.
With today's fast-paced society and modern technology, the magnitude of
mail fraud schemes is much greater and impacts more people than ever
before.
THE IDENTITY THEFT AND ASSUMPTION DETERRENCE ACT OF 1998
The Inspection Service was one of the primary law enforcement
agencies involved in the legislation initiative to combat identity
theft, due to the impact of these offenses on the Postal Service and
the mail. The Postal Inspection Service has long understood that the
majority of identity theft schemes involve the use of the mail.
Public Law 105-318, The Identity Theft and Assumption Deterrence
Act of 1998, was signed into law on October 30, 1998. This law expanded
the scope of the identity fraud statute (18 U.S.C. Sec. 1028), and made
it a federal crime for the unauthorized use of personal identification
in the commission of any federal law (felony or misdemeanor), or a
state or local felony. This Act was needed since Section 1028 [``Fraud
and related activity in connection with identification documents'']
previously addressed only the fraudulent creation, use, or transfer of
identification documents, and not the theft or criminal use of the
underlying personal information. The Act criminalizes fraud in
connection with unlawful theft and misuse of personal identifying
information itself, regardless of whether it appears or is used in
documents.
The Postal Inspection Service supports additional legislative
efforts to reduce identity related schemes. The Identity Theft
Prevention Act of 2000, S. 2328, introduced by Senator Feinstein on
March 30, 2000, contains several key provisions designed to prevent
identity related fraud in credit transactions and credit reports. Under
this Act, credit card issuers would be required to confirm cardholder
change of address requests; notifications would be mailed to
cardholders to confirm additional car requests; the Fair Credit
Reporting Act would be amended to require consumer reporting agencies
to comply with fraud alert procedures; and a standardized form would be
developed for consumers to notify creditors and credit reporting
agencies of identity fraud.
The Social Security Number Protection Act of 2000, S. 2699, also
introduced by Senator Feinstein on June 8, 2000, grants the Federal
government the authority to limit the sale and purchase of social
security account numbers in circumstances that could result in
fraudulent activities. The Postal Inspection Service supports
restrictions on the use and dissemination of social security numbers,
as they continue to be one of the prime personal identifiers used by
financial institutions for credit and banking purposes. The Social
Security Administration reported over 30,000 complaints relating to the
misuse of social security numbers during 1999. As long as this practice
exists, social security number will remain a keep element in the crime
of identity theft.
OTHER INITIATIVES
In an effort to enhance the penalties associated with identity
related crimes, the Inspection Service has met with and submitted
recommendations to the United States Sentencing Commission. Those
proposals have included a specific guideline to address the offense
element of multiple victims in both the theft and fraud guidelines.
The Inspection Service further supports a change in the valuation
loss for credit card offenses. In past years, we have asked the
Commission to establish the alternate loss as the credit line of credit
cards (the true intended loss) as opposed to the $100 minimal loss per
card. We believe this is a more accurate measurement of intended loss,
but support the Commission's proposed $1000 loss as a better
alternative to the minimal value the guidelines currently set for
stolen but unused credit cards.
PREVENTION INITIATIVES
While the Postal Inspection Service works hard to identify and
prosecute promoters of mail fraud, we also recognize our ability to
lessen the impact of fraud upon the public through various prevention
campaigns. In a survey commissioned by the Postal Inspection Service it
was revealed that 48 percent of the respondents who were victims of
fraud did not report the crime, often citing they did not know where to
go for help.
Inspection Service efforts to prevent identity theft can best be
summarized as an educational campaign to alert members of the public
and business communities to identity related schemes, and the problems
associated with them. Those efforts have included the publication of a
brochure titled, Identity Theft, An Awareness & Victim Guide, the
posting of identity related fraud advisories on the Inspection
Service's we page (located at www.usps.gov/postalinspectors), and the
March 12, 2000, release of the Showtime movie, The Inspectors 2, based
on Inspection Service files relating to identity theft investigations.
