Monday, January 07, 2008
Editorial: Protect consumers from fraud
When it comes to identity theft, what we don't know can cost us -- dearly.
From the RoundTable blog
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Virginians' personal information, such as Social Security, driver's license, account or credit card numbers, could fall into thieves' hands and be used to establish fraudulent accounts and consumers wouldn't know until creditors came calling.
Unfortunately, no law prompts companies to tell their customers when hackers have breached their computer systems or when employees misplace laptops loaded with sensitive information.
Lawmakers have a chance to correct this error. Last year, they declined to pass a bill -- similar to that enacted in 37 other states and Washington, D.C. -- that would have required companies to notify customers if their personal information was compromised.
This year, Gov. Tim Kaine is pushing for its passage. And it couldn't come soon enough. The loss or theft of personal data was tremendous last year. Identity Theft Resource Center believes 79 million records containing Social Security or credit card numbers were compromised, a four-fold increase over 2006, according to an Associated Press story.
Kaine not only wants customers to know about security breaches but he wants them to be able to freeze their credit so that no new accounts can be opened. The major credit reporting agencies for now are doing this voluntarily. Codifying the practice into law can only help consumers.
Requiring companies to report breaches and giving consumers the ability to easily freeze their accounts are reasonable requests. Businesses, though, might claim it will be too cumbersome and too costly to notify every customer.
To that, Kaine offers an out. If companies establish that the information hasn't fallen into miscreants' laps, will not be used fraudulently or that no harm will befall their customers, then they needn't notify anyone.
While that may appease big business, it should raise concerns for consumers.
First, time is of the essence in stopping identity theft. The sooner people are notified of a risk the faster they can act to protect their credit. Giving companies time to stall while they determine if there is a risk gives thieves a running start.
Second, what if companies guess wrong? Or worse, hide behind this exception to try to spare their image? "Then it would become an enforcement issue," Kaine's press secretary told The Washington Post.
By then it would be too late to spare consumers the nightmare of reclaiming their good credit. Consumers deserve to know when they are at risk as soon as they are at risk. Lawmakers should see to this.
