Consumers are still wary of placing their personal information or credit card number on the Net, and with good reason. Although we hear much about encryption and security, breaches do happen. The problem has become so severe that the FBI has set up a division to focus solely on identity theft and high-tech fraud against financial institutions.
It has always been possible for someone to go through a dumpster and find a discarded credit card receipt--remember the old carbons? So, how come itís now such a huge problem? Because now technology is doing the difficult work for the criminals. "Without the technology to manipulate and transfer that data easily and inexpensively, we wouldnít have this problem," said Ed Howard, attorney for the Center for Law in the Public Interest.
As proof, Trans Union established a fraud victim hotline in January 1992. They received approximately 300 complaints. Six years later, in January 1998, 42,300 calls were received. According to Trans Union, about 14,000 of those calls represented identity theft.
While some thieves are still rummaging through the garbage or stealing wallets, some are simply signing on to the Web and taking advantage of all it has to offer. For example, a résumé or personal home page probably lists a phone number, address, and a social security number. All of these help a thief assume an identity. "Some families put their whole family tree out there," said Beth Givens, executive director of the Privacy Rights Clearinghouse. "You get dates of birth and maiden names, which is pure gold to identity thieves."
But, since perpetrators face just one year in jail, maximum, the disincentive to steal is minimal. And even if they are caught, many financial institutions find it cheaper to write off the loss than to take the case to court, so usually charges are dropped.
Which means, if the case is never heard in court, consumers may have their money refunded, but they do not have the opportunity to clear their names in a court of law. Therefore, the financial institution is the perceived victim, rather than the individual. "Thatís where it unravels," said Werner Raes, an expert on economic crimes at the Anaheim Police Department in California. "Law enforcementóweíre here. Weíre willing to investigate the cases. We want to assist the publicÖbut we need the cooperation and the buying in from the financial industry."
Until the financial industry is willing to admit that there is a problem, it doesnít look like that cooperation will be any time soon.
Have you really thought about the purpose of the signature card that you signed when you opened you current checking account? If you think every check that you write must be compared to that signature card, or your bank is not meeting its legal obligations, think again. And in this changing legal framework, what will banks duties be as it relates to check truncations at the bank of first deposit, or perhaps at the point-of-sale? In this issue of The Green Sheet we provide some background information, some differing views by state, and a few thoughts on changes in the Uniform Commercial Code (UCC), from a firm which specializes in this area of the law.
