DAVID FLOREEN
‘Standardized protocols’
The Massachusetts Bankers Association recently presented testimony to the Joint Committees on Public Safety, Commerce and Labor and Criminal Justice in an effort to bring increased awareness to the issue of identity theft.
In joint testimony with Kenneth Jones, inspector in charge for the U. S. Postal Service in Boston, the MBA outlined the many steps the Postal Service has taken to address identity fraud, and what associations can do to promote consumer safety.
David Floreen, senior vice president of the Massachusetts Bankers Association, noted that in a Federal Trade Commission study released in September on identity theft, about 3.3 million American consumers discovered within the last year that their personal information had been used to open fraudulent bank, credit card or utility accounts or commit other crimes. An additional 6.6 million people were victimized by account theft last year, according to the FTC.
According to the FTC study, the average loss to businesses and financial institutions in instances of fraudulent new accounts – true identity theft – averaged about $10,200, while the average cost to consumers was $1,180 in addition to an average of 60 hours spent repairing their credit history.
Nationally, banks and other businesses lost over $14 billion, while consumers suffered over $1.1 billion in losses, with 80 percent of the cases involving credit card fraud, according to the FTC study.
With that information, the MBA and the Postal Service, along with credit unions and other local organizations, have combined efforts to offer recommendations on how to battle identity theft and asked the state Legislature to join in and ask law enforcement officials to help in combating identity theft.
“One initial suggestion is to designate specific law enforcement agencies that victims of identity theft should contact. Given the intra- and interstate nature of these activities, we suggest that a statewide agency such as the state police or the Office of the Attorney General be the primary designee,” said Floreen in his statement. “While many large city police departments, especially Boston, are very effective in prosecuting identity theft crimes, many smaller departments’ resources are already stretched too thin and must focus their activities on traditional public safety concerns.”
‘A Substantial Price’
While the MBA has submitted many proposals in the past year to the Joint Committee on Banks and Banking, the issue of identity theft was brought to the Joint Committees on Public Safety, Commerce and Labor and Criminal Justice because of jurisdictions those committees cover, according to Floreen, and working with the Postal Service provides an additional source of protection to consumers.
“The Postal Service has major jurisdiction over fraud in mails … a lot of the fraud that can take place can be done by rifling through mailboxes and letters,” said Floreen. “The Identify Theft Task Force that has been reconvened is multi-jurisdictional and includes local police, the [Federal Bureau of Investigation], state police, U.S. Postal Service and the Secret Service. Part of the public frustration is that there isn’t a central place for the public to go. We are all trying to make that much more streamlined and much more effective.”
Floreen said the MBA, along with the Postal Service, credit unions and other organizations, have met twice and identified five key areas for action: enhanced coordination among law enforcement officials; establishing an information-sharing initiative and communication among law enforcement officials, financial institutions and government agencies at all levels; development of “best practices” within the financial services and business community in preventing and responding to victims; stepping up a public awareness and consumer education campaign; and stiffening the penalties for identity theft, including restitution to victims.
“To provide better coordination with law enforcement and government agencies, the financial services industry recommends the development of internal systems within each bank to provide a single point of contact so a victim knows clearly where to report allegations of identity theft,” said Floreen. “Consumers are frustrated by having to provide the same information on duplicative affidavits and, most importantly, they are frustrated and angry that the person who stole their identity is seldom punished, while they have to spend hundreds of hours to restore their identity. Establishing standardized protocols within financial institutions would also simplify training of bank personnel and speed up the investigative process.”
Without question, said Floreen, consumer education is the most important aspect in combating identity theft.
“A major focus of combating identity theft is promoting public awareness and consumer education. While the sophisticated new technologies in financial services allow consumers to conduct banking business anywhere in the world with ease, criminals use the same technologies to defraud financial institutions, banks and consumers of millions of dollars every day,” said Floreen.
The MBA has developed a comprehensive identity theft brochure, providing tips on how to prevent identity fraud and outlining steps consumers should take if they suspected they became a victim.
Floreen noted that member banks have distributed well over 500,000 copies of the brochure to their customers and thousands more have been distributed to libraries, senior citizens groups and many other organizations. “We also sent copies to all legislators in 2001 and offered to provide additional copies at no charge,” said Floreen.
But Floreen said consumer protection must also be dealt with at a state level.
“Since identity theft does not recognize arbitrary geographic boundaries, tracking down alleged perpetrators of these crimes and prosecuting them present significant challenges for the law enforcement community,” said Floreen. “Identity theft often takes place over several legal jurisdictions within a state, as well as across state lines.”
The MBA and Postal Service suggested that the joint committees examine whether the penalties for identity theft should be increased, with a particular emphasis on more creative sentencing such as mandating those convicted of identity theft to provide full restitution to their victims and some form of community service.
“We support the efforts by the three committees here today to enhance the level of awareness of identity theft and examine ways that the various parties affected by identity theft can work together to reduce this incredible burden on Massachusetts consumers and financial institutions,” said Floreen. “We all are paying a substantial price.”
Melanie Nayer may be reached at mnayer@thewarrengroup.com.
