Ending Identity Theft

Identity theft is a growing form of fraud in which a person applies for various forms of credit under another person's name, and then defaults on the debt. The creditor then goes after the person impersonated, resulting in that person going through a lengthy period of clearing his/her name. The creditor is often left holding the bag. The loss is passed on to the creditor's customers, and it is likely that the proceeds from identity theft are supporting other forms of organized crime, including terrorism.

The reason identity theft is a growing problem is because those responsible for the problem do not bear the burden of proof in the resulting disputes. It is not Jack Smith's fault that someone else applied to Consolidated Amalgamated Bank for a loan in Jack Smith's name, it is not Jack Smith's fault that the bank failed to ensure they were dealing with the real Jack Smith, and it is not Jack Smith's fault that the real applicant defaulted on the loan. Yet the law places the burden of proof on Jack Smith.

The identify theft problem has one primary cause: Creditors who fail to positively identify the debtor before granting credit. As a rule they simply accept the credit application at face value.

Since credit applications are easily falsified, any disputes between the creditor and debtor come down to a "he said, she said" situation, and to avoid a sudden rush of loan defaults by actual debtors, the agencies which enforce debts have placed a much higher burden of proof on professed victims of identity theft than would otherwise be justified.

This needs to stop, and it is not too difficult to accomplish.

First, the credit-granting agencies must obtain direct physical proof of the applicant's identity before granting credit.

Second, the courts must cease to enforce debts unless the creditor can produce physical evidence that the alleged debtor is the actual debtor.

A requirement for photo identification is not enough, because the black market in fake identification cards is large enough to get around that. What is required is a method of identifying applicants that cannot be faked. At the present time, the best way for the credit-granting agencies to physically verify identity is to obtain a fingerprint from the applicant at the time of application. This fingerprint should be a physical part of the application, and the original application should be retained by the creditor for the duration of the debt (and returned when the debt is paid).

Admittedly, the prospect of being fingerprinted will discourage some legitimate applicants. However, it must be pointed that discouraging Americans from getting more debt is not exactly a bad idea. Furthermore, fingerprinting applicants will discourage fraudsters to a far greater degree, and absent any other enforcement measures will produce a drastic drop in ID theft. To those who balk at presenting a fingerprint for a legitimate loan, I say only this: Blame the thieves who made such measures necessary. It's their fault we already have to show photo ID everytime we write a check.

Moving right along: If a debtor subsequently claims to be an identify theft victim, it is a simple matter to obtain a fresh fingerprint from the alleged debtor and compare it to the original on the credit application. If the fingerprint matches, the debtor is still on the hook for the debt. If not, all record of the debt (and all consequent action for delinquency) is expunged from the alleged debtor's credit history, and the matter can be turned over to the police, who will have fingerprint evidence to help catch the perpetrator.