San Diego, CA. The Federal Trade Commission is close to proposing rules under the Fair and
Accurate Credit Transactions Act (FACTA) regarding further definition of the terms “identity theft”
“identity theft report,” and the appropriate proof of identity needed by consumers to block fraudulent
trade lines in their consumer reports, place or remove fraud or active duty alerts, or obtain a file
disclosure containing a truncated Social Security number under certain circumstances.

FACTA, which was enacted on December 4, 2003, and amends the Fair Credit Reporting Act (FCRA), gives identity theft victims new rights to place “fraud alerts” on their credit reports and work with creditors and credit bureaus to “block” negative information appearing in their credit files as a result of identity theft. These new rules can't come fast enough.

According to a recent online study conducted by InsightExpress.com, Americans are very concerned
about identity theft and looking for more guidance (mainly from banks, credit unions and credit card
issuers) on how they should protect themselves.

"Three out of five consumers are telling us that banks are not doing enough to educate them on how to
protect against identity theft, as most are learning about it through television commercials and/or news
reports," said Lee Smith, president and chief operating officer of InsightExpress.

"Credit card issuers and primary banks stand a better chance of capturing and retaining customers if
they take a more proactive approach in educating and protecting consumers against the threat."

The study found that 15% of Americans have been a victims of identity theft with one-third having had a friend or family member victimized. The survey also found that 42% of Americans have a higher level of concern over the possibility of identity theft this year than last, while almost three out of five, 59% are actively taking measures to protect themselves.

A majority of Americans, 85%, are concerned that identity theft could happen to them, and a major
source of concern is credit card purchases, the study found. Americans say the online purchasing
environment carries the greatest risk of identity theft, 37%, followed by telephone purchases, 35%, and in-person purchases, 10%.

Some of the measures Americans are taking to protect themselves, according to InsightExpress, are not
giving out their social security number, shedding or destroying bank documents, creating passwords
containing letters and numbers, avoiding buying or making donations over the phone and only making
online purchases from reputable websites.

In terms of liabilities, almost half, about 48%, expect that they would be at least partially responsible
for charges made on their credit card should they become a victim. Almost three out of five, 58%, say
the person who stole the credit card is responsible, followed by the institution who issues the card,
33%, the institution who approves the credit card charge, 29%, and the merchants, 26%, according to
InsightExpress.

An identity theft risk study by Rutgers University has preliminary data to date indicating that checking
a credit report is the least frequently performed practice and that there is no difference between
respondents from states that mandate free credit reports currently and others. Folks involved with the
study caution that the findings come from a small convenience sample of Web users and can't be widely generalized to the U.S. population as a whole.

Either way it seems that there is a lot of education to be done about credit reports and how to get them
free under FACTA.

Is it identity theft or unauthorized use of a credit card?

The Commission proposes that “identity theft” be defined as a fraud which is committed or attempted,
using a person's identifying information without lawful authority and that “identifying information”
have the same meaning as the criminal statute's “means of identification.” Consumers need to use
“identity theft reports” to obtain an extended fraud alert on their credit file and to block negative
information resulting from identity theft from appearing in their credit files. In other words if
someone just uses a credit card account to make an unauthorized purchase, and does not attempt to
create an identity for themselves using your name, it is not going to be considered identity theft but
rather fraud.

To prevent misuse of identity theft reports for credit repair scams, the FTC proposes to add two
elements to the definition of “identity theft report.” First, the proposal would require that consumers
allege the identity theft as specifically as possible, and second, would allow credit bureaus or creditors
to request, within reasonable bounds, additional information or documentation to help them determine
if identity theft actually occurred.

Finally, it addresses what constitutes “appropriate proof of identity” to block a fraudulent trade line,
place or remove a fraud alert, or obtain a file disclosure containing a truncated Social Security number.

The proposed rule would require credit bureaus to develop “reasonable requirements” to ensure that
consumers are matched with their files and to adjust what information is requested to prevent
identifiable risks of harm. The FTC suggests, using two examples, that the “requirements” for a file
match may entail full name, full address, full Social Security number, and/or date of birth, and for
additional proof of identity, copies of government-issued identification documents, utility bills, and
other current authentication methods such as answering questions only the consumer would know.

A great resource for determining one's risk to becoming a victim of identity theft is the quick Identity
Theft Risk Assessment Quiz put online by the Cooperative Extension at Rutgers University. It is 20
questions plus some demographic data questions. The quiz gives a quick score and suggestions for
improving things.

Try it out at: http://www.rce.rutgers.edu/money/identitytheft/default.asp

The ICFE’s Credit Report Reviewer Certification Program 2004 on the new FACTA law, has a
major focus on identity theft, including prevention, detection and correction and also offers a
certificate as an Identity Theft Prevention Specialist.

For more information contact Paul Richard, RFC - ICFE Executive Director 619-239-1401
or visit the ICFE @ www.icfe.info.
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