Identity Crisis.

• Author: Bernstel, Janet Bigham
• Position: Fraud and identity theft prevention

Misuse of the Social Security number (SSN) is quietly becoming a national crisis, according to testimony by Social Security Administration Inspector General times Huse Jr. before a U.S. House subcommittee hearing in May. SSNs have become the main component used to commit identity theft. Each instance of identity theft can end up costing individuals and institutions thousands of dollars. Thomas felt this growing crisis first-hand. Once her "imposter" held the numerical key to Thomas's financial life, the thief found easy pickings.

"She rented an apartment, set up utilities in my name and then started getting credit cards," recounts Thomas. "I was locked out of my own credit for over a year, and I-had never before even been so much as late paying a bill.

White-collar crime wave

Thomas is one of an estimated 500,000 people who become victims of identity theft each year, according to the FBI. Others say that estimate is conservative, and will fall closer to the 750,000 mark by the end of 2001.

Why such rapid growth? It's a calamitous outcome of an increased availability of personal information in the marketplace and the increasingly ready availability of credit, according to the testimony of the U.S. Secret Service in September 2000 before the House Committee on Banking and Financial Services.

It's also less dangerous than robbing banks. The FBI calls identity theft the fastest growing white-collar crime in the country. Not surprisingly, the number of physical bank robberies has slacked off in recent years. Privacy consultant Rob Douglas says the two are directly related.

"An FBI agent told me about a guy they had apprehended for doing financial fraud who had done numerous hank robberies in the past," recounts Douglas. "He said his friends had convinced him that he could get a whole lot more money and spend a lot less jail time by doing identity theft and fraud."

Rather than being intimidated by customer privacy problems such as identity theft, banks need to see these issues as an opportunity to strengthen then bond of trust between them and their customers--and to reinforce the bank's brand image. Bank programs to protect customer privacy can also help to differentiate the institution and improve its competitiveness.

As CEO of American Privacy Consultants Inc., in Alexandria, Va. Douglas lectures around the country on financial fraud. He is currently working with the ABA to offer his Awareness and Prevention Program to banks nationwide. He is clear about how banks can east themselves in the role of "here" in connection with the identity-theft issue. Be a victim advocate, he stresses. "What we bear again from victim of identity theft is that nobody helped them, and--right or wrong--they blame the financial institution."

Thomas is infuriated at the way she was created as the criminal rather than the victim during her ordeal. Credit card companies refused to speak to her, collection agencies hounded her and creditors continued to issue credit despite the fraud alert she placed on her credit report.

She is particularly annoyed by the fact that the financial services industry seems quick to blame the consumer for the identity theft problem. "If you had your identity stolen, it must be because you didn't have a locked mailbox, or you didn't have a shredder," she says. But, Thomas says, every victim she has talked to had their identities compromised because someone in the financial services industry mishandled their information.

It took Thomas two years and $15,000 to dig out from the financial wreckage. Her imposter never...