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Financial Literacy - Protecting your identity Click Here
SPOTLIGHT
Banks: Fess up
Financial institutions should have to publicly report basic statistics on their fraud rates, says this privacy law expert.
Protecting your identity

Spotlight: Chris Jay Hoofnagle

So using only the Social Security number and birth date make it easier for banks to turn over more accounts?

Consumers: Be on high alert
Prevalence of ID theft
Identification/authentication
ID theft losses
Phone company ID theft
Benefits of banks reporting fraud
Protection for consumers
Weird impulsivity
Recent improvements

One can make a determination by looking at just the Social Security number and date of birth of a rough authentication, but sophisticated fraudsters have learned that you can engage in Social Security number tumbling to beat that type of authentication.

What is Social Security number tumbling?

It's simply changing the Social Security number slightly: 123-45-6789 to 123-45-6790.

Why did you get started on this project, "Measuring Identity Theft at Top Banks"?

It relates to security breach notification. When the security breach notification bills were first moving in California, I looked at them and thought that they were pretty mediocre.

But, what's happened is that giving public notice has created all sorts of secondary benefits including more investment in security and use of new security to reduce security problems and the reduction of the amount of the collection of sensitive information. It created a market for a number of services that were under-invested in prior to 2003.

In a similar way, if we had reliable measures to compare institutions on the level of fraud, it would spark a market for reduction of identity theft that is much more robust than it is today. You'll see that the big names are trying to reduce identity theft at the consumer level by basically insuring individuals' accounts.

I think that the losses from identity theft are much greater than what's known by the Federal Trade Commission and it's exercising a real cost on consumers. So if we had a better market for identifying incidents and letting consumers make decisions based on it, I think we'd have a serious reduction in identity theft. Institutions would actually compete to reduce identity theft rather than remunerate victims.

And do you think that all businesses should report identity theft statistics or mainly financial institutions?

I think it's important to look at banks and payment processors currently. Other industries one might consider are telecommunications and insurance. But primarily I've been focusing on banks, which is just a rough way of saying credit cards, too.

-- Posted: April 21, 2008
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