Friday, April 23, 2010

Lenders are careless in checking applications for fraud; helps explain large number of victims despite FACTA

Brad Stone has an important blog entry today on the New York Times site (Bits blog) exploring how careless lenders are in verifying applications, link here.


A paper at the University of California by Chris Jay Hoofnagle, “Internalizing Identify Theft”, with 9.9 million victims in 2009 just as in 2003, Social Science Research Network abstract link (web url) here.

In 2003, a change was made to the Fair Credit Reporting Act with the Fair and Accurate Credit Transactions Act (FACTA) (link ) that allows victims of identity theft to ask lenders for copies of fraudulent applications submitted under their names. Yet this capability has not reduced the crime, because lenders were so eager to grant credit, and still sometimes remain so, despite all the problems in the credit markets since the Crash of 2008.

Would the presence of an NCOA-based database for verifying identities (as I proposed here Sept. 25, 2006) and ensuring that people learn of all applications in their name slow down the activity of careless lenders?

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