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Why Lenders Overlook Warning Signs of ID Theft

kdawson posted more than 4 years ago | from the take-the-money-please dept.

Crime 225

Hugh Pickens writes "Despite all the new fraud alert tools and increased awareness of the perils of identity theft, incidence of the crime remains at 2003 levels, with about 10 million Americans falling victim every year. Now the NY Times reports that there may be a simple reason for the persistence of ID theft: lenders are too willing to extend credit to just about anybody, even when there are big red flags that indicate fraud. Chris Jay Hoofnagle at UC Berkeley worked with a small sample of six ID theft victims and delved into how they were defrauded. Of 16 applications presented by imposters to obtain credit or medical services, almost all were rife with errors that should have suggested fraud — yet in all 16 cases, credit or services were granted anyway. 'Identity theft remains so prevalent because it is less costly to tolerate fraud,' writes Hoofnagle. 'Adopting more aggressive and expensive anti-fraud measures is extremely costly and jeopardizes customer acquisition efforts.' Hoofnagle says business decisions leave individuals and merchants with some of the externalities of identity theft as victims spend their own money, and more often, valuable personal time dealing with the problem. Hoofnagle suggests that lenders contribute to a fund that will compensate victims for the loss of their time in resolving their ID theft problems."

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Here we go.. (3, Insightful)

BVis (267028) | more than 4 years ago | (#31788420)

Can't wait to see how people blame the victim on this one.

Re:Here we go.. (4, Interesting)

WrongSizeGlass (838941) | more than 4 years ago | (#31788454)

Can't wait to see how people blame the victim on this one.

I think it's pretty clear that these 'honorable institutions' are actually enablers. Accepting that the cost to compensate individuals is lower than fixing the system sounds awfully familiar ... Ford's Pinto comes to mind as does the recent Toyota situation. They're not killing anyone ... they're just ruining their lives for a while.

Re:Here we go.. (4, Insightful)

Shakrai (717556) | more than 4 years ago | (#31788646)

Ford's Pinto comes to mind as does the recent Toyota situation

The "Toyota situation" has been blown completely out of proportion. Whatever problems may exist with Toyota automobiles have long since been buried under sensationalist "OMG, if you own a Toyota you are going to die!!!" media headlines and politicians looking to build "I'm tough on big business" street cred. It's been alleged that 37 people have died due to problems with Toyota's in the last ten years. That's a drop in the bucket compared to the number of people who have died in old fashioned automobile accidents. Even if you accept that all of those were due to a design flaw (which hasn't been proven yet) it hardly seems worth all of this FUD.

I don't own a Toyota but if I did I wouldn't be afraid to drive it. I'd be more worried about getting killed because of the stupidity of a fellow driver than I would be about being killed by a design flaw in my own automobile.

Re:Here we go.. (0, Redundant)

Schadrach (1042952) | more than 4 years ago | (#31788754)

I actually do own a Toyota ('95 Avalon, bought from a guy who lives a block away from me and rebuilds totaled vehicles [as in the vehicle is sold at auction as "salvage"] and resells them). It has a few minor issues you expect from a vehicle in that kind of accident (the doors don't always register as "closed" when you close them, had a power window motor go out on the side that got hit, a bearing give out that required replacement, and it doesn't align quite properly). Other than that (which was less issues than I expected), it's been one of the best cars I've owned.

Re:Here we go.. (2, Informative)

Lumpy (12016) | more than 4 years ago | (#31788868)

Or compared to the number of Ford F150 pickup truck fires that actually caused deaths and damage. Oh wait, let's ignore that because a pickup truck is AMERICAN!

Re:Here we go.. (2, Informative)

arekusu_ou (1344373) | more than 4 years ago | (#31789384)

I do own a Toyota Camry and I love it, and thought all that sensationalism was total BS.

I was asked, well if your car suddenly accelerated out of control, what will you do!

I answered, well the first thing I would do is push my gear shift forward from D to N. I don't know if it's a safety feature, but D to N doesn't require pressing the release button on the side, just pushing it with enough force.

Then I'd tap my breaks and start slowing down as if there was bumper to bumper traffic suddenly showing up in front of me. I'd try to coast to breakdown lane if I could, even in neutral you have some momentum left. I know, my engine in a Ford Taurus and Pontiac Grand Pris cut out on me twice on the highway, leaving me with sluggish steering wheel.

My other options once I'm in neutral is yanking on my emergency brake and using my emergency blinker, because that's what they're there for, but emergency brakes aren't safe at high speeds.

Slamming on my breaks or panicing doesn't do me any good. And if I get rear ended in that situation, well the person behind me wasn't paying enough attention since I tapped my breaks as a warning before slowing down. If I ram the person in front of me, than I was tailgating them and that's my own god damn fault and not my cars.

The problem is that we dumbed down America so much, the driving skills are so abhorrent and a god damn given "right" that even the worst and dumbest of drivers can pass, and the thinking and rational skills of people are nearly non-existent. There may be a flaw in a car design that strikes 1 in millions, hundreds of millions, who knows under what conditions. That IS generally an acceptable margin of error in design because NOTHING is perfect, and to believe so would be hubris.

Re:Here we go.. (0)

Anonymous Coward | more than 4 years ago | (#31789222)

The Toyota point has been made above.

I'd like to point out that the Pinto thing is along the same lines. The Pinto was no more likely to cause problems any most other vehicles at the time. It was just the scapegoat (see also Chevy's saddle tanks). The whole thing was blown out of proportion with media sensationalism.

Re:Here we go.. (1)

rcamans (252182) | more than 4 years ago | (#31789840)

NO, Not enablers. They are seriously greedy, and frantic for money. Because of this, they are actually ACCESSORIES TO ID THEFT CRIMES. Let's start prosecuting them as such. Oh, wait. The feds already ok banks and lending institutions as ok to steal, etc, so this would be ok, too. Oh, wait, the feds give the banks, etc money to cover their losses, so they could get more money from the feds for this, too.
Never mind.

Re:Here we go.. (0, Flamebait)

Anonymous Coward | more than 4 years ago | (#31788472)

"The victim"?

If you steal someone's identity and scam a bank out of $1,000, then there is more than one victim: namely, the person whose identity you stole, and the bank (or broadly, its shareholders). Of course, I don't expect most slashdotters to be capable of recognizing this simple fact.

Re:Here we go.. (1, Insightful)

Anonymous Coward | more than 4 years ago | (#31788636)

Well let's be realistic, a Bank an take a $1000 hit and still operate. I am also sure there is some sort of insurance for that, if there isn't they will still carry on. However, if that's a person's last $1000 or a portion of that money needed to go to pay for food or rent, they are royally screwed. I'd say, yes there are 2 victims, but lets look at this from a practical standpoint, the guy making $40K/year has more to lose being defrauded, than the Bank that probably has a couple of hundred million under its belt.

Re:Here we go.. (0, Troll)

medcalf (68293) | more than 4 years ago | (#31789352)

So are you saying it's ok to rob banks, because that's where the money is kept?

Re:Here we go.. (1)

ajrs (186276) | more than 4 years ago | (#31789630)

So are you saying it's ok to rob banks, because that's where the money is kept?

So your saying it OK to rob places without money?

