ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, August 14, 1996 TAG: 9608140058
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: LAURA MECKLER ASSOCIATED PRESS
note: below
LARGELY THANKS to computers, credit is easy to get - legally or not. It's correcting your record after your identity is stolen that's tough.
Ken Robinson didn't buy that satellite dish. Or that diamond ring. And he surely would have remembered taking home a house full of furniture.
Someone posing as him made those purchases. And thus began Robinson's long, arduous journey of proving that he was a victim of credit card fraud.
``It's just a never-ending nightmare,'' he said.
His story is becoming increasingly common. With personal information easy to get, thieves are stealing the identities of people with good credit, getting cards in their names and charging away.
Critics point a finger at the companies that issue credit, saying they don't do enough to investigate applications.
``If you went to a bank and wanted a $2,000 loan, they would want every bit of information about you, including your shoe size,'' said David Szwak, an attorney in Shreveport, La., who specializes in credit card fraud. ``But you can get a five or 10 thousand dollar credit card with no personal contact and very minimal contact at all.''
Issuers respond that they are working to improve their electronic approval processes, developing systems that detect fraudulent addresses and Social Security numbers belonging to dead people.
``Some members [banks] scrupulously check every application. Others don't,'' said Joel S. Lisker, senior vice president for security and risk management for MasterCard International.
Statistics from MasterCard show that application fraud increased 9.7 percent to $28.3 million in 1995, up from $25.8 million in 1994.
The Federal Trade Commission plans a conference this month focusing on identify fraud - what's being done inside the industry to combat it and whether the commission should do more.
``There are federal laws that protect the privacy of consumer credit information and the accuracy of it,'' said spokeswoman Bonnie Jansen, referring to the Fair Credit Reporting Act of 1970. ``We need to talk about enforcement of those laws.''
Getting credit is not difficult. Credit card applications ask for name, address, Social Security number. The information is entered into a computer, which then automatically checks with one of three national credit reporting agencies.
If the applicant's name matches an existing credit report, the application is scored. An applicant with good credit is approved, and soon, a credit card is in the mail to the address.
Some companies say they investigate any application whose address doesn't match the credit report. But others do not, and if just one gets through, the fraudulent address is listed on the credit report as a new, legitimate address, making the next fraudulent application all the easier.
Most victims, like Ken Robinson, know nothing about the fraud until they apply for credit and are rejected. Robinson, who lives outside Dallas, requested a copy of his credit report after he was turned down for a credit card for the first time in his life. He quickly saw why: Four pages of applications, along with past-due bills, that he never made.
It was now his job to prove to Montgomery Ward, J.C. Penney, Diners Club and every other company that granted bogus credit that they had made a mistake.
The credit bureaus won't take information off your report - even if you can prove it's bogus - unless the reporting company makes the request. That means victims must go to each company individually.
Victims say responses vary widely. Some companies quickly close the account and report to the credit bureaus - problem solved. But others never report the mistake, and victims have to ask repeatedly to correct their credit history.
``You're a pain in their butt. That's the simplest way to describe it,'' Szwak said of the companies. ``They don't want to deal with you. They've already lost money.''
Lisker responded that most banks working with MasterCard respond to such victims' problems.
The card issuers are the primary victims: They have to pay the bills once it becomes clear the person whose name is on the card isn't responsible.
That's why issuers are interested in preventing fraud in the first place, said Gary E. Rutledge, senior vice president for insurer risk at First Data Resources of Omaha, Neb., which develops computer systems for banks. ``It's a huge issue we've got to rectify.''
At the same time, he said, issuers want to continue to provide customers with convenience - and that means fewer - not more - hassles when they apply for and use credit. Szwak and others suggest a little less convenience would go a long way toward solving this problem:
* Credit bureaus could notify consumers when their credit reports are accessed. Credit bureaus respond this would cost big bucks. ``We sell 1 million credit reports per day. We'd have to make a million notifications a day,'' TRW spokeswoman Janis Lamar said.
* Merchants could ask for identification when someone uses a credit card.
* When dealing with the accounts of credit fraud victims, credit bureaus could handle inquiries individually rather than automatically by computer. Lamar said that takes more time and money.
Credit bureaus put an alert on the file of fraud victims to warn banks, but often that alert is ignored when computers process applications.
Victims say it is difficult to get authorities to investigate fraud complaints.
``No guns are involved. There's no drugs, no violence. That falls way down the priority list for law enforcement,'' said one, Steve Shaw of Washington, D.C.
Robinson had a signed confession from a former work colleague who had stolen his identity. It didn't matter. The losses were under $20,000, and the U.S. attorney declined to prosecute, he said.
The Secret Service investigates credit card fraud, focusing on organized crime rings, said Michael Stenger, special agent in charge of the Financial Crimes Division.
He encourages victims to report to the Secret Service, noting that a small-time story may point the way to a big case. But the service cannot investigate all cases.
Szwak said that's just what makes the crime so attractive: ``It's so easy to do. It's simple. It doesn't take even a moron to do it. It's kind of like winning the lottery.''
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