Federal Trade Commission Chairman Robert Pitofsky said Wednesday that the Internet was responsible for the rapid increase in the number of cases of identity theft, noting that he had been a victim too.
"It is possible to be more efficient in behavior as a thief on the Internet than anywhere else," Pitofsky said in a luncheon address to the Department of Treasury's summit on identity theft, a conference called for by President Clinton when he signed last year's Financial Services Modernization Act.
"So much of the increase of identity theft occurs in part because of the modern credit system and the growth of commerce on the Internet," Pitofsky said, citing an increase in complaints to 523,000 in 1997 from 35,000 in 1992. "To the extent that it prevents the Internet from reaching its full potential, it causes harm not just to individuals but to the Internet itself."
Pitofsky said he was victimized when he noticed a fraudulent purchases on his U.S. government purchasing card. But once the theft was identified, his experience of canceling the card, expunging the bill and clearing his credit report was, for him, only a minimal hassle.
"The fact that I was forced to identify myself as chairman of the Federal Trade Commission may have had something to do with it," he said, to loud laughter among attendees.
In a typical case of identify theft, someone steals an offer for a pre-approved credit card, and submits the application with a change of address. But while banks are victimized by the theft, individuals are victimized by reputation-an act that was criminalized by Congress in 1998. But Pitofsky said the crime must be placed in the context of the proliferation of personal information made available by the Internet.
"Even more broadly than fraud, identity theft is the invasion of privacy-it takes your identity from you, run up bills, and takes your name and your credit rating," he said.
Since the 1998 legislation, the FTC has established a toll-free number and has created a centralized log of cases of identity theft. The agency also is reconsidering a 1997 self-regulatory agreement with the Individual Reference Services Group, which includes the three major credit bureaus. Consumer and privacy advocates consider this organization and others to be responsible for making it easier to steal identities.
The Treasury Department also announced initiatives to combat the crime. It will expand its counterfeit check database, utilize a computer-based training module developed by the department's Secret Service, and begin a pilot program with Citicorp to identify suspicious e-commerce transactions and report them to law enforcement.