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Statement of the Honorable Howard Coble, Chairman

Hearing on H.R. 1731, the “Identity Theft Penalty Enhancement Act of 2004", and H.R. 3693, “Identity Theft Investigation and Prosecution Act of 2003"

(March 23, 2004)

The Subcommittee on Crime, Terrorism, and Homeland Security will now hold the first hearing on H.R. 1731, the “Identity Theft Penalty Enhancement Act", and H.R. 3693, the “Identity Theft Investigation and Prosecution Act of 2003".  

This hearing examines the growing problem of identity theft in this country and what additional steps Congress, law enforcement, business, and individuals can do to address this problem. There has been a great deal of focus on this issue in Congress in recent years. H.R. 1731 and H.R. 3693 propose some additional steps Congress can take to minimize the threat of identity theft to the individual, American companies, and the security of our country. H.R. 1731 would establish penalties for aggravated identity theft when the theft is related to or in the furtherance of certain other criminal acts. H.R. 3693 would provide $100 million to the Department of Justice to investigate and prosecute identity theft crimes. This hearing will examine the need for these bills as well as additional legislative proposals Congress should consider to address the growing problem of identity theft.

Identity theft and identity fraud are terms used to refer to all types of crime in which an individual’s personal or financial data is misused, typically for economic gain or to facilitate another criminal activity . Identity crime is not directed at any one demographic, it affects all types of individuals, regardless of age, gender, nationality or race.

In 1998, Congress enacted the Identity Theft and Assumption Deterrence Act, directing the Federal Trade Commission (FTC) to establish the Federal Government’s central repository for identity theft complaints, and to provide victim assistance and consumer education. In 2002, the FTC received 161, 819 victim complaints of compromised personal information. The FTC statistics for 2003 determined that a total of 4.6 percent of survey participants indicated they were victims of some type of identity crime in the past year. Identity crimes include identity theft, credit card fraud, bank fraud, check fraud, false identification fraud, and passport/visa fraud. Identity crimes can be associated with a variety of other crimes such as mail theft and fraud, money laundering, immigration fraud, narcotics and weapons trafficking, and terrorism.

According to the FTC, theft, including lost or stolen wallets, or the theft of a victim’s mail, was the most commonly mentioned way of obtaining the victim’s personal information. Approximately 25 percent of identity theft victims reported that their information was obtained through such theft. Approximately 50 percent of the identity theft victims said they did not know how the person who misused their personal information obtained it.

Of those victims who did know the person who obtained their information, the FTC found that 23 percent said the person responsible was someone who worked at a company or financial institution that had access to the victim’s personal information. According to 13 percent of victim’s, their information was compromised during a store purchase, or purchases by mail, internet or telephone. Approximately 4 percent of victims cited stolen mail as the point of compromise and 14 percent of all victims claimed their information was compromised by other means, including family member’s and workplace associates.

Since September 11, 2001, the Federal and State officials have taken notice of this crime because of the potential threat to security, but the cost to the consumer and corporations is equally alarming. The FTC estimates that the loss to businesses and financial institutions due to identity theft to be approximately $47.6 billion. The costs to individual consumers are estimated to be approximately $5.0 billion. Additionally, victims have a difficult, time consuming, and expensive task of repairing a damaged credit history, and their reputation.

As identity crime increases, we must find new ways to combat this compromise of personal information. Today we will discuss additional steps that may be taken to address this continuing problem of identity theft.

I would like to thank the witnesses who were able to be here today and look forward to their testimony. With that I recognize the ranking Member, Mr. Scott from Virginia for his opening statement.