An 11-minute video titled, Identity Theft: The Game of the Name,
was recently produced by the Inspection Service as an informational and
reparative guide for victims of identity theft. This video profiles the
exploits of an identity thief, and documents the trials and
tribulations of identity fraud victims. This video will be available
for distribution to law enforcement personnel and the general public.
In an effort to educate consumers, the Postal Inspection Service,
in November 1999, joined forces with several federal, state and private
agencies, including the AARP, Better Business Bureaus' Foundation,
Department of Justice, Federal Bureau of Investigation, Federal Trade
Commission, National Association of Attorneys General, and the
Securities and Exchange Commission, to launch project KNOW FRAUD. This
initiativewas the largest consumer protection effort ever undertaken,
designed to connect the public with those agencies that can help and
provide consumers with new resources to stop telemarketing and mail
fraud. A toll-free number and a KNOW FRAUD Website were also
established to provide consumers with additional fraud prevention
information and to link them with law enforcement officials who would
share the information.
Although work continues on the first KNOW FRAUD initiative, plans
are underway for a second one to launch in early 2001. Focusing on
identity theft, the goal of this new effort is to deliver to every home
in America prevention information that will raise their awareness of
this growing trend and provide them with protective tactics.
Information on identity theft can already be found at the KNOW FRAUD
Web site (located at http:www.consumer.gov/KNOW FRAUD), and consumers
may call a toll-free Identity Theft Hotline (1-877-IDTHEFT) for help
with problems related to this crime. All complaints are input to the
Consumer Sentinel's Identity Theft Data Clearinghouse.
Agencies participating in KNOW FRAUD: Identity Theft include the
U.S. Postal Inspection Service, AARP, the Council of Better Business
Bureaus' Foundation, the Department of Justice, the FBI, the Federal
Trade Commission, the National Association of Attorneys General and the
Securities and Exchange Commission.
PREVENTION STEPS
As part of the Postal Inspection Service's ongoing campaign to help
educate and empower the American public when dealing with those
criminals who attempt to steal the most personal of all things--your
identity, I would offer the following prevention tips:
Promptly remove mail from your mailbox after delivery.
Deposit outgoing mail in post office collection mailboxes
or at your local post office. Do not leave mail in unsecured mail
receptacles.
Never give personal information over the telephone, such
as your social security number, date of birth, mother's maiden name,
credit card number, or bank PIN code, unless you initiated the phone
call. Protect this information and release it only when absolutely
necessary.
Shred pre-approved credit applications, credit card
receipts, bills and other financial information you don't want before
discarding them in the trash or recycling bin.
Empty your wallet of extra credit cards and identification
cards or better yet, cancel credit cards you don't use and maintain a
list of the credit cards you do use.
Order your credit report from the three credit bureaus
(Equifax, Experian Information Solutions, and TransUnion) once a year
to check for fraudulent activity or other discrepancies.
Never leave receipts at bank machines, bank counters,
trash receptacles, or unattended gasoline pumps. Keep track of all your
paperwork. When you no longer need it, destroy it.
Memorize your social security number and all of your
passwords. Do not record them on any cards or anything in your wallet
or purse.
Sign all new credit cards upon receipt.
Save all credit card receipts and match them against your
monthly bills.
Be conscious of normal receipt of routine financial
statements. Contact the sender if they are not received in the mail.
Notify your credit card companies and financial
institutions in advance of any change of address or phone number.
Never loan your credit cards to anyone.
Never put your credit card or any other financial account
number on a postcard or on the outside of an envelop
If you applied for a new credit card and it hasn't arrived
in a timely manner, call the bank or credit card company involved.
Report all lost or stolen credit cards immediately.
Closely monitor expiration dates on your credit cards.
Contact the credit card issuer if replacement cards are not received
prior to the expiration dates.
Beware of mail or telephone solicitations disguised as
promotions offering instant prizes or awards designed solely to obtain
your personal information or credit card numbers.
INTERNET AND ON-LINE SERVICES
Use caution when disclosing checking account numbers,
credit card numbers or other personal financial data at any Web site or
on-line service location unless you receive a secured authentication
key from your provider.