Re:Here we go.. (4, Informative)

Shakrai (717556) | more than 4 years ago | (#31788656)

If you steal someone's identity and scam a bank out of $1,000, then there is more than one victim: namely, the person whose identity you stole, and the bank (or broadly, its shareholders)

If the ID theft involved a credit card account then you can add the merchant(s) to your list of victims. When a credit card charge is disrupted it's the merchant who winds up taking the hit.

Re:Here we go.. (3, Insightful)

Migraineman (632203) | more than 4 years ago | (#31788784)

Actually, that's the root of the problem. When the credit card company pushes the burden of loss onto the merchant, they have no incentive to shoulder the expense of stopping fraud. If they had to absorb the loss themselves, and were prohibited from shoving this onto the merchants, you can bet their attitude toward fraud would change immediately.

Re:Here we go.. (1)

Shakrai (717556) | more than 4 years ago | (#31788832)

Except that in certain cases the merchant is the one responsible for the loss. For instance, they are supposed to compare your signature on the charge slip to the signature on the back of the card. This simple step would stop a large number of illicit transactions using stolen credit cards but most merchants can't be bothered -- even though the agreement they signed to accept credit cards says this is part of the process.

Mind you, that wouldn't help with ID theft, but I don't think it's fair to ask the bank to eat the loss in an instance where due diligence on the part of the merchant could have prevented it.

Re:Here we go.. (1)

Sancho (17056) | more than 4 years ago | (#31789130)

The credit card companies should allow merchants to check ID, then. Comparing a signature is pointless. It only takes a few minutes to learn to forge something that's passable to untrained eyes.

Though some merchants ask for ID anyway, the merchant agreement usually forbids requiring ID to complete the transaction. This is pretty much there because the credit card company wants to make using the card as easy as possible. They don't want any negative implications to the card. It's the same reason that you can allow a cash discount, but you cannot charge a fee to use the card. The semantics are wholly within the perception of the consumer.

Re:Here we go.. (1)

tophermeyer (1573841) | more than 4 years ago | (#31789324)

Sounds like a losing situation for the Merchants. They are required by the creditor to make the purchasing process simple and convenient, but are stuck with the financial burden of the loss when someone takes advantage of that.

Personally, I would prefer a credit card agreement that would require me to prove who I am to make a purchase. I write "Check ID" on the signature field of my credit/debit cards. I get called on it so rarely that I know someone could absolutely steal and use my card, but there's a little part of me that hopes any mugger or pickpocket would be too nervous to try it.

Re:Here we go.. (1)

Sancho (17056) | more than 4 years ago | (#31789482)

It really is a pretty bad deal for the merchants. What they get out of it, though, is the ability to compete with other merchants who take credit cards. Since that is most other merchants, it just means that they're on equal footing. If they refused to take credit cards, they'd probably lose a lot of sales.

I'd love to have more proof of identity in purchasing with credit cards. Having had my CC stolen or compromised 3 times in my life (and gone through the hassle of changing auto-pay services to the new number) I'd welcome a little more trouble at the register in order to keep fraud down, even though for credit cards, there is little customer financial burden if the card is stolen.

Re:Here we go.. (1)

PopeRatzo (965947) | more than 4 years ago | (#31789370)

The credit card companies should allow merchants to check ID, then

"Allow"? How about "require"?

Does anyone really have a problem with pulling out an ID when making a purchase? You're already pulling out one card. Is it really too much trouble to show a second?

Banks don't care because they're going to get paid, one way or the other.

Re:Here we go.. (1)

Chaos Incarnate (772793) | more than 4 years ago | (#31789470)

Yes, that's a great solution: let's combat identity theft by exposing more personal information! </sarcasm>

(Yes, I have a problem with showing an ID, both on its own "merits", and that an ID isn't required to get a card and thus shouldn't be required to use it.)

Re:Here we go.. (1)

Qzukk (229616) | more than 4 years ago | (#31789514)

For instance, they are supposed to compare your signature on the charge slip to the signature on the back of the card

That's a nice idea, but whoever stole the card has the signature to study, and you're asking some highschooler to perform handwriting analysis to see how close of a match it is. Not to mention the proliferation of those digitizer tablets that turn your signature into something like a solid block of pixels.

I suspect, though, that given the relative frequency of a mugger taking one credit card from one person and hackers taking ten million+ card numbers from a company, focusing on the signature isn't productive (especially when it's trivial to write any number you want to a magstrip with whatever signature you want on it, which is why many stores have you hand over the card so they can type the last 4 digits stamped on the face of it).

As a merchant myself, what's needed is for the transaction clearinghouses to get off their asses and come up with a public key system. I don't do any recurring charges so I discard the entire CC number after a charge, but none of the processors that I'm aware of has any way for me to submit encrypted CC numbers if I needed to keep them around for a subscription (or to save them so people don't have to re-enter them every time). The best I could do is encrypt them here and hope the employees with the keys don't get any ideas. If I could store an encrypted string of "ccn-merchant#" and submit that to the processor every month, then I could be certain of the security of the numbers in my control.

For ID theft in general, we need to enforce the existing ban on the use of social security numbers for identification, and to force banks and other institutions to come up with their own way of identifying people that doesn't pretend that only one person in the whole world knows your nine digit number despite the fact that you're giving it out left and right.

While I'm on a roll, bonus points if banks implement separate deposit and withdrawal account numbers so that I don't have to give potentially untrustworthy employees in the HR division my real account number for direct deposit.

Re:Here we go.. (1)

Red Flayer (890720) | more than 4 years ago | (#31789686)

While you raise a lot of really good points in your post...

While I'm on a roll, bonus points if banks implement separate deposit and withdrawal account numbers so that I don't have to give potentially untrustworthy employees in the HR division my real account number for direct deposit.

This already exists and is cheap for the individual. Just open an additional savings account with $50 under your main account, and then set up recurring transfers to move the entirety of your paycheck to your regular savings or checking account. Make sure you do not have overdraft protection on this account. Then your maximum liability is $50.

Re:Here we go.. (1)

maxume (22995) | more than 4 years ago | (#31788584)

I blame the victim.

Of course, I also think that the victim is the lender.

Re:Here we go.. (1)

PopeRatzo (965947) | more than 4 years ago | (#31789396)

Of course, I also think that the victim is the lender.

But the lender's not the one who's going to have their credit rating trashed and have their accounts cleaned out.

I wouldn't be surprised if at some level, the banks see identity theft as a profit center.

Re:Here we go.. (1)

maxume (22995) | more than 4 years ago | (#31789602)

Oh yeah, it all breaks down into semantics. Certainly, the person matching the identity used in the fraud is victimized, but they are more a victim of the legal framework and the lending institution than they are a victim of the fraud.

Re:Here we go.. (5, Interesting)

RAMMS+EIN (578166) | more than 4 years ago | (#31788710)

``Can't wait to see how people blame the victim on this one.''

The victims ... are all of us. The fallout of identity fraud is costly, and, eventually, all of society bears that cost. Higher rates for borrowing money, insurance against identity fraud, the enormous cost of cleaning up after your name has been misused, and society missing out on people who would otherwise have been productive members.

It seems to me that the choices we have are trading the inefficiency of a better identification system against the inefficiency of having more failures, and sharing the burden vs. letting a few shoulders carry it all so the rest of us goes unencumbered.

