(Washington, D.C.) – Below is a letter submitted by Consumers Union for today’s Senate panel on identity theft. For in-depth testimony from Consumers Union also submitted to today’s Senate Judiciary Committee hearing, click here.
April 12, 2005
Members, Judiciary Committee
United States Senate
Washington, DC 20510
In anticipation of tomorrow’s hearing on the security of our personal information, Consumers Union, the non-profit, independent publisher of Consumer Reports, would like to highlight several proposals to address the escalating problem of identity theft.
Identity theft is a serious crime that has become more common in recent years as we have delved further into the “information age.” According to the Federal Trade Commission, 27.3 million Americans have been victims of identity theft in the past five years, costing businesses and financial institutions $48 billion and consumers $5 billion. Victims pay an average of about $1,400 (not including attorney fees) and spend an average of 600 hours to clear their credit reports. The personal costs can also be devastating; identity theft can create unimaginable family stress when victims are turned down for mortgages, student loans, and even jobs.
As recent scandals involving ChoicePoint, Lexis-Nexis, and others have illustrated, American consumers cannot fully protect themselves against identity theft on their own. Even consumers who do everything right, such as paying their bills on time and holding tight to personal information such as Social Security numbers and dates of birth, can become victim through no fault of their own because the companies who profit from this information have lax security standards.
We are encouraged that several Senators are working to craft strong measures to prevent and address identity theft. We urge Congress to act promptly to ensure that consumers have control over their most prized possession – their identity. Specifically, Congress should:
• Prevent breaches from happening in the first place.
It is critical to impose strong requirements on information brokers to protect the information they hold and to screen and monitor the persons to whom they make that information available, and require creditors to take additional steps to verify the identity of an applicant when there is a sign of possible ID theft. In addition, Congress should act to restrict the sale, sharing, posting, display, and secondary use of Social Security numbers.
• Require notice of breaches of sensitive information.
Congress must impose requirements on businesses, nonprofits, and government entities to notify consumers when an unauthorized person has gained access to sensitive information pertaining to them. Consumers need prompt and proper notice, including information on what kind of data has been stolen.
• Ensure that victims have rights, too.
Currently, when a company improperly breaches a consumer’s sensitive information, the onus is on that consumer – the victim – to fix the problem. Congress can do much to change this to empower consumers who are at risk for or who already are victims of identity theft, such as by strengthening the protections of the Fair and Accurate Credit Transactions Act (FACTA). FACTA can be made more effective by extending the initial fraud alert period from 90 days to one year, automatically sending consumers with a fraud alert a free credit report, and giving consumers who receive a notice of a security breach the right to an extended fraud alert.
Congress should also authorize federal, state, local, and private enforcement and provide funding for law enforcement to pursue multi-jurisdictional crimes promptly and effectively. Victims also need tools to fix the problem once the breach occurs – such as making sure there is a clear process for preventing identity theft and repairing credit once a breach occurs, providing for free credit monitoring, and covering the costs of fixing the problem.
Thank you for your time and consideration. We look forward to working with you and your staff members on these important identity theft and privacy issues. Please contact us at (202) 462-6262 if you have any questions.
Esther Peterson Fellow