ID-Theft Victims Fight for Years to Fix Mess

By: Frank James/Knight Ridder
Posted In: News

WASHINGTON- Since falling victim to identity theft four years ago, John Harrison has learned the hard way that the crime is like a chronic disease that goes into remission, only to flare up again when least expected.

“I dealt with my latest debt collector just a week ago,” the 44-year old salesman for a firearms-maker said.

“And the Army actually just garnished my retirement pay for the third time,” said Harrison, a retired infantry captain who lives in Connecticut.

The man who misused Harrison’s personal information not only obtained credit using Harrison’s name but also opened checking accounts and wrote more than 125 bad checks as Harrison, some of them on government installations.

“The ones that were written on military bases become government debt,” Harrison said. “And because I’m retired and get a government paycheck, when these things surface I just get a government letter in the mail saying, `We’re taking your money.'”

Recent disclosures by consumer-data collection companies including ChoicePoint, LexisNexis and Bank of America that sensitive information about millions of consumers was compromised have fueled concerns that many more people could be victimized like Harrison.

If these failures to protect consumers’ personal data lead to more identity theft, the victims would be added to what experts consider the fastest-growing financial crime in the United States.

The Federal Trade Commission estimated 10 million people were victimized by the crime in 2002, the most recent year for which it has data. No credible expert believes that number has fallen. Identity theft costs the U.S. economy billions of dollars annually.

While federal and state governments and businesses that extend credit have made progress in helping victims regain their financial footing, the experience of victims shows much more is left to be done.

In January, for example, a Springfield, Ill., police officer made a routine traffic stop of a 79-year-old woman, an identity-theft victim, according to Illinois Attorney General Lisa Madigan.

The officer ran the motorist’s name through the state’s criminal database, which turned up a warrant for writing bad checks. It was the identity thief, however, who wrote the checks.

Nevertheless, “the poor, little old lady was hauled off to the police station,” Madigan said. That occurred even though the identity theft took place in 1996, and she had reported it to state law-enforcement officials.

The arrest also happened even though the attorney general two years ago had pushed legislation through the Illinois General Assembly meant to prevent that kind of humiliation.

Such an arrest might have been avoided if there had been a statewide database of identity-theft victims, something Madigan is trying to implement.

The financial services industry has raised concerns about such databases, fearing that unscrupulous borrowers could falsely claim to be identity-theft victims to avoid paying debts.

Something that could help victims and non-victims alike would be to give them the ability to deny prospective credit providers access to credit bureau files for the purpose of issuing new credit. That could stop identity thieves.

Victim advocates say a federal law to that effect would help greatly. So far, only California and Texas allow victims to place security freezes on their files maintained by the three largest national credit bureaus.

But a dozen states are considering following suit, said Gail Hillebrand, a senior attorney with Consumers Union, an advocacy group.

Banks, car dealers and other businesses have opposed such legislation, however, raising doubts about such laws’ effectiveness. And such freezes could deny consumers the instant gratification of walking into stores, getting rapid credit approvals and leaving with cars, televisions or refrigerators.

“The problem is, let’s say mortgage interest rates dropped and I wanted to refinance,” said Nessa Feddis, senior federal counsel at the American Bankers Association. “It’s going to be an impediment. It’s an unnecessary cost. It would probably end up frustrating more customers than helping them.”

Creditors say they have taken steps to fight identity theft. Using advanced computer technology, companies can often spot fraud by detecting unusual spending patterns, for instance.

But victim advocates say the financial-services industry isn’t moving aggressively enough, in part because they say the industry can pass along the costs of identity theft to other customers through fees and additional charges.

Identity-theft experts add that while the financial industry often advises consumers to protect themselves from the crime by shredding credit-card statements and the like, consumers are helpless in most cases of identity theft since lax security at companies or unscrupulous employees are often to blame.

Identity-theft victims and their advocates acknowledge the situation has improved in recent years for many victims, who sometimes include children whose Social Security numbers are misused by dishonest parents to obtain credit. They ruin the children’s credit, making it hard for them to get loans later.

The improvement started with increased sensitivity to the victims among many law-enforcement officials, government policymakers and financial industry executives who once appeared to operate as though identity theft were a victimless crime.

A 2003 federal law resulted in changes phased in over the past year requiring businesses taken in by identity thieves to provide victims with the fraudulent credit applications. Before, victims routinely were denied such information.

California has a security-breach law in which consumer-data companies must notify consumers when security around sensitive consumer information has been compromised. It was that law that required ChoicePoint to go public with its problem. About 20 states are considering similar laws.

Some states also have passed laws requiring police departments to take crime reports from identity-theft victims. Illinois allows victims to go to court to obtain a factual declaration of innocence.

Still, numerous proposals that would have helped identity-theft victims have been rebuffed in Congress and state legislatures.

During the recent Senate debate over legislation to tighten bankruptcy rules, Sen. Ben Nelson, D-Neb., tried to pass an amendment exempting debtors who could prove their financial problems were caused by identity theft. He failed.

Meanwhile, Linda Foley, executive director of the Identity Theft Resource Center. Foley, a victim of identity theft, asked “Why don’t we have all states requiring that victims of identity theft are allowed to have police reports taken, that the police must take police reports in the jurisdiction where the victim lives?”

She said even more understanding is needed of the “secondary wounding” that occurs after someone is targeted.

She blames the collection agencies, credit issuers and credit bureaus- as well as law enforcement- for requiring victims to provide copious documentation, which can be time-consuming and expensive.

“It’s frustrating,” Foley said. “You’re guilty until proven innocent.”

Harrison, the firearms company salesman, said he stopped keeping track of the time he spent trying to clear his name after he hit 2,000 hours in early 2003, more than a year after he learned his identity was stolen in November 2001.

He blames losing an earlier sales job to the theft when his productivity dropped from having to field calls from collection agents at work. He suffered from depression and anxiety. His consumer debt interest rates tripled, and insurance premiums soared inexplicably.

“It’s a difficult thing to explain,” Harrison said. “I’ve always a been a real strong person. I was a company commander in the 82nd Airborne. I actually kind of thrived in stressful situations.

“But this is (a) different deal because you really don’t have any control over what these other people do or don’t do,” he said. “With identity theft you’re not bleeding … you haven’t lost an arm or a leg. It’s real difficult for people to see your loss or your damage.”

Harrison had trouble finding another job; potential employers were scared off after conducting the standard credit checks. His solace was that the identity thief was caught and served 38 months in prison.

But the thief was released Dec. 15, giving Harrison pause.

“He could still have my Social Security number right in his wallet,” he said.

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c 2005, Chicago Tribune.

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