When you subscribe to an on-line service, you may be asked
to give credit card information. When you enter any interactive service
site, beware of con artists who may ask you to ``confirm'' your
enrollment service by disclosing passwords or the credit card account
number used to subscribe. Don't give it out!
ACTIONS STEPS FOR IDENTITY THEFT VICTIMS
Contact all creditors, by phone and in writing, to inform
them of the problem.
Call your nearest U.S. Postal Inspection Service office
and your local police.
Contact the Federal Trade Commission at 1-877-ID-THEFT, to
report the problem. Call each of the three credit bureaus' fraud units
to report identity theft: Equifax Credit Bureau, Fraud, 1-800-525-6285;
TransUnion Credit Bureau, Fraud, 1-800-680-7289; Experian Information
Solutions, 1-888-397-0949.
Ask to have a ``Fraud Alert/Victim Impact'' statement
placed in your credit file asking that creditors call you before
opening any new accounts.
Alert your banks to flag your accounts and contact you to
confirm any unusual activity; request a change of PIN and a new
password.
Keep a log of all your contacts and make copies of all
documents. You may also wish to contact a privacy or consumer advocacy
group regarding illegal activity.
Contact the Social Security Administration's Fraud Hotline
1-800-269-0271.
Contact the state office of the Department of Motor
Vehicles (DMV) to see if another license has been issued in your name.
If so, request a new license number and fill out the DMV's complaint
form to begin the fraud investigation process.
The Postal Inspection Service will continue its public awareness
and educational campaigns to prevent the spread and related
consequences of identity theft. You can be certain that Postal
Inspectors nationwide will continue to work together with all other
federal, state and local law enforcement agencies to aggressively
investigate, arrest and seek prosecution for those individuals who dare
victimize hard working Americans through identity takeover schemes.
Thank you.
Senator Feinstein. Thanks very much, thank you. I think
that was excellent testimony.
I have found that many people don't really think this is a
problem yet.
And yet every bit of testimony that we have had indicates
that indentify theft, in fact, is a growing problem, and that
we need to move.
I want the record just to reflect that I have sent a letter
to the Secretary of the Treasury, urging that he take action,
so that the Social Security number is not as available on the
window envelopes that they send out checks on, and I think
that's a real problem.
My first question would be, has anybody got any information
that the government itself, in that sense, is helping people
gain these numbers indiscriminately?
Ms. Vezeris. I think that has been an issue, and I believe
that that may have already been initiated, that the Social
Security number has been removed from the visible portion of
the envelope, you know, when, when government checks are being
mailed.
Senator Feinstein. Oh, that's excellent. I'm glad to hear
that.
Ms. Vezeris. So, I, I believe that that's, if it's not, if
it's not already happened, it's in the works.
Senator Feinstein. We'll check and see.
Ms. Vezeris. And then I'll, I'll verify that----
Senator Feinstein. If you would.
Ms. Vezeris [continuing]. With your office.
Senator Feinstein. Thank you.
Ms. Vezeris. Yeah, be happy to.
Senator Feinstein. Thank you, very much. I think that's,
that's helpful.
Second question, you mentioned that there, there is some
concern on the enforcement provisions. Do you want to give me
some input in that direction?
Ms. Vezeris. Sure. I think that these bills are, are
wonderful, in its efforts to try to, at the front end help the
consumers.
The concern that we have, and something that we'd like to
try to work out before it's enacted, is the interplay between
the FTC's regulatory responsibilities, in defining what is, and
what isn't appropriate business practices, as far as the use
and sale of the SSN, and how they will be treating perceived
violations under their unfair trade practices, as that relates
to our investigative efforts.
And I guess what we would recommend is that the FTC would
concentrate on legitimate commerce, and not be entertaining,
let's say, as an example, an Internet company that sells
identity documents, claiming that they're novelty items, to try
to circumvent the law, that the FTC would not try to treat that
as an unfair business practice, but rather have law enforcement
immediately get into that type of investigation, as a criminal
matter, and not as an unfair business practice.
And I think it's just a matter of kind of working that out,
before the legislation.
