Identity Theft How to Protect Your Name by Gummo

Author:Gummo [Gummo]
Language: eng
Format: epub
Tags: IDtitl
Published: 0101-01-01T00:00:00+00:00

CHAPTER

BANKS AND

CREDIT BUREAUS

In 1999, Congress passed the Gramm-Leach-Bliley Act (the GLB Act), legislation that allowed banks, insurance companies, credit bureaus and securities firms to affiliate under a single corporate structure. The purpose of this change? To allow financial services companies to “more readily anticipate and meet their customers’ financial needs.”

At least that’s what the head of the Financial Services Roundtable told Congress in March 2001.

The GLB Act also reformed the system of federal regulation and requires greater coordination among the various agencies. This coordination is a challenge.

In all, there are almost 200 different financial services regulators—including the various state banking, insurance and securities regulators and all of the federal banking, thrift and securities agencies.

As integrated financial services companies have increased the scope of their business activities—mix-ing banking, investments, insurance and consumer lend-ing—they have become more directly involved in establishment and use of personal financial identities. In 1 4 9

B A N K S A N D C R E D I T B U R E A U S

fact, they’ve marketed these identities. As recently as the 1990s, most Americans were only vaguely aware of their credit ratings or “FICO scores.” In the early 2000s, financial institutions have marketed these credit profiles like soap or soft drinks. One example: In 2002 and 2003, radio and television ads for new cars started referencing “credit tiers” when describing available financing packages.

As a result, financial identities—credit scores—have become commodities, with market values. And, as any economist will tell you, commodities are significant in two ways. First, their value is defined by marketplace conditions that are usually beyond any single owner’s control; second, they are vulnerable to theft, piracy and manipulation.

These are the economic trends that have enabled identity theft.

What do the fast-integrating financial services companies think about ID theft? In his March 2001 congressional testimony, Steve Bartlett—President of the Financial Services Roundtable—put the problem in context:

It is estimated that the financial services industry loses more than $100 billion a year in fraud, which includes $85 billion to $120 billion in insurance fraud, $24 billion of which comes from property/casualty fraud; $13

billion in check fraud; $3 billion in identity fraud; and $600 million in credit card fraud.

1 5 0

C H A P T E R 7

So, the financial services companies think that insurance fraud is their biggest problem. But ID theft is, by most accounts, the fastest growing form of financial fraud; and, as we’ve seen throughout this book, ID theft often operates in conjunction with other kinds of fraud—including insurance fraud.

C R E D I T B U R E A U S

When most Americans hear the term “financial services,” they think of faceless corporate giants that buy lots of ads during the Super Bowl. Beyond that, they have a vague notion of companies that combine banking, insurance, stock brokerage and various other money-related activities.

One of the key “various other” activities is the setting and tracking of individual consumer’s credit ratings.

Throughout this book (and any discussion of ID theft) you’ve heard references to the “big three” U.

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