[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
PROTECTING PRIVACY AND PREVENTING MISUSE OF THE SOCIAL SECURITY NUMBER
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JULY 17, 2000
Delray Beach, Florida
__________
Serial 106-43
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
66-584 CC WASHINGTON : 2000
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
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C O N T E N T S
__________
Page
Advisory of July 10, 2000, announcing the hearing................ 2
WITNESSES
Florida Office of the Comptroller, Douglas Darling............... 15
Florida Department of Law Enforcement, Robert W. Ivey............ 17
Horowitz, Robert, Boca Raton, FL................................. 6
SIC Inc., Carlos J. Melendez..................................... 10
SUBMISSION FOR THE RECORD
Kodish, Vala B., Miami Shores, FL, letter........................ 36
PROTECTING PRIVACY AND PREVENTING MISUSE OF THE SOCIAL SECURITY NUMBER
----------
MONDAY, JULY 17, 2000
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9:00 a.m., at
the City Commission Chamber, 100 N.W. 1st Avenue, Delray Beach,
Florida, Hon. E. Clay Shaw, Jr., (Chairman of the Subcommittee)
presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
July 10, 2000
No. SS-21
Shaw Announces Hearing on Protecting Privacy and Preventing Misuse of
the Social Security Number
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a field hearing on protecting privacy
and preventing misuse of the Social Security number (SSN). The hearing
will take place on Monday, July 17, 2000, in the City of Delray Beach,
City Commission Chamber, 100 N.W. 1st Avenue, Delray Beach, Florida,
beginning at 9:00 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
The SSN was created in 1936 solely for the purpose of tracking
workers' Social Security earnings records. However, use of the SSN has
expanded significantly beyond its original purpose, and today, it is
commonly used as a personal identifier. For example, the SSN is
required, by law, for the administration of several Federal programs,
such as the income tax, the Food Stamp program, and Medicaid. SSNs are
also commonly used in the private sector. For instance, many businesses
require that individuals disclose their SSN as a condition for doing
business. According to the Social Security Administration (SSA), the
SSN is the single-most widely used record identifier in the public and
private sectors.
Some believe that the expanded use of the SSN benefits the public
by improving access to financial and credit services in a timely
manner, reducing administrative costs, and improving record-keeping so
consumers can be contacted and identified accurately. Others argue that
the pervasive use of SSNs makes them a primary target for fraud and
misuse. According to SSA, allegations of fraudulent SSN use such as so-
called, ``identity theft,'' increased from 26,531 cases in fiscal year
1998 to 62,000 in fiscal year 1999. Since fiscal year 1999,
approximately 1,000 more allegations have been reported each month. In
addition to concerns about SSN misuse, privacy concerns have also been
raised as companies increasingly share and sell personal information
without the customer's knowledge or consent. As a result of these
concerns, several proposals have been introduced that would restrict
SSN use and protect privacy.
In announcing the hearing, Chairman Shaw stated: ``People should
have the right to protect sensitive private information, such as their
Social Security number. The SSN was never intended to be a personal
identifier, yet it has clearly taken on that role over the years.
Although the widespread use of SSNs helps individuals in many ways, it
also raises serious concerns about privacy and misuse, such as identity
theft. We must take steps to protect privacy and prevent fraud while
maintaining the legitimate uses of the SSN which benefit the public.''
FOCUS OF THE HEARING:
The hearing will focus on the widespread use and misuse of SSNs in
the public and private sectors. The hearing will also examine
legislative proposals aimed at combating SSN misuse and protecting
privacy. The ramification of these proposals on businesses,
governments, and consumers will also be examined.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Monday,
July 31, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the district office of Representative E. Clay Shaw, Jr.,
1512 East Broward Blvd., Suite 101, Ft. Lauderdale, Florida 33301, by
close of business Friday, July 14, 2000.
FORMATTING REQUIREMENTS:
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Committee.
1. All statements and any accompanying exhibits for printing must
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or
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pages including attachments. Witnesses are advised that the Committee
will rely on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
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3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
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clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the
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The above restrictions and limitations apply only to material being
submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press,
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at ``http://waysandmeans.house.gov''.
The Committee seeks to make its facilities accessible to persons
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call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
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materials in alternative formats) may be directed to the Committee as
noted above.
Chairman SHAW. The hearing will come to order. Good
morning. I'd like to, first of all, thank the city commission
and the mayor for allowing us to use the beautiful hall here. I
was just remarking to Mark that if I was just moving to
Florida, this is probably the city I'd settle in. This is
really a great community.
When the Social Security numbers were first introduced only
six decades ago, their purpose was simple, to keep track of the
worker's earnings so benefits could be calculated when the
worker retired. The government would even warn individuals to
only use their Social Security numbers for purposes of nothing
else. As a matter of fact, my Social Security card is a rather
old one, I might say, but it also has ``not for identity
purposes'' printed plainly on the face of it.
Today you can barely cash a check or, in my case, I found I
couldn't rent a video up in North Carolina without giving this
information. In many states, your Social Security number is in
plain view on your driver's license. We seldom stop to think
how often a number as unique as a fingerprint is a prime target
for theft and abuse. Yet theft and abuse of Social Security
numbers is happening every day all across America.
Social Security numbers have become the gateway for crooked
con artists to raid your bank accounts, max out your credit
cards and literally steal your identity. Identity theft is the
fastest-growing financial crime in the nation, affecting nearly
600,000 Americans annually.
What was once a form of financial security has become a
tool for financial ruin. That's wrong, and that's why last week
I, along with a number of my Ways and Means colleagues,
including Mark Foley, from both sides of the aisle, introduced
legislation that will take some strong steps towards protecting
Americans from these rip-off artists. This legislation will
prohibit the sale of Social Security numbers and bar their
widespread government and public display. It also deters
businesses from refusing services to someone who says no to
providing their Social Security number.
Additionally, our legislation gives the inspector general
new powers to fight fraud and better protect the privacy and
integrity of the Social Security number. Finally, penalties and
fines are stiffened when the law is broken.
District hearings allow us the unique opportunity to get
out of Washington and hear from those citizens on the front
line. I look forward to hearing the views and experiences of
our expert witnesses, many of whom are our neighbors, as they
assist us in finding ways to protect ourselves from identity
theft and Social Security number abuse.
Again, I would like to say I'm especially pleased to hold
this hearing today in this beautiful city of Delray Beach. I
want to thank the city for allowing us the use of this
impressive city commission chamber. I think the last time I was
in this chamber was to recognize Delray Beach as an All-
American City, and that was in 1993, as that plaque says
hanging behind me.
[The opening statement follows:]
Opening Statement of Chairman E. Clay Shaw, Jr., a Representative in
Congress from the State of Florida
When Social Security numbers were first introduced nearly
six decades ago, their purpose was simple--to keep track of a
worker's earnings so benefits could be calculated when the
worker retired. The government would even warn individuals to
only use their Social Security number for this purpose and
nothing else.
But today, you can barely cash a check (or in my case, rent
a video) without giving this information. In many states, your
Social Security number is in plain view on your driver's
license. We seldom stop to think of how often a number as
unique as a fingerprint is a prime target for theft and abuse.
Yet theft and abuse of Social Security numbers is happening
everyday in America. Social Security numbers have become the
gateway for crooked con-artists to raid your bank accounts, max
out your credit cards, and literally steal your identity.
Identity theft is the fastest growing financial crime in
the nation--affecting nearly 600,000 Americans annually. What
was once a form of financial security has become a tool for
financial ruin. That's wrong and that's why last week I, along
with a number of my Ways and Means colleagues from both sides
of the aisle, introduced legislation that will take some strong
steps toward protecting Americans from these rip-off artists.
This legislation will prohibit the sale of Social Security
numbers and bar their widespread government public display. It
also deters businesses from refusing services if someone says
no to providing their Social Security number. Additionally, our
legislation gives the Inspector General new powers to fight
fraud and better protect the privacy and integrity of Social
Security numbers. Finally, penalties and fines are stiffened
when the law is broken.
District Hearings allow us the unique opportunity to get
out of Washington and hear from those citizens on the front
line. I look forward to hearing the views and experiences of
our expert witnesses, many of whom are our neighbors, as they
assist us in finding ways to protect ourselves from identify
theft and Social Security number abuse.
I'm especially pleased to hold this hearing today in the
beautiful City of Delray Beach and want to thank the City for
allowing our use of this impressive City Commission Chamber.
I'm pleased to introduce my colleague, Mark Foley, a member
of the Ways and Means Committee, to this hearing. Mark.
Mr. Foley. Thank you, Mr. Chairman. I don't have an opening
statement, but I do want to thank you and members of the
committee for looking into what is a serious and growing
problem in our country relative to the theft of people's
personal IDs. As I mentioned during our conference, I myself
have been the victim of theft identity, if you will, having had
a credit card taken out in my name, using my Social Security
number and the fact that I was a government employee in order
to gain over $700 worth of merchandise at a store that I do
shop at, but never had a credit card issued to me by.
I think clearly the struggles that I undertook in order to
clear both my credit and discharge the obligation that was not
my own was time-consuming, was frustrating. And it was clearly
insulting having a collection agency calling you constantly at
home, leaving messages, when you get a live person on the
phone, threatening you if you didn't pay your bill that you'd
be listed as a deadbeat. It was mind-numbing.
I obviously had the resources and the time to call and
continue to pursue and finally get Target, who was most
cooperative once I reached their corporate office, discharging
the debt. The collection agency, even after I reached Target,
consistently tried to call and disrupt me at all hours of the
day.
I can only imagine the senior citizen who has had their
card stolen having fear of these type of tactics on the phone,
threatening that they would lose their home, that they'd lose
their credit, that they'd be taken seriously. And some may even
pay the bill that they did not owe simply to get rid of
harassers.
I think we've got a multitude of problems here. But most
importantly, the age of the Internet, more transactions
occurring on computer, I think it's more important than ever
that your bill, with the help of Mr. Matsui and others on the
Democratic side, be ushered through Congress expeditiously. I
think as we take testimony and hear from others, we will
probably find out how great a problem this is becoming. A lot
of people don't come forward and talk about this simply because
they're embarrassed, because the initial thought is oh, I have
to report the fact that I didn't pay a credit card, even though
it wasn't mine, and that that may jeopardize their credit
standing.
Again, Mr. Chairman, thank you for coming and helping on
this issue and for the testimony we're looking forward to
hearing.
Chairman Shaw. Mark, this matter is becoming even more
increasingly difficult and such a growing area of crime. I
think that the abuse of the Social Security numbers by just
flat-out crooks increased over 200 percent just in this past
year. Those are the ones that we know about. Of course, there's
many of them going on that we don't know about.
One of our witnesses in Washington had several automobiles
purchased in his name and he had his credit card companies
after him--or not the credit card companies, but credit bureaus
after him. He's still having problems with that thing
continuing to pop up. In his instance, it was used as his
serial number in the Armed Forces, a colonel in the Armed
Forces. On the base at the PX, they required him to show his
serial number on the back of a check, which is, of course, his
Social Security number. He figures that's probably where his
number got out.
This morning our panel of witnesses are composed of Robert
Horowitz of Boca Raton, Florida; Carlos Melendez, president of
SIC Inc., of Miami, Florida; Douglas Darling, the Director of
Florida State Comptroller, Office of Accounting and Auditing.
He's with us from Tallahassee. And Wayne Ivey, Special Agent,
Florida Department of Law Enforcement, Fort Pierce, Florida. We
thank all of you for being with us. We have your full text of
your testimony, which will be made a part of the record. And we
would ask you to proceed in the way you're most comfortable.
Mr. Horowitz.
STATEMENT OF ROBERT HOROWITZ, BUSINESS OWNER, BOCA RATON,
FLORIDA
Mr. Horowitz. Thank you, Mr. Shaw and Mr. Foley. I
appreciate the opportunity you're giving me to read my
testimony. I'm going to read off of a prepared text.
My name is Robert Horowitz, a 36-year-old single father of
three. I am a homeowner, as well as a business owner, in Boca
Raton, Florida. At the end of April 2000, at work, I received a
phone call that would change the way I feel about a great many
things.
On the phone was a collection agency attempting to collect
on a past due debt for several accounts opened with BellSouth
Mobility. This was when I was first made aware that someone
somehow obtained my personal information, specifically my
Social Security number, and my name as it correlates to that
number.
I immediately contacted BellSouth Mobility and began the
task of cleaning up what I thought was just a reasonable
misunderstanding. However, upon speaking with them, I began to
realize that what was happening to me was more than some simple
error. I was informed that these accounts, five in all, were
opened using my Social Security number and my name only.
BellSouth Mobility suggested that my credit bureau reports
might bear some fruit as to what may also be happening to me.
So I immediately did obtain my credit reports.
Chairman Shaw. Can you check and see if your microphone is
on?
