[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




                               before the


                                 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
RON LEWIS, Kentucky

                     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
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 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S



Advisory of July 10, 2000, announcing the hearing................     2


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



                         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) 
    [The advisory announcing the hearing follows:]



                                                CONTACT: (202) 225-9263

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.


    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.''


    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.


    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.


    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or 
MS Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
    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 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
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 
    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 
    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 
    Again, Mr. Chairman, thank you for coming and helping on 
this issue and for the testimony we're looking forward to 
    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.


    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 
    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 
    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 
    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 
    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 
    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 
    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.



    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 
    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 
    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 
    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 
    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 
    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, 
    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 
    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 
    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.


    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 
    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, 
    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.


    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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,

    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 
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 
    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 
    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 
    [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 
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 
    Thank you for you time and consideration in this matter.
            Yours Truly,
                                         Ms. Vala B. Kodish