Senator Feinstein. So, this is a difference in point of
view, between the FTC and the Social Security Administration.
Is that fair assumption?
Ms. Vezeris. I--you don't, I----
Senator Feinstein. Because we worked closely with the FTC,
in drafting this.
Mr. Klurfeld. I would only remark parenthetically, Senator,
that the Federal Trade Commission has not formally commented on
Senate Bill 2699.
So, I can't really, because I can't speak on behalf of the
full commission, what its position would be.
However, expressing my own position, certainly any
legislative measure, to restrict access to Social Security
numbers, which seems to be the centerpiece of this fraud in
terms of capturing someone's identity, would certainly thwart
identity theft.
So, to that extent, I would say that, that conceptually,
this is very important legislation.
We are sensitive to the fact that there are legitimate uses
for perhaps the sale of this identifying information, as my
colleague indicated, in terms of, of legitimate commerce, but
also to the extent that there is a great potential for misuse,
then this also needs to be looked at very closely and, and the
commission, of course, would do so at your request.
Senator Feinstein. Yeah, we've received testimony that
there are twelve websites, involved in the sale of this
personal identification, and we know at least four of them sell
Social Security numbers, no questions asked for as little as
$25.
My view is a very clear one, that that should not be
permitted. You should not be able to sell anybody's, anyone
else's Social Security number, period, the end.
What I'd like to ask is that either you give Tom
Oscherwitz, my judiciary Counsel the person in your department,
so we can get this remedied between the two departments, before
you leave.
My second point relates to your comment it is possible to
buy a fraudulent Social Security card over the Internet.
Could you elaborate on that point, so that we have it in
the record?
Ms. Vezeris. What, what some of these Internet companies
will do, is they will sell things that, that purport to be a
Social Security card, for instance.
What they will do is attach a sticker on it that says
novelty item, you know, or not for purposes of identification,
but that sticker is very easily removable, and then once you do
that, you in fact, have, have something that would deceive
someone into thinking that it was a real form of
identification.
And, and that has, I mean that's, that's out there.
Senator Feinstein. And you know very well, the sticker's
going to be taken off, and the card is going to be used.
So, I mean that clearly, I think we should respond to, but
our point in this legislation, and this has been pretty well
gone over, is that the Social Security number should not be
sold, except for a specific number of limited circumstances.
Ms. Vezeris. Right.
Senator Feinstein. And I assume you've reviewed the
information and you're in agreement with those circumstances.
Ms. Vezeris. Yes, I mean we've, we've worked with your
staff on those, on those items.
Senator Feinstein. OK.
Ms. Vezeris. I may add one other point of concern, and it's
really just a technical point.
We really appreciate the civil monetary penalty provisions
in your bills, because it really adds another dimension.
It's another tool in law enforcement's box, if you will.
Senator Feinstein. Right.
Ms. Vezeris. Especially, with the demands in, at the U.S.
attorney's offices for instance.
They can't prosecute all of the cases that, that are
presented.
So, at least we have then an opportunity to financially
attack these people that are trying to do these things.
One of the concerns that we have with respect to the, CM,
with the civil monetary penalty provision, is we would want to
make sure that the way it's drafted, it does cover people who
are selling these Social Security cards, with this novelty
sticker on it.
It's something that we would just like to work with your
office, and make sure that the language is, will cover that.
Senator Feinstein. OK, thank you very much.
Let me ask Mari Frank this question. In July, when you
tried to report the second instance of credit card fraud to
three major credit bureaus, I'd like to know what their
response was.
Was it difficult, getting through on the phone? Were you
provided with adequate information?
Ms. Frank. That's a, that's an excellent question. I was
able to get through after about 30 minutes to Trans Union and
to Equifax. Experian had no human on the phone. You could not
get one.
I wrote letters to all three, return receipt requested. I
sent a copy of my driver's license and my mortgage statement,
and I did, within about a week, from Trans Union and Equifax,
get my credit report.
From Experian, it took me about 20 days, and then they sent
me a letter saying that I had to pay $8, which is not true. I
am, as a victim, allowed to get a credit report for free.