Personally, I think that there should, first of all, be fewer occasions where you need to authenticate. Usually, it doesn't matter who you are, so why require authentication? Secondly, authentication should not always disclose everything. If the same data that I need to hand over to buy a $50 mobile phone can be used to get a $20000 loan, that's a security hole.

Thirdly, when you're lending money, that's your choice. You can charge interest and/or fees to make it worth your while. What you can't do is get someone who wasn't a party to the agreement to be responsible for getting the money back to you. If you lent it to the wrong person based on false credentials, that's your mistake, not that of the person whose credentials were misused. Somehow, institutions seem to be able to strong-arm that person into paying up anyway. I'd like to see the end of that, too.

Re:Here we go.. (1)

Rob the Bold (788862) | more than 4 years ago | (#31789502)

Personally, I think that there should, first of all, be fewer occasions where you need to authenticate. Usually, it doesn't matter who you are, so why require authentication? Secondly, authentication should not always disclose everything. If the same data that I need to hand over to buy a $50 mobile phone can be used to get a $20000 loan, that's a security hole.

This is a good idea. I just can't figure why one needs to hand over an SSN to buy even a prepaid phone plan. Even worse, I was expected to give it out for a blood draw/lab work. I went in all adamant about kicking ass when they demanded it, telling them that they weren't paying me anything so they didn't need to make any IRS filings, privacy, etc. Then they didn't even care when I left the field on the form blank -- I was almost disappointed. I suppose that many times, SSNs are demanded just because the guy creating the paper/online form saw it somewhere else and copied it or else they just can't be bothered coming up with their own unique client ID. Naturally, online forms are the worst, since they'll just keep asking till you type something plausible.

Thirdly, when you're lending money, that's your choice. You can charge interest and/or fees to make it worth your while. What you can't do is get someone who wasn't a party to the agreement to be responsible for getting the money back to you. If you lent it to the wrong person based on false credentials, that's your mistake, not that of the person whose credentials were misused. Somehow, institutions seem to be able to strong-arm that person into paying up anyway. I'd like to see the end of that, too.

You'd think this is a no-brainer, wouldn't you? I get collections calls all the time for (I guess) the guy who previously had my number. If I look up the calling number, it's always a debt scavenger. If I actually get a person on the line when I answer I tell them that there's no "Gary" here, and the calls stop for a week for two. Then they start up again from a different number of a different scavenger, and we repeat. I suppose the collector sold the debt down the food chain. So I'm on-the-hook for some guy's bills because of only a phone number.

But not really. It's just a nuisance. I'm not Gary, and the only credential we share is a phone number. Still, I wonder if these agencies are hoping that a certain faction of "victims" will pay up just to be rid of the hassle. If you're buying the debt at pennies on the dollar, I guess you play the percentages.

So why should someone be really liable for a debt just because it was incurred with their SSN, address, etc., instead of just their phone number? I guess it's because the SSN is the ultimate blackmail tool: give it to the credit reporting bureaus if the victim doesn't comply. That's a lot more leverage than annoying calls.

I can understand that banks/etc. want to recoup their losses in these cases. That's understandable. But if they go and threaten to financially ruin an innocent 3rd party, there should be a punishment. Seriously, if you can't be bothered to do your due diligence on the front end of the transaction, then you better do it on the back or face the consequences.

How about a lawnmower analogy for a change . . . If someone steals my lawnmower by saying 'Hey, I'm your neighbor down the block, can I borrow your mower?', can I then go the alleged neighbor's house and take their mower? I'm pretty sure a court would say 'no.'

Re:Here we go.. (0)

Anonymous Coward | more than 4 years ago | (#31788736)

I didn't even have to wait for the /. comments about how "the man" is keeping us down. I swear this site is more and more like a bad 70's flashback--because of course the big, bad bank is your enemy. People power!

Funny thing is, most here don't find it irrational to try and have it both ways: the evil bank is making fraud too easy on the one hand, and yet you hear all the time how the evil bank wouldn't make loans on the other. I can pretty much guarantee that if they post a story about a bank turning down an application with an error in it and you can cue the "OMG evil corporations" rants on /.

Re:Here we go.. (1)

Lumpy (12016) | more than 4 years ago | (#31788858)

It's the victims fault for not protecting their info. It's also the victims fault for not checking their credit report every 60 seconds.

finally it's the victims fault for electing the scumbags they have in government that hates consumers and loves banks.

Honestly, the US government fully supports credit fraud, otherwise they would have put in rules for banks that made it the banks responsibility and liability at all times. It needs to become expensive for banks to ignore the red flags. I support a $50,000.00 tax free fine directly payable to the victim for every red flag a bank ignored.

Tell me about it (4, Insightful)

cybrthng (22291) | more than 4 years ago | (#31788430)

Bank fraud is why i shutdown my business after losing about 15k. Banks make a LOT of money milking the merchants with fees & services to create a "Safe shopping facade" but to screw you over in the end. What sucks even worse is that the consumer always wins in the end regardless or not if the consumer is legit or fraud and the banks LIKE it that way.

Banks make a lot of money in playing the high risk game and its screws everyone over in the end.. someone is paying for it.

Re:Tell me about it (1)

Aeros (668253) | more than 4 years ago | (#31788486)

no doubt. Look at the high end game they played a few years back that helped turn the world economy upside down for the past few years.

Re:Tell me about it (-1, Offtopic)

Vanderhoth (1582661) | more than 4 years ago | (#31788550)

How F*&$ dare anyone out there make fun of Britney... I mean the banks.

Re:Tell me about it (1)

conureman (748753) | more than 4 years ago | (#31788514)

Kinda ironic, the shite I wade through to cash a legit check with my name on it... My GF's purse was stolen a couple weeks ago, and whoever got it has cashed THOUSANDS of dollars in checks, mostly in the four- to eight-hundred dollar range. I wish I knew the secret, I'd like to get away with cashing my own checks more easily.

Re:Tell me about it (1, Flamebait)

Shakrai (717556) | more than 4 years ago | (#31788694)

Find a bank that isn't run by assholes. The girls at my local community bank know who I am, never ask me for ID and never give me any issues cashing a check. Do business with an outfit that sees you as a person rather than someone who is looking to rip them off.

Re:Tell me about it (0, Flamebait)

Lumpy (12016) | more than 4 years ago | (#31788918)

Yup. Everyone that works at a 5/3rd bank are raging assholes. They actually seek out asshole attitudes...

excerpt from an interview....

Interviewer: What do you do if a customer wants you to do something like a withdraw or cashing a check?

Intervieweee: I check their bank balance, if it's above 6 figures then I help them, if it's not then I tell them to go fuck themselves.

Interviewer : You're hired!

Re:Tell me about it (0)

Anonymous Coward | more than 4 years ago | (#31789578)

I ran into an interesting problem when I was 15 years old.

I had opened a bank account when I was 12, using my mother's signature and my health care card to guarantee my identity. I was required to sign a signature card for comparison purposes.

When I was 15, I decided to close the account. When I went in, I was told in order to close the account I needed 2 pieces of government ID - one photo. I didn't have photo ID at the time - I didn't have my licence or learner's licence. I was told I could not close the account. I asked if I could withdraw all my money. They said yes. I signed a withdrawal slip and handed it to the bank teller. She came back and told me I could not withdraw the money because my signature did not match.