Mr. Horowitz. It's on.
Mr. Foley. We can hear you.
Mr. Horowitz. I can speak up a little bit.
Chairman Shaw. As long as the recorder can hear you.
Mr. Horowitz. I'm going to turn this off at this point.
Before I even received my credit reports, I was again being
contacted by phone and by mail by other collection agencies.
And they were all trying to contact me about past-due accounts
with other different companies, numerous different companies.
First, let me note that obtaining my credit reports was no
easy task. It turns out that the credit bureaus will send you a
copy of your report, but they will send it to the most current
address on the credit report. In my case, two of the three
credit reporting agencies had fraudulent addresses. Therefore,
the current address was an address that I had no access to and
could not get my credit reports directly. In addition, these
credit reporting agencies make it very difficult to communicate
with them in any kind of timely fashion. Most things are
automated or you have to contact them by way of mail.
Upon receipt, finally, of my credit reports, I was
overwhelmed with the amount of incorrect information, as well
as fraudulent activity, approximately $15,000 worth of
fraudulent activity. How could it be so easy to put fake
information on what I thought was my personal credit history?
Equally disturbing were that all three credit reports varied a
great deal.
For example, Equifax and TransUnion listed me correctly by
name and they listed my name correctly only once. However,
Experian lists my name nine different times and six of those
nine times, my name was spelled wrong. Also, TransUnion had
three addresses, one current and two previous, two of which are
wrong. And Experian lists 10 different addresses, seven of
which are wrong.
After calming down a little bit, I started contacting the
companies which I knew were not supposed to be on my credit
reports. I also contacted the Palm Beach County Sheriff's
Office.
I have since been able to begin the slow process of
straightening out my credit reports. In addition, I have kept
in touch with Palm Beach County Sheriff's Office. I have come
to the conclusion that the police are overwhelmed by this type
of crime, simply too many cases and not enough manpower.
I still have a hard time dealing with how easy it was to
steal credit or to steal other things using my S.S. number. The
only thing they had was my Social Security number and my name.
In my case, an American Express card was obtained by way of
mail-in application and my name was the only thing correct in
addition to my Social Security number. All other information on
the application was wrong. My address was wrong. My date of
birth was wrong. My phone number was wrong.
As it turns out, all of the fraudulent credit and purchases
obtained in my case were obtained in a similar fashion. On all
applications for credit, only my first name and Social Security
number were correct. All other information was wrong. What
puzzles me is why didn't anyone look? Why don't these companies
check to see if the information given on these applications
correlates to the Social Security number correctly? On every
occasion, so much credit was just handed out based solely on my
Social Security number, no cross-reference check of any
information whatsoever.
Another thing that puzzles me is how quickly and
cooperatively these companies are when it comes to clearing up
this bad debt; however, uncooperative and completely
disinterested they seem to be when it comes to catching the
criminal. In fact, it was told to me by more than one of the
companies I've dealt with they're not going to attempt to catch
the criminal because the amount of fraudulent activity was not
significant enough. It was significant enough to send to
collection. It was significant enough to have them coming after
me and significant enough to have them reporting to credit
bureaus; however, not significant enough to try and catch a
criminal.
I guess I'm full of old-fashioned thinking, but to me it
seems vital to make all attempts to deter this type of criminal
activity. If I were a criminal and I knew that as long as I
stole a small amount, no one would ever come looking for me,
let alone prosecute me. What would be the logic in expecting me
to stop doing these crimes? These days, and in the days to
come, credit bureaus and their histories and all information
are becoming quite a precious commodity.
Certainly, we can foresee a society in the not-too-distant
future where we will become cashless altogether. Believing
this, we must do more to protect the system of credit. The
abuses of the Social Security number as it relates to credit is
a problem that's not in the future, however. It is here now.
I am not aware of the current laws as they relate to this
issue. I feel that there needs to be a mandatory cross-
reference system put into place so that just because someone
knows my Social Security number, shouldn't mean they can get
credit as they wish. What is wrong, so foreign, about just
simply checking all the information available when handing out
somebody's credit, not just checking the Social Security
number? In my case, every time a person or persons actually
approved the credit, they did so without going any further than
just checking my Social Security number, even though they had
full access to my credit reports.
In closing, I'm told that even if the criminal is
apprehended, he most likely will be plea-bargained down and not
even have a trial. Again, what kind of deterrent is that?
Shouldn't we all be interested to know where the S.S. number
was obtained? In my case specifically, I am told there is
nothing, no laws that can force this criminal to tell where he
got the S.S. number from. Therefore, my worries are not over.
This can keep happening to me even if he is arrested. All one
would need to perpetrate these identity crimes is a Social
Security number and a name that has good credit.
As a society, we need to come up with a system that does
not rely solely on Social Security numbers to obtain somebody's
credit or personal information. Until a new and better way is
found, I guess we can all expect to be victims.
Again, I thank you for the time.
Chairman Shaw. Thank you, Mr. Horowitz. Mr. Melendez.
[The prepared statement follows:]
Statement of Robert Horowitz, Business Owner, Boca Raton, Florida
My name is Robert Horowitz, a thirty-six year-old single
father of three. I am a homeowner, as well as a business owner,
in Boca Raton, Florida. At the end of April, 2000, at work, I
received a phone call that would change the way I feel about a
great many things.
On the phone was a collection agency attempting to collect
on a past due debt for several accounts opened with ``BellSouth
Mobility.'' This was when I was first made aware that someone,
somehow obtained my personal information--specifically my S.S.
# and my name as it correlates to that number.
I informed the person on the phone that I had never had any
accounts with ``Bell South Mobility'' and began the task of
clearing up what I thought was just a simple misunderstanding.
However, upon speaking with them I began to realize that what
was happening to me was more than a simple error. I was
informed that these accounts (five in all) were opened using my
credit via my Social Security number. BellSouth Mobility
suggested obtaining my credit bureau reports to see if any
other unknown activity was taking place.
So I immediately did just that. Yet, even before I received
the first credit report. I was again being contacted by phone
and mail by other collection agencies about other past due
accounts with other companies. [These companies are: again
BellSouth Mobility, Burdines, Travelers Bank (Citifinancial)
(City Furniture), American Express, BlazerFinancial (Washington
Mutual), and Target Stores (Dayton Hudson)].
First, let me note that obtaining my credit reports was not
an easy task. It turns out that the credit bureaus will send a
copy of one's report only to the most current address on the
credit report. In my case, two of the three credit reporting
agencies had the fraudulent addresses, being used by the
perpetrator, as my current address and would only send the
reports to this fake address. It took much precious time to
find this out because as you may be aware, the credit reporting
agencies make it very difficult to communicate with them in a
timely manner.
Upon receipt of my credit reports, I was overwhelmed with
the amount of incorrect information as well as fraudulent
activity. How could it be so easy to put all this fake
information on what, I thought, was my personal credit history.
And equally disturbing, all three reports varied greatly.
For example: Equifax and TransUnion list my name correctly
and only once, but Experian lists my name nine times and six of
the nine are spelled wrong. Also, TransUnion lists three
addresses (one current and two previous) two of which are
wrong. In addition, there are numerous variations from report
to report.
After calming down, I started contacting the companies
which I knew were not supposed to be on my reports. I also
contacted the Palm Beach County Sheriff office.
I have since been able to begin the slow process of
straightening out my credit reports. In addition, I have been
as active as the law allows in helping the Palm Beach County
Sheriff's Office investigate my case. I have come to the
conclusion that the police are overwhelmed by this type of
crime.
I have a hard time dealing with how easy it is to steal
credit to steal other things--all one would need is the name
and Social Security number of anyone with good credit. In my
case, an American Express card was obtained via a mail-in
application. I obtained a copy of the application and on it was
my name (wrong middle name and last name spelled wrong) and my
Social Security number. All other information, i.e. address,
date of birth, phone number were wrong!
As it turns out, all of the fraudulent credit and purchases
were obtained in a similar fashion. On all applications for
credit only my first name and my Social Security number were
correct--all other information was wrong. What puzzles me is
why didn't any of these companies check to see if my Social
Security number correlated correctly with all of the other
information given On every occasion, so much credit was handed
out based solely on my Social Security number and not on any
kind of cross-references.
Another thing that puzzles me is how quickly and
cooperatively these companies are too clear the bad or
fraudulent debt, but, how slow or uncooperative or completely
disinterested these same companies are when it comes to
catching the criminal who is actually ``stealing'' from them.
In fact, I was told by more than one of the companies that I've
been dealing with, that they are not even going to attempt to
catch the criminal because the amount of the fraudulent account
wasn't significant enough. Significant enough to send to
collections to get the money from me. Significant enough to
report to all three credit bureaus, but not significant enough
to try to catch the criminal.
I guess I am just full of old-fashioned thinking but to me
it seems vital to make any and all attempts to deter this type
of criminal activity. If I were a criminal who knew that as
long as I stole only a small amount no one would even come
looking for me, let alone prosecute me, then what is the logic
behind expecting me to sop doing this?
These days, and in the days to come, credit and credit
histories are becoming a precious commodity--more now than
ever--certainly we can foresee a cash-less society in the not
to distant future--believing this, we must do more than ever to
protect the system of credit. The abuses of the Social Security
number as it relates to credit is a problem that is not in the
future--it is here now. I am not aware of the current law as
they relate to this issue, however, I feel that there needs to
be mandatory cross-reference system put into place so that just
because someone knows my Social Security number they shouldn't
be able to get my credit to use as they wish. What is so wrong,
so foreign, about just simply checking all information
available when handing out someone's credit and not just the
Social Security number. In every case that, I personally
investigated with the fraud using my Social Security number,
every single time the person, or persons, who actually approved
the credit application did so without going any further than my
Social Security number--even though these people had full
access to my credit reports.
In closing, I am told that even if the criminal is
ultimately apprehended, he most likely will be plea-bargained
down and not even have a trial. What kind of deterrent is
that?! Shouldn't we all be interested to know where he obtained
my Social Security number. In my case specifically, I am told
that there is nothing (no laws) to force the criminal to tell
where he obtained the Social Security number from, therefore,
my worries are not over. If my Social Security number is all
one would need to perpetrate these credit crimes or identity
crimes, we all need to know the sources of the illegally
obtained Social Security number.
As a society we need to come up with a system that does not
rely solely on Social Security numbers to obtain someone's
credit or personal information. Until a new and better way is
found we can all expect to be a victim.
STATEMENT OF CARLOS J. MELENDEZ, PRESIDENT, SIC INC., MIAMI,
FLORIDA
Mr. Melendez. Yes, sir. My name is Carlos Melendez. I've
been a private investigator in Miami since 1982, started my own
agency in '84. The focus of my investigations have been, the
majority of them, exactly the kind of problems that the
gentleman to my right has been referring to.
As an investigator, I think that the biggest value that I
can make to this hearing on behalf of the investigators across
this country is to point out that there are approximately
80,000 investigators licensed in the United States presently.
They're identifying fraud in the civil sector. The government,
quite frankly, is very, very busy involved in looking at
criminal behavior. The drugs and all of the major crimes,
murder, preoccupy the time for law enforcement to investigate.
If Mr. Rosen was to go to the FBI and say I want you to
investigate this identify theft that happened or the local
police, he would generally not get a favorable response to say
``Yeah, we'll go ahead and take that case and we'll go ahead
and start investigating it for you now.''
So the problem is how do you respond to the theft of the
Social Security number. I would also point out that the
insurance industry is anywhere from--depending upon job
classification listed by the Department of Labor, anywhere from
90,000 to a million people engaged in the business of
identifying fraud. The GAO issued a report that talks about $40
billion a year in entitlement fraud and how do these fraud
cases happen.
As an investigator and in looking at the problem that I've
been asked to comment on today, the privacy issue and identity
theft, I think for purposes of definition, it needs to be
pointed out that identity theft and identity fraud are two
different things. You can have somebody take your Social
Security number off of the Internet or steal it from your
wallet or steal it from someplace where you're safeguarding the
number, but the fact is if he takes it away, that's a theft.
So the question is what is the penalty for him taking your
Social Security number? Until that issue becomes a serious
enforcement or a serious penalty for him, there's no incentive
for him not to go ahead and continue stealing the Social
Security number, because nothing's going to happen to him.
I'm not naive to say okay, if we go ahead and say we'll put
the guy in jail for a hundred years that that will stop the
crime. The punishment, according to criminologists who study
these kinds of things, say just by cutting somebody's hand off
is not going to solve the issue of theft.
The question then becomes access. As a private
investigator, I'm very concerned that in my investigations in
my practice that if I don't have as many tools available to me
to go ahead and identify--the first thing I do in opening a
case is identify the individual and make sure I have the right
person. The Social Security number is one of the means to do
that, because it's been used as a national identifier for many,
many years. The Federal Government in an executive order has
got a litany of law that is established as to that. And so it
is, in fact, a national identifier, whether we say formally
it's not.
