Quote of note:

It could be that financial institutions aren't hurrying to tighten standards because of a little-known fact: Retailers, not banks, generally absorb losses caused by identity thieves. That means the companies issuing credit cards have little incentive to scrutinize applications, critics contend.

"As long as they continue to make money by granting credit easily to thousands of people every day, we're still going to have the problems," said Beth Givens, director of the nonprofit Privacy Rights Clearinghouse, a consumer information and advocacy group.

Industry at Odds Over ID Theft Liability
By Joseph Menn
Times Staff Writer
March 7, 2005

Heidi Anderson didn't know much about identity theft until her Christmas 2001 shopping trip to Victoria's Secret, where a cashier said her store card —  which she had used only once before  — was over its limit.

A check of her credit reports revealed the depth of Anderson's misfortune: Using her name and driver's license number, someone had opened 33 charge accounts and run up more than $30,000 in debt.

Her finances wrecked for more than a year, Anderson couldn't use what had been a spotless credit record to qualify for a mortgage on the home she had just picked out with her fiance. "We lost our house," said Anderson, a university fundraiser in Southern California. "It has to be one of the worst experiences of my life."

Anderson is angry at the Redondo Beach woman who wronged her and was later convicted. But she also blames the financial industry, specifically the institutions that screen credit card applications, for making the thief's job so easy.

"They'll give anyone a credit card without checking," Anderson said. "Until we hold the companies accountable, nothing's going to be done."

... Identity theft annually victimizes 10 million Americans and costs $50 billion, according to the Federal Trade Commission. But crimes are rarely prosecuted and sentences are generally light, said Judith Collins, a Michigan State University criminology professor who studies the subject.

Givens of the Privacy Rights Clearinghouse said lenders would extend credit based on little more than an address, Social Security number and birth date, all of which can be easily acquired by a thief.

Armed with new cards, the thieves often switch addresses, so that the victim never sees the bills that are piling up. Identity thieves then make purchases on the Internet, collecting and selling off the goods for cash. They also can try to tap into other accounts held by the victim. If they succeed in transferring money, the consumer often can't get it back.