You shouldn’t pay for a bank robbery
AS MANY AS 9 MILLION Americans have their identities stolen
each year, according to the Federal Trade Commission. And
by far the most frequent financial crime resulting from the
thievery is a new brand of bank robbery: crooks using stolen
information to open fresh lines of credit—credit cards, car
loans, even home loans. The independent Identity Theft
Resource Center (ITRC) conducts an annual in-depth study
of identity theft. In 2008 a record 67 percent of cases it
monitored involved lenders duped into extending credit to
a criminal. People 50 and older— 30. 5 percent of the populace—accounted for 35 percent of the victims.
The same whiz-bang technology that fosters online credit
approval makes it hard to combat anyone with your Social
Security number and an evil intent. “Law enforcement just
isn’t up to the task of handling thousands of ID-theft cases
crossing hundreds of jurisdictions,” says Jay Foley, director
of the ITRC. “The crooks know this and exploit it.”
While it’s the banks that get robbed, their failure to detect
fraud creates far-reaching collateral damage. In 2008, the
ITRC found, it took 165 hours on average—and cost $951
for everything from attorney’s fees to childcare—for indi-
viduals to undo the harm from a fraudulent loan. The crooks
prey on young and old alike. Leah Beltran, 26, of Portland,
Oregon, thought she had escaped disaster because she
quickly notified police and
canceled her credit cards after her wallet was stolen. But
then came a stream of forged
checks, fraudulent credit accounts, and traffic violations
attributed to her. Even though
Beltran and her family were
the victims, the bank froze
their accounts for two months
while figuring things out. “The
bank treated us like we were
the criminals,” she recalls.
MORTGAGE
BROKERS
IN MOST STATES
STILL HAVE
NO OBLIGATION
TO AC T IN THE
BEST INTEREST
OF THEIR
CLIENTS—
WHAT’S
KNOWN AS
A FIDUCIARY
DUTY.
That was in 2006. More than three years later, debt collectors still call in pursuit of transactions she never made.
What could banks do to protect customers? Simply put:
their job. Banks are supposed to keep our money safe, not
give away our credit to impostors. Here’s an idea: Instead of
selling us ID-theft-protection as an extra, why don’t banks
provide us with the shields we need for free?
Doug Johnson, a vice president at the American Bankers
Association, allows that when extending credit, “certainly
it’s the bank’s obligation to get it right.” But he says getting
free credit protection onto bankers’ to-do list would take a
competitive spark: “The cost for online banking has been
driven to zero. It could be the marketplace will drive the
price of that kind of protection to zero as well.”