So the question is, do you restrict that access to people
that are using it that are in the industry and in the business
of trying to reduce fraud and theft? My strong message
hopefully that will be heard in this hearing is that the
private investigator community will not stop their
investigations and will not stop finding bad guys just because
you can't have access to the Social Security number.
In fact, as I told George during some of our discussions
over the phone, what will happen is it will drive the cost of
investigating up, because all that's going to happen is we're
going to have one less element of information to use in
identifying the bad guy. We'll go ahead and go through a
process that any good investigator uses in investigating a
crime. We'll find the guy. But the Social Security number is
one of the things that helps identify without any doubt that
this is the bad guy and that is the person.
Then, of course, you get into the situation well, this
guy's got many, many Social Security numbers and he's been
doing fraud. So now you get on to an investigative run that the
gentleman to my right is describing.
George also asked me to speak to some provisions of the
law. One of the administrative notes that I will ask--I didn't
have a chance to talk to anybody about the law--but it makes
reference to the display factor, that you can't have the Social
Security number displayed anymore. I would ask the impact on
the military? Because, as a retired person, I have a Social
Security number on my ID card.
With that, I thank the committee for allowing me to
testify.
Chairman Shaw. Thank you.
[The prepared statement follows:]
Statement of Carlos J. Melendez, President, Sic Inc., Miami, Florida
Mr. Chairman.
I wish to thank you and members of the committee for the
opportunity to present my testimony. My name is Carlos J.
Melendez, President, SIC Inc., Miami, Florida.
I come from a military background, having retired in 1981
after 20 years of service in the Army. I settled in Miami and
started my own investigative agency in 1984. I began working as
a Private Investigator and Security Consultant, serving
corporations, insurance companies, law firms, and private
individuals and continue to do so to this day.
I understand the focus of this hearing centers on the
national debate on the use of the SSN and the abuses to the
Individual's right to ``privacy'' and protection from a rapidly
growing crime called ``identity theft".
Put another way, ``what would be the impact of legislation
prohibiting the sale of the SSN, and, restricting its use to
the Private Investigator?''
The short answer is this. If the Private Investigator is
found to be abusing the use and access to the SSN, then punish
him for violations under applicable law. The obvious
observation, why punish all for the mistakes of a few?
On the privacy issue, when conducting an investigation
requiring the use of a SSN, Private Investigators already abide
by the Federal Trade Commission rules and regulations. Database
companies that provide access to their databases which hold the
SSN, require Investigators to state the permissible purpose of
their inquiry to insure that the purpose meets the criteria
established by the provisions of the Fair Credit and Reporting
Act.
The practical and direct effect to the consumer of denying
access of the SSN to the Private Investigator is: 1) the cost
of fraud and abuse losses will go up dramatically; 2) the
criminal will have more freedom from detection and will be
bolder in deciding to commit crime; and, 3) the cost to
investigate fraud and abuse, currently estimated in some
quarters to cost society $400 billion in losses, will rise
immediately.
In street vernacular, the most significant impact that
comes to mind would be, the ``bad guys'' would win big time!
Why is denying access of the SSN to the Private
Investigator even being considered?
In preparing for this hearing, I researched the question of
how the Social Security Number (SSN) came to be and why its use
became so widespread.
I found that the genesis of the SSN was born with the
enactment of the Social Security Act, (P.L. 74-271) (42 U.S.C.
301 et seq.) in 1935. While the term ``SSN'' was not
specifically mentioned in the Act, there was authorization to
create a means of keeping an accurate record of the earnings of
workers covered by the Act.
It wasn't until a year later that a Treasury regulation,
``Treasury Decision 4704,'' required the issuance of an account
number to each employee covered by the Social Security program.
However, the SSN began being used in earnest as a
``national identifier'' in 1943 as a result of the promulgation
of Executive Order 9397. The Order required all Federal
components to use the SSN ``exclusively'' whenever the
component found it advisable to set up a new identification
system for individuals. The Social Security Board was directed
to cooperate with Federal uses of the number by issuing and
verifying numbers for other Federal agencies. And so the SSN as
a ``national identifier'' was born.
This hearing is a necessary and positive step in responding
to the needs of the consumer on the issues, and, represents a
reasonable effort to find responsible solutions to the various
problems which need to be clearly identified and understood.
In your deliberations, I ask you to consider the make up,
number, and nature of work the Private Investigators across
this country are performing.
Private Investigators are presently a major crime and fraud
fighting force in this country. They are actively engaged on a
daily basis in investigating fraud and abuse not currently
investigated by law enforcement. Without getting into specific
detail, anyone familiar with the differences between law
enforcement and private sector investigations understands the
roles and missions of each.
Certainly, the Federal agencies; FBI, DEA, IRS, ATF,
Customs, and others, are engaged in investigating fraud and
abuse. To say otherwise is inaccurate and wrong. It is well
known that the focus of law enforcement is primarily on
criminal investigations thereby requiring the private sector to
initiate private investigations.
The Private Investigative community certainly investigates
criminal cases. However, private sector investigations
necessarily involve investigating ``White Collar crimes'' and
other so-called ``civil investigations'' involving fraud and
abuse, where Federal, state, and local law enforcement leave
off or simply choose not to investigate.
It is well known that Federal law enforcement agencies have
an unspoken threshold of dollar value for conducting an
investigation. This is recognized by all concerned as simply a
matter of allocation of available resources. Thus the private
sector is growing exponentially as ``white collar'' and
``civil'' crime increases.
Close examination of the ranks of Private Investigators
across the country shows, the membership is comprised of a
large population of retired and former government service
investigators (Federal, state, and local), professionals from
the insurance industry, and the legal community. This body of
combined experience, clearly demonstrates that today's Private
Investigator is a member of a disciplined and professional
force. This force is expert with the law and the requirements
to respect the Individual's right to privacy. This expertise
didn't come about by accident but rather from years of
experience gained in his or her previous government service or
occupation.
There are numerous professional associations that are
dedicated to establishing and maintaining standards for
acceptance into membership. There are only 5 states that do not
have licensing requirements for Private Investigators. They are
Alaska, Colorado, Idaho, Mississippi, and South Dakota.
Thus, Private Investigators are regulated or governed by
either State laws or association by laws. Both are vigilant in
policing their ranks to insure promulgated laws and regulations
are abided by. This regulation protects consumers' rights and
provides for sound management of a growth industry that is
making a significant contribution to the country.
Meanwhile, out in the field, the Private Investigator is
actively engaged in investigating fraud and abuse which is
costing the country, hence the population, billions of dollars
every year.
Consider the following: 1) the Association of Certified
Fraud Examiners reports the figure of $400 billion annually
lost to fraud and abuse; 2) Medicare fraud (fraudulent claims)
is estimated to be an annual loss of $12 billion; 3) Fraud by
Health Care Providers is estimated to cost $95 billion
annually; 4) Merchants took in more than $13 billion in bad
checks in 1996, an 18 percent increase over the year before,
according to the credit industry's Nilson Report, June 1997; 5)
Russell Mokhiber (1995), in his article ``Soft on crime,''
states that $200 billion a year is lost to white-collar, or
corporate, crime while Josh Martin (1998a), in the more recent
article ``Dissecting the books,'' estimates the annual cost to
be closer to $400 billion.
Private investigations are being conducted everyday on high
dollar losses attributed to money laundering, insurance fraud,
medicare/medicaid fraud, credit card fraud, cell phone fraud,
identity theft, mortgage fraud, and telephone scams directed at
the elderly. Employee theft is major part of the $400 billion
dollar loss attributed to fraud and abuse.
Certainly, the obvious impact of denying access of the SSN
to the Private Investigator would be to slow down his or her
ability to investigate the above described crimes. It most
certainly would not stop the investigation. However, the other
side of the question is clear. It would be far easier for the
criminal to go undetected in the commission of crimes involving
fraud and abuse if the Investigator can't find him because of
privacy laws. The effect would be that the government would be
inadvertently protecting criminals from investigation.
Certainly this is not the intention of anyone concerned with
fraud, crime, and corruption.
It doesn't take a rocket scientist to conclude that the
fraud and abuse numbers cited above would dramatically increase
in the billions in annual losses.
But this increased cost can easily be avoided. How?
Continue to allow the Private Investigator access to the
SSN as it is currently be used. Regulate and punish abuses by
Private Investigators within the existing body of regulation.
The Industry is growing. The Federal Government must grow with
it.
For example, the Federal Trade Commission (FTC) establishes
rules and guidelines for its use. One recent FTC interpretation
that appears to have been resolved is classifying the Private
Investigator industry as a ``Consumer Reporting Agency.'' While
it is understood why this interpretation was made, Private
Investigators would consider it ludicrous. The good news is,
that it appears that the FTC has accepted the response from the
Investigative community through hearings such as this, that an
Investigator's report must not be classified as a ``Consumer
Report,'' specifically, an Individual's credit report, and is
preparing language to reflect the differences.
Anyone familiar with writing rules and regulations for
nationwide use is very familiar with the care that must be
taken for each word and the use of punctuation. That
impractical interpretations of the law occur, is
understandable. All this means is that a procedure for feedback
and response must be available to the consumer to insure bad or
ill conceived rules are changed as soon as possible to minimize
negative fallout.
The FTC action demonstrates how rules can be amended to
reflect practical and workable restrictions enacted to protect
the consumer's privacy and at the same time, not enable the
criminal more freedom to commit crime.
In polling associates of known or potential abuses of the
use of the SSN, some examples were discussed which may need to
be investigated. For example, the displaying of the SSN in a
bank statement or on a check. In the military, post exchanges
require checks be imprinted with the SSN of the person desiring
check cashing privilege. These abuses can be administratively
corrected by stopping the practice. For example, Florida uses
the SSN as part of an identifier in its database but does not
print it on the driver's license. This is an example of the
responsible management of the database.
The issue of the display of the SSN on a document or in
public should be weighed on the occurrence of abuse being
experienced. Does it contribute to identity theft? Or does the
problem stem from someone who has access to the SSN? Does it
stem from access into the database of the institution holding
this information simply because he has knowledge of the SSN? In
most if not the majority of identity theft cases, the issuing
authority of new identification documents failed to check the
originating documents to insure their authenticity. Cashing a
check without verifying signature or other identifying features
such as driver's license happens all the time. False credit
card sales without following proper identification procedures
is another daily if not hourly occurrence. False credit card
sales from collusion from employees with the perpetrator is an
example of the classic inside job.
My view is, that the institutions responsible for
safeguarding the SSN must be put on notice to safeguard the SSN
or it will be done for them.
Then the question becomes, should the consumer have an
``opt in or opt out'' choice for the use of the SSN? It is also
my position that investigation of problems and solutions can be
developed to resolve privacy issues and preserve consumer's
rights. Each situation must be dealt with on a case by case
basis. Only then can you establish rules and regulations to fix
the problem.
Another aspect of the question is, how many Investigators,
law enforcement and private sector, would this change affect?
The Department of Labor (DOL) web site, proved to be
helpful in counting the number of Investigators in the US,
http://stats.bls.gov/oco/ocos125.htm.
In 1998, police and detectives (law enforcement community)
held about 764,000 jobs. NOTE: They are already restricted by
laws on the use and sharing of the SSN in an investigation.
Adjusters, Investigators, and Collectors,'' classified by the
DOL as administrative occupations, held 1.5 million jobs.
Private Detectives and Investigators, classed as a service
occupation, held 79,167 jobs. Legal assistants held 85,959
jobs. Claims examiners, property and casualty insurance
occupation, held 48,746 jobs.
A quick tabulation shows that in 1998, there were an
estimated 977,872 to 1.5 million Investigators asking the same
question in the course of an investigation, ``do we have the
right person?''
The clear implication in changing the law requires careful
consideration be given to the number of investigators currently
using the SSN in the conduct of an investigation. Will it bring
the process to a standstill? The potential cost in time and
expense certainly requires serious deliberation.
Identity theft is the other aspect of this hearing. Clearly
this is a high priority issue that requires a fix at the
earliest possible date. The problem is, the fix must extend to
all the segments of our society that depend on the SSN as an
identifier. Supervision and adherence to existing controls
would eliminate the majority of violations. Careful handling of
the number and its' by the consumer would help. Discovery,
access, and the use of the SSN by establishments accepting
credit cards is likely the most logical place to start to find
ways to stop identity theft.