And so, then I called and spoke to them. And, as a matter
of fact, I spoke to the head of the Fraud Department, Tim
Puckett, and explained to him, he said to me, to, to let you
know that this doesn't always happen, and he didapologize, but
it did take me this, you know, so long to get my credit report, and
then when I did get, finally get a number to get a human being, that
took me another half hour.
So, someone who has already been through this, who's pretty
savvy, had to experience this, as badly as I did, I told him
that there really needs to be some changes, because obviously,
if it happened to me, and I had the problems that I did, then I
can just imagine what the other consumers are experiencing.
Also, by the way, there's no help from the credit reporting
agencies, and they are the one source that all victims must go
to.
Not everybody knows to go to the Federal Trade Commission
yet, or the Social Security Administration, but everyone has to
go to the credit reporting agencies.
So, I would really like to have that kind of public private
venture, where you work together, because they are not
sporting, you know, referrals and assistance.
Senator Feinstein. So, let me get this straight.
So, a victim would have to go to all three agencies?
Ms. Frank. Yes.
Senator Feinstein. Is there, is it not possible to evolve a
kind of one-stop shop between the agencies?
It seems to me, you know, knowing how hard it is to make
these calls, to get through to the right person, it seems to me
some kind of one stop shop--yes please.
Mr. Klurfeld. I, I think that's a, a excellent comment,
that it would certainly be far more efficient for a victim to
be able to file one affidavit.
The Federal Trade Commission is working with the credit
reporting agencies, to try to establish that a complaint to us
could then be forwarded immediately, basically, the most
efficient way is one-stop shopping to the three credit
reporting agencies.
When I also think of the volume of, of, I mean this really
resonates, but on our own website, in terms of identity theft,
we have recorded a hundred thirty-nine thousand hits, for
people who are obviously concerned about this.
And, I mean, obviously everyone isn't complaining but
people do express great concern and apprehension about this.
If you were a victim, it would be excellent to be able to
either file your affidavit with us, and we could then
immediately transmit it to the credit reporting agencies, or if
there were a mechanism for them to cooperate inter se, so
they're filing it with one, would generate the fraud alerts,
which are so critical to their, to competitors.
Sheriff Baca. May I comment on that?
Senator Feinstein. Please. Ms. Vezeris, and then we'll go
to the Sheriff.
Ms. Vezeris. I, I would just like to add one thing.
On the enforcement side, we have established an agreement
between the FTC and our office, and as allegations come in,
presume most of them come to our hotline, although they can
come through field offices, as well.
But when those allegations come in, with the permission of
the caller, we then, we've already, it's a, it's a new
agreement, and we've only done this at one time, but we will
exchange that information with the FTC directly.
So, the caller can provide the information to us, and it
will be fed into the FTC, so they don't have to make multiple
calls.
Senator Feinstein. But is there any reason that the Federal
departments would feel you could not have a one-stop shop,
whether it's the FTC or wherever, there should be one?
Mr. Klurfeld. Correct.
Senator Feinstein. Then would you mind very much talking
among yourselves, and seeing who it should be and how we get
that started? That'd be helpful. Sheriff.
Sheriff Baca. I would like to say this, that if a victim
were to come to the Sheriff's Department and define the scope
of their problem, and one of course would be, an element of
that scope, would be that they want to know what their credit
report truly says.
People don't have experience with all of us in law
enforcement. They tend to wander a lot on the, on the field of
where do I get my help.
And so the Federal Trade Commission is, is extraordinary,
as is the Social Security and the Postal Service.
All three of these agencies have incredible capabilities.
But the average citizen really needs someone like a seeing-
eye dog, to kind of let them go here and go there.
Now, we ought to be able to do that in the Sheriff's
Department. My investigators who are here, Sergeant Rolando
Bracamontes, where are you? He's right there, stand up please,
Joe Dulla.
Two of my investigators here could be very easily by
policy, the person, the contact persons to the Federal Trade
Commission, if that's where we trigger the process, or to
Social Security, or even to the Postal Service that, that the
training that local law enforcement needs to have is not one
when say a victim comes in and says, what do I do? I make these
phone calls, no one's on the phone. I got hits on two credit
agencies, however, I need the third, can you help?
