The New Jersey Identity Theft Prevention Act

Assembly Sponsors: Asw. Watson Coleman and Asm. Cryan

Senate Sponsors: Senators Turner, Baer, Vitale, Kavanaugh and Ciesla
Senate Committee Substitute For Senate No. 1914, 2154, 2155, 2440, 2441 and 2524

ID Theft, The Fastest Growing Financial Crime in NJ
Banks, credit card companies, and other financial institutions are collecting more data about us than ever. These companies are careless with our data, making it easy for thieves to steal our identities. In the first four months of this year, corporations and universities have confessed to exposing approximately 3.5 million Americans to the risk of ID theft. (See Table 1. ) Identity theft has become an epidemic; based on FTC numbers, an estimated 218,000 New Jerseyans were victimized in 2004 alone.

Armed with the personal details of our lives, thieves steal our money electronically, use our credit cards, and take out new credit in our names. The Identity Theft Prevention Act addresses all these problems in comprehensive, potent, and yet simple ways.

The Identity Theft Prevention Act Prevents New Account Fraud
New account fraud occurs when a thief uses your personal information to take out new credit in your name. This kind of fraud relies on credit reporting agencies' willingness to sell your credit report to anyone with a few bits of your personal information. This bill empowers New Jerseyans to prevent new account fraud by giving them a Security Freeze.

• A Security Freeze is the right to control access your own credit report by protecting it with a passcode, akin to your ATM PIN. A potential creditor won't issue credit without reviewing your credit report, and if only you can grant access to your credit report, thieves won't be able to get new credit in your name, regardless of how much of your personal information data companies let them steal. With the right to a Security Freeze, New Jerseyans can end new account fraud.

According to the Federal Trade Commission:

New Account Fraud Costs Much More Than Existing Account Fraud.

• New account fraud cost business $10,200/victim, for a one year total of $32.9 billion, while existing account fraud cost business $2,100/victim for a one year total of $14.0 billion.

• On top of the cost to business, new account fraud cost victims an average $1,180, for a one year total of $3.8 billion, versus $160 each for victims of existing account fraud, and a one year total of $1.1 billion.

The Consequences Of New Account Fraud Are More Severe.

• New account fraud victims are much more likely than other victims to suffer the following other difficulties: credit card problems, harassment by a debt collector, loan rejection, banking problems, insurance rejection, utilities cut off, civil suit filed against them, and a criminal investigation.

• New account fraud victims are more likely to be concerned about future misuse of their information (47 percent of victims versus 36 percent, page. 15)

The Problems From New Account Fraud Are Harder To Resolve

• On average victims of new account fraud spent 60 hours resolving their problems, while victims of existing account fraud spent only 15 hours. (Table 2)

• New account fraud takes longer to resolve, with 39 percent taking three or more months versus 9 percent for existing credit card fraud.

The Types Of New Account Fraud Are Very Diverse Making It Hard To Anticipate Risks

• All of these types of accounts were fraudulently opened: credit cards, loans, telephone service, checking and savings accounts, internet accounts, insurance, and other. Also, identity thieves sometimes rented housing in victims' names, a transaction that is not new account fraud, strictly speaking, but does involve a credit report check.

New Jerseyans In Particular Can Benefit From Using A Security Freeze

• According to the FTC's 2004 report of identity theft in New Jersey, 49.1 percent of the different reported fraudulent transactions could have been prevented with a freeze, as compared to 37.7 percent nationally.

The Identity Theft Prevention Act Reduces Existing Account Fraud
Existing account fraud occurs when a thief shops with your credit cards or steals from your bank account electronically. If companies took better care of your data, this thievery would be limited. This bill fights existing account fraud theft by forcing companies to tighten data practices and