I had the same piece of ID that I opened the account with, and my bank card. I went to the ATM and withdrew my max $ each day until I depleted my account. When I got my licence I went into the bank and finally closed my account.

Hoofnagle is right (5, Interesting)

dontmakemethink (1186169) | more than 4 years ago | (#31788476)

Settling the fraudulent debt is one thing, being compensated for the runaround is another. If banks are going to save money by enabling ID theft as a matter of policy, they must compensate for when that policy causes damages to their clients in the form of time and money spent correcting the problems. Then we'll see if it's actually better to save on ID theft prevention.

Re:Hoofnagle is right (1)

conureman (748753) | more than 4 years ago | (#31788652)

I think that is like getting compensated for SPAM damages. An idea too good to see daylight. "There was an impassioned plea for an end to corruption in government, but cooler heads prevailed."

They make money off of it. (1)

tomhudson (43916) | more than 4 years ago | (#31788494)

  • You might not notice the charges;
  • By the time you do notice, it may be too late to complain;
  • It might be for such a small amount that after getting the run-around, you let it pass;
  • You might notice the charge and think "my birthday/the holidays/our anniversary is coming up - it must be a surprise" - and let it slide until it's too late;
  • CowboyNeal stole your identity and gave you his, and now nobody believes you.

I'm sure people will add more reasons to the list.

Credit Agencies (4, Interesting)

Shotgun (30919) | more than 4 years ago | (#31788506)

I've got an idea. How about the credit agencies be required to inform me when they give out reports about me? They already know everything about me, right? If someone is illegitimately getting credit under my name, I'll find out about it. If they have incorrect information, I'll find out about it. The cost of an inquiry would go up by $1(US), the cost of printing and mailing a duplicate report.

Re:Credit Agencies (2, Insightful)

Anonymous Coward | more than 4 years ago | (#31788750)

I like your plan, but it would first require the approval of the credit agencies and $1 million in lobbying (by the credit agencies) before any congressman would sponsor such a bill. Unless of course some influential consumer advocacy group can out-lobby the credit agencies, but none come to mind.

Your plan would only work if you use the strategy that got us health reform. The bill has to be written by the enablers (banks and credit agencies). The bill would mandate that all Americans be required to pay for credit monitoring, with government subsidies for the poor. Then everyone would get a monthly statement of their credit activity. Democrats will debate for a public option, then drop the charade and pass the bill without one.

Re:Credit Agencies (1)

c-reus (852386) | more than 4 years ago | (#31788794)

If someone can convince a bank to give them a loan using your name, how difficult could it be to have the contact information changed?

Re:Credit Agencies (4, Insightful)

mcelrath (8027) | more than 4 years ago | (#31789124)

You seem to be under the illusion that credit agencies are legitimate businesses, interested in the welfare of their customers, and you are their customer.

Let me fix that for you: Credit reporting agencies are a blackmail and extortion ring that somehow are allowed to legally exist. They don't give a shit that your information is correct or not, or if someone defrauds you. If you get defrauded, they're happy to just put it in the report. After all, if you get defrauded, you're a risk, aren't you? Still not their problem.

No one has ever been contacted by a credit agency, unsolicited, to verify the accuracy of information in their file.

The only way your idea will come to pass is if it is legislated.

Personally I think a better idea is to just get rid of credit agencies. Make holding information about a person without their knowledge or consent illegal. Require that anyone holding information (of a certain nature) about a person notify that person of the content and existence of that data on a regular basis. Thus holding information about people becomes expensive, and illegitimate extortion operations like credit agencies would be forced (economically) to improve.

Re:Credit Agencies (1)

arekusu_ou (1344373) | more than 4 years ago | (#31789570)

I would also like to add correcting issues, even as minor as contact info or erroneous history is a freaking pain in the ass.

Re:Credit Agencies (1)

CopaceticOpus (965603) | more than 4 years ago | (#31789134)

Even an email would be fine. A simple message saying that "Bank X has requested your credit report in order to process an auto loan. If you have not initiated this loan request, please contact so-and-so at Bank X immediately."

They're totally unaccountable. (4, Interesting)

copponex (13876) | more than 4 years ago | (#31789464)

Did you know you cannot even compel a credit agency to produce the documentation proving that you owe the claimed debt? Verification involves them contacting the party reporting the debt, saying "This guy owes money, right?" When they reply in the affirmative, that's called "verified."

Financial regulations in the United States are practically non-existent. The reason for uncertainty in our markets has nothing to do with government regulations - it has to do with the total lack of accountability and transparency required. Every five years the scheisters are exposed, and the markets collapse, because everyone - Wall Street, the credit rating agencies, and of course the companies themselves - are in on the take.

Re:Credit Agencies (2, Informative)

QuantumRiff (120817) | more than 4 years ago | (#31789550)

They do that already, but they charge for it. Why would they want to ruin a perfectly good revenue opportunity?

However, you can put a freeze on your credit report, and people can't pull it unless you are contacted and approve.

The obvious solution to ID Fraud (4, Interesting)

rock_climbing_guy (630276) | more than 4 years ago | (#31788516)

I have an obvious solution to ID fraud. It must be wrong, or else it would be implemented years ago.

The solution is this: you loan money to Joe and Joe signs his name as David? Wow, too bad for you, lender. You just gave away your money to Joe. David can't be held liable for this since he had no hand in it?

Doesn't it sound like the logical solution. If someone goes to the bank claiming to be me and the bank gives them a loan in my name, then the impetus is on the bank to track down the schmuck who tricked them. The bank ought to be liable for allowing themselves to be duped like this; they shouldn't be allowed to come after me. After all, I didn't do anything!

What's wrong with this solution?

Re:The obvious solution to ID Fraud (4, Funny)

P-Nuts (592605) | more than 4 years ago | (#31788596)

Mitchell and Webb covered this [youtube.com]

Re:The obvious solution to ID Fraud (2, Funny)

Vanderhoth (1582661) | more than 4 years ago | (#31788620)

Well if you didn't let Joe use your name in the fist place you wouldn't be in that mess would you? You deserve to pay whatever the bank tells you to pay.

Re:The obvious solution to ID Fraud (4, Insightful)

HangingChad (677530) | more than 4 years ago | (#31788650)

What's wrong with this solution?

The banks spend millions on lobbyists to fight making the laws more fair to the consumer. Otherwise your solution would already be law.

Banks start whining that making them responsible would raise the cost of extending credit. Good. Credit should be harder to get.

One slight problem (2, Insightful)

petes_PoV (912422) | more than 4 years ago | (#31788738)

The bank lends some money to Joe. Joe denies ever having seen it, says it must've been David using Joe's assumed name. When the bank challenges Joe and says "but here's the proof that your identity was used", Joe replies "dam' clever these identity theft people, you really should tighten up your procedures". Same standoff, different people benefit and get blamed. Now I'm not saying the banks are blameless - they obviously rely to heavily on shoddy checks to ensure the applicant is who they say they are. However, once you make them take the hit, all that will happen is they pass on the costs to the customers by increasing their charges. Which is what they'll do in every situation, anyway.

The only workable solution is to have some way of absolutely and uniquely guaranteeing that the person who claims to be "X" can only be "X" and cannot be anyone else. Even DNA checks are not good enough for this (as cases involving identical twins have shown), so the actual solution is very, very hard.

Of course the simpler solution is for the banks to not lend anything to anyone.

