[Federal Register Volume 61, Number 249 (Thursday, December 26, 1996)]
[Notices]
[Pages 68044-68045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32495]


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FEDERAL RESERVE SYSTEM
[Docket No. R-0953]


Fair Credit Reporting

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Notice; request for comments.

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SUMMARY: The Board solicits comment on issues to be addressed in a 
study concerning the public availability and use of social security 
numbers and other sensitive identifying information about consumers. 
The Board's study is required by the Economic Growth and Regulatory 
Paperwork Reduction Act of 1996.

DATES: Comments must be received on or before January 31, 1997.

ADDRESSES: Comments should refer to Docket No. R-0953, and may be 
mailed to William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, DC 20551. Comments also may be delivered to Room B-2222 of 
the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the 
guard station in the Eccles Building courtyard on 20th Street, N.W. 
(between Constitution avenue and C Street) at any time. Comments may be 
inspected in Room MP-500 of the Martin Building between 9:00 a.m. and 
5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's 
rules regarding the availability of information.

FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell or Sheilah Goodman, 
Staff Attorneys, Division of Consumer and Community Affairs, at (202) 
452-2412 or (202) 452-3667; for users of Telecommunications Device for 
the Deaf (TDD) only, please contact Dorothea Thompson at (202) 452-
3544.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 30, 1996, the President signed into law the Economic 
Growth and Paperwork Reduction Act of 1996 ( Pub. L. 104-208, 110 Stat. 
3009) (the 1996 Act). The 1996 Act amends several consumer credit laws, 
including the Fair Credit Reporting Act (FCRA) (15 U.S.C. 1681). An 
amendment to the FCRA directs the Board of Governors of the Federal 
Reserve System (Board), in consultation with the Federal Trade 
Commission (the Commission) and the federal financial regulatory 
agencies, to conduct a study to determine the availability to the 
public of sensitive identifying information about consumers, the 
possibility that such information could be used for financial fraud, 
and the potential for fraud or risk of loss, if any, to insured 
depository institutions. By March 31, 1997, the Board must report the 
results of the study to the Congress, including any suggestions for 
legislative change. The Board solicits the comment of interested 
parties on these issues. The comments received will be used in the 
Board's study. Because of the short time frame the Congress gave the 
Board to study this matter, all comments must be received by January 
31, 1997.

II. Availability of Sensitive Consumer Information

    The Congress became concerned about the availability of sensitive 
identifying information about consumers after a widely-publicized 
incident in which a large database service offered personal information 
for sale--including individuals' social security numbers-- from one of 
its electronic databases. After a few days, the service discontinued 
the practice of making social security numbers available but continued 
to permit users to search for information by social security number. At 
about the same time, members of Congress learned of situations in which 
such identifying information was being used for financial fraud. In 
addition, testimony at a recent Federal Trade Commission hearing 
highlighted how easy it is to obtain identifying information about a 
consumer and to use that information to fraudulently receive credit in 
the consumer's name--without the knowledge of the consumer or the 
credit granting institution. This practice is often referred to as 
``identity theft.'' Armed with such information, criminals can request 
and receive credit or negotiate checks in the consumer's name, with 
devastating results for the consumer.
    Sometimes identity theft begins with the use of publicly available 
information. A government employee who participated in the Commission 
hearings related such an incident. General information about this 
witness was listed in a publicly-available government directory. Using 
that information, an unknown individual was able to obtain a copy of 
the employee's college transcript, which showed his social security 
number. The individual was able subsequently to get a copy of the 
employee's birth certificate using the social security number. The 
thief then had all he needed to ``assume'' the employee's identity and 
use the information to commit fraud.

III. Request for Comment

    In response to concerns about the availability of identifying 
information about consumers, and anecdotal evidence suggesting an 
increase in identity theft and financial fraud, the Congress has 
directed the Board to conduct a study regarding the availability to the 
public of sensitive information used to identify consumers. The Board 
is to determine whether there are organizations ``engaged in the 
business of making sensitive consumer identification information, 
including social security numbers, mothers' maiden names, prior 
addresses and dates of birth, available to the general public.'' To 
help make this determination, the Board solicits comment on the 
following issues:
    1. What is or should be considered sensitive consumer information 
for purposes of the study?
    2. What information is currently used, or might be used in the 
future, to identify individuals, and what types of public or private 
organizations, repositories, or databases make such

[[Page 68045]]

information available to certain entities or to the general public?
    3. How is the information obtained (for example, by phone, through 
the mail, or on the Internet), what costs are associated with obtaining 
the information, what are the specific uses for which the information 
is obtained, and does the furnisher place any restrictions on the 
distribution or use of this information on the purchaser? If so, how 
does the furnisher ensure that use of the data is limited to its 
intended purposes?
    4. Is the compilation, sale, and use of sensitive identifying 
information about consumers subject to industry guidelines or 
regulations, and if not, what guidelines, regulatory or legal 
requirements might be appropriate?
    If sensitive information about consumers is available, the Board 
must determine whether the availability of the information creates 
``undue potential for fraud and risk of loss to insured depository 
institutions.'' In order to make this assessment, the Board seeks 
comment on the following issues:
    5. How is sensitive identifying information about consumers used 
for financial fraud (for example, to obtain a credit card in another 
person's name)?
    6. What types of identifying information about consumers are most 
meaningful in granting and verifying credit, and how can consumers, 
financial institutions, and others control the fraudulent use of this 
information?
    7. What magnitude of financial loss do institutions attribute to 
fraudulent use of consumer information?
    Finally, if the Board determines that additional laws are needed to 
lessen the risks of fraud and loss to the banking system, the Board is 
directed to make legislative recommendations to the Congress. 
Accordingly, the Board is seeking comment on the following issues:
    8. What, if any, legislative changes should be considered to help 
protect sensitive identifying information about consumers?
    9. What, if any, legislative changes should be considered to limit 
the use of such information and reduce the risk of fraud or other loss 
to the banking system?

IV. Form of Comment Letters

    Comment letters should refer to Docket No. R-0953, and, when 
possible, should use a standard courier typeface with a type size of 10 
or 12 characters per inch. This will enable the Board to convert the 
text to machine-readable form through electronic scanning, and will 
facilitate automated retrieval of comments for review. Also, if 
accompanied by an original document in paper form, comments may be 
submitted on 3\1/2\ inch or 5\1/4\ inch computer diskettes in any IBM-
compatible DOS-based format.

    By order of the Board of Governors of the Federal Reserve 
System, December 17, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-32495 Filed 12-24-96; 8:45 am]
BILLING CODE 6210-01-P