Lenders Need Better Systems For Discovering Identity Theft

from the mis-categorized dept

Apparently, one of the reason most lenders haven’t done much to prevent identity theft is because they haven’t realized it was a problem. They’ve been miscategorizing most identity theft all along – chalking it up to unpaid debt and writing it off. In other words, they assume we really are so bad about paying off our debt that they’d rather just eat the loss (and raise premiums, of course) than get to the bottom of things and figure out ways to better prevent identity theft. However, because of this, most lenders haven’t thought that identity theft is that big of a problem. The study discussed in the article above suggests that fraud may be 8 times as worse as the credit industry believed. In some cases, where credit is granted immediately, fraud rates are ridiculously high. The question, then, is why has so much fraud been miscategorized? The theory in the article is that credit card companies are afraid it would hurt them on Wall Street if it were discovered just how much of their “revenue” is really from scam ID thefts – even if they never get to see that cash. Even now that the matter has been brought to light, there’s no indication that the credit providers are planning on doing anything to change things. They assume that “credit loss” is a risk of doing business and don’t care about the criminal aspect of it – or the impact on their customers. Credit risk is either to explain away than fraud, apparently.

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Comments on “Lenders Need Better Systems For Discovering Identity Theft”

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Fred Edison says:

ID theft and the credit card companies response

How nice of them to make rising identity theft so much easier. I don’t buy their blissful ignorance line. They know more than they let on. They are a business first, customer care second. The only reason they treat ID theft so nonchalantly is plain. They’re able to pass on the loss to their merchants and customer credit card account holders. If the credit card companies were held financially responsible, you can bet your life savings they would do something resolute about ID theft yesterday.
ID theft is serious and nothing to laugh at. I’m currently refuting an $1800 charge some sob added to my cc account. I had to check my credit reports (finding two “personal” phone numbers that don’t belong to me!), close the old compromised account and get a replacement card with a different number. Plus still waiting for all the crap I didn’t need to work itself out. ID theft already affects millions of people every year, and it’s bound to increase in number.
There is no guarantee anyone can be completely safe of ID theft, but the web is full of sound advice to help protect you before you do.

Anonymous Coward says:

Stringent requirments for Credit Kompanies

Instead of waiting for the credit industry to police itself (which will never happen while they’re making money at 12% to 18% over the prime intrest rate), I simply impose a US$3k to US$5k complamentry debt load on the service they offer.

They tend to write this off every few years once they realize I’m never going to pay off the debt, but I don’t have any problem with people stealing my identity and applying for loans/credit.

simple system, but it works…

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