Re:One slight problem (1)

maxume (22995) | more than 4 years ago | (#31789010)

A general solution to the problem is impossible (there are lots of situations where it is fairly easy, say, where the bank manager has known the applicant for their entire life). Even in a situation where a very good government agency is tracking identity and handing out identity documents, the authentication is still only as good as their practices and the security features of the documents (both of which involve humans, so are unlikely to be perfect, and thus fall short of a guarantee).

So perfection is (probably) impossible. Short of perfection, making the party that is handing out the money responsible for their choices makes a lot more sense to me than blithely accepting the collateral damage to an arbitrary third party. In your scenario, Joe had better be real careful to avoid using the money for anything the bank's investigators will notice.

Re:One slight problem (1)

petes_PoV (912422) | more than 4 years ago | (#31789272)

But banks don't have any money of their own to pay in compensation. All they have is ours (so long as we can prove we are who we claim to be.) So making "the banks" responsible for losses doesn't work. They'll just take the loss and pass it on to the only people in the loop who have money: their depositors. End result: we pay for their lack of diligence. However, since we also benefit from the profits they make by lending (either from reduced bank charges, or through direct investment in bank shares or indirect investments via pension funds) it's hard to complain.

You can't even boycott one bank in favour of another, since they all pay into the same compensation scheme and effectively underwrite each others' losses there's really only one game in town.

The only way to force a solution is by outside intervention

Re:One slight problem (1)

maxume (22995) | more than 4 years ago | (#31789548)

I'm operating under the presumption that they would focus more effort on loss prevention than loss absorption (because I'm pretty sure it would be relatively inexpensive).

Anyway, most people saying that the banks should be responsible for the losses mean that they would support consumer rights legislation that forced banks to demonstrate some sort of proof before they sent a collections letter to Joe, or at least gave Joe a simple way to challenge the account (such a challenge would require the bank to immediately start treating the account as not being connected to Joe until they provided some measure of documentation that it indeed did belong to Joe). They feel this way because the current situation is woefully unfair to consumers.

I guess that might make banking a little more expensive for the lucky majority that never has to deal with fraudulent use of their identity information, but I'm okay with that, because I think it would make society more fair (to clarify, I don't see a completely fair society as an end goal, life isn't fair, but I do oppose legal frameworks that actively diminish fairness).

Re:One slight problem (5, Insightful)

david_thornley (598059) | more than 4 years ago | (#31789074)

If it's the bank's decision to lend or not, then the bank should take responsibility for fraud. Suppose Joe borrows money under my name fraudulently, from a bank I don't personally do business with. I have had no opportunity to influence the security of the bank's system, except politically. I have had no market influence, not being a customer. The decision of what level of fraud to accept is the bank's.

Any cost pushed off on me is an externality for the bank, since they don't have to pay, and they aren't even losing a customer. Therefore, market forces will not create incentives for banks to reduce fraud below what is best for their balance sheets. In the situation where I can be forced to repay the loan, there is no incentive for the bank to avoid fraudulent loans, and the amount of fraudulent loans increase until everybody's doing it as a matter of self-defense.

In general, the cost of a loss is best assigned to those with the ability to avoid the loss. That way, the market pushes them to the correct balance of preventing and accepting the loss.

Re:One slight problem (3, Insightful)

bendodge (998616) | more than 4 years ago | (#31789726)

Even DNA checks are not good enough for this (as cases involving identical twins have shown), so the actual solution is very, very hard.

Just take a thumbprint with the signature. That's good enough to cover 99% of the cases. (If someone is rich enough that someone else will make a thumbcap to match, then you're getting into real cloak-and-dagger. But most crooks are dumb.) Inkpads are cheap. Even though the bank likely can't verify the thumbprint immediately, it will be invaluable to the police when the fraud is investigated.

Re:One slight problem (1)

Rastl (955935) | more than 4 years ago | (#31789854)

Just take a thumbprint with the signature. That's good enough to cover 99% of the cases. (If someone is rich enough that someone else will make a thumbcap to match, then you're getting into real cloak-and-dagger. But most crooks are dumb.) Inkpads are cheap. Even though the bank likely can't verify the thumbprint immediately, it will be invaluable to the police when the fraud is investigated.

And how about a digital picture of the person getting the loan? Pretty darn easy to do, not an invasion of privacy, and clear proof of who actually performed the transaction. Simple, cheap and verifiable.

Oh wait. That would mean the institution could really be held accountable when it comes to a fraud investigation. That's why it won't work. Silly me.

Re:One slight problem (1)

Rob the Bold (788862) | more than 4 years ago | (#31789820)

However, once you make them take the hit, all that will happen is they pass on the costs to the customers by increasing their charges.

This oft-used expression runs counter to the model of supply-and-demand in a market with any demand elasticity.

Re:One slight problem (0)

Anonymous Coward | more than 4 years ago | (#31789870)

What about adding finger prints as an ID method. It could be added to a person's credit report and checked to verify they are who they say they are. It's much more difficult to forge someone's finger prints.

I think the cost to add this would be minimal for the banks since they wouldn't really need a lot of scanners (one for most small banks) and they already have internet connections. The most difficult part would be getting everyone's prints and adding it to their credit for existing reports, but I think this information is available for many people. I know when I did my Insurance license they scanned my print to verify who I was, but I don't know what they checked against. Future generations could be added when they get a license, graduate high school, or are born.

Re:The obvious solution to ID Fraud (0)

Anonymous Coward | more than 4 years ago | (#31788870)

The problem is that anyone could claim to have been the victum of ID theft instead of paying back their loan (insisting the bank refund checks they did actually write, etc). This would require the banks to prove (probably involving lawsuits) that every tansaction you made was in fact made by you not an ID thief. Now given the nature of technology this would mean you can only conduct buisness in person with a teller who is videotaping the tansaction, and probably taking fignerprint scans. As the banks will only want to conduct transactions that leave sufficent evedence that they can prove in a court of law that there wasn't a TV-esque super-hacker ID thief making these transactions.

Now ask yourself, which would you really rather have: absolute security but no convinience, or convinience with shoddy security (you can't have both)? then consider that once you've started down the slope there's no incentive for the banks to not persue a way of recouping their losses in fraud cases, and that banks have lots of money for lobyists and you will see the flaw in your plan, namely "it doesn't work because some people are jerks and the rest are lazy".

Re:The obvious solution to ID Fraud (1)

DrugCheese (266151) | more than 4 years ago | (#31789174)

The only thing wrong is that it's the banks playing field and they set the rules...

Re:The obvious solution to ID Fraud (1)

QuantumRiff (120817) | more than 4 years ago | (#31789564)

But outside of criminal cases, you ARE guilty until proven innocent.

Because (1)

copponex (13876) | more than 4 years ago | (#31789566)

The rules of accountability only apply to people who don't have any money. Every middle class American needs to accept responsibility for their actions, even if they are victims of simple misfortune.

Banks and corporations play by a different set of rules. They make big bets, pay themselves billions in bonuses for providing the illusion of profit, and then walk away without a slap on the wrist when the illusion collapses. I think today this is referred to as a "free" market. But the costs are indeed very high.