And then, I think the process should be, yeah, we can help,
and we will just automatically contact these agencies for the
victims and get things rolling, 'cause we're gonna wanna see
that stuff, too.
Senator Feinstein. That's excellent. Yeah, Mr. Klurfeld.
Mr. Klurfeld. Thank you. Again, responding to your
initiatives, Senator, from the 1998 bill, the clearinghouse
again is really the central repository, and this month, we are
making it accessible to all law enforcement officers,
throughout the country.
So, to the extent that you have a laptop computer, or you
are online, and no matter how small your police department, or
how large your police department, you will now have access to
the very data that we have, and therefore you will be able to
track trends.
So, if you wanted to find out whether a certain type of
identity theft is erupting in your particular market or
jurisdiction, city, town, even village, you will be able to
access the Federal Trade Commission data.
Senator Feinstein. Well, let's say that the FTC is the
agency that handles all the complaints. Would it be possible
then for the sheriff or the law enforcement officer, wherever
the complaint comes in to register that affidavit with your
department to save time? Because I'll tellyou, people have a
terrible time, when it comes to the Federal Government. I hate to say
it, but they really do, even getting to the right place is a----
Sheriff Baca. Well, hey, you make the, you make it a
strong, you make a strong point there, Senator.
I think, ideally, we're saying that it would be nice to
have the Federal Trade Commission investigator in the task
force, as Social Security and postal, recognizing it's, it's a
break from the traditional way of doing things.
But these investigations have so many tentacles, that the
applications of inquiry are beyond just what we're telling you
here.
When you're dealing with financial institutions, this
country, and Jeff you might know the answer, I don't know how
many financial institutions are registered with the Federal
Trade Commission, but it's gotta be what?
Mr. Klurfeld. We don't have a registration system for
financial institutions, but clearly there are----
Sheriff Baca. Well, there's gotta be----
Mr. Klurfeld. When you're talking about the global economy,
you're talking about millions, probably.
Sheriff Baca. Exactly, and, and so the expertise of dealing
with the victim's plight, is one that has to cross over, just
what we know in, in local law enforcement, and that's why I
think the, the skill level is incredible, the availability of
this kind of expertise is one that is emerging now.
Mr. Ahern. The, if, if I could just make one point.
Senator Feinstein. Finish, then Mr. Ahern has a comment.
Mr. Klurfeld. We have a database called Consumer Sentinel,
in which every law enforcement agency, and consumer protection,
non-government agencies, such as a Better Business Bureau,
input data to us, so we are able to find out where fraud is
erupting, throughout the landscape.
This is not just confined to identity fraud theft, excuse
me, but whether you're talking about telemarketing fraud or
tele-funding, prize promotions, the hit list of really the rape
and pillage out there, in terms of the fraud landscape.
By virtue of that database, you will also have access to
all of the identity theft data, and you will be able to input,
for example, if another victim were to come to you, by virtue
of your taking in that information, you will be able to input
it automatically, in to the Federal database, and that can be
shared, as you've indicated.
You know, this thing is global at this point, and it's
vital that we do, you know, cooperate, Federal, State, all
levels of law enforcement.
I think we have to use all the tools that are available to
us, in terms of high tech, because quite frankly, it is, it is
obvious that the thief is using all those weapons and we must
be as, as alert as, as they are and use the same tools.
Ms. Frank. Senator Feinstein, can I add one quick point?
Senator Feinstein. Before Mari----
Ms. Frank. OK.
Senator Feinstein. Mr. Ahern was next, and then I'll----
Ms. Frank. OK.
Mr. Ahern. OK, thank you Senator.
One thing that kind of identified the problem to us was a
couple of years ago, prior to us coming out with the identity
theft awareness, bulletin and prior to ``Project No Fraud,'' we
actually ran a survey, two people, and found out that 48
percent of the victims of an identity theft didn't readily
report it, because they didn't know where to go.
