Prepared Statement of Mari J. Frank In Support of S 512 (U S Senate)

Mr. Chairman and honorable members of the subcommittee, I applaud your efforts for dealing with this insidious and often misunderstood crime. Thank you for allowing me to appear before you to discuss identity theft and S.512. My name is Mari Frank and I reside in Laguna Niguel, California. I am an attorney, recovered Identity Theft Victim and victims advocate.

A CBS survey shows that one out of four adults have already been victims of some sort of identity theft. TransUnion gets 1200 calls a day from victims of fraud.

Since most states do not have identity theft statutes-law enforcement rarely will even take a police report. Identity Fraud victims are told that they are not considered a victim under the law because it is the credit grantor who suffers the monetary loss. The credit grantor rarely prosecutes these cases since they have already lost large sums of money and do not want to waste the time and funds to seek court redress since they know that most impostors are not apprehended.

Even if the perpetrator is caught, violent crime takes precedent and it probably wonít be prosecuted. If there is a conviction, and a short suspended sentence with probation is ordered, the credit grantor knows that any restitution ordered will rarely be paid. For the credit grantor, the bottom line is cost effectiveness. The losses are written off and charged back to consumers in higher interest rates and additional fees. Thatís the cost of doing business.

Where does this leave an identity theft victim who cannot clean up the credit nightmare without a police report? Where does this leave the victim who cannot get the credit grantor to prosecute the case? It leaves him with financial ruin, creditors hounding, collection agencies accusing, and credit profiles that will make him unable to buy a car, rent an apartment, buy a house, or even get a job. What if the impersonator committed moving violations, or felonies? The mess created by not having a law defining the identity theft victim leaves the victim not only financially raped, but also tainted-possibly for life.

S.512 makes great headway for victims of identity theft.

1.      Many victims have their identity taken over by impostors who use their credit in many different states. One airline pilot living in San Diego found out that even with a fraud alert on his credit report, his impostor had purchased $7,000 worth of furniture getting instant credit in his name is Detroit. It was delivered to a known location in Michigan, yet neither the Detroit Police nor the San Diego Police would investigate this crime. A woman called me from Fort Lauderdale, Florida after her impostor had gotten credit at various large department stores up the Southeastern Coast. She tried calling every police department in every city where credit had been issued, and no police would help her because the individual dollar amount was too low and she wasnít the victim. Additionally, the credit grantors would not prosecute. The total dollar amount charged to her was over $80,000-yet she was not the victim-even though her life was in financial shambles. With this crime being committed across state lines, this new law will give law enforcement the jurisdiction and impose the duty to take a report and hopefully investigate and prosecute these cases.

2.      Additionally, the fact that the Federal Government makes Identity Theft a crime, I believe will encourage states to follow suit. In my state of California, we passed a law making identity theft a misdemeanor as of January 1, 1998. Still many local law enforcement agencies are not taking it seriously and are not taking reports. So now we have a bill pending to make it a wobbler so it may become a felony under certain circumstances. I do not blame law enforcement for this problem. In fact I honor the Ventura Police Department in California who vigorously investigated and prosecuted by case. In fact the Watch Commander who first spoke with me on the phone was an identity theft victim himself and was very empathetic. I also applaud all the work that Jim Bauer, Assistant Deputy Director of the Secret Service, has done on behalf of victims. Law enforcement officers are frustrated as well. Most of the time they cannot even get the evidence they need because the credit grantors will not cooperate with the prosecution, or the prosecutors will not file the cases. (Show Overhead)

3.      It is important to note how crucial a police report is to the victim. As of July 1998, a law in California is effective that helps victims if they get a police report. If a victim makes a report to the police and the fraud accounts are listed on the report, the Credit Reporting agencies must immediately remove the fraud from the credit profile. Then the burden shifts to the credit grantors to prove that the accounts were not fraud. This enables the victim to regain his financial reputation sooner. It does not clear all his problems. I have spoken with Diane Terry from TransUnion who informed me that her company would enforce this as a policy nation-wide. Therefore it is critical for victims in all 50 states to have law enforcement at least take a report. This bill will make that happen.

4.      This bill allows for restitution. Although the credit grantor absorbs the monetary losses. There are still out of pocket costs, mine were $10,000 not including my loss of earnings for the 500 hours I logged as a result of dealing with the agencies, and writing the 90 letters return receipt requested. Many victims also need legal help in cleaning up the mess when creditors refuse to remove the fraud. Although the impostor may never repay their victim, hopefully victim funds will be of assistance.

5.      This bill requires the Treasury to set forth regulations so that financial institutions must report these types of theft in suspicious activity reports. I think this is an important issue. The regulations should require that the banks and other credit grantors provide the evidence, including the forged application and billing statements to the victim, and law enforcement agencies without the need for a subpoena. Most victims and law enforcement people cannot even obtain the evidence from the creditors. The credit grantors should be required to report all identity theft reports that are verified. This would help the treasury to research which banks and creditors have policies, which facilitate this crime.

6.      This bill requires the FTC to set up procedures whereby citizens can complain to them. The FTC is to refer to law enforcement and the credit reporting agencies. Law enforcement may apprehend the impostor, but they wonít clean up the credit nightmare. The credit reporting agencies are critical, but they wonít clean up the overwhelming mess. The FTC should be a clearing house for all of the non-profit consumer groups who help victims of identity theft such as the Privacy Rights Clearinghouse, The California Public Interest Research Group which is a part of US PIRG and VOIT, the support group for Victims of Identity Theft. They should have an 800 hotline and all of the information should be on their website. Additionally they should provide written resource lists to the three credit reporting agencies who should be required to include the resource lists with the credit reports that are sent to identity theft victims. Many other sources should be included

I wholeheartedly support this legislation however identity theft is far more complex. The real issue for the victim is not sending the impostor to jail. It is getting the impostor to stop ruining the credit and even more critically cleaning up the disaster that has ruined his finances, reputation and sanity.

I hope you will soon also strongly consider S.600 the Personal Privacy Act, which was introduced by Senator Feinstein. With just your social security number, an impostor can get thousands of dollars in your name and turn your life into havoc. The credit header information including names, addresses, unlisted phone numbers, birth dates and social security numbers that are being sold without our permission expose all of us to this crime. We donít even have the right to correct it. As long as these numbers are used as identifiers in issuing credit, we are in danger unless law protects the information. The woman, who stole my identity obtained my credit report by posing as a private detective. The credit reporting agency did not verify anything, instead they sold her my report. Once she had my credit report the fraud was easy. Your information sold without legislative safeguards are dangerous to your financial health.

In my limited time I cannot address this and the other concerns about the policies and practices of the financial industry that enable this crime to be so easy. I will be happy to answer your questions.

Thank you for your consideration of this bill.


Mari Frank