Re:The obvious solution to ID Fraud (1)

LatencyKills (1213908) | more than 4 years ago | (#31789788)

Nothing wrong with it, except as someone pointed out below the banks don't want it that way, so the government makes laws to support the banks. After all, it's their government, not yours. An even larger problem with the way lending works, at least specific to mortgages, is the brokers. The broker sells you the mortgage, and they get a fee for doing so. They don't get a fee if they decide that you're not you or you can't afford the loan, so there's actually incentive for them to check the person getting the loan as little as possible. They make the loan to someone claiming to be you, take their fee, pass it off to the banks, and let it be someone else's problem (yours or the bank's, they really don't care).

ID theft is due to the pure negligence of lendors (4, Insightful)

stox (131684) | more than 4 years ago | (#31788540)

If lendors had to pay for the damage they cause, the problem would disappear overnight. They should be responsible, not the poor victims, for cleaning up the mess. Sadly, they do not care, as it costs them nothing.

Re:ID theft is due to the pure negligence of lendo (1)

cbreak (1575875) | more than 4 years ago | (#31788642)

The lenders are the victims, they lend money and don't get it back.

Re:ID theft is due to the pure negligence of lendo (1)

Hognoxious (631665) | more than 4 years ago | (#31788830)

They do, just not from the same person they lent it to.

Less about greed, more about legacy... (3, Insightful)

Manip (656104) | more than 4 years ago | (#31788556)

You have to keep in mind that a lot of systems that check people's IDs, Credit Cards, and Applications are built on top of legacy systems that were designed to work using modems and other terminals. I mean, yes, they have lovely UIs and web-sites but you rip all that stuff away and the entire process runs on the same communications channel as it did in 1990.

Credit Cards address information is often only checked in a very vague way. Since there is no encoding standards and since the address often winds up as one string you have to be very easy going about what passes and what doesn't. For example this might be the string you get in (all examples are valid/legal):
"123 Fake Street TownName State Country POCODE"
"123 FakeStreetTownNameStateCountryPOCODE"
"POCODE"
"123 Fake Street"

And this is the information you have to validate - Address Line 1, Line 2, Line 3, Line 4, Line 5 (Country), POCode (Post Code/Zip code). See the problem?

Re:Less about greed, more about legacy... (1)

thePowerOfGrayskull (905905) | more than 4 years ago | (#31788732)

Shhh, we're working ourselves into a fine froth about corporate greed. Don't ruin it now.

Re:Less about greed, more about legacy... (1)

TheSpoom (715771) | more than 4 years ago | (#31789048)

To be fair, programs like Verified by Visa do attempt to stem this... but then, conspiracy theorists could make the argument that Visa only did that to make it harder to make a chargeback in case that password is stolen (kinda like PIN-authenticated transactions in Chip-and-PIN countries).

It is a little weird to me that some merchant accounts allow online transactions without fully using AVS (address verification system). The real problem here are those last two examples you gave:

"POCODE"
"123 Fake Street"

Where the full set of data isn't being transmitted. I know gas stations do this for convenience, but those are card-present transactions... online ones should be fully authenticated.

Re:Less about greed, more about legacy... (1)

captaindomon (870655) | more than 4 years ago | (#31789278)

Actually, most large companies in the united states are going to third-party address validation solutions that use USPS postal data to mitigate this pretty well: http://www.qas.com/ [qas.com] Interesting to note who owns that company-

The government can fix this (0)

Anonymous Coward | more than 4 years ago | (#31788558)

They are notorious at preventing fraud in Medicaid, Medicare, and food stamps. We should have them take over lending so that they can apply their ruthless standards and high accountability.

That's the best solution they could come up with? (2, Insightful)

gnarl (245774) | more than 4 years ago | (#31788562)

Considering how lending institutions generally operate, it makes more sense that they are making a bigger profit off of "ID Protection" insurance, than they take in actual losses from ID theft.
The only solution I see is to introduce regulation that forces the lenders to pay the cost of ID theft instead of the victims.

Bad incentive alignment (4, Insightful)

MetricT (128876) | more than 4 years ago | (#31788578)

Lenders are being completely rational from their perspective. They get paid for creating a market for loans. If they don't issue loans, they don't get paid.

They are using Other People's Money by packaging the resulting debt into CDO's and selling them off, so they don't have an incentive to look too closely at how credit-worthy the individual is. It's a bad combination of negative externalities and information asymmetry. It's a market failure that requires government regulation to fix.

Re:Bad incentive alignment (1)

nedlohs (1335013) | more than 4 years ago | (#31788882)

Why does it require government regulation?

I would think that the entities buying those CDOs would all be bankrupt by now and hence not buying anymore putting an end to such a ridiculous setup. Or at least not making enough money to continue funding such schemes.

Oh, the government bailed them out you say? And the government buys the CODs too?

Well yes, you do need government regulation if the government intentionally fucks over the market correction.

Re:Bad incentive alignment (1)

ShadowRangerRIT (1301549) | more than 4 years ago | (#31789264)

Well yes, you do need government regulation if the government intentionally prevents the next Great Depression.

Fixed that for you.

Re:Bad incentive alignment (1)

nedlohs (1335013) | more than 4 years ago | (#31789774)

I think you mean "causes".

Re:Bad incentive alignment (1)

ShadowRangerRIT (1301549) | more than 4 years ago | (#31789802)

If you had any idea what the Great Depression was, you wouldn't make such a laughable claim. Let me know when you see Hoovervilles [wikipedia.org] in Central Park.

Re:Bad incentive alignment (1)

medcalf (68293) | more than 4 years ago | (#31789638)

Why is it that when the government creates a poor legal system or poor incentives, the solution to fixing that is always put forth as more of what caused it in the first place? Courts are very good at figuring out who defrauded whom and what to do about it. Simply remove government backing for the banks and lenders, and let them compete in the market, and pretty soon the courts and the market will have sorted it out. It's the government's constant thumb on the scale that causes most of these problems; the solution is not to push the thumb down harder.

Its not "ID Theft" its FRAUD (5, Insightful)

AnnoyaMooseCowherd (1352247) | more than 4 years ago | (#31788638)

What annoys me is that by coming up with the spin incantation "ID Theft", banks have been able to make what is actually their problem your problem

Its not "ID Theft" its FRAUD

Before "ID Theft" existed, con artists would regularly pretend to be someone they weren't in order to steal things. If I pretend to be an engineer from the local telephone company in order to con my way into an old ladies house and steal her purse, no one would even think for a minute that the telephone company should foot the bill, but when someone pretends to be me and convinces a bank to give them some money on that basis, apparently it is ok for the bank to turn round and try to get me to pay for the result of their gullibility.

MOD PARENT INSIGHTFUL (4, Insightful)

ikoleverhate (607286) | more than 4 years ago | (#31789590)

If I fall for a phishing scam because I'm convinced the site I'm looking at is owned by my bank, isn't that the bank having it's ID stolen? So if the phishers get me to give them money, the bank pays it back right? Obviosuly not, that would be crazy. Just because it was done in the bank's name doesn't mean it's the bank's responsibility. Surely then, it's just as crazy that private individuals have to pay back banks who get scammed, just becuase it's done in their name.

People give away too much info (4, Interesting)

Alain Williams (2972) | more than 4 years ago | (#31788728)

I recently wanted an 0845 phone number (a non geographic number in the UK). The vendor (uk2numbers.co.uk) wanted to verify my address. The only suitable document (that had my PO box address) was a credit card statement. So I scanned it, blurred out my credit limit and part of the credit card number. Long story short: they refused to deal with me because I refused to give them a copy with these numbers in full. I refused to give it to them because of security concerns.