And I think that's what we're talking about here. So, we're
talking education, and you know, prevention is very important.
This Consumer Sentinel that Jeff mentioned, I do know we
have a postal inspector at our headquarters office assigned
full-time with FTC. I think that's a step in the right
direction.
But I'd like to support what the Sheriff said there, some
kind of system, if we just have one place, that's fine for a
clearinghouse, but the problem is it comes in, in a lot of
different areas, and we have to make sure all the agencies, the
Social Security Administration, that we forward this on, or
have some way electronically.
Because I think in the past, a victim calls in to a credit
agency, and they don't get a response, they can't get a human
voice, they just get frustrated. They might report to a local
police officer in a small town somewhere. It might not go
forward, and have to make sure we capture that.
So, I think some of the efforts, some of the discussion
here, the data base with Consumer Sentinel is a step in the
right direction. We'd be supportive of that.
Senator Feinstein. Thank you very much.
Ms. Frank. I get about a hundred e-mails and phone calls
from victims a month, and the victims either report to the
police, or to the credit reporting agencies, and I'm happy to
hear that Sheriff Baca is going to refer them to the FTC.
I think that's a great place to start, and, and you move
on, but if the credit reporting agencies, perhaps in your bill,
you could make it incumbent upon the credit reporting agencies
to have a referral to the FTC, because when you call in and
you're listening to the voice mail, there's no referral to the
FTC now, and in the letter that I just received last week,
there was no referral to the FTC.
So, I think that would be a great place to start, is have
that as part of the bill.
Senator Feinstein. What, what do you think?
Mr. Klurfeld. I, I think that is excellent also.
Again, as much information as can be obtained to track
trends, to find out what the extent of the problem is, is
certainly welcome, to interdict the problem.
Ms. Frank. And then you refer on, as well, correct? If they
need help?
Mr. Klurfeld. Yes, we do, and also back to law enforcement.
The only caveat I would have to give is again a bureaucratic
one that, that would be a decision for the commission itself to
make, rather than for Jeffrey Klurfeld to arena to himself.
Senator Feinstein. I understand. But you will take it back.
Mr. Klurfeld. Absolutely.
Senator Feinstein. Yeah, because----
Sheriff Baca. And we'll help you, if you need letters and
support.
Senator Feinstein. That, that, that's great. I mean, I
think it is so hard, and I think if there were oneclearinghouse
affidavit recipient, that if it was a Social Security fraud, that it,
you know, a copy went to Social Security, if it was post office, it
went to post office, if it was another area, the FTC is really the
agency, it seemed to me, equipped to handle that, but it is clear that,
you know, we have hundreds of thousands of these now a year, so going
to have to get cracking.
Lieutenant, you wanted to----
Lieutenant Jordan. Yes, one of the things, Senator, that we
did, when we started our task force, we got the strike force
deputies to advise the citizens that were victims of identity
theft to contact, contact the people from the Federal Trade
Commission.
Also, for the police officers' standard and training class
that we developed the curriculum for, earlier this year, that
is one of the things we stressed for all the officers and
deputy sheriffs throughout the State of California to do this.
Senator Feinstein. Well, that's great.
Well, all right. Selene, do you have any comments that you
might like to add at this, at this point? Or else, I think
we'll----
Ms. Kassin. Well, I think that the FTC would be wonderful
as a clearinghouse, only because with my personal experience, I
was shuffled from one police department to another police
department, to another police department, and there were
jurisdictional issues, and nobody would give me any
information.
So, I had no information, and again I had the same
experience as Mari Frank, calling the credit card, calling the
credit bureaus and being put on hold, and, and pushing one,
pushing 10, pushing five, and not, not, not having any
resources to where to go next. It was a lot of investigation on
my part.
Senator Feinstein. Well, I, I think that's an excellent
point. I think you made the point very clearly. We've got a
couple of charts up there, and I don't think they're terribly
visible, but I think they're important.
One chart outlines the steps that identity theft victims
can take, and another shows how to prevent identity theft from
happening, I think there's some very good statements in these
charts, that consumers should know, like, first, regularly
review your credit card statements, and bank statements for
unauthorized withdrawals or charges.
