Online banking, credit cards and ATM’s have made everyday life easier for consumers. And at the same time, made it simpler than ever for thieves to obtain your personal information.

“With the downturn in the economy, conventional wisdom suggests that identity theft attempts will increase,” says Tomas Oscherwitz, vice president of government affairs and chief privacy officer of ID Analytics, which provides on-demand identity intelligence. “In this new environment, consumers should step up their efforts to maintain the privacy, security and integrity of their identity information.”

So what are the government and credit card companies doing to help us little guys in the fight?

The Credit Industry’s United Stance

“In 2003, identity theft was the fastest-growing white collar crime in America,” says Tony Hadley, vice president of government affairs at Experian. Yet the Federal Trade Commission estimates that identity theft decreased 16 percent from 2003 to 2006; the U.S. Department of Justice estimates an 11 percent decrease from 2004 to 2005. “Such dramatic decreases are in large part attributable to a huge investment by third-party companies, like credit bureaus, in fraud prevention tools used by its clients and an equally large investment by businesses in their internal processes,” says Hadley.

Other actions taken by the credit reporting companies include the removal of Social Security numbers from printed credit reports; suppressing account numbers on credit reports; notifying other credit bureaus when fraudulent activity is discovered; and placing a security alert on a credit fraud victim’s credit report for seven years.

Credit issuers are also stepping up their efforts. “The current Computer Security Institute 2008 report says organizations report an average loss close to $500,000 per financial fraud event,” explains Dr. Murray Jennex, information and decisions systems professor at San Diego State University. Although the steps credit issuers take vary from bank to bank, these fraud detection programs are using fairly sophisticated applications. “That includes data mining to discover behavior rules of credit card holders and [setting up] alerts and/or blocking transactions that do not fit these profiles,” adds Dr. Jennex.

Additional credit issuer safeguards include calling an applicant to confirm a change of address on a pre-approved credit application; cross-referencing applications with reports of fraudulent activity cases; notification when a new card has been sent; and requiring consumers to call to verify their identity before activating a card.

The Government’s Stand – bigger fines for thieves, less pain for consumers

In many states, identity theft is already a crime punishable by law, including restitution to the victim for financial loss, fines for the offender, and/or imprisonment. “The government is clearly aware of the identity fraud epidemic in the U.S. and is taking the problem seriously,” says Oscherwitz.

Additional legislation by the federal government continues to grow as states expand the definition of what constitutes identity theft, as well as the penalties. On a national level, Congress passed the Fair and Accurate Credit Transactions Act (FACT Act), setting a countrywide standard for credit and debit card, giving you free access to your credit report and more, all with the goal of reducing the effects identity theft can have on your credit.

What We As Consumers Need To Do

For starters, consumers can obtain a free copy of their credit report once every 12 months from each of the three nationwide consumer credit reporting companies (Experian, Equifax, and TransUnion). “This is very important as many incidences of identity theft are done not to steal money from you, but to enable a thief to obtain something they can’t normally get, like a loan, lease, credit card, job, Visa, etc.,” advises Jennex. “This allows consumers to scan for information and activity that may indicate possible credit fraud.”

When reviewing your credit report, Oscherwitz urges you to pay special attention to the Inquiries section. Only organizations you have given express permission to check your credit should be listed in that section; unauthorized inquiries may indicate attempted credit fraud. Next, double-check all the accounts listed in the Account History section, especially those that are open and active or delinquent, to verify that only accounts you are aware of are present. Finally, verify that the addresses listed on your credit report are yours and yours only.

Oscherwitz adds, “If any one of those three areas has incorrect information, you should immediately take steps to protect your identity – add fraud alerts, security freezes, or purchase one of the consumer identity protection products available.”

The Future of Identity Theft

Although identity thieves may never disappear completely, there is no reason to make it easy for them to get their hands on your personal information.

“ID theft has the same economic dynamics as we have see in other types of fraud – if it’s hard to get information from one company, fraudsters will move on to the next one,” explains Wasim Ahmad, vice president of Voltage Security, which provides email and database encryption software. “By simply protecting consumer and employee data at its source using format-preserving encryption, no matter where that data goes it cannot be used to commit identity theft.”

Soon, identity criminals will have to find another way to make a living at their own expense, not yours.

– Writer Michelle Bruns contributed to this article.

Related posts:

1. Best Credit Card for Detecting Identity Fraud
2. Eight Ways to Protect Your Credit Card Limits
3. Paranoid or Prepared? 36 Tips to Protect Your Identity
4. How To Protect Children From Identity Theft
5. How Identity Theft Affects Your Credit Score

Tagged as: Credit, Credit Bureau, credit card, credit report, credit score, equifax, experian, fraud, Identity Theft, transunion, TransUnion Credit Bureau

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