One of my pet peeves that has been festering like a boil is the issue of identity theft. Unless you have been on a desert island for some time now I sure you have heard of the problem. We are bombarded every day with commercials in print, on the Internet, radio and television adds for companies that will for a fee keep your identity safe or clean up the aftermath if it should be stolen.
Here is my question though, just when did it become my problem when some merchant accepts fraudulent information for a sale at his or her place of business? I don't care if it is my drivers license number used or my credit card number the fact of the matter is that if it is not me making the transaction it should not be my problem. Why does any business get to make sales and if the buyers information turns out to be stolen the business gets to put the ownis of the fraud on my door step?
When I was a young man and ventured out into the working world one of the first things I learned was that cashing a check could be a difficult task. You typically had to deal with a bank where you had an account and if you were lucky local merchants would accept or cash checks for you if you lived in town and were known to them. Some wanted you to have a check cashing card issued after your residence and employment had been verified. The reason for all these precautions? If that merchant accepted your check and latter found that it wasn't worth the paper that it was written on they were on the hook for the loss. To be sure there were legal recourses they could take to recoup their lost funds but in many cases these were more expensive especially if they did not bear fruit than simply taking the loss and putting your name on a black list never to have dealings with you again.
Then came the wonderful world of credit. Charge accounts at the local department stores. Then revolving charge accounts that allowed buyers to carry a balance forward to the next month and make payments on their purchases. Followed hot on the heals by the universally accepted credit cards like Visa and Master Card. Now it became practical to make purchases either in person or over the phone with only a number. Also as credit became more and more a part of the American life style agencies grew to act as clearing houses for information on individuals credit practices and history. If only we had known early on how much power these agencies would wield in the future I think the regulation of their operations might have developed in an entirely different manner.
Here is a bit of trivia for you. You probably know there are three major credit reporting agencies in the United States. Equifax, Experian and Trans Union. I don't really know anything about the first two but while reading a book I learned the origins of the third. The Union Tank Car Company made the bulk of the tanks cars used in the United States and I believe around the world. As a business move the acquired a county credit bureau and then continued to make other acquisitions either buying or establishing agreements with bureaus in major cities around the country. Thus was born Trans Union who along with the others we have all come to know and love.
Now we have the Internet out of which on line shopping has grown into a multi billion dollar business. Along with this growth has come an increased opportunity for fraud and crime the implementation of which is much easier for its perpetrators. Identity theft has become a world wide profit center for organized crime which is something that we should all be worried about.
So now we have come to a point in time when most people consider credit a necessity of life and an essential part of commerce in their day to day lives. This I don't have a problem with although I do feel that living on credit is not good for our country or the consumer. My problem is this upside down model that says if fraud is committed by someone who claims to be you that an assumption is made that you are guilty of that fraud until you prove otherwise.
Now my solution to this problem is quite simple. We change the rules and put the credit card on the same footing as the paper check. If a merchant accepts a credit card for payment and it turns out that the owner of the card is not the one that made the purchase they are on the hook for the loss. I do live in the real world and know that this would surly kill almost all Internet commerce instantly. At least if you are dealing with a merchant fact to face they can take precautions such as asking for photo identification when accepting a credit card for payment.
So what is to be done? The first thing we have to do is stand together as a group and and tell the credit industry, composed of both the credit card issuers and the credit reporting agencies, that we will no longer accept their current business practices or pay a third party to clean up the messes that they create while shielding us from the process. I feel confident that there are technological solutions to this problem that would allow secure business transactions and reduce identity theft to the level of an annoyance. The problem is that it would cost business time and money to implement these kinds of changes and they are not willing to take the necessary steps.
When the cell phone industry came on the scene all phones and the infrastructure that supported them used clear radio transmission that could be overheard with a consumer grade police scanner or even an old UHF television tuner. When the mass media started to point out to the public that their conversations were being listened in on and it started to hurt their sales their first move was to get law makers to make it illegal to listen in on cell phones. Now anyone with even a basic understanding of the laws of physics and how radio works knows this was just comfort food for the marketing people. When the subject again surfaced and it was show that just having a law that says someone can't do something means very little they came back for another round of laws that baned the sale of scanners that could receive cell phone signals. Needless to say it wasn't long before it became public knowledge that these radios could be easily modified to restore the deleted frequency ranges and that yes their customers still had a listening audience out there. At this point with the threat of a considerable loss of business they did what they should have done when the initial system was constructed. They moved from a clear analog FM signal to a digital system that could be encrypted. I am not going to tell you that cell phone conversations are completely private under this system because they are not. There are a number of people out there with the technical knowledge to listen in if they so desire. And this doesn't even take into account the government agencies with three and four letter names that are capable of listening to anything in the RF spectrum they want too. I can tell you though that at least 99.9% of the people who used to listen in on cell phones just to satisfy their salacious desires have been eliminated from the listening audience.
I think the credit industry is in the same position. They could fix this problem but they don't want to subtract from the bottom line by making the investment in time, software and equipment that would be required. I think they are also afraid that if this became a public debate or if the did implement new safety measures that it would cause the loss of some business because of a lack of education of the subject on the part of the consumers.
All I know is that I'm getting very tired of having to worry about other people creating an environment by they way they do business making their losses my problem. If you feel the same I suggest that you talk with your friends and relatives making the case to them and asking them to let their thoughts be known to both the credit card industry and the merchants that they support. If we the people start putting pressure on them collectively that we can bring about change.
Labels: credit cards reporting agencies fraud identity theft
