It can ruin your credit. And that's just the beginning
That's evident in a soon-to-be-released U.S. General Accounting Office report obtained by U.S. News. While no single agency tracks identity fraud, statistics collected by the GAO point to a growing problem. Trans Union, for example, one of the three major credit bureaus, says two thirds of all consumer inquiries relate to identity fraud. Those inquiries numbered 35,235 in 1992; last year there were 522,922. "The costs of identity fraud can be very high," states the report: The Secret Service says losses to victims and institutions in its identity-fraud investigations were $745 million in 1997, up from $442 million in 1995. "It's a problem that Congress has to address," says Rep. Jerry Kleczka, the Wisconsin Democrat who requested the GAO study. He has introduced legislation prohibiting credit bureaus from giving out facts like Social Security numbers and dates of birth--details thieves crave. But that's only part of the problem.
Identity fraud is a relatively new phenomenon, and it's not a crime, except in a handful of states like Arizona and California that have recently made it so. (Legislation is pending to make it a federal crime.) Most victims call the police. But in states with no statute, some police departments refuse to take a report because the law sees the victim in a case of identity fraud as the party that granted the credit (the bank or the merchant, for example), not the person impersonated. "That's frustrating to the victims because they often need a report to prove they are not the bad guys," says Beth Givens, director of the Privacy Rights Clearinghouse in San Diego.
Victims need proof because the attitude they often encounter when dealing with creditors is guilty, guilty, guilty. "Every person I talk to has been skeptical, condescending, and hostile," says Chris Scurlock of Laurel, Md., who is still trying to clean his credit report of 20 bounced checks, written to stores in Arizona in 1994 on a bank account opened fraudulently in his name. "That really aggravates me," says Scurlock, who has already been turned down for a mortgage. Victims often have to play detective, coming up with clues, leads, and even the basic evidence that a fraud has been committed. "You have to do all the footwork yourself," says Kathy Brown of Albany, Ore.
The kitchen sink. Typically, creditors ask an identity-theft victim to fill out an affidavit certifying he or she did not incur the debt. Some require much more: One collection agency told Grant it needed a copy of her driver's license, her Social Security card, her birth certificate, and any lease or mortgage contract for the past five years--all for a $43 cable bill. In the end, Grant neither paid the bill nor sent the copies to prove her innocence, opting to explain the $43 item on her credit report to future creditors. As with many victims of identity theft, sensitive documents were the last thing she wanted to send to a stranger.
The belligerence that victims encounter from some creditors is particularly irksome to those who suspect a creditor's negligence in the first place. "Many creditors do not take the proper steps to verify the identity of the credit applicant," says Givens. Mari Frank, of Laguna Niguel, Calif., points to a credit card application that started an impostor on a crime spree in her name: The application was preprinted with the impostor's name and address, but the impostor had crossed off her own name--leaving her address--and written in Frank's name, Social Security number, and occupation. The bank gave the impostor a credit card with a $10,000 credit line, leading Frank to ask: "Wouldn't a reasonable person say something is fishy here?" Bankers, meanwhile, insist they are on the ball. "All the banks have systems that detect fraud," says Nessa Feddis, senior federal counsel at the American Bankers Association. "They have to modify them for every new scheme that comes up."