Identity theft affects millions of Americans annually, and our research points to an increase in incidence of the crime in 2008. Despite the scope and severity of the crime, consumers have few tools to avoid it. For instance, consumers lack information to enable a comparison of banks’ relative performance in preventing identity theft and other frauds. A light touch regulatory approach could spark a revolution in the prevention of fraud if institutions were required to publicly report aggregate statistics describing the number of identity theft incidents suffered or avoided; the forms of identity theft attempted and the financial products targeted; and the amount of loss suffered or avoided. Significant benefits would accrue to consumers, banks, and regulators if basic identity theft reporting were mandated. Such an intervention would have to be made at the federal level, because preemption has reduced states’ role in ensuring consumer protection in financial services. Read the rest of this entry »