It seems evident that most who deal with them just hand this stuff over, and then wonder why they end up being owned.

In the end it turned out good for me since I looked elsewhere and got a much better service on phone numbers - but at the time it looked to me as if I was paying a cost (today) for trying to keep secure (future). They do not need my credit limit for their purposes, I am concerned about what is happening with such information that others have given them; I will report them to the UK ICO [ico.gov.uk] .

Re:People give away too much info (5, Interesting)

Lumpy (12016) | more than 4 years ago | (#31789020)

That's why I do not blur those numbers but replace them with fake numbers. the idiots making the decision as to the legitimacy of a document never actually try to verify it so they want to see something that LOOKS legitimate. Honestly anyone with an IQ over 90 can generate a legitimate looking document in 30 minutes on a computer. yet banks and phone companies hire people with an IQ under 60 to verify the legitimacy of documents.

Re:People give away too much info (0)

Anonymous Coward | more than 4 years ago | (#31789494)

Sort of what I do too except I just remove the numbers completely, and anything that indicates something was suppose to be there (eg. if it says "Credit Limit" I remove that too). That way I am not falsifying any information and the document still shows everything they actually need.

ID Theft is not a crime (2, Insightful)

Gim Tom (716904) | more than 4 years ago | (#31788740)

ID theft is not the crime. It is just another form of fraud where the organizations that grant credit are not the ones who suffer when the fraud is committed against them. ID theft did not really exist until one could get credit based on simply a Social Security Number and little else. It was not that long ago where I worked that old stacks of large green bar print out paper covered on one side with peoples names, Social Security Numbers, and addresses were just taken home by virtually everyone for use by their children as scrap paper on which to draw with crayons. I would bet that anyone who was in IT back in the 1980's will remember this as normal. Back then a "stolen" identity had no value. Things that have no value are not usually stolen. It was only when the credit card companies MADE an identity have value that "Identity Theft" became something that was worth stealing. If some enterprising attorney would find a way to put together a nice class action law suit against the companies that control the issuance of credit and set a precedent that THEY were liable if credit was granted fraudulently in someones name who did not request it then ID theft would cease to exist since it would no longer be an externality

Lenders will do nothing until it costs them money (2, Informative)

KDN (3283) | more than 4 years ago | (#31788744)

Lenders will not do anything until it costs them more money to get it wrong than to get it right. I have recently been the target of a fraud. The bank has called me 4 times in the past year about this account. They have my name and my home telephone number. They have the wrong home address, nothing right except the state. They have the wrong SSN. They have the wrong birth month, day, and year. The birth year is off more than 30 years. The card has my name and some other guy (I'm not even going there). How much do you need to get wrong before you refuse this guy? How did they get my phone number? My suspicion is that the original phone number was incorrect so they just looked up anyone with my name in my state and updated it.

Twice I hung up on the bank because I thought they were a telephone phishing attack trying to get me to hand over PII (They were asking my SSN, my home address, my birthdate). The last two times I've talked to their fraud department saying that whomever this is is not me and has no PII even close to me.

Re:Lenders will do nothing until it costs them mon (2, Interesting)

medcalf (68293) | more than 4 years ago | (#31789736)

Something similar happened to me years ago. A person with my wife's name and who had lived on the same street some years prior had taken out a loan and defaulted on it (among many, many other defaults and legal issues). The lender had sent it to collections. The collections agency called us (presumably looking up name and street), and we told them they had the wrong people. They read off the information we had, and the only thing that matched was the first and last name and the street name. We told them the middle name was wrong (it was X, my wife's is Y) and that the address was wrong (it was 1234, ours was 4321) and so forth. A week later, we had a collections letter at our address with the "corrected" information. We called up the collections company president, and noted the legal trouble he was about to be in if he didn't correct this forthwith (thankfully, we were smart enough not to correct the SSN!), and things got corrected. We no longer give out any PII, and no longer do business over the phone unless we initiate the call. Sad that we had to learn the hard way, but at least it wasn't harder.

Just like DRM (1)

Aladrin (926209) | more than 4 years ago | (#31788766)

So it's just like DRM: More costly to implement than the money it saves.

And like anti-theft in stores.

There's always a line that you cross where you -can- prevent more theft, but to do so will cost you more money than you save.

It's funny (1)

jason.sweet (1272826) | more than 4 years ago | (#31788802)

Even with all the talk about "ID theft", people still get annoyed when they have to show an ID. Hell! In most stores, the clerk doesn't even see my credit card. But the stores make it easy because the customers want it easy.
It's the same thing with the lenders. Procedures that will effectively reduce credit card fraud are likely to inconvenience the customers, and inconvenienced customer tend to take their money elsewhere. If one bank relaxes their rules, all the rest have to follow suit in order to stay competitive. They know there will be losses, but they expect to make up for it in volume.
I expect that the situation will not change, unless identity theft victims start finding ways to make the banks take responsibility through legal action.

I know this from experience (5, Interesting)

Jason Levine (196982) | more than 4 years ago | (#31788884)

I had someone open a credit card in my name. They knew my name, address, date of birth and social security number. What they didn't know, however, was my mother's maiden name. However, the credit card company (*cough* Capital One *cough*) ignored this and let them get a credit card in my name via an online form. Then they immediately changed the address to another address in another state halfway across the country. Then they called up and asked for a $5,000 cash advance before the card was even activated. None of these set off red flags apparently.

The only reason it was caught was that the thieves tried to get the card quickly and so paid for "rush delivery." The card was sent out before the address change went through and it wound up at my door. When I called up, the credit card company first gave me the runaround insinuating that perhaps my wife did it. (Neither of us would ever open a credit card without consulting the other. Much less open an account in the other person's name and then try to get a $5,000 advance.) Then they claimed that they couldn't give me any information because (and this is a nearly direct quote) they'd be "liable if I went out and shot the person." Yes, they were now insinuating that I'd commit murder and then *they* would be sued.

Fine, I had the police call them. But they gave the police the runaround also. They insisted the police call a special "police" number, but apparently only an answering machine staffs that number and nobody returns calls from it.

Basically, the credit card company doesn't care *who* they give a card to because they can write off the fraud and will wind up making a profit either way. Fraudulent charges that consumers pay mean credit card company profits. Fraudulent charges that consumers don't pay are charged back to the merchants for no real loss (to the credit card company, the merchant's out the merchandise). In the end, they don't give a rat's posterior about messed up consumer credit or store losses due to fraud/ID theft. They're making a tidy profit and that's all that matters.

why the walking dead look like the rest of us (0)

Anonymous Coward | more than 4 years ago | (#31788908)

no holes in their heads/pale complexions. quite the opposite in fact. that's just for tv, or some other media(haha).

once the conscience goes, everything else follows. it can be ok/good to do harm to one's fellow man (including eating them). think about it.

just like the nazis, 'our' felonious 'bankers' have made off with everything that our politicians gave them without hesitation. for most of us to continue to attempt to operate in that system, we must become either hostages or fodder.

fortunately, there's still time to consult with/trust in your creators, who have always advised caution in regards to the coin of the realm. they also have no intentions of abandoning us. ask them.