Second, tear or shred charge receipts, pre-approved credit
applications, bank checks and statements, so that these don't
float around, but particularly, the credit card receipt.
Another one is don't carry your social security card in
your purse or wallet. I do, most people do, I think.
Order copies of your credit card report each year and
review them for errors, and the numbers are right there on that
first chart.
And I think importantly, don't give out personal
information over the phone, unless you know the contact is a
valid one.
At work, be careful who has personal access to your
personal information, and so on, but I think these are
important things.
If there is any number one thing a person can do to protect
their identity, does anyone have a suggestion what it might be,
Mari?
Ms. Frank. I, I think we need to have a monitoring of our
credit reports more often, like some have, there are some
websites that may be going up that will offer free reviewing of
monitoring on a weekly basis, because that is the only place
you're going to really know if you're a victim of fraud.
Neither Selene nor I could have done anything to protect
what happened to us, nothing. If we did every one of these
things, it wouldn't have done anything to help us, you know,
not carrying our Social Security number, not talking on the
phone, not giving out personal information on the Internet.
Senator Feinstein. Wouldn't have made a difference.
Ms. Frank. The truth of the matter is, the way to really,
at least get a quick response, is to find out if there's any
inquiries that are fraudulent, that are coming on your credit
report. That's the one thing you can do.
And if you can take your profile off-line, then no one
could access it, to get your credit.
In other words, if I could, and I've been asking the credit
reporting agencies to do that, which is they won't allow us to
take our profile off-line, so that no credit cards could be
issued.
So, that would be another thing, to allow, have that, that
a consumer could take his credit off-line.
Senator Feinstein. I think that's a good point. Yes, and,
and I think our bill mandates that every consumer would be
entitled to one free credit----
Ms. Frank. Right.
Senator Feinstein [continuing]. Report a year.
Ms. Frank. We do.
Senator Feinstein. I mean, just getting a credit report is
difficult.
So, I think your point, allowing the consumer to remove
their credit from on-line would also be something we should
add. So, I think that's a good point.
Any other suggestions, and we'll close it off?
Well, let me just say, I think this has been a great
hearing. I thank you very much.
Sheriff, you're going to ask each of these departments for
cooperation and assignment, and I'm happy to back you up on
that.
Sheriff Baca. We have an excellent relationship now,
Senator. I think that undoubtedly, their resources are like any
law enforcement agency's resources, limited.
If it's possible that they can assign full-time
investigators to this task force, we have the space available,
the office equipment is there.
I think it would be useful. I think we're just at the tip
of the iceberg, Senator, to be really honest with you.
Obviously, you've focused on the right part of the problem.
Undoubtedly, there are people in this audience here, who have
had fraudulent credit card charges on their accounts, and then
when they've called their credit card agency sources, they've
literally had those charges wiped off. Police reports were
never made.
The issue has a clear need for a tremendous amount of
additional research.
Senator Feinstein. All right.
Sheriff Baca. You've done a magnificent job, but there's
much more that we need to find out about it.
Senator Feinstein. That's absolutely right.
Sheriff Baca. And when we find out more, Senator, as you
know, we're gonna come back to you with this information, and I
think we should probably give you a, an update, probably in
another 6 months to a year, as to where we've gone from here.
You, you've done wonderful, you're the leader on this
matter.
Senator Feinstein. Well, it's, as you said, it's the tip of
the iceberg, and we can only address what we know is happening
now, but my sense is that this is going to be growing in
sophistication, as the data becomes available, and I think the
key thing that I'm trying to do is make a beachhead with the
Social Security number.
Social Security numbers shouldn't be something that's
traded or sold. It's not intended to be that, it's not meant to
be that, that's not its purpose.
And so, if we can get that established and really, just
kind of crack down in one area, it might, then we can see what
else develops, but it's an ever-moving target, no question.
Let me just thank everybody very, very much, and the
hearing stands adjourned. Thank you.
[Whereupon, at 10:44 a.m., the subcommittee adjourned.]