Thieves, the ``fences,'' and the drug (crack cocaine) sub-
culture that thrive on stolen credit cards, passports, and
other forms of identification; are not high priority targets
for investigation by local law enforcement. Does anyone doubt
that the FBI or DEA or local police department could not find a
thief who stole your purse or billfold, to include the drug
dealer and the fences? Is there any doubt in anyone's mind that
they could be found? Then why aren't they being found? Because
of the allocation of resources? Go ride with a police officer
one day in a major crime area to appreciate what they do. No,
the thief is not sought after because he stole a credit card or
a purse, he is most likely sought because he seriously injured
or killed someone in the course of stealing the identity cards.
Until law enforcement is given the resources to investigate
these types of crimes that give birth to ``Identity Theft,''
then don't expect restricting access of the SSN to be reducing
the occurrence or elimination of ``Identity Theft'' anytime
soon.
My experience on the planet so far has clearly demonstrated
one constant. If we in the United States mean to do something
about it, then it will get done in a manner we can all be proud
of.
I am happy to entertain any questions you may have. Thank
you for your time. And thank you for this opportunity to
contribute in this small way to my country.
Chairman Shaw. Mr. Darling.
STATEMENT OF DOUGLAS DARLING, DIRECTOR, ACCOUNTING AND
AUDITING, OFFICE OF THE FLORIDA COMPTROLLER, TALLAHASSEE,
FLORIDA
Mr. Darling. Mr. Chairman, Mr. Foley, I appreciate the
opportunity to appear before this subcommittee. I'm
representing both Governor Bush and my boss, Comptroller Bob
Milligan.
I'm here in support of the legislation. I think that from
the Federal level, you have a responsibility, as do we at the
local and State level, to protect our citizens. As Governor
Bush and Comptroller Bob Milligan's initiative to bring
government to the people, one of the ways we're going to do
that is by using the Internet.
I think the Internet is both wonderful and frightening when
you think about all the information that someone can find out
about any of us in this room. And I think that by limiting
access to the Social Security number as proposed in this
legislation, would help prevent some of the identity theft and
identity fraud that's being talked about.
I think the other thing that I would like to leave with you
is that from the State level, at least, we take the lead from
the Federal Government. Whether we want to admit it or not, as
Mr. Melendez said, the Social Security number is the key data
element for identification in any system, in any procedure, in
any application, as required by the Federal Government. I
support your legislation because of that very fact.
You can't get a Federal grant, you can't get a student
loan, you can't get a driver's license, you can't get a post
office box, you can't get anything without providing your
Social Security number. That's not a problem. But what's
happened to your Social Security number after that is where the
problem comes in. I think the next speaker is going to talk
about some of those problems.
One other suggestion that I would like to make, and that is
the legislation does not prohibit someone from giving a Social
Security number away for free. It just says they can't provide
it for anything of value. Maybe another thing to look at would
be to add a sentence or two about providing the information,
period.
Again, I thank you for this time.
[The prepared statement follows.]
Statement of Douglas Darling, Director, Accounting and Auditing, Office
of the Florida Comptroller, Tallahassee, Florida
Mr. Chairman and members of the subcommittee, my name is
Douglas Darling. I am the Director of Accounting & Auditing in
the Florida Comptroller's Office. I am here representing
Florida Comptroller Robert Milligan and Governor JEB Bush in
support of proposed legislation to enhance privacy protection
and reduce the misuse of social security numbers.
We support the proposed legislation because it appears to
provide additional safeguards for our citizens without unduly
restricting the use of social security numbers for legitimate
government use. I would like to address some issues with the
subcommittee on how the State of Florida uses social security
numbers for the benefit of our citizens.
In many instances, states follow the lead of the Federal
Government. This is particularly true in using the social
security number for identification, income tax reporting, and
entitlement programs. In any automated system, certain
information is critical to ensure data integrity. Most Federal
systems use the social security number as that key element of
information. Consequently, this precedent has required states
to design systems that also report and track using social
security numbers. This is not inherently bad. Unfortunately, as
addressed by this proposed legislation, when social security
numbers are used for unlawful purposes catastrophic results can
occur. One of the many valid uses of social security numbers in
Florida has resulted in providing support for some of our most
vulnerable citizens.
Since the Florida Department of Revenue assumed operational
control of Child Support Enforcement, we have been extremely
successful in tracking ``dead-beat'' parents. The key element
in our success is the use of social security numbers. Without
the ability to monitor earnings and verify current addresses,
helping custodial parents would be nearly impossible.
Another use of the social security number by states has
increased public safety. Drivers' licenses issued by states use
the social security number as a cross reference. This helps
prevent individuals whose license has been revoked from simply
applying in another state.
Another reason we support this proposed legislation is our
unique ``Sunshine Law.'' Chapter 119, Florida Statutes, Public
Records Law, requires Florida Government to conduct it's
business in a complete and open forum. Any meeting or document,
with few exceptions, is available for public inspection. While
this law is one of the foundations for our great state, it may
be inadvertently contributing to some of the issues addressed
by this proposed legislation. The State of Florida could use
this legislation as a catalyst to help further protect our
citizens from abuses of identity theft.
In summary, State and local governments have necessary and
valid uses for social security numbers in providing services to
their citizenry. Any reduction of the governmental uses should
be carefully analyzed for impact before restrictions are
levied. However, this proposed legislation appears to allow
valid use by State and local governments while limiting the
availability to unlawful users. It is for these reasons that we
can support this proposal.
Chairman Shaw. Thank you.
Mr. Ivey.
STATEMENT OF ROBERT W. IVEY, SPECIAL AGENT, FLORIDA DEPARTMENT
OF LAW ENFORCEMENT, FORT PIERCE, FLORIDA
Mr. Ivey. Mr. Chairman and Mr. Foley, I thank you for
having us here. I represent the Florida Department of Law
Enforcement and more specifically, the law enforcement
community as a whole.
Earlier when you were starting the meeting, you addressed a
number of the issues that we face from the law enforcement
standpoint concerning identity assumption fraud. And each of
you shared some comments on the overwhelming effects that it's
having on our communities. It's basically, in my opinion with
basically 20 years of law enforcement, this is the fastest-
growing crime that we're facing at this time from a non-violent
standpoint. The individual type of activities that we're seeing
range from anything from someone assuming that identity and
then using it to purchase a cellular telephone to using that
same Social Security number and identity to purchase homes.
We at the Florida Department of Law Enforcement work long-
term, protracted cases. For the past seven years, I've been
heavily involved in working fraud cases that deal specifically
with identity assumption fraud and more specifically with
Social Security numbers being utilized in those frauds.
One of the cases that I pointed out in my authored letter
to this committee is the Campbell Organization. This
organization, within a two-year time frame, did an accumulative
amount of $3 million in fraudulent activity with over 150
different victims. Each one of those victims faces the same
horrors that Mr. Horowitz shared with us earlier today, trying
to get their credit straightened out.
Even more importantly, we've had victims that we
continually run their name in the computer to determine if
they're wanted for a worthless check or some type of fraudulent
activity where the investigative agency didn't recognize that
it was fraudulent activity. They thought that actual person had
gone in and perpetrated that crime when, in fact, it was
somebody that had just assumed their identity.
Imagine being stopped for a normal traffic citation or even
a driver's license check and finding out that not only have you
been the victim of fraud, but now you're wanted for that
victimization. The other horrors that we deal with, they go and
on.
This organization specifically purchased everything from
cellular telephones, computers, homes, cars. They used all of
that equipment to either sell on the street or they had an
outlet where they were distributing it outside the country.
Again, they reached $3 million in just a short period of time
of two years. We knew for a fact that single organization had
been in operation for about 10 years and had never been
arrested.
Mr. Horowitz pointed out in his statement that they did a
small amount of fraud on his account and that that would
probably never get them arrested. That is the type of activity
that happens. Local law enforcement is so overwhelmed with
these type of crimes that they're not able to put it all
together and recognize that there's a racketeering-type
activity or an organized fraud activity that's taking place.
When a victim finally realizes that their identity has been
assumed and someone is utilizing their Social Security number,
it's too late. It's three, four months into the ball game
before they can even start making notifications to the credit
bureaus or the other involved parties. That's when their
nightmares really begin.
The impact of this on the law enforcement community is
overwhelming. We're working these cases. Everyday we have a new
case coming in. I know the local law enforcement officers are
dealing with the same fact.
We try and put them together and try and establish these
organized frauds, but there's a number of organizations that
are functioning out there. The primary item that they need in
order to function in this capacity is that Social Security
number.
Everything in our society is tracked by that. If I go to
register for college today, I can almost assure you that
they're going to ask me for my Social Security number. And that
therefore, is going to become my student ID number at that
point. Anything you do, if you open a local checking account at
a local bank, your Social Security number is required. If you
go fill out an instant credit application, your Social Security
number is required.
With that emphasis being put on identity assumption fraud,
we have to facilitate some way to restrict the access to these
numbers and perhaps look at penalty enhancements for
individuals that use Social Security numbers to facilitate
fraudulent activity. Right now the criminal element perceives
economic crimes and fraud dealing with identify theft as a low-
impact crime. They're not going to get a significant jail
sentence for it because it's handled individually. They hit one
place here, they get a slap on the wrist so to speak.
We have to address those issues in order to start dealing
with this problem. It's overwhelming. Is restricting the Social
Security number in itself going to solve this problem? No, I
don't think so. But that is a very significant step in that
direction, as well as the penalty enhancements and everything
that goes along with it.
One of the other items I'd like to present to the Committee
is Miss Vala Kodish, who was a victim in the Campbell
Organization. She authored a letter that I've made available
here today spelling out the individual heartaches that she went
through in dealing with all this type of activity. She's asked
that I publish that letter here today for your review and
consideration.
Basically, in closing, I would ask that this committee
consider the ramifications of this type of fraudulent activity,
the overwhelming impact that it's having on our community in
every respect, from an increase in needed law enforcement to
deal with it, from our victims dealing with their identity and
credit being destroyed at this point and the heartache that it
takes to straighten all of that out.
Thank you, Mr. Chairman.
[The prepared statement follows:]
Statement of Robert W. Ivey, Special Agent, Florida Department of Law
Enforcement, Fort Pierce, Florida
My name is Robert W. Ivey and I am currently employed as a
Special Agent with the Florida Department of Law Enforcement
(FDLE). I am assigned to the Ft. Pierce Field Office and have
been so employed for the past seven years. Prior to obtaining
employment with FDLE I served as a Detective with the Clay
County Sheriff's Office and the Putnam County Sheriff's Office
for approximately thirteen years. In total I have approximately
twenty years of Law Enforcement experience that has been
primarily dedicated to criminal investigation assignments. My
assignments with FDLE have primarily been in the area of Fraud
Investigations and have focused on major fraud organizations
that target victims through the usage of Identity Assumption
Fraud. My experience in this area of criminal investigations
has enabled me to provide instruction to various organizations
in fraud investigations and the prevention of fraudulent
activity. Currently I serve on the Education Committee for the
newly developed Strike-force Against Fraudulent Enterprises
(S.A.F.E.) that has been initiated by the State of Florida in
an effort to combat fraudulent crimes throughout the State of
Florida.
Since becoming involved in fraud investigations it has been
my experience that Identity Assumption Fraud is the most
damaging fraud that is committed in our society. The first
victim of this type of criminal activity is the person whose
identity has been compromised. The problems for this person
begin immediately following the assumption of their identity.
If the individuals name is compromised that's one problem but
if the person's social security is compromised that creates an
entirely different set of problems. This is due to almost
everything in our society being connected to our social
security number. If I attempt to apply for an instant credit
loan I must have my social security number. If I want to
purchase a vehicle I must have my social security number. In
order to open a checking account at a local bank I need my
social security number. Everything in the credit world is
attached to this one form of identification. The credit bureaus
utilize this number to track a person's credit status making it
totally vulnerable when utilized in fraud. The major concern
for the victim is not dollar loss. The concern is that because
of the fraudulent activity their credit is forever damaged.
Today along with my testimony I am also publishing a letter
addressed to Congressman Shaw from Vala B. Kodish. Mrs. Kodish
was a victim of fraud that was perpetrated against her by
members of the Campbell Fraud Organization. This organization
was investigated and eventually arrested by FDLE and the Metro
Dade Police Department. Most financial institutions and credit
card companies recognized the organization as one of the
largest fraud organizations that operated in the State of
Florida. The organization, their operational procedures and the
case outcome are detailed during my statement in an effort to
demonstrate the impact that identity fraud can have on our
community. Mrs. Kodish is a perfect example of the heartache
that is suffered by the victim of this type of crime. Her
letter to Congressman Shaw is inclusive of the many problems
that are created by having your identity assumed by one of
these types of perpetrators. I request that you accept her
letter as part of your proceedings as she was unable to attend
this meeting due to being out-of-State on vacation during this
time frame.
In order to fully explain the impact that this type of
crime can have on our society I will utilize case presentation
of the Campbell Fraud Organization. The Campbell Fraud
Organization primarily operated out of the Miami and Ft.
