Imágenes de páginas

the premise for the movie in the beginning, which is probably why nobody went to it. But it is something we should consider as we are addressing the Fair Credit Reporting Act.

I am very strongly in favor of reauthorizing the Fair Credit Reporting Act so that we do not get an interruption in the progress that we have made in the years that it has been established. But I think a hearing like today's, where we are brought up to date on the extent of identity theft, the technological challenge of fighting it, and the various progress that has been made is a very salutary thing to do.

Chairman SHELBY. Thank you, Senator Bennett.
Senator Miller.

COMMENTS OF SENATOR ZELL MILLER Senator MILLER. Thank you for holding this hearing. It is very timely, Mr. Chairman, and I thank our witnesses for being here, and I have no opening statement.

Chairman SHELBY. Thank you.

On our first panel today we have Mr. Howard Beales, Director of the Consumer Protection Bureau, Federal Trade Commission; and Mr. Timothy Caddigan, Special Agent in Charge, Criminal Investigative Division, U.S. Secret Service.

Gentlemen, we welcome you both here. Your written statements will be made part of the record in their entirety. Mr. Beales, we will call on your first. Proceed as you wish.


U.S. FEDERAL TRADE COMMISSION Mr. BEALES. Thank you, Mr. Chairman and Members of the Committee. My name is Howard Beales, and I am the Director of the Bureau of Consumer Protection at the Federal Trade Commission. I am pleased to have this opportunity to discuss identity theft and its relationship to the Fair Credit Reporting Act. The views expressed in the written statement represent the views of the Commission, but my oral presentation and responses to questions are my own and do not necessarily reflect the views of the Commission or any individual Commissioner.

Identity theft can be devastating to consumers' reputations, to their financial well-being, and to their sense of security. At the FTC, we are fighting identity theft on many fronts. We are training local law enforces on how they can fight identity theft, and we are providing local law enforcers with case referrals from our Identity Theft Data Clearinghouse. We are also working to keep consumers' financial data safe through our new safeguards rule, which took effect at the end of May, and our enforcement actions against companies that fail to keep their security promises to consumers.

Just yesterday, we announced a settlement with online retailer for failing to protect consumer data as promised. We also released a tip sheet for businesses on steps they should take to assure the security of their online systems.

Through workshops, educational campaigns, and our identity theft hotline, we are counseling consumers and businesses on how to prevent identity theft. We are also providing consumers with tools such as the uniform identity fraud affidavit to help them recover more quickly and easily from identity theft when it occurs.

Today, you have asked for testimony about identity theft and the Fair Credit Reporting Act. In addition to harming consumers, identity theft also threatens the fair and efficient functioning of consumer credit markets. It undermines the accuracy and the credibility of the information flows that support those markets.

Credit bureaus are simultaneously a target for identity thieves and a valuable resource for combatting identity theft. The credit reporting system can play an important role in helping to detect identity theft, in limiting the damage from identity theft when it occurs, and in helping identity theft victims clean up the mess that the thieves leave behind.

The Fair Credit Reporting Act helps consumers detect identity theft by providing consumers access to credit reports when they need them most. A credit report digests in one timely document all accounts opened in a consumer's name, and it is the best way to discover those accounts that may have been opened by an impostor.

Under the FCRA, a consumer who believes that he may have fraudulent information in his or her file is entitled to a free credit report. Moreover, the Fair Credit Reporting Act requires that a consumer who is denied credit based on his credit report be notified of the adverse action and given the opportunity for a free copy of his credit report. This adverse action notice can alert consumers that they may have bad marks on their credit record that they do not know about, and the free credit report helps them to pinpoint the fraudulent accounts. Adverse action notices provide consumers with a critical safeguard, and we are vigorously enforcing the statute's adverse action provisions.

In addition to helping victims detect identity theft, the credit reporting system helps limit the damage that identity thieves can cause. It allows for the placement of a security alert in a victim's credit file. Currently, the three major credit bureaus include a standardized format security alert in the credit reports of identity theft victims. This alert puts potential creditors on notice that they should proceed with caution when granting credit in the victim's name.