Not quite (0)

Anonymous Coward | more than 4 years ago | (#31789016)

I wonder how many legitimate applications are "rife with errors that should have suggested fraud."

I wouldn't be surprised if it were significant. People make a lot of mistakes, are quite sloppy, and want things (in this case, applications) to work despite being so. I tend to agree with the results of this "study," but it is clearly not extensive enough/too small a sample.

Shifting the risk (2, Insightful)

rajats (891347) | more than 4 years ago | (#31789060)

The credit card companies and banks are wanting to shift the residual risk to the customers. That's why they want you to pay for "SafeProtect" etc. for which you have to pay in advance so they monitor any ID thefts. My question is shouldn't they already be doing that? If yes, then why do they want you to pay for it? Cost reduction in my humble opinion.

It doesn't help that many customers are ignorant (1)

ndogg (158021) | more than 4 years ago | (#31789120)

At a former job of mine, I had to deal with customers over the phone (a customer service representative). The company actually had some anti-fraud policies that were slightly better than average, but a lot of representatives would ignore them, mostly because many customers were just ignorant (or perhaps they were the fraudsters themselves).

When I would try to enforce those policies strictly, I would get yelled at a lot by customers. Occasionally, I would get a thank you for enforcing those policies in such a strict manner, but often times those few people had been stung by id theft, and so already understood the reasons for the company's policies.

Greatest PR Spin Ever (1)

MarkvW (1037596) | more than 4 years ago | (#31789140)

"Identity Theft?" HAH! That's not what it is. It's the lender's failure to provide a secure credit. transaction. And they offload the risk and expense onto the consumer. Enough of this bullshit fucking doublespeak!

Don't let the PR spin blind you. Push for consumer-oriented credit reform!

Of big business, by big business, for big business (0)

Anonymous Coward | more than 4 years ago | (#31789354)

This is the sort of situation that comes about when you have a system based on politicians and judges getting campaign contributions mostly from businesses and wealthy individuals. I know of a few cases personally, and read about other cases all the time of middle class families fighting an uphill battle with deep-pocket businesses, especially banks. The smaller the court, such as small claims, the more business friendly they tend to be. In small claims the judges tend to act as counsel for the business in a consumer dispute, with rare exceptions. Higher courts under the spotlight tend to be more balanced, but not by very much, and your case won't get that high if you haven't already paid thousands in attorney and court costs, and you often can't appeal a lower court decision without posting a bond for the full amount you are alleged to owe (which the creditor takes if you lose your appeal).

To make matters worse, banks have you sign away your constitutional rights, such as a trial by jury or even a trial by judge. You are forced into binding arbitration with a private arbitrator who doesn't even have to be a judge, attorney, or even apply clear written law to his decisions. The defendent in arbitration has to pay the cost of arbitration up front or lose his case before it is heard. Once the business has a judgment on you they have the sheriff show up at your bank to take out your cash, place a lien on your home (and sometimes forclose), and even have the sheriff come to your home or business to take away all your property that isn't protected by law, such as food, diapers, etc. Funny how cops won't show up for me when burglars are IN THE ACT of stealing a lawn mower from my shed.

Studies have shown that once a dispute with a bank goes to binding arbitration, the decision is always in favor of the bank except for a handful of exceptional cases. The banks choose the arbitrator and never re-hire an arbitrator that makes a decision against them, so there is bias built in. One arbitration firm, the NAF I believe, was exposed to have a profitable relationship with collection agencies and they would share information with the collection agencies even before the case was closed. So more built-in bias.

In the end, the consumer knows the odds are stacked against him even when he is right and has complete evidence. The risk of being ordered to pay the opposing parties legal expenses is usually too great of a risk, so consumers don't even attempt their cases pro se when they can't afford an attorney. The businesses know that most people will settle quickly to cut their losses, and sometime just out of ignorance of their rights or how to fight the accusations. Oddly enough, most ID thieves don't report their income to the IRS and know how to hide their assets from any potential creditor or claimant and aren't afraid to lie to a judge, so for the banks there is no incentive to pursue them in court. They DO go after the ID theft victim, even in cases where the ID thief is exposed in the media. So you see, ID theft is actually good for their business as it allows them to go after the victim's assets and they don't have the hassle of chasing a crook who has his assets hidden.

Risk - Insurance - Investments -Investor's Risk (4, Informative)

sherriw (794536) | more than 4 years ago | (#31789356)

This is why they can get away with it; Lenders sign up as many new lending accounts as possible. They have certain % that will default or are fraudulent. They buy insurance for this risk. The insurance company sells insurance policies which it says have a certain risk (low compared to the # they sell) of actually being claimed on. An insurance policy is something that keeps making money (with a certain % risk of being claimed on). These policies are sold as investment instruments (insurance bonds) to investors. Investors like you and me. They are put into people's pension funds, 401Ks, RRSPs, wrapped into various types of funds. And bingo.... it is now you and I who are carrying the risk. Magic.

Read This! (0)

Anonymous Coward | more than 4 years ago | (#31789372)

Zero day threat, it is a book that discusses this exact topic. After reading I was pretty stunned at how easy banks and credit bureaus make it to steal someone's identity. Convenience and speed in the system are the only things that matter, security comes second. Whats worse is that the victims (people who are getting their identity stolen) are the ones who are held responsible, it's a backwards system that needs to be changed.

Catching fraudulent checks, so we stopped IDng (2, Informative)

McDozer (1460341) | more than 4 years ago | (#31789624)

In the past few months I've had some checks stolen. All the checks were used at the same grocery store and they used the electronic scan thing where they pretty much run the check kind of like they do a debit card. I went to the grocery store ( Harvey's Supermarket....I'm outing them because of how shady this is.) the same day I noticed the check was ran and asked the manager if they still had the check because I wanted to see how it was signed. He told me they do not keep copies of the checks and explained the electronic system they use. I asked him 'So you guys don't ask to see identification when someone is writing a check?' ( I personally believe anytime a check or debit/credit transaction is made presenting an ID should be required. ) his reply was.....'Well, we use to, but then I ended up spending so much time in court because of all the people we were catching writing fraudulent checks that we quit checking IDs'. So I'm like 'So, you quit checking IDs because you were catching so many people?'....his reply...'Well, I know it sounds bad but yeah.'. So I'm like, 'Well that is just great.'. It's pretty obvious if you check someones ID and the name on the ID is not the same as the name on the check that something is up. I mean, come on....your catching people and have to go to court over it so you just stop checking? What kind of shit is that? It really sucked, they don't have a copy of the check, do not keep the original check and since they do the electronic scan I can't see a copy of the check with my online banking ( like every other check I write ) so there was no way to do anything about it. I was pretty much assed out of quite a bit of money and ended up with a couple of bounced checks which ended up costing me more money because of the fees that bounced checks incur. I ended up having to cancel quite a few of my checks just to make sure I wouldn't have more of them written fraudulently which cost me more money. It was a total let down because my bank would not reimburse me and Harvey's Supermarket were surely not going to reimburse me. I was just shocked at the logic. I'm sure there is a good car analogy for this situation but I'm not to good with car analogies....maybe something like the police saying.....'Well, we kept catching people with stolen cars when we set up a roadblock in this neighborhood, it was causing us so much paperwork and court time so we decided to just stop setting up roadblocks in that area.' What a bunch of hosers!
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