Lauderdale areas of the State of Florida. Their organization
existed for the sole purpose of committing identity fraud as a
means of support for their family. The organization was
comprised of various family members but was primarily directed
by FREDDIE CAMPBELL and JEFFREY CAMPBELL, two brothers that had
educated themselves in the fraud industry. The organization had
operated unobstructed for well over ten years. FDLE initiated
their investigation in December of 1995 when the organization
committed various fraud-related crimes in the Jensen Beach area
of the State of Florida. The investigation revealed a large
organization that consisted of almost twenty members that were
all involved in identity fraud. This group operated by assuming
someone's identity and then using that identity to perpetrate
fraudulent transactions in almost every form of fraud
imaginable. This included instant credit loans, checking
accounts, purchases of vehicles, purchases of computer
equipment, credit cards, cellular telephones, and even the
purchases of homes. The operation involved three independent
groups that had specific assignments. The first group was
responsible for obtaining the true identification of the
victim. This was accomplished through various means to include
burglary, robbery, auto theft, postal theft, infiltration of
legitimate employees of banks and credit card companies, and
the obtaining of information from existing documents that are
readily available through various means. Once this information
was collected it would be sold to the second group in the
conspiracy that would then compile the information and sell it
and various forms of identification to the third part of the
organization. The third group is the group that would utilize
the information to commit the various acts of fraud.
The fraudulent activity that was committed by this one
organization totaled approximately three million dollars in
fraudulent loss to various private citizens, companies, and
taxpayers in the State of Florida alone. This accumulative
figure only covers a time period of December 1995 through April
of 1997. The actual figure for this organization would be
astronomical if law enforcement could apply the actual dollar
loss over the past ten years. This organization would target
citizens that were perceived to have good financial status due
to the perception that their credit would be readily available
and have a higher threshold for credit approval.
Once the members of this part of the organization were
armed with the identity of the victim the fraudulent activity
would begin. The subjects would work in teams and travel
throughout the State of Florida and other southern states in an
effort to perpetrate as much identity fraud as possible. The
subjects would often rent a U-Haul truck and travel from the
Miami/Ft. Lauderdale area in a northerly direction. The group
would attack every mall or merchant store in the area as they
traveled through the state. Their target purchases would be
directed by either orders for certain items that had been
placed with the organization or purchases of high-dollar items
that were easily marketed on the street. The organization was
also responsible for exporting large amounts of electronic
equipment, computers, and other significant items out of the
country through a source that was identified pursuant to the
conduct of the investigation. The organization would apply for
instant credit in many of the fraudulent transactions that
required the victim's social security number. Additionally the
organization would purchase vehicles in the victim's name that
would also require the assignment of a social security number
in order for credit approval. In summary the members of the
organization could and did purchase anything they needed as
long as the victim's credit was clean and they had the proper
identification to include the victim's social security number.
Since the victim would eventually determine that fraud was
being committed in their identity the organization needed a
system of checks and balances that would alert them that the
identity was no longer clean. This was accomplished by listing
a contact telephone number on the credit applications that
would be contacted by the merchant whenever the account was
identified as fraud. The number was listed as a reference
number but was actually a cellular telephone that was operated
by the perpetrator of the fraud. When an inquiry was made the
perpetrator knew that the name was no longer available to use
in fraudulent applications. The organization member would then
purchase another form of identification from the middle group
and start the process over again. This case involved well over
one hundred and fifty separate victims that were all targeted
by this organization. The victims ranged in age from 18 to 89
years of age. The victims were from every ethnic background and
from almost every type of social economic level that exists in
our society. As the investigation progressed I discovered more
fraudulent activity and began to realize the impact that
identity fraud has on our community. The investigation
eventually lead to the issuance of warrants for the
perpetrators of the crimes and a two State fugitive search for
several of the defendants. While searching for the defendants a
cooperating witness who was assisting law enforcement was
identified by members of the organization. The witness was
subsequently approached by three members of the organization
and shot in an effort to keep their location from being
compromised. The witness survived the attack and was later
available for court proceedings.
The investigative phase of the case lasted approximately
two and a half years before the final arrests were made. The
case was then prosecuted by the Statewide Prosecutors Office in
Ft. Lauderdale, Florida and encountered another two years of
prosecution and court hearings. The defendants were charged
with Racketeering, Organized Fraud, Forgery, Grand Theft, and
various other fraud-related crimes. The case was finally
disposed of when all of the defendants pled guilty and were
sentenced to lengthy prison sentences in the Florida Department
of Corrections.
It is important to understand that there are numerous
organizations that operate in our society that are of this same
magnitude. Each organization is responsible for the impact that
identity assumption crimes have on our everyday lives. It is
also important to recognize that many times these types of
crimes are worked as individual incidents rather than as
organizations that are committing these types of crimes. The
victim's in these types of cases are now faced with the uphill
battle of trying to recover their good credit name and standing
so that they can benefit from the original clean credit record
that they once enjoyed. As outlined in the letter by Mrs.
Kodish this battle is almost never over and certainly never
forgotten. The impact of these types of crimes is far reaching
and damaging. Let's first address the problems that face the
person who has been the victim of the identity takeover. Their
problems do not end with attempting to straighten out their
credit status. Throughout the conduct of the investigation we
continually had to make sure that our victim's were not wanted
by outside agencies who had received worthless check complaints
by store owners who were unaware that the true named individual
did not issue the check or credit request that had been
perpetrated. Imagine the nightmare that is created by this type
of criminal activity. Imagine being the victim of this type of
crime and then being arrested for a worthless check that you
did not write while stopped during a traffic incident or
license check. Or think of walking into your local grocery
store and being unable to write a check for a purchase because
your credit is bad. The list of nightmares is endless and
unpleasant.
As a law enforcement officer with twenty years experience I
strongly feel that identity assumption and takeover is fast
approaching the most serious non-violent crime challenge that
America faces. Fraud eventually effects each one of us as the
dollar loss for fraudulent activity has to be made up by the
merchant who then charges more to the consumer to recover the
loss. If we are going to have a chance at combating this
problem I feel that there are several issues that must be
addressed. First and foremost is a necessity to restrict the
availability of social security numbers and other biographical
identifiers that are currently available in our society. As
discussed earlier in this statement the social security number
has become the single most important piece of identification
that we have. Every credit related inquiry is attached to this
number and identifier. Identity theft crimes are dependent on
this number and would become far more difficult to perpetrate
if this number were unavailable or unneeded in certain daily
activities. Any effort that would restrict the availability of
a person's social security number would aid in combating this
increasing problem of identity theft that is faced by law
enforcement. By restricting the availability of these numbers
we would severely handicap the criminal element in their
endeavors to commit identity fraud and other fraud-related
activities. While this effort alone would not stop the criminal
element from committing identity assumption crimes, it would
certainly limit the availability of these numbers to the
perpetrators of this type of fraudulent activity. This
restriction must address all areas that make social security
numbers available to the general public.
While the restriction of social security number
availability is an important option to consider, I note that
the reality of our society and our commerce is that social
security numbers have been widely used by legitimate businesses
and interests for decades as a means of identifying customer
accounts and information. Indeed, the use of social security
numbers as an identifying factor is a part of our everyday
lives. This being the case, it is likely that attempts to
restrict social security number usage will be frustrated by the
common availability of those numbers already placed in
computers, records, and files. Those inclined to use social
security numbers for criminal purposes will be able to secure
those numbers easily from the huge inventory of information
already existent in which social security numbers have been
utilized in one form or another.
Additionally, restricting the use of social security
numbers could have the unintended effect of punishing all the
legitimate businesses and persons who have never utilized those
numbers to steal another's identity or to violate the law. If
all the legitimate entities in America were to be required to
switch their I.D. systems to something that no longer utilizes
social security numbers as a factor in customer or client
identification, the costs could be significant.
Given this reality, I suggest you consider enacting a
penalty enhancement law that would significantly enhance the
penalty for anyone convicted of a crime that involved the
unauthorized use of another's social security number or that
was in any way facilitated, promoted, or assisted through the
unauthorized use of a social security number. Such an
enhancement would focus upon those who misuse social security
numbers, but would not penalize legitimate business owners and
others who are using, and have used for years, our social
security numbers as a means of identifying customer or client
record information. Restricting the widespread legitimate usage
of social security numbers may be overwhelming and cost
prohibitive. The application of penalty enhancement could
easily be accomplished by evaluating the types of crimes that
so often occur utilizing identity theft and social security
number misuse. This type of penalty enhancement would
discourage fraudulent activity of this nature and deter
criminals who consider this type of activity.
The second effort must be focused on increased penalties
and sentences that are the result of crimes that involve
identity assumption. Currently economic crimes of this nature
are not perceived as a serious threat to society. The sentence
for an economic crime is far less than that for a theft or
burglary. The majority of the members of the Campbell Fraud
Organization had been arrested on multiple occasions for the
same types of fraudulent crimes. But because economic crimes
generally do not carry a severe penalty the perpetrators
received non-prison or jail sentences. One of the subjects in
the case had been arrested over thirty times for fraud related
felony crimes. That individual never served a day in State
prison until this case was charged. This is true of a great
deal of perpetrators in the fraud arena. We must address this
issue if we are to combat this problem. We must change the
penalties for this type of criminal activity so that the
criminal element no longer feels that these types of crimes
will go unpunished.
In closing I would like to thank Congressman Shaw on behalf
of Commissioner Tim Moore and the Florida Department of Law
Enforcement for giving the law enforcement community an
opportunity to offer input in this matter. Additionally I would
ask that this committee strongly consider the massive impact
that identity theft crimes has on our society and the potential
for crimes of this nature to become the front runner in
criminal activity that must be faced by law enforcement.
Chairman Shaw. I have Miss Kodish's letter, which will be
made a part of the record without objection. I see she's from
Miami Shores, which is part of my congressional district as
well as where we're sitting today.
Mr. Ivey, where do you see the main place where the Social
Security numbers are obtained? Or is there anything that you
can point to as a place where there's more problems than
others?
Mr. Ivey. If I continue with the Campbell case, they
obtained the information that they needed for their
transactions in a number of different areas. Some of those
areas were obtained from actual armed robberies of victims
where the only thing they were looking for was their Social
Security card. They robbed in specific an 89-year-old lady that
was held at gunpoint at a gas station while she was filling up
her car.
They commit burglaries. They access it through post
offices. They access it through local--not local, but through
national credit card companies. We've had a number of instances
where they've infiltrated those organizations, gotten employees
to give them that information. They have people in the post
office that intercept packages that appear to be from credit
card companies, from government mailings, those type of things.
Specifically, they're looking for the Social Security numbers.
We're also seeing a large influx in the gathering of that
type of information from the Internet, from other available
resources, government documents, college transcripts. The list
is endless. It goes on and on. They're basically going to try
every avenue possible to get that one significant piece of
information, that Social Security number.
Chairman Shaw. Mr. Horowitz, where did you lose yours?
Mr. Horowitz. At this point, I don't know.
Chairman Shaw. You don't have any idea? You weren't the
victim of a robbery?
Mr. Horowitz. No. Nothing was stolen from me. In fact, no
mail has ever been missing. I've never misplaced my
identification. I watch over it very closely. I'm, at this
point, clueless as to how they got it.
I don't purchase anything over the Internet. If I want to
get a gallon of gasoline, I need to give somebody my Social
Security number. It could have come from my college records. It
could have come from my hospital records. It could have come
from numerous places. I truly don't know where it came from.
Chairman Shaw. I know my kids would have their grades
posted according to their Social Security numbers. They'd have
it posted on the----
Mr. Horowitz. Readily available. I don't know exactly where
mine was taken from
Chairman Shaw. Mr. Melendez, two questions for you with
regard to the Social Security numbers that you say that you use
in your investigations. One, where do you generally get those
numbers when we talked about the Social Security number of the
bad guy? And second, when you have the number, what makes you
think that you've got the correct number or that this is the
correct ID of the person you're after?
Mr. Melendez. For example, if you were to ask me, you have
somebody that's committing a mortgage fraud or you have
somebody that's been stalking or you have somebody that's
committing disability fraud or something like that and you gave
me his name, you would give me some of the basic elements of
information. In the case of insurance companies, they would
give me the Social Security number and they would give me the
other information, like date of birth, address, the kind of
cars----
Chairman Shaw. The insurance company would have the--I'm
not sure what type----
Mr. Melendez. The insurance company would have that. I
would have a file from an insurance company investigator and he
would have worked up a file based on application information
that would have been received in his office through the process
of applying for insurance coverage in an application form.
Chairman Shaw. At that point, you've got a name, you've got
an address----
Mr. Melendez. Social Security number and date of birth.
Chairman SHAW.--Social Security number and date of birth.
How does that help you in developing the case?
Mr. Melendez. Well, it makes sure that I investigate the
correct person. I don't want to be investigating somebody else
with the same name.
