(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
JS-1681
Delivered to Lorain County Community College
Lorain, Ohio
Fighting Identity Theft: Challenges and Opportunities in
Implementing the Fair and Accurate Credit Transactions Act of 2003
Identity theft is one of the fastest growing crimes in America. According to a November 2003 study by the Federal Trade Commission, 10 million Americans were victims of identity theft in 2002. Identity theft cost American consumers $5 billion in 2002. It cost financial institutions $50 billion.
I don’t have to tell you that identity theft is right here, in Ohio. Comprehensive state by state data is hard to come by. But we have some idea from a January 2004 report by the Federal Trade Commission on the number of identity theft complaints submitted to its consumer sentinel database. The Cleveland-Lorain-Elyria metropolitan area ranked 21 st in the nation among metropolitan areas with the most identity theft complaints.
The President recognized the growing threat of identity theft. He called it, “one of the most harmful abuses of personal information.” For that reason, the President tasked Secretary Snow and the Department of the Treasury with identifying new tools in the fight against identity theft. We, in turn, consulted with financial institutions, technology companies, regulators, and victims. On June 30, Secretary Snow announced the result: a baker’s dozen of proposals to help fight identity theft and renew national uniform standards that govern our national consumer credit reporting system. With some exceptions, we didn’t invent the ideas in the proposals. These didn’t come from bureaucrats in Washington. They came from you: from financial institutions, technology companies, consumers, and, most importantly, from victims.
Congress showed great leadership in this battle. Chairman Oxley, Congressman Bachus, and Chairman Shelby held extensive hearings documenting the scope of the problem of identity theft and the economic importance of national, uniform consumer credit reporting standards.
Their leadership, and the leadership of many of their committee members, culminated in the Fair and Accurate Credit Transactions Act of 2003, which passed the Congress with overwhelming bipartisan support. I should add that Ohio’s congressional delegation was crucial to getting this Act passed. Chairman Oxley, Congressmen Gillmor, LaTourette, Ney, and Tiberi all provided strong leadership in the House Financial Services Committee.
The President signed the FACT Act on December 4. It was an important step toward strengthening our economy. As the President said, “reliable access to credit and capital is essential to growth and prosperity.” And the FACT Act, as the President said, “confronts the problem of identity theft.” For example:
- Consumers will be able to get a copy of their credit report free of charge every year so that they can correct inaccuracies and spot fraud early in the crime spree.
- With one phone call, a consumer will be able use the national security alert system established under the law to put merchants and lenders on their guard that an impersonator is transacting business fraudulently in the consumer’s name.
- An Active Duty Alert will permit our active duty service men and women, or their representatives, to alert merchants and prospective creditors that they are away from home for an extended period of time, and potentially vulnerable to fraud.
- Bank regulators will draw up guidelines to identify patterns of identity crime that financial institutions will use to help prevent the crime and protect their customers.
Since passage of the Act and the President’s signing, regulators – the FTC, the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and, of course, and the National Credit Union Administration – have been hard at work implementing the Act through rules and regulations.
This process is a difficult one. Congress imposed very tight deadlines on the regulators so that the rules would be issued as soon as possible. The issues are difficult and complicated. They are inter-related. There are many moving parts. It is something of an understatement to say that implementation of the FACT Act through regulation presents some challenges.
I believe that we can meet those challenges if we keep two principles in mind. They were the principles that the President talked about when he signed the Act. They were the principles that the Secretary talked about when he announced the Administration’s proposals way back on June 30 th. They are accessibility and security. As we write the rules, we should keep our eye on expanding access to credit while enhancing the security and accuracy of consumers’ personal financial information.
Thank you.