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FTC Looking for Ways to Combat Identity Fraud

August 20, 1996

WASHINGTON (AP) _ The answer could be as simple as checking your credit report each year. And it could be as expensive as a new system to record every credit card user’s fingerprint.

Suggestions for combatting identity fraud came from industry, consumer groups and government regulators Tuesday as the Federal Trade Commission convened a conference to look for solutions.

It’s the latest in credit card fraud, where a thief uses someone’s name, social security number and credit history to obtain a card and rack up a slew of charges. The bills go unpaid, and the victim is left to sort out the mess left behind.

``I think it’s fair to say that identity fraud goes to the very heart of the issue of personal privacy. It involves the theft, the misuse, the destruction of an individual’s good name and reputation,″ said Commissioner Janet Steiger. ``The case studies we see are, frankly, frightening.″

After a three-hour public meeting with more than 60 interested parties, the commission staff announced formation of a working group to study the issue further.

While there were many ideas for combatting the problem, most came from people who didn’t have to actually carry them out. And many participants poked holes in the suggestions that applied to their own industries.

Among the suggestions for companies:

_Do not issue a credit report unless a consumer authorizes it.

_Notify consumers when their credit reports are accessed.

_Ask consumers for identification when they use credit cards.

_Develop better computer programs that identify possibly fraudulent applications.

_Create a standard form for consumers to report credit fraud.

_Have credit bureaus take victims’ credit histories out of the electronic system, forcing issuers to examine the application individually to check its validity.

_Develop sophisticated systems that identify consumers by an inkless fingerprint.

Most ideas mentioned had their detractors.

The fingerprint is a good idea, but how do you build an initial database of prints, asked Joel S. Lisker, senior vice president for security and risk management for MasterCard International.

Asking for identification during the sale could upset legitimate customers, said Marianne Birarelli, regional fraud director for Sears Roebuck and Co.

``Sometimes you want to make sure you’re not inconveniencing everybody else,″ she said. ``A lot of customers aren’t pleased or are embarrassed if they’re asked to show ID.″

Most of the suggestions would cause expense for someone in the industry. Reaching an agreement will not be easy, said David Medine, who ran the conference for the FTC’s Bureau of Consumer Protection.

But companies will do it because it’s in their financial interest, he predicted.

``They suffer huge (fraud) losses,″ he said. ``It’s costing them money to not address these issues.″

Meanwhile, the FTC is planning a consumer education campaign. Tips for consumers include:

_Minimize the amount of personal information a thief can steal. Don’t carry extra credit cards, a Social Security card, birth certificate or passport in your purse or wallet.

_Keep a list of all credit cards, account numbers and expiration dates so you can quickly contact creditors if they are stolen.

_Never give a credit card number or personal information over the phone unless you made the call.

_Check your credit report for accuracy once a year from each of the three credit bureaus: Equifax, Trans Union and Experian (formerly TRW).

_Do not print your social security number on your checks or give it out unless necessary.

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