Chairman Shaw. How would you know that?
Mr. Melendez. Well, in Miami there are a lot of folks with
the last same name, for example.
Chairman Shaw. I know that. We don't have it tattooed on
us. How would you be sure that this was the right guy? How
would you use the Social Security number in your investigation?
Mr. Melendez. The Social Security number would be one of
the elements of information that I would use. I primarily would
rely upon in most cases the driver's license information and
the tag.
As an example, when you do a surveillance, one of the first
things that you want to make sure that you do is to make sure
that you have the right address, that you have the right
person. And you verify that through property records, which has
nothing to do with the Social Security number. You go and see
whether or not the person is, in fact, renting from that
address or if he's, in fact, purchased that address. Those are
public record type searches that you double-check to make sure
that you're not investigating the wrong person.
Chairman Shaw. Are Social Security numbers on any of those
documents?
Mr. Melendez. With some. In the Department of Highway
Safety and Motor Vehicles in the State of Florida, it is on the
driver's license.
Chairman Shaw. Is my Social Security number on my driver's
licence?
Mr. Melendez. No. It's in the database, but it does not
appear on the driver's license.
Chairman Shaw. Is this database available to anybody who
wants to go look at it?
Mr. Melendez. It's public record, yes.
Chairman Shaw. So all of our Social Security numbers are
public record in the State of Florida?
Mr. Melendez. Not necessarily, sir. It all depends. For
example, if you went to get your driver's license information
or your driving record, as an example, you can get it in a
three-year or seven-year, to see what your driving record has
been, it would be in that publication generally.
Chairman Shaw. If you wanted to get my driver's license
information, could you go get it? Mr. Melendez. Oh, yeah. Any
person in the country can get it.
Chairman Shaw. I'm missing something.
Mr. Foley. If the gentleman will yield. The problem is in
Florida, they were selling driver's licence information. As of
six months ago, I think the practice has been stopped. Our very
own State agency was transmitting the information you're
talking about, including your Social Security number, to
outside vendors.
Mr. Melendez. One of the main problems in identity theft in
verifying that somebody--in other words, once somebody says
they are who they are, how do you authenticate that? Short of
an encryption program that authenticates your Social Security
number, you have to use other elements of information, where
you live, your telephone number, your date of birth, family
members, any other information that you would have that I could
find in public records.
Then if you give me an authorization to say it's okay for
me to interview a university--for example, if you were going
through a top-secret clearance, for example, and I was a
contract employee--to go investigate if your credentials are
correct or if you have friends that would vouch for your
reference and your character and those kinds of things, that's
where you get other elements of information to verify the
person's identity.
Chairman Shaw. Mr. Foley.
Mr. Foley. Thank you very much, Mr. Chairman.
I do appreciate the testimony today because it can bring us
to many different points of view. Obviously, the Social
Security number is vitally important. It consolidates
information. Governments need to share it. It can also help in
detecting people who are committing fraud or who have bad
credit by using a centralized number. So at one point, I see
the need for kind of standardized use of the Social Security
number as a way to track citizens' activity, not necessarily in
a big government way, but to figure out where they're
purchasing, how they're repaying, to make certain additional
credit is not issued.
It seems to me our biggest problem is, and it happens
potentially even at a rental car counter where you are asked
your Social Security number. Who knows whether that clerk is
not, in fact, writing it down on a separate ledger and taking
it with them?
Mr. Melendez.
Mr. Melendez. If I may, just listening from the questions,
I think the thing we need to do trying to fix the problem of
identity theft and identity fraud, we need to examine the
systems--the public records systems, the management systems,
the financial systems. For example, I asked George when he
first asked me about this question, Who's dying or bleeding?
Where is the real pain?
The pain is in--there's 10 areas, according to the IG's
office and the Social Security Administration, where there's
major abuses. The primary abuse, the principal abuse, is in the
financial industry. Now, the financial industry is using the
credit cards, the three credit bureaus, because they have a
large body of information. So the credit card industry is very
definitely trying to fix the problem, because it's in their
financial interest to do so.
Now if you talk about the government entitlement programs,
where you have identity theft and entitlement fraud occurring,
and if it's occurring in large enough numbers, then I think
that you look at how do you fix those problems, as opposed to
saying let's go ahead and eliminate the Social Security number
from being used as an identifier because it's there. If you say
you're going to eliminate it, then what you're really in effect
saying is you're going to render all of these systems that use
it as an identifier as ineffective or useless, unless you
replace it with something else.
The final thing that I would say, because of discussion
that's being made on the Internet, you need to look at the use
of the Social Security number as kind of like an analog
historic--a prehistoric way to the way we used to use it. And
we need to be looking now, because we depend on vertical and
lateral use between systems, whether it be government, whether
it be private sector, the insurance industry versus the State
versus the Federal Government, we need to have what I would
call a digital signature that is the equivalent of an update--
the answers to do this are out there. The technology is there
to be able to do this. Authentication encryption procedures are
out there, as well as the IG's office talking about using
fingerprints as a biometric solution.
The solutions are out there. The question is, how do you go
ahead and fix it and apply it to all these systems that are
using the Social Security number as a national identifier?
Mr. Foley. Well, you do mention digital signatures, which
is something Congress has undertaken and has passed recently at
least in the House. We're moving along on that venue.
The interesting thing, though, you illuminate is another
scary aspect, and we probably don't know the total cost to the
taxpayers, is how much potential fraud may be in entitlement
programs, as you suggest, whether it's through Medicare
reimbursements using somebody's Social Security number. There's
no way to trigger whether it's fraudulent, because there is no
bill necessarily sent to the recipient. Medicare just pays
whoever the provider is using the false number.
Mr. Melendez. I'm sure Special Agent Ivey knows of gangs,
especially down in the Miami area, because I know about them,
that do nothing but go out and send people to go ahead and
apply for entitlement programs using phony Social Security
numbers. I mean, it's organized.
Mr. Foley. Mr. Horowitz also mentioned something that I
think is telling that is frightening to me, when you do talk to
the credit agencies or to the vendors who are the suppliers of
credit, Oh, it's too small to pursue. One of the problems is
the person committing the crimes knows that. So they go out and
figure out let's run it up to a grand or so knowing they're not
going to come after me. It's small change. But it's affecting
everyone in the room, because we're paying higher for
merchandise, for credit and for prosecution of the rest of it.
One thing that was mentioned--I think Mr. Darling you said
it, I think it's important to note and I hope the record will
reflect your statement--providing the information free. It's
very, very important in this age of trading, bartering, that we
don't provide it or allow it as an exchange rather than a fee
for service. That's another way they may get around it.
The question I raised the other day in Washington was, What
happens if I'm not selling your number, I'm selling your name
and the number is attached? Can they get around it in another
vehicle? Well, I'm not selling your name or your number in
order to obviate the law. I'm selling addresses and a zip code.
That can be a potential problem, as well.
Do you see any way to maybe potentially provide some
coverage for those areas that you raise?
Mr. Darling. Mr. Foley, in the State of Florida, we have
Chapter 119, which is the Sunshine Law. I absolutely support
that concept. Any citizen in this State can ask just about
anything of its State government. By law, under penalty of a
felony, you provide it. There are very specific exclusions.
Cases that are under investigation, certain criminal
investigations and things like that are protected until the
court issues final order. Then that's public record also. I
support that entirely.
But I think one of the responsibilities of government is to
take a look at what we are doing and make sure that we are not
doing more harm than good. And specifically to your question, I
think the legislation could be strengthened just slightly by
adding words to the effect that the Social Security number will
neither be sold nor provided. And that would fix the situation
you just talked about where credit bureaus or whatever are
selling this to other customers, where an insurance company is
selling its client list that has Social Security numbers on it.
Whether they provide it for free or provide it for something of
value, if you just prohibit them from passing that along under
any circumstances except for their own internal uses, I think
it would strengthen it a little bit.
Mr. Foley. One of the things I had to do relative to credit
was to require them to notify me if somebody made an inquiry
now. So it does delay my ability to pursue my own credit
application. If you go to a store, they may offer a special, 30
percent off if you get a credit card in this company name. Now,
I require credit bureaus to call me to see if, in fact, I made
an application. So it extends, if you will, some of the
problems associated with obtaining credit.
I wanted to ask Special Agent Ivey, your testimony
describes the method used by Campbell organization to defraud
the citizens of Florida of 3 million. Can you tell us a little
about how these thieves gained access to the identifying
information of the victims?
Mr. Ivey. Yes, sir. Basically, there were three working
groups within that organization. The first group was
responsible solely for obtaining Social Security numbers,
driver's license numbers, any type of identity from a victim.
They primarily targeted victims that they perceived would have
a high credit threshold. That way they could utilize their
credit references and everything from that perspective to
facilitate the fraud.
The second group would buy that information from the first
group. They would then make the fictitious driver's license or
counterfeit driver's license, give them outlets to get certain
things, passports or whatever. Once they completed the package
on that specific identity, they would turn around and sell it
to the third group who would actually go out and commit the
fraudulent acts.
That group would on many occasions we tracked them through
their historical documents and everything they committed, we
would basically observe them or have tracked them going from
the Fort Lauderdale or Miami area where they resided, renting a
U-Haul and traveling up the Eastern Coast of Florida, hitting
every mall, every computer store, everything on the way up
until they loaded the U-Haul with the items. They either had an
already existing order from someone who wanted that specific
item or they would package it and ship it out of the country
through another outlet.
The first group basically, as I said earlier, they would
obtain that information through whatever means possible,
whether it was off the Internet, whether it was from stealing
mail out of the U.S. Postal Service, from infiltration of
credit card companies or insurance companies, armed robberies,
burglaries, auto theft. The list just goes on and on.
Mr. Foley. I gather from your testimony that the hard-
working Americans who have kept their credit records clean are
the ones being targeted for theft identity. Once victimized,
can a credit record be restored to its original integrity?
Mr. Ivey. Within a long time span, yes, sir.
Miss Kodish describes in her letter to the subcommittee the
horrors that she went through. She had always had perfect
credit, had worked hard. She shared with me that her mother and
father told her that good credit is one of the most important
things you can have. She had worked hard to maintain that
status.
All of a sudden, this incident occurs and now she was
scared to go into the grocery store and attempt to write a
check, because they would push it through the TeleCheck or one
of the other check verifying systems and it would be kicked out
because of her credit status. Her family attempted to purchase
a home. Both of them shared a great credit status. And they
were declined on the purchase of their home because of the
activity.
She went around to the various credit bureaus, gave them
business cards with my name on them so they could contact me
and determine that she had been the victim of fraud and
therefore, it had created her bad credit status. It was just a
continuing nightmare.
Even now--she was victimized, I believe, in early 1996.
Even now when she attempts to apply for credit, that still
appears on her record. Within a four or five-year time span,
it's still maintained on her record.
Mr. Foley. Let me ask a final question of you. I know Mr.
Shaw has others as well.
You recommended enhanced penalties for identity theft. Our
bill currently includes criminal penalties of up to five years
imprisonment or up to 250,000 in fines.
Do you think these are sufficient?
Mr. Ivey. I think that's definitely a great step in that
direction. As indicated earlier, a lot of the criminal element
feels that committing identity theft fraud or any type of fraud
for that matter is a low-impact, low-sentence crime. If they go
out and they commit an armed robbery, they know, especially
here in the State of Florida with the new gun bill, that
they're going to face significant incarceration. If they commit
a burglary, it's the same thing.
Fraud has always been treated as a less-impacted crime. And
generally speaking, they may get arrested for--let's just
hypothetically say going into a merchant and attempting to use
someone's credit card or attempting to open an instant credit
account, that is going to be treated as an isolated incident.
And their sentence for that may be community control or maybe
probation.
Very rarely does someone have the time to look into these
large organizations that are perpetrating frauds against
hundreds of victims and not being recognized as an organized
crime. If we can increase penalties for each isolated incident
or a penalty for utilizing a Social Security number on another
type of entity in the perpetration of a fraud, I think it would
definitely have an impact in that direction.
Mr. Foley. Thank you.
Chairman Shaw. What happened in the prosecution of the
Campbell people?
Mr. Ivey. The prosecution was handled by the statewide
prosecutor's office out of Fort Lauderdale. We arrested almost
20 defendants in that case. The charges ranged from
racketeering, organized fraud, hundreds of grand theft charges
that were incorporated into it. As that case continued, we
started looking for the subjects to arrest them. They had
gotten word that we were investigating them. They fled.
We found someone that was willing to point them out to us
or help us trap them, so to speak. They figured out he was
cooperating with law enforcement. They approached him and shot
him, trying to keep him quiet from pointing them out.
So the charges at that point went up to attempted murder,
witness tampering, racketeering. That was only against two of
the defendants, the attempted murder and the witness tampering.
