Forty-six state Attorneys General are calling on Congress to help protect consumers from identity theft by enacting national security breach and credit freeze legislation.
The proposed laws would require businesses entrusted with personal financial data to notify consumers if their company’s data files are breached and allow consumers to put a credit freeze on their accounts.
In the letter, the AGs point out that millions of consumers over the past year have been exposed to potential ID theft because of security breaches suffered by large financial and retail establishments.
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The advertisements are intentionally frightening: If someone steals your identity, you could lose your home, your job, even your life. The ads are meant to scare you into buying identity-theft protection. And while the problem is real, insurance isn’t always the answer.
In fact, most consumers could better protect their identities if they guard their Social Security numbers, read their bank and credit-card statements, request their free credit reports and enroll in state security freeze programs.
“If it hits, it could be quite destructive to your life for a long time,” said Linda Foley, co-director of the Identity Theft Resource Center in San Diego. “Identity theft is not a picnic, but it is repairable.”
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Governor Arnold Schwarzenegger signed legislation last week that will help prevent identity theft in California. Among the provisions, the legislation will increase the penalties for “spam,” ban the use of equipment to make fake documents, prohibit prisoners from accessing personal information while in work programs, and authorize the Department of Managed Healthcare to perform criminal background checks for state employees and others who have access to medical information.
“Identity theft is one of the fastest growing crimes in America,” said Governor Schwarzenegger. “We must do everything we can to close the vulnerable pathways that allow thieves to steal personal information. The effects of identity theft can be devastating and take years to recover from.”
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Gov. George Pataki has signed a bill into law requiring companies, governments and private organizations to notify customers in cases where confidential information has been exposed to possible identity thieves.
The new law should prevent some identity theft or at least minimize the disruption to the lives of people whose identities could be used by criminals, Pataki said in a statement released by his office. Pataki himself was in China Tuesday meeting with government and commerce officials during a visit to promote New York businesses.
The new law, which takes effect in December, will make notification mandatory if databases involving identifying information such as Social Security numbers, driver’s license numbers or bank and financial account numbers may have been hacked into by possible thieves. The law requires customers to be notified “without unreasonable delay.”
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What’s really scary about identity fraud is the final chapter, when victims – not their banks or credit card companies – discover the crime, usually almost six months afterward, with no real advocate to help them argue their innocence and get their money back.
Sometimes, that last chapter has no ending. More than 1 of every 4 victims of identity fraud are unable to resolve their cases after a year of trying, according to a survey by Nationwide Mutual Insurance Co. Even more alarming: 16 percent of victims wind up paying an average of $6,440.
“That shocked me,” says Kirk Herath, chief privacy officer for Columbus, Ohio-based Nationwide. “I was not aware people would be liable for that much.”
The reason they would be in such a hole is because a criminal had used their debit card. Unlike credit card fraud, in which individuals are usually off the hook for anything over $50, liability for losses stemming from a stolen debit card can be anywhere from $1,000 to the total amount, regardless of how much.
Account holders are also responsible for all cash transfers, whether they made them or not. As for the unresolved cases, Herath says they usually drag on because of a lack of evidence; credit card companies are suspicious of their own customers acting dishonestly.
“It’s very hard to prove you didn’t do it,” he says.
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The burgeoning problem of identity theft is spurring new lines of insurance to cover the rising costs of consumers reclaiming their good names.
“Most of the insurance companies, the bigger companies, are offering it,” said John Schapperle, president of Island Insurance Cos. “I think the trend is following the scare in the nation … there’s a lot of publicity about it.”
Coverage is not just for wealthy individuals, Schapperle said. “It can happen to anybody and everybody at any time.”
art In addition to Island Insurance, most local insurers are offering coverage, said state Insurance Commissioner J.P. Schmidt.
Hawaii cases of identity theft shot up 188 percent from 2001 to 2004, according to the Federal Trade Commission. The most dramatic year-to-year increase — 167 percent — occurred between 2001, with 222 reported cases, and 2002, when 593 people reported stolen identities to the FTC.
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A Connecticut House Bill 6831, recently passed by the House and the Senate, will help protect citizens from bank fraud and identity theft. “Unfortunately, the crime of identity theft has been occurring with alarming frequency in Connecticut and in many other states around the country for the past few years; and, with the increasing popularity of online shopping and bill-paying, bank fraud involving identity theft is also becoming more common,” said state Rep. John E. Stripp, R-135. Stripp, who represents Weston, is a member of the General Assembly’s Banks Committee, where the measure originated.
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“Both offenses threaten the financial security of thousands of Connecticut residents. If enacted, this measure will enable law enforcement agencies and financial institutions to share information about new identity theft and bank fraud threats and take action to protect consumers from fraud and other unauthorized transactions or claims. I’m very pleased that the House acted in a timely manner to approve this bill,” said Stripp in a statement.
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Identity thieves can steal your sense of well-being, your good credit and your money.
Now, several banks and insurance companies are selling identity theft insurance. NewsChannel5’s Adam Shapiro looked at whether purchasing this protection is worth it.
On Wednesday, identity theft crook Jerome Moonie was sentenced to two years for his crime, but he’ll be out of prison before most victims are able to fix their credit.
That’s why ID theft insurance may sound like a good deal. But make sure you know what you are buying.
Identity theft is a crime that totals almost $50 billion, and has 10 million victims nationwide, reported Shapiro.
Maureen Mitchell, of Cleveland, is one of those victims.
“Being the victim of identity theft is equated to financial rape and all the insurance in the world will not minimize the emotional trauma to the victim and the invasion of privacy that has occurred,” said Mitchell.
Mitchell has her identity stolen six years ago, and has been trying to get her life back ever since.
“The paper work in this brief case alone represents 400 hours of time, effort, blood, sweat and tears, and this is just our first round of ID theft — there’s another briefcase at home,” said Mitchell.
National City Bank Vice President Thomas Munoz says that studies have shown that it takes as long as two years for a customer to restore their identity.
This is one reason National City is getting ready to offer customers identity theft insurance, called Identity Protect.
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Clark Kent was Superman. Samuel Clemens was Mark Twain. Increasingly, however, Rogers police are finding people — comic book heroes and literary legends aside — who have multiple identities complete with stolen documentation for use in capturing ill-gotten gains.
Cpl. Kelley Cradduck of the Rogers Police Department talked about identity theft with the Friends of the Library group on Tuesday. “This is a huge, huge problem,” Cradduck said.
Last year, Rogers investigated 30 cases of identity theft, which ranked the municipality fourth statewide along with Fort Smith and Jonesboro. Little Rock, which was No. 1 on the list, dealt with 214 cases.
While Rogers’ number may seem relatively small, Cradduck said identity-theft investigations are tricky. “Logistically, it’s a nightmare to deal with a victim in another state or (a perpetrator),” Cradduck said.
In fact, city police have had to look outside the United States to investigate identity-theft cases.
And while the breadth of the problem has grown, so has its depth.
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