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FTC Testifies on Identity Fraud

Consumer awareness of identity fraud is growing, according to Howard Beales, director of the Federal Trade Commission's (FTC) Bureau of Consumer Protection.

With an identity theft scam directed at electronics retailing giant Best Buy still fresh in the headlines, Beales told the House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit Tuesday that in November 1999 the FTC set up a toll-free hotline where identity theft victims can obtain counseling and consumers can learn how to minimize their risk of becoming victims.

Beales noted that in 2001, more than 117,000 complaints from identity theft victims were added to the FTC's database, the Identity Theft Data Clearinghouse. In 2002, those complaints increased by almost 162,000. Beales said the increase may reflect a growing awareness of consumers about identity theft.

Beales said consumers who call the FTC hotline "receive telephone counseling from specially trained personnel who provide general information about identity theft and help guide victims through the steps needed to resolve the problems resulting from the misuse of their identities."

Beales said the FTC's primary role in combating identity theft derives from the 1998 Identity Theft Assumption and Deterrence Act, directing the agency to establish the federal government's central repository for identity theft complaints and to provide victim assistance and consumer education.

The FTC also works extensively with industry on ways to improve victim assistance, including providing direct advice and assistance in cases when information has been compromised. The Commission can take enforcement action when companies fail to take adequate security precautions to protect consumers' personal information.

"Because law enforcement at the state and local level can provide significant practical assistance to victims, the FTC places a premium on outreach to such agencies," Beales said.

As an example of the FTC's efforts to work with state and local officials, Beales cited an initiative taken in conjunction with North Carolina's Attorney General, Roy Cooper, to notify each state's attorney general to alert them to how they could use the FTC resources to better assist their residents.

"Through this initiative, the FTC hopes to make the most efficient use of federal resources by allowing states to take advantage of the work the FTC has already accomplished and at the same time continuing to expand the centralized database of victim complaints and increase its use by law enforcement nationwide," Beales said.

Beales also said the FTC started identity theft training for state and local law enforcement officials. More than 730 officers attended the training sessions, representing more than 170 different agencies.

'"Prosecuting perpetrators sends the message that identity theft is not cost-free," Beales said. "The Commission knows that as with any crime, identity theft can never be completely eradicated. Thus, the Commission's program to assist victims and work with the private sector on ways to facilitate the process for regaining victims' good names will always remain a priority."