Finally, the credit reporting system can help identity theft victims clean up the bad marks caused by an identity thief. A common problem of victims is that they find it difficult to get credit, insurance, or employment in the wake of an identity theft incident because the impostor has damaged their credit history. The Big Three credit bureaus now allow victims to block fraudulent information on their credit report with a valid police report of the identity theft incident.

We are also working with the three credit bureaus to develop other victim assistance programs. For example, this spring, the Big Three credit bureaus implemented their joint fraud alert initiative whereby victims need only make a call to one credit bureau to get a security alert and a free credit report from all three. There is always more we can do, and we are always looking for new opportunities and new ways that we can make recovery easier for victims when this crime occurs.

I thank you very much for the opportunity to appear today, and I will be happy to respond to your questions.

Chairman SHELBY. Thank you, Mr. Beales.
Mr. Caddigan.



U.S. SECRET SERVICE Mr. CADDIGAN. Thank you, Mr. Chairman and Senator Sarbanes. Thank you for inviting me to be part of this hearing today, and the opportunity to address the Committee regarding the Secret Service's efforts to combat identity crime and protect our Nation's financial infrastructure.

For over two decades, the Secret Service has been the leading Federal law enforcement agency for the investigation of access device fraud, including credit and debit card fraud. We also continue to share jurisdiction with other law enforcement agencies in identity crime cases. The explosive growth of these crimes has resulted in the evolution of the Secret Service into an agency that is recognized worldwide for its expertise in the investigation of all types of financial crimes. Our efforts to detect, investigate, and prevent financial crimes are aggressive, innovative, and comprehensive.

The burgeoning use of the Internet and advanced technology, coupled with increased investment and expansion, has intensified competition within the financial sector. Although this provides benefit to the consumer through readily available credit and consumeroriented financial services, it also creates a target-rich environment for today's sophisticated criminals, many of whom are organized and operate across international borders.

Simply stated, identity crime is the theft or misuse of an individual's personal or financial identifiers in order to gain something of value or to facilitate other criminal activity. Types of identity crime include identity theft, credit card fraud, bank fraud, check fraud, false identification fraud, and passport/visa fraud. Identity crimes are almost always associated with other crimes such as narcotics and weapons trafficking, organized crime activity, mail theft and fraud, money laundering, immigration fraud, and terrorism.

Identity crime is not targeted at any particular demographic; instead, it affects all types of Americans, regardless of age, gender, nationality, or race. Victims include everyone from restaurant workers, telephone repair technicians, and even police officers, to corporate and Government executives, celebrities, and high-ranking military officers.

What victims do have in common is the difficult, time-consuming, and potentially expensive task of repairing the damage that has been done to their credit, their savings, and their reputation. According to the General Accounting Office, GAO, the average victim spends over 175 hours attempting to repair the damage inflicted by identity criminals.

Identity crimes originate when another person obtains your personal or financial identifiers. The methods of acquiring such information can range from so-called "dumpster diving, where the criminal searches through your garbage for billing statements or

other documents that may include personal identifiers, to insiders who purge information from their own company's database and place it for sale on the Internet.

The events of September 11 have altered the priorities and actions of law enforcement throughout the world, including the Secret Service. As part of the new Department of Homeland Security, the Secret Service will continue to be involved in collaborative efforts to analyze the potential for identity crime to be used in conjunction with terrorist activities through our liaison efforts with the Bureau of Immigration and Customs Enforcement, Operation Direct Action, FinCEN, the Diplomatic Security Service, and the Terrorist Financing Operations Section of the FBI.

Since our inception in 1865, the twin pillars of the Secret Service have been prevention and partnership building. We simply could not fulfill our dual mission of protecting our Nation's elected leaders and safeguarding our financial infrastructure without two essential elements: Incorporating preventive strategies and training, and building cooperative, trusted relationships with our local, State, and Federal law enforcement partners.

A central component of the Secret Service's preventive and investigative efforts has been to increase the awareness of issues related to financial crimes investigations in general, and of identity crimes specifically, both in the law enforcement community and the general public. The Secret Service has worked to educate consumers and provide training and resources to law enforcement personnel through a variety of partnerships and initiatives.

The Secret Service has already undertaken a number of unique initiatives aimed at increasing awareness and providing the training necessary to combat identity crime and to assist victims in rectifying damage done to their credit. This includes the development of a number of training tools designed to assist our local law enforcement partners.

Mr. Chairman, I cannot emphasize enough the importance of sharing our expertise with our local and State police partners and empowering them with the ability to respond on the local level to identity crimes. In a Nation of thousands and thousands of communities and a population exceeding 280 million, providing the first responder-in this case, the local police officer-with the tools and resources they need to investigate an identity crime and provide victim assistance is imperative.

So, in partnership with the International Association of Chiefs of Police, the Secret Service produces the "Best Practices Guide to Searching and Seizing Electronic Evidence.” The pocket-size guide instructs law enforcement officers in the seizure of evidence from personal computers, wireless telephones, to digital cameras.

We have also worked with this group and our private sector partners to produce the interactive, computer-based program known as "Forward Edge,” which takes the next step in training officers to conduct electronic crimes investigations. The "Forward Edge" CDROM incorporates virtual reality features as it presents different investigative scenarios to the trainee as well as provide investigative options and technical support to develop the case. Thus far, we have distributed, free of charge, over 300,000 “Best Practices Guides" and over 20,000 “Forward Edge" CD's to local and Federal law enforcement.

In addition, we are nearing the completion of the Identity Crime Video and CD-ROM which will contain over 50 investigative and victim assistance resources that local and State law enforcement officers can use when combatting identity crime. This CD-ROM also contains a short identity crime video that can be shown to police officers at their roll call meetings, which discusses why identity crime is important, what other departments are doing to combat identity crime, and what tools and resources are available to those officers.

Next week, we will be sending an Identity Crime CD-ROM to every law enforcement agency in the United States. Departments can make as many copies as they wish and distribute the resources to their officers to use in investigations. Over 25,000 CD-ROM's are being prepared for distribution.

In short, any police department in the country, regardless of size or resources, now has access to state-of-the-art training as well as multiple investigative and victim assistance resources to help them combat identity crime.

As part of a joint effort with the Department of Justice, the U.S. Postal Inspection Service, and the Federal Trade Commission, as well as the International Association of Chiefs of Police, we have been hosting Identity Crime Training Seminars for law enforcement officers. In the last year and a half, we have held such training seminars in Chicago, Dallas, Las Vegas, Des Moines, Iowa, and Washington, DC. In the coming months, we have training seminars scheduled in New York, the State of Washington, and Texas. These training seminars are focused on providing local and State law enforcement officers with the tools and resources that they can immediately put into use in their investigations of identity crime.

For law enforcement to properly prevent and combat identity crime, steps must be taken to ensure that local, State, and Federal agencies are addressing victim concerns in addition to actively investigating identity crime. All levels of law enforcement should have access to the resources used to combat identity crime and to assist victims in rectifying the damage inflicted. It is essential that law enforcement recognize that identity crimes must be combatted on all fronts, from the officer who receives a victim's complaint, to the detective or the Special Agent investigating an organized identity crime ring.

The U.S. Secret Service is prepared to assist this Committee in protecting and assisting the people of the United States, with respect to the prevention, identification, and prosecution of identity criminals.

Mr. Chairman, that concludes my prepared remarks, and I will be happy to answer any questions that you or the Members of the Committee may have.

Chairman SHELBY. Thank you very much.

Mr. Beales, one of the outstanding issues in this debate is determining the actual scope of the identity theft problem. In a report issued last year, the GAO indicated that, "It is difficult to fully or accurately quantify the prevalence of identity theft. Nevertheless, the prevalence and cost of identity theft seems to be increasing,

« AnteriorContinuar »