Opening Statement of Congressman Steven C. LaTourette (R-OH)
Hearing on Identity Theft
House Committee on Banking and Financial Services
September 13, 2000

Mr. Chairman, I thank you for holding this hearing today and for bringing attention to the issue of identity theft, and the magnitude of the problem. I'd also like to thank my colleague, Congresswoman Darlene Hooley of Oregon, for her efforts on this issue. The legislation that is the subject of today's hearing -- the Identity Theft Prevention Act of 2000, H.R. 4311 -- has enjoyed great bipartisan support and goes a long way to strengthen consumer protections.

Mr. Chairman, I thought by way of illustration I'd share with you how I became so interested in the subject of identity theft. Last year, a couple from my hometown -- Madison, Ohio -- came to visit me in my district office. Ray and Maureen Mitchell told me a numbing story about how they became the victims of identity theft and remain trapped in "identity theft hell." There are a half million people a year out there just like them -- victims of a crime wave that is largely unreported and widely misunderstood.

In many ways, being the victim of identity theft can be far more devastating than being the victim of a typical theft. Once you are exposed to this crime, you may never be totally safe. Victims live in constant fear, wondering when the other shoe will drop. In fact, the Mitchells now carry a signed affidavit with them in their car. They fear, and rightly so, that they could be the targets of an arrest warrant placed on the "bogus" Ray or Maureen Mitchell. This is no way for the innocent to have to live.

Mr. Chairman, this year, the Mitchell's daughter graduated from college and they wanted to get her a car, as many parents would love to be able to do. They paid cash for the graduation gift, but not because they're rolling in the dough and have money to toss around. No, they paid cash because they feared they wouldn't be able to obtain a simple car loan. Their once-stellar credit is in tatters thanks to a squad of identity thieves who have brandished Ray Mitchell's name, address, date of birth, Social Security number and employment history as their weapon of choice in a free-wheeling, unending crime spree.

It started a year ago September when the Mitchell's bank noticed $2,100 worth of unusual charges on their credit card, and it's been downhill since then. The thieves used the Mitchell's personal information to open new credit cards, buy cell phones, take out huge personal loans, and purchase not one but two $40,000 luxury sport utility vehicles -- a new Ford Expedition, and a Lincoln Navigator that was later torched and is now the subject of an insurance fraud inquiry.

All told, Ray and Maureen Mitchell have been victimized to the tune of $110,000. The Secret Service and Postal Inspector are involved in this case, as are Illinois authorities. One suspect has been charged, and authorities are looking for at least two others.

Mr. Chairman, last November 18 -- three days after fraud alerts were placed on the Mitchell's credit report -- a man went into three different Chicago banks in a two-hour period and applied for $45,000 worth of personal loans in Ray Mitchell's name. Each time the bogus Ray Mitchell presented a "valid" Illinois driver's license and an Illinois State Identification Card containing his own picture and all of the real Ray Mitchell's personal information. The thug had every bit of information one would need to secure a loan -- right down to pay stubs from Ray Mitchell's former employer, and his personal references. How he got this highly personal information is anyone's guess.

The Mitchells never engaged in "so-called" risky behavior, or behavior that is, frankly, typical for millions of American families. They didn't put shopping receipts and pre-approved credit card offers in the trash, they didn't buy things online, they didn't do catalog shopping or pay for credit card purchases over the phone. There was no stolen wallet or credit cards, either. Still, someone was able to recreate Ray Mitchell's identity with ease. Because the Mitchells had a history of always paying their bills on time and had a blemish-free credit report, they were the perfect target.

The good news is that the guy who applied for the loans was arrested the same afternoon he posed as Ray Mitchell. Police nabbed him as he tried to leave Bank One in Chicago, just moments after securing a $15,000 personal loan as "Ray Mitchell." He had $5,000 in cash and $10,000 in bank checks made payable to "Raymond Mitchell."

The bad news is that a judge freed him two days later on a personal recognizance bond even though he has a criminal record dating back to 1977 and has used 17 different aliases. Suffice it to say the accused is not shaking in his boots. When arrested, he told a detective: "I didn't use a gun. I didn't use a knife. Call my lawyer and I will plead guilty and they will place me on probation."

Two others suspected of buying the SUVs have yet to be apprehended.

Mr. Chairman, the Mitchells are angry, and rightly so. They agree with Congresswoman Hooley and I that more needs to be done to protect consumers from this, and that the three major credit unions and the financial services industry have an obligation to be more on the ball when things like this happen.

There were red flags that should have been noticed by someone -- like the 30 inquires in the Mitchell's credit report in just 60 days, or the numerous change-of-address requests.

Almost every other day the bogus Ray Mitchell was applying for car loans and personal loans, opening credit cards, buying cell phones, etc. The Mitchells hadn't had that much activity on their credit report in two decades -- they averaged just 1.5 inquiries a year.

The Mitchell's address also hasn't changed in 20 years, yet in a two-month period last fall the bogus Ray Mitchell placed six change-of- address requests. Wouldn't it throw up a red flag if a person who'd lived at the same address in Ohio for two decades suddenly hopscotched from house to house in Chicago six times in two months?

Mr. Chairman, this family wants to know why creditors had no trouble finding the "real" Ray and Maureen Mitchell when they wanted to collect their money, but didn't even try to check with them before they loaned out their money or agreed to change their address.

Mr. Chairman, this is just one story of one family that's been victimized. As I said earlier, there will be a half million more folks just like the Michells this year alone -- folks living with the presumption of guilt until they can prove their innocence, and having to spend hundreds of hours on the phone with creditors trying to undo the damage to their financial lives.

It's getting worse, too. Complaints about identity fraud have gone up 1,400 percent since the early 1990s. The FTC is now getting 1,000 calls a week about identity theft . The Secret Service, meanwhile, says that losses to individuals whose cases they investigated jumped 75 percent from 1995 to 1997 -- from $442 million to $745 million. Those skilled in the Internet will undoubtedly make identity theft even more common. The bold new frontier will spark bold new criminals.

Mr. Chairman, it is disheartening to me that legislation supported by consumer groups is opposed by the credit reporting agencies, credit card companies and financial institutions. The legislation Congresswoman Hooley and I have introduced will not unduly burden the industry, but instead will put in place a series of common-sense safeguards that are now missing.

For example, think how much earlier this could have been nipped in the bud if just one creditor had called the Mitchells when the first change-of-address request was made, let alone the five others that followed.

The industry might argue that our legislation would impose excessive costs and unnecessarily complicate the credit reporting system, and with little benefit to consumers. Little benefit to consumers? Tell that to Ray and Maureen Mitchell.