In a whole, the organization was facilitated by Jeffrey and
Freddie Campbell, two brothers. Each of them received 10 years
incarceration in the State of Florida. And they both pled as
habitual offenders with 10 years probation pursuant to that.
They received pretty significant sentences from that.
Chairman Shaw. When will they be eligible for parole?
Mr. Ivey. Believe it or not, the case started in 1995. We
arrested them in 1997. The case was just recently closed, with
everyone receiving sentences. Everyone pled guilty. They just
started within the last year to serve their Department of
Corrections sentence. We're looking at approximately eight to
nine years before they're----
Chairman Shaw. They'll serve eight to nine years?
Mr. Ivey. Yes, sir.
Chairman Shaw. Mr. Darling, let me quiz you just a little
bit as to exactly what uses these Social Security numbers are
used for in the State. I know with welfare reform and going
after the deadbeat dads, we use that as identification to
spread across the country so that we can stop them and prohibit
them from receiving driver's licenses, even fishing licenses,
that we can identify where they are. That's a very important
situation as far as being able to find them and have them come
up with their obligations for the support of their children.
What are those areas that the State uses that we have to be
careful not to interfere with?
Mr. Darling. Yes, sir. One of the initial concerns we had
with the legislation in an earlier version was we didn't feel
like it would have allowed us to do the very thing that you
just described. Florida, since turning over child support
enforcement to the Department of Revenue, has become extremely
successful in tracking down child support payments. The way we
do that is if you earn wages in the State of Florida, because
of the Social Security number being reported to the IRS, the
Department of Revenue can find you and can levy fines and can
take some of your wages, if you prefer not to do it yourself.
We've been very successful in this regard getting support for
the children who need it.
I think the legislation as currently written will still
allow us to do that. That was one of the things I was wanting
to make sure, from the State prospective, you still allowed
State and local governments to use that number until some of
the other items that Mr. Melendez mentioned are available.
One of the other things I received from Florida's Highway
Safety and Motor Vehicles is the ability to use the Social
Security number to track down drivers who say, for example, in
North Florida would get a drunk driver conviction, then go to
Georgia and apply for another license there. Without the Social
Security number, there would be no connection between those two
states and not keeping those kind of drivers off the road. So
it becomes a public safety concern, also.
Chairman Shaw. Mark, do you have anything further?
Mr. Foley. I wanted to, if I could, Mr. Chairman, someone
who is the audience, Tim Verrill, has given me a Palm Beach
Daily News article dated March 9, 1992 that really goes into a
little bit more detail on credit history and one court citing
when credit bureau information was used adversely in a court of
law.
If you have those two documents, if you'd supply them as
part of the report to our recording secretary, it would be
helpful, at least, because it may lead us in another direction
later on.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T6584.001
In the Circuit Court of the Fifteenth Judicial Circuit, Palm Beach
County, Florida
George O. Plaintiff,
Plaintiff,
vs. Case No.: CL
Lawyer-Defendant, Esq., Credit Bureau Inc.,
Insurance Carrier-Defendant Insurance Company, and Lawyer-
Defendant, Law firm-defendant, P.A., Defendants. /
Plaintiff's Response to Defendant's Motion to Dismiss and Defendant's
Memorandum of Law Supporting his Motion to Dismiss
Issue: Whether it is unlawful to intentionally obtain from a credit
bureau consumer credit information for use as background information
against an averse party in litigation?
Brief Answer: YES. The Fair Credit Reporting Act provides for
damages when a ``user'' willfully and knowingly obtains consumer
information from a consumer reporting agency under false pretenses.
Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d. 1264, 1273 (USCA
9th Cir. 1990);
``Users'' of the credit report include the ultimate destination of
the report as well as any persons who acquired the report for others.
Yohay v. City of Alexandria Employees Credit Union, 827 F.2d 967, 973
(USCA 4th Cir. 1987); Rylewicz v. Beaton Services, Ltd., 698 F. Supp.
1391, 1440 (US Dist. Ct. N.D. II. 1988); Boothe v. TRW Credit Data, 557
F. Supp. 66, 71 (US Dist. Ct. S.D.N.Y. 1982).
``The standard for determining when a consumer report has been
obtained under false pretenses will usually be defined in relation to
the permissible purposes of consumer reports which are enumerated in 15
USC sec. 1618(b)...'' Hansen v. Morgan, 582 F.2d 1214, 1219(USCA 9th
Cir. 1978).
Obtaining credit information on a consumer from a credit reporting
agency for litigation purposes against that consumer is not a
permissible purpose under the Fair Credit Reporting Act and, therefore,
Attorney Lawyer-Defendant and his lawfirm may be held liable for
damages including punitive damages and attorney's fees. Mone v. Dranow,
945 F.2d 306, 308 (USCA 9th Cir. 1991).
Discussion: The gist of the case against Attorney Lawyer-Defendant
and the Lawyer-Defendant, Lawfirm-defendant lawfirm is that they
obtained a credit report on George Plaintiff sometime during the
pendency of other civil litigation-and, that they obtained this
information without George Plaintiff' authorization. The question
raised here, is whether this conduct is illegal.
As set forth in Mone v. Dranow, the Fair Credit Reporting Act
(FCRA) provides in relevant part:
A consumer reporting agency may furnish a consumer report under the
following circumstances and no other:
(3) To a person which it has reason to believe-
(A) intends to use the information in connection with a credit
transaction involving the consumer on whom the information is to be
furnished and involving the extension of credit to, or review or
collection of an account of, the consumer; or
(B) intends to use the information for employment purposes; or
(C) intends to use the information in connection with the
underwriting of insurance involving the consumer; or
(D) intends to use the information in connection with a
determination of the consumer's eligibility for a license ...; or
(E) otherwise has a legitimate business need for the information in
connection with a business transaction involving the consumer.
15 U.S.C.'s 1681 b (1982). A consumer whose credit report is
obtained for reasons other than those listed in the statute may recover
actual and punitive damages and attorney's fees and costs from the user
of such information. 15 U.S.C.'s 1681n (1982). Mone v. Dranow, 307-308.
Mr. Plaintiff's claims against Attorney Robert Lawyer-Defendant and
the Lawyer-Defendant Lawfirm-defendant lawfirm are particularly
established through paragraphs 8, 23, 24, and 29. That is, within the
context of the Credit Bureau credit report being a consumer report, the
allegations are that these defendants acted willfully, with no proper
purpose, and did affirmatively conceal and misrepresent the nature of
what they had done. That being said and previously sworn to by Mr.
Plaintiff, the defendant's factually based claims that the report was
not a consumer report and that these defendants did not themselves ask
that Mr. Plaintiff's credit report be pulled cannot have any weight on
a motion to dismiss:
A motion to dismiss tests whether a cause of action is stated
and requires the court to look only at the four corners of the
complaint without considering any affirmative defenses raised
by the defendant, or evidence likely to be produced by either
side. Martin v. Principal Mutual Life Insurance Co., 557 So. 2d
128, 128-129 (Fla. 3d DCA 1990); quoted from: Florida Civil
Practice Before Trial, pp 13-12; The Florida Bar (1993).
In any event, there can be no doubt that the Credit Bureau report
at issue in this matter was a ``consumer report'' within the FCRA:
The term ``consumer report'' means any written, oral, or other
communication of any information by a consumer reporting agency
bearing on a consumer's credit worthiness ... which is used or
expected to be used or collected in whole or in part for the
purpose of serving as a factor in establishing the consumer's
eligibility for (1) credit or insurance to be used primarily
for personal, family, or household purposes, or (2) employment
purposes, or (3) other purposes authorized under section 1681b
of this title ....15 U.S.C.'s 1681a(d) (1988). Comeaux v. Brown
& Williamson Tobacco Co.,supra,1274.----
What other reason does a credit bureau have for collecting such
information? In Hoke v. Retail Credit Corp. 521 F.2d. 1079 (USCA
N.C.1975); cert. den. 96 S.Ct. 878., a ``consumer report'' was held to
be virtually any information communicated by a consumer reporting
agency about a consumer. Also see Hall v. Harleyville Insurance Co.;
896 F.Supp.478, 482 (US Dist. Ct. ED P.A. 1995):
the FCRA covers actual credit reports because those reports
were originally collected for the purposes of determining
eligibility for insurance, credit or employment purposes, even
if they were not used for those purposes in these particular
instances. See St. Paul Guardian Ins. Co.v. Johnson; 884 F.2d
881, 883 (5th Cir. 1989); Ippolito v. WNS, 864 F.2d. 440,
453(7th Cir. 1988); Zeller v. Samia, 758, 780 (D.Mass. 1991).
Attorney Lawyer-Defendant and the Lawyer-Defendant Lawfirm-
defendant lawfirm have urged this Court to believe that even if they
did obtain Mr. Plaintiff's credit report without his authorization, and
even if the purposes for which they obtained the report were improper,
the FCRA simply does not apply to either of them.
In particular, Attorney Lawyer-Defendant and the Lawyer-Defendant
Lawfirm-defendant lawfirm cite this Court to the case of Di Carlo v.
Focas, 855 F. Supp. 823 (US Dist. Ct. Md. 1994) and the case upon which
DiCarlo relied, Frederick v. Marquette Nat'l Bank, 911 F.2d 1 (USCA 7th
Cir. 1990, citing Ippolito v. WNS, Inc. 864 F.2d 440, 7th Cir. 1988).
These cases as applied to the present allegations simply have no
merit. The DiCarlo case simply regurgitated the holding in Fredrerick,
without any further analysis or review of the existing case law and the
Court in Frederick: A. Was not briefed on the issues which constituted
the basis of its holding; B. Did not properly apply the WNS case upon
which it allegedly relied and C. Never considered FCRA section 1681 (q)
which provides:
Any person who knowingly and willfully obtains information on a
consumer from a consumer reporting agency under false pretenses
shall be fined not more than $5000.00 or imprisoned not more
than a year or both.*
Indeed rather than simply FCRA section 1681 m cited by Attorney
Lawyer-Defendant and the Lawyer-Defendant Lawfirm-defendant lawfirm,
several sections of FCRA have been held to place requirements of users:
Section 1681 d, 1681 q, and 1981 r. Rice v. Mongomery Ward, 450
F.Supp. 668, 670 (US Dist. Ct. MD N.C. 1978)
Non-compliance with s. 1681q thereby forms the basis of civil
liability under 1681 n. [This] construction has been adopted by
the other circuits addressing this question. See Yohay v. City
of Alexandria Employees Credit Union, Inc., 827 F.2d 967, 972
(4th Cir. 1987); Zanmora v. Valley Federal Sav. & Loan Ass'n,
811 F.2d 1368, 1370 (10th Cir 1987)...
Comeaux v. Brown & Williamson Tobacco Co.,supra, 1274.
It must be taken as a given that Attorney Lawyer-Defendant and the
Lawyer-Defendant Lawfirm-defendant lawfirm could not have obtained
George Plaintiff's credit report for any legitimate reason (Mone v.
Dranow), therefore a factual question exists as between these lawyers,
Insurance Carrier-Defendant, and Credit Bureau as to why Mr.
Plaintiff's credit information was unlawfully given out. See Joseph
LETSCHER v. SWISS BANK CORPORATION; No. 94 Civ. 8277 (LBS) US
Dist.Ct.,S.D.N.Y. April 16, 1996.(1996 WL 183019 (S.D.N.Y.))--finding
that since discovery had not taken place it would have been improper to
grant summary judgment where allegations and inferences therefrom could
support claim that defendants used false pretenses to obtain the
plaintiff's credit report.
* Although the DiCarlo decision did consider this point,
procedurally, the case was in a different posture-ie opportunities to
create factual issues had been available in DiCarlo as the matter was
determined on motion for summary judgment. In this case, discovery has
been suspended by order of the court pending a final determination of
the legal entitlement to proceed.
Conclusion: Every Federal circuit court which has considered
whether users may be liable under FCRA for intentionally and improperly
requesting credit reports has found civil liability as a matter of law
(note, in WNS v. Ipolito, the court pointed out that under 1681 q,
merely obtaining ``information on a consumer''--not a consumer report
per se--is all that is required to establish liability under the
circumstances alleged in the present complaint, See FN 8, page 448).
At this stage of the proceedings, the Court should immediately
allow discovery to be taken and the case to proceed on claims for
punitive damages as allowed by the Federal law.
Mr. Foley. Let me ask Mr. Horowitz, you mentioned that
credit bureaus will send a copy of ones credit report to the
most current address on the credit report. If the person's
identity has been stolen, the false address is the only address
the credit bureau will send the report to.
How did you go about resolving this so that you would
receive all of your credit reports?
Mr. Horowitz. It wasn't easy. I had to mail a letter of
request explaining my situation in great detail. At which
point, they mailed back to me a request for a couple of bills,
like my cable bill, my water bill, to prove that I am, in fact,
living where I am living before they would mail me anything to
that address.
