Session Date: August 19, 2005
Annual Meeting Session Summary: Who Has Your Personal Information and How Safe Is It?
By James Paribello
Communications Specialist, Washington House Democratic Caucus
This summary is provided for information purposes only. NCSL does not endorse any views it contains.
SEATTLE – Identity theft is the fastest growing form of financial fraud in America and the world, experts told state lawmakers at the National Conference of State Leguslatures' 2005 Annual Meeting. At a session titled Who Has Your Personal Information and How Safe Is It? lawmakers discussed and learned how best to fight identity theft.
The session began with a synopsis of legislation proposed last year by Texas Representative Helen Giddings, a victim herself of stolen checks.
According to statistics provided by Giddings, as well as Washington State Attorney General Rob McKenna, there were 10 million identity theft victims in 2004, amounting to an estimated $5 billion in losses to consumers. That figure is dwarfed by the amount of loss to businesses, estimated to have been $48 billion in the same year.
And the number of reported cases in the United States has been increasing at a rate of 20 percent a year. It cost an average of $1,495 out of pocket in 2004 to resolve an identity theft case, with most finding it difficult to obtain help from financial institutions and creditors.
A popular idea spreading among state legislators is freezing credit reports when an incidence of identity theft is reported. This can save the victim large amounts of time and money, as well as the frustration of a lengthy process to clear one’s credit report.
Attorney General McKenna outlined what his office is doing to combat these thieves in the face of thin resources and somewhat of a lack of technical expertise. “With limited funding, identity theft cases take a backseat to violent crimes,” he said. Law enforcement is struggling to keep up; most departments are still ill-equipped to deal with the skyrocketing rate of identity theft and the ever-advancing technologies criminals are employing.
Some thieves are developing new ways to steal identities, including using camera phones and miniature scanners to capture credit card or bank account numbers from receipts. The Attorney General’s office is also pursuing creators of spyware, as well as the latest trends called “phishing” and “pharming” (typically fraudulent emails or Websites imitating banks or credit card companies and requesting personal information). These scams grew by 4,000 percent in the past year.
Of course, thieves still employ the old-fashioned method - stealing mail. “If you don’t have a locking mailbox, you’re foolish,” warned McKenna. “Get a locking mailbox.”
Other pieces of legislation suggested would require companies to warn those in their database when a security breach occurs and personal information leaks. That way, customers can take steps to protect themselves. They can freeze their credit cards or bank accounts.
California State Senator Joseph Simitian, the prime sponsor of identity theft legislation there, explained how it might be difficult to understand the issues surrounding identity theft until you come face to face with them. California lawmakers didn’t support his bill, he said, until they themselves became potential targets of identity theft. Sen. Simitian said his bill didn’t make it out of committee until it was revealed that a hacker had infiltrated a state computer’s database and stole the personal information of thousands of state employees, including those of the House and Senate. Next time the bill was up for a vote, it passed unanimously.
Sen. Simitian hopes that all states will adopt similar legislation. He would like to see the federal government do the same. “Ignorance is not bliss,” Sen. Simitian stated. Currently, U.S. Senator Dianne Feinstein, from California, is taking up the cause.
Chris Hoofnagle, of the Electronic Privacy Information Center, believes the law must do more than merely inform consumers after the fact. He pointed to the Choicepoint example, the company that sold 144,000 records to Nigerian Scam Rings. Given that some record-keeping companies have been caught selling customers’ private information to anyone willing to pay for it, he believes the public should have the right to know where and when their information is getting out.
Hoofnagle also called for better regulation of the pre-approved credit card methods employed by lenders. It’s clear that these are falling into the wrong hands and ruining victims' credit. Findings also show that impostors are opening these accounts for children and even dogs, not just once but several times. “And some of these are Platinum,” he added.
The call from some participants to increase penalties on identity thieves was met with some skepticism by the panelists. “Fraud is already fraud,” stated Attorney General McKenna. “What we need is more resources for investigating and prosecuting.”
According to Rep. Giddings, the states hardest hit by identity theft are:
- Arizona
- Nevada
- California
- Texas
- Florida
- New York
- Oregon
- Colorado
- Illinois; and
- Washington.
NCSL is the bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.
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