WV Executive

Identity theft is America’s fastest growing crime according to FBI statistics. In fact, 27.3 million Americans have been victims of identity theft within the last five years. Recent headlines indicate that this number will most certainly increase. In March of this year alone the following incidents occurred:

• California State University reported that the Social Security nubmer of 59,000 students and employees had been compromised;
• Boston College notified 120,000 alumni that their Social Security nubmers had been compromised;
• Payroll outsourcer PayMaxx exposed 25,000 of its customer's payroll records online;
• LexisNexis reported that the personal data of 30,000 individuals had been obtained by online intruders; and
• Bank of America misplaced backup tapes containing financial information of 1.3 million federal employees.

The sudden rise in identity theft crimes is having a staggering effect on businesses and individuals. According to a recent Identity Theft Resource Center study, the average amount charged in a single identity theft case has risen to $92,893. Not to mention that it takes the average identity theft victim 600 hours and $1,495 of out-of-pocket money to clear their names. In fact, nearly half of all victims are still attempting to clear their names two years after the theft was first discovered. Perhaps the most stunning figure is that identity theft will cause $2 trillion in worldwide losses to businesses, consumers and governmental entities by the end of 2005.

While there are state and federal laws on the books that deal with several of the peripheral issues associated with identity theft, many laws do not adequately safeguard consumers. Therefore, Congress recently passed legislation in an attempt to protect individuals and slow the growing identity theft epidemic. The Fair and Accurate Credit Transactions Act of 2003 (FACTA) was signed into law on December 4, 2003. The legislation amends the Fair Credit Reporting Act to enhance the ability of consumers to combat identity theft, increase the accuracy of consumer reports, allow consumers to exercise greater control regarding the type and amount of solicitations they receive and restrict the use and disclosure of sensitive medical information. Several of the more important provisions of FACTA are as follows:

Free Credit Report

Consumers have long been encouraged to monitor their credit reports as a way to detect identity theft. While historically individuals were advised to request a copy of their credit report once a year from each of the three national credit bureaus: Experian, TransUnion, and Equifax, they had to pay for them.

Now, FACTA requires the Federal Trade Commission (FTC) to adopt regulations that: 1) allow consumers to obtain a free annual credit report from each nationwide consumer reporting agency, 2) require the development of a standardized form for such requests and 3) require the development of a streamlined process for consumers to request free annual credit reports. The procedures developed by the FTC call for a “phase-in” of the free report program, West Virginians become entitled to a free copy of their credit report September 1, 2005. The credit reports will be available on-line at www.annualcreditreport.com or by calling 877-322-8228.

Fraud Alerts

Victims of identity theft may now request that a reporting agency place a fraud alert on their credit report. A fraud alert is a statement that the consumer may be a victim of identity theft or other fraud.

There are two types of fraud alerts, an initial fraud alert and an extended fraud alert. An initial alert lasts up to 90 days and asserts in good faith a suspicion that the consumer has been a victim of identity theft. An extended alert lasts up to seven years and is triggered by the receipt of an identity theft report that is filed by the consumer with an appropriate federal, state or local law enforcement agency and proof of the consumer’s identity. In both cases potential creditors must contact the consumer by telephone to confirm that the credit application is not the result of identity theft.

Truncation of Credit Card Information

To help ward off identity theft, retailers must now hide credit card and debit card information on customer receipts. Only the last five digits of a card number may be listed. As of January 1, 2005, all new cash registers and point-of-sale terminals must print these safeguarded receipts. Merchants have until December 4, 2006 to phase out any existing registers or terminals that print full account numbers on receipts.

Collection Agencies

If an individual is contacted by a collection agency about a debt resulting from identity theft, the collection agency must inform the creditor of the identity theft. Also, an individual is entitled to receive all information regarding the fraudulent debt from the collection agency. FACTA also prohibits creditors from selling a debt or placing it into collection once it is informed that the debt is the result of identity theft.

Disputing Inaccurate Information

Consumer reporting agencies must block the reporting of information that a consumer identifies as having resulted from identity theft. However, the consumer must provide the reporting agency with proof of identity, a copy of an identity theft report, and the identification of the information that resulted from the theft. Once this occurs, the reporting agency must notify the furnisher of the information that the information may be the result of identity theft, that a report has been filed, that a block has been placed on reporting that information and the effective date of the block.

In addition, consumers may dispute inaccurate information directly with the furnisher of the information. Upon notice of disputed information, the furnisher must investigate the claim and it cannot report the disputed negative information while the investigation is pending.

Information Available to Victims

Obtaining copies of unauthorized account applications is a crucial step toward regaining financial health for identity theft victims. Any business that provides credit or products and services to an identity thief must give the victim copies of all related documents, such as the credit application. The business must also provide copies of the documents to all state, federal or local law enforcement agencies specified by the victim.

Disposal of Consumer Reports

The practice of dumpster diving has historically provided identity thieves with a wealth of personal data. FACTA now imposes a new requirement on persons who possess or maintain, for a business purpose, consumer information derived from consumer reports. The Act requires that “any person that maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose, properly dispose of any such information or compilation.”

Medical Information and Consumer Reports

Most individuals demand that their medical information be handled with utmost confidentiality. A major concern is that medical information may be used against them when they apply for a job or refinance their mortgage. Now, consumer reporting agencies are prohibited from reporting the name, address and telephone number of any medical creditor unless the information is provided in codes that do not identify or infer the provider of care or the individual’s medical condition.

Military Personnel

While there is no need for identity theft to have taken place for such an alert to be placed on an account, Congress determined that such protection was necessary because the military is more easily targeted for identity theft. Since enlisted men and women may be gone for an extended period of time and may have limited ability to monitor their civilian affairs, a military alert will let potential creditors know that the consumer is on active duty and that care should be taken in granting credit.

Protection from Identity Theft

Every individual who uses a credit card, supplies personal information over the Internet or simply discards personal information without first destroying it is at risk of having their identity stolen. However, there are several precautions that one can take:

The most important step is to safeguard all personal information. Bank statements and credit applications should be shredded before being discarded in the trash. Sensitive information should never be given over the phone or Internet unless the identity of the individual receiving the information is verified.

Due to the tremendous financial liability identity theft is creating in the corporate world, many employers are offering identity theft protection to their employees. These programs not only help employees clear their names, they also help the employer by reducing employee absenteeism.

“An individual cannot be an effective employee when his or her whole life is turned upside down,” advises Randall Carter of Pre-Paid Legal Services, Inc. The company offers a service called IdentityTheft Shield. For a small monthly fee, it monitors an individual’s credit report for them. If it discovers identity theft, its trained experts will restore the individual’s good credit for them.

Oftentimes individuals do not have the time to clear their own credit and cannot afford to hire attorneys to do it for them. Therefore, programs such as IdentityTheft Shield are sometimes the only viable option for victims of identity theft.