There was one other thing you mentioned about putting a tag
or note on your credit bureau report. I've also done that. I
understand you can only do that if you claim to be the victim
of fraud, which is strange. I mean, put the ointment on after
you've been bit. However, the human factor involved in this, I
don't put much credence in those little notes.
My information, in my particular case, it was so blatantly
wrong and nobody bothered to check the credit report anyway. So
why would I believe they're going to check the credit report to
see a little note on there that says, Hey, this is a victim of
fraud? They didn't check to see if it was my right birth date,
if my name was spelled right. What would make me think they're
going to check those little things?
The incentive when you go in to apply for credit, the
person behind the counter, I believe there's a financial
incentive in most places to get you a credit application and
get you approved for credit. This way the employee makes a
little extra money each week. That incentive in itself leaves a
lot of room for error. If I was told every time somebody gets
an application, push, push, push, get it approved and you get
an extra 20 bucks, I'd be looking to do that as often as
possible. I'd ignore that information.
Mr. Foley. One thing that I've noticed as well is the
recent surge of credit card applications being mailed to my
home in both Washington and in Florida. One concern I have, and
I didn't realize this, every time a person inquires as to my
credit, it acts, if you will, as a negative on my report.
I tried to apply for credit at one point and somebody said
No, you're denied. I said ``Why am I denied?'' They said
because you've had too many inquiries. I said, ``Inquiries from
who?'' They said, well--they sent me a report, and there were
places I never heard of.
They inquired on to my credit for either the purposes of
soliciting me for a gold platinum super express card with two
interest, only for the first three days, then it's 19 after
that. But the fact is they apparently applied or tried to gain
a view of my credit before they sent the application. That
counts as a negative against my score card.
Are you all aware of that?
Mr. Melendez. Yes, sir.
Mr. Darling. Yes, sir.
Mr. Ivey. Yes, sir.
Mr. Horowitz. Yes, sir.
Mr. Foley. How can we go about correcting some of that? The
false inquiries that I have not authorized seem to be as big a
problem as those that are fraudulently taking place.
Mr. Ivey. One area that I think needs to be considered is
the credit companies that are facilitating these loans. For
example, if I go to a store and I fill out an instant credit
application in your name, if I'm the perpetrator of fraud, I'm
going to put down some legitimate information that I know is
warranted to get the loan approved. At the same time, I'm also
going to put down some information that will allow me to have a
system of checks and balances, if you will.
An example of that would be a telephone number for a
contact. It might be an employer. It might be any number of
persons that I list. What I would therefore do with that number
is when they realized that fraud has been perpetrated against
this account, they're going to take that loan application,
they're going to look at it and say here's a phone number.
Let's determine if this person works here. They're going to
call that number that's been listed. That person may answer the
phone in any business name. He may just answer the phone hello.
The person that's making the inquiry is then going to say I'm
looking for Wayne Ivey or I'm looking for Mr. Foley.
That person at that time knows this account is no longer a
good account for me to use. It's been compromised. Now, they go
and obtain another account.
One thing that might benefit everyone is if the credit
report was inclusive of contact information that is provided by
the actual person with that identity. If I have a credit report
in my name, there's a contact number at the Florida Department
of Law Enforcement. There's a contact number at my home. Then
that company, for example the finance company, can look at that
credit report and say here's the legitimate information. Here's
the information that was provided. Let's call the information
that's listed in our credit report. Then they're actually
talking to the person.
If that had happened in Mr. Horowitz's case, he wouldn't
have the problems he's had at this point.
Mr. Foley. Mr. Chairman, the reason for some of these
diverse questions is obviously I think we have another mission
on our hands, not only for the sale of Social Security numbers,
but a fair credit reporting standard and the way the law
applies we're going to have to look at. I think there's a two-
prong problem here. One is using the incorrect or correct
Social Security number by the person perpetrating the crime.
But also the problems encountering the clearing out,
solving the inquiries made to, the granting of credit, the
dunning of people, the whole process seems to be particularly
for citizens who are maybe more vulnerable and less able. A
senior citizen; a mother raising children trying to go to work,
raise the kids, get them off to school and, by the way, call a
credit reporting company or a harasser or credit collection
agency five, eight, 10, 15, 20 times never with a 1-800 number.
It's all on your nickel to try to get this thing straightened
out.
At times I'm sure people throw up their hands, find
themselves then unable to get credit when they desperately need
it themselves. They apply for a car, like the person you
mentioned, five cars are purchased in your name. So I'm not
selling you a car. You've got a bad credit rating. Nothing done
by my own initiative, but by a thief. Then all of a sudden, low
and behold, the legitimate citizen can't gain access to credit.
That's a serious problem.
I think we have a multitude of things we're going to deal
with. Hopefully your testimony and your submission to the
record will help us in looking through the web of problems that
we have.
Chairman Shaw. We're now operating in the Banking
Committee.
I don't think you'll get things done quite as quickly over
there when you try to get into that area. I've ventured into
that maze before. I was amazed to find out how many friends the
Banking Committee has to do credit reports.
I'd welcome to do it. I'd like to support you in that
effort. I think that the reporting of credit today is so
important to all of us. This is a significant first step to
halt the use and dispersement of these numbers.
I'm particularly interested in the sunshine law in Florida,
which we all support, but there's nothing to be gained by the
public having access to people's Social Security numbers. That
wasn't what the sunshine law was all about. I think we need to
be sure and I'm reasonably sure that we closed that loophole
with the legislation that we have. I believe Mr. Darling you
testified as such.
One final question. Mr. Ivey, is that a Super Bowl ring you
have on your finger?
Mr. Ivey. No, sir. It's from wrestling. I won the World
Police Olympics twice.
Chairman Shaw. It looks like a Super Bowl ring. You've got
to be a tough dude to wear that.
I'd like to thank all of you for being with us today. This
is good information, meaningful information that we can take
back to Washington. As a result of this hearing, we'll make
some adjustments.
Mr. Melendez, I don't know what we can do to help your
situation with regard to the identity. I think that the
problems that we might cause you in your investigating process
will be more than offset by the problems that we will solve for
the Mr. Horowitzes of the world who find that this information
is being distributed. Anyway, as an investigator you'll
probably find some way around the legislation anyway, in order
to get all the information you need to complete your work.
The Social Security number is being used for many
legitimate purposes, which we have to continue to use it for,
such as child support enforcement, such as driver's license
protection, driver's license identity, whether it be someone
who owes child support in prohibiting them from getting a
license or whether it be someone going over to another State to
get a license where their license has been suspended for some
unlawful activity. So we have to be very careful that we don't
shut those processes down. Also for purposes of reporting
income, banks are still going to need this to report the
interest you earn as are other type of agencies, including
brokerage offices, I would assume.
The dispersement of the information by other than the
person whose number it is, is what we've got to close down. The
intergovernmental use of the number I think is protected under
this legislation. I'll see that it is. But the dispersement of
this and relaying these numbers over to the public is something
that we do need to stop.
Again, I thank this panel. You've helped us greatly. With
that, I believe that's the only thing we had. The hearing is
adjourned.
[Whereupon, at 10:08 a.m., the hearing was adjourned.]
[A submission for the record follows:]
Miami Shores, Florida
To: Congressman Clay Shaw, State of Florida
From: Vala B. Kodish, Miami Shores, FL
Dear Congressman Shaw:
First, let me apologize for the informality of this letter being
sent to you via email. Agent Wayne Ivey, FDLE, contacted me about your
hearing and I happened to be on vacation out of state. I would prefer
to be there in person, as this matter is very important to me.
Please allow me to tell you a little about myself and why this
letter comes to you at this time. I am a mother of 3 small children; an
employee of a major U.S. corporation; and a partner in my husband's
successful business.
Four years ago, Leap Day to be exact, I was taking my two sons to
their church preschool in our small community. I remember it well. I
had the flu, so I hid my purse in the back of my mini van under some
pillows and locked the door. I was out of the car no longer than 2
minutes. When I returned, my purse was gone. I reported it to the local
police. Of course I made all the necessary calls to my bank and credit
companies. Within days agent Wayne Ivey showed up at my house and told
me that he had reason to believe that I had fallen victim to a crime
ring. Indeed I had. The mail began to pour in.
At first it was the plastic for credit that had been approved for
items bought on the spot...$4,000 worth of leather furniture; then
computer equipment; pool supplies, etc. Not long after that I began to
receive notices for bounced checks. They even opened an account for
company checks based on a fictitious business that I supposedly owned.
I spent hours on the phone and sending letters of explanations, along
with copies of the police report and the case number that Mr. Ivey had
given me. That was all I could do. I was helpless. At one point Mr.
Ivey came to me to help him with his investigation and showed me
pictures of the woman impersonating me; and of the others that were
working with her; along with copies of the fraudulent checks. You have
no idea how frightening that was to see all the evidence there before
me. Worst of all, they were committing the fraud within my small
community and the perpetrators were living within close proximity. I
cannot tell you the hours I laid in bed at night worrying they would
get just a little more greedy or even curious about me since they knew
where I lived.
Then I worried they would be in a fatal accident and I would be
blamed for it. I called the State Troopers and they told me it could
possibly happen, that I needed to send them a letter of explanation for
their records. Then I went to get a new driver's license. Do you know
that they would not give me a new license number even after I told them
that the previous number was being used fraudulently by criminals. They
told me that under no circumstances do they give new numbers. Then I
worried about my Social Security retirement fund. I called the office
in Washington and was flabbergasted at what they told me. They said,
(to paraphrase) ``It is highly unlikely that a criminal would try to
receive Social Security benefits. And if you change your number it is
possible that your life's earnings may not follow the new number. I
wouldn't take that chance.'' What kind of choice is that!!?? THEY WERE
TELLING ME THAT I HAD A BETTER CHANCE TRUSTING THE CRIMINAL THAN THEIR
ACCOUNTING SYSTEM! Day by day I began to understand why these criminals
were making a living at beating the system. A child could beat this
system! There is no way out for the victim. And let me tell you, I have
continued to be the victim for these past 4 years. Let me count the
ways: I cannot write checks. I have a black mark against my name. In
some cases it remains even after I have jumped through all the hoops
the credit establishment requires. Therefore, I have to carry cash
(which is not an option in Miami) or use credit. Using credit as my
only option means I have to pay interest on the charges made. We sold
our home for $300,000. A year later we bought a home for $285,000. You
would think that we would qualify without a second thought. I spent at
least 8 months working on clearing my credit before the new purchase.
When it came to shopping the mortgage, I had no choice but to use a
mortgage broker because I had one creditor who had bought the debt and
actually told me he didn't care if it was fraud or not, he wanted his
money and he would not clear my name. As you know, the broker had to
take his cut in order to make the transaction, therefore the loan cost
us more than if we would have shopped it on our own.
Mr. Shaw, I learned as a child the importance of good credit. I
have had the same banking account for 27 years. I have never bounced a
check or been late on a payment. My credit was perfect to say the
least. And my reward was that due to my excellent credit, these
criminals were able to walk into any establishment and buy what ever
they desired on the spot, merely because they had access to my Social
Security card. And now if I were to attempt it, I would be treated like
a criminal. What kind of system is that? Of course, the lessons I
learned were to never have anything on your person with your Social
Security number on it. To never write your Social Security number when
asked for it. However, sometimes it is completely unavoidable. For
instance, I went to school last semester at F.I.U. Your student I.D.
number is your Social Security number. You have no choice. Our bank
statements has our SS # on it. All you can do is hold your breath and
hope that the ``bad guys'' pass you by this time.
I was relieved when I was informed that the criminal ring had been
busted and sent to jail. But my worries began again when I was asked by
the D.A. to testify. I told him that I wanted them off the street but
that I feared them, as they were a big family that lived in close
proximity to my home. They shopped at the same KMart! He tried to
reassure me they would not come after me and I tried to believe him.
Fortunately, they never called me as a witness, because I found out
from Agent Ivey that they actually shot an informant.
In conclusion, it seems to me that with the onset of advanced
technology, that we can come up with a system that deters the criminal
and protects the victim. I believe the first thing that must be done is
to do away with the attachment of Social Security to the identity of
someone and their financial welfare. What about thumbprint
identification? I know the technology is there. Do you think someone
who knowingly is writing with stolen checks would give their thumb
print? I may not have the answers and my idea is a shot in the dark,
but I do know from my nightmare that the current system is merely an
invitation and a ticket for the criminally minded. I implore you to
research the alternatives and find a way to protect the honest, hard
working citizens of Florida.
Please feel free to contact me to talk about this matter by phone,
mail or email. I am eager to help solve this problem in any way that I
can.
Thank you for you time and consideration in this matter.
Yours Truly,
Ms. Vala B. Kodish