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FEBRUARY 11, 2003 SECURITY NET By Alex Salkever To Thwart the Identity Thieves [Page 2 of 2]
Credit-card companies and banks could easily insert this step into the credit-application process as a simple line item asking which of the big three you use. As part of the deal, allow the three credit-rating giants to charge an annual fee for this service -- something they're already doing with their subscription update services. In essence, they would then be working not only for the companies they service but the customers paying them to guard credit histories. Trans Union, Experian, and Equifax (EFX ) would want to keep as many people on their rolls as possible for two reasons -- smaller customers lists would mean less business from big corporations as well as less revenue from individuals. In this competitive environment, the agencies would respond more readily to individual concerns. So if I think my credit bureau isn't doing a good job protecting me, I can go next door. CLOSING A HOLE. Next, I would establish on a national level something akin to the California database-breach law, albeit with a twist. That law has a giant loophole for ongoing criminal investigations. I would eliminate that loophole and mandate unconditional notification. Allowing a big ID-theft ring to operate unchecked while authorities investigate would levy an unacceptable social cost on individuals. And alerting them of the problem early would ultimately make ID theft less lucrative. The faster victims can respond by freezing their credit, the less money could be harvested. I'd even add in a condition that companies facing database breaches provide lists of individuals who may be affected to the credit agencies. Activity on those accounts should receive a higher level of scrutiny. All of these things would cost money and possibly make it more expensive to keep the credit system running. As it stands now, ID theft also exacts a steep cost. Average out-of-pocket expense to a victim runs $800 according to a 2000 study by Privacy Rights Clearinghouse, an advocacy group in San Diego. Victims generally spend hundreds of hours cleaning up their accounts, something that has no dollar value attached to it now. And as ID theft increases, individuals will be asked to pay a higher and higher price to keep the credit industry running. SIMPLE PRINCIPLE. True, the financial industries and other parts of the economy also pay for ID theft. But under the current system, individual victims get hit the hardest even though they rarely share any of the blame for the crime. The only way to reverse that injustice is to shift the burden and the cost to those who bear the blame. Only when it's truly in the financial interest of business and the credit agencies to stop identity theft, will this plague be thwarted. Until lawmakers reform the credit-reporting system to conform with that simple principle, identity theft will continue to spread out of control.
 Salkever is Technology editor for BusinessWeek Online and covers computer security issues weekly in his Security Net column Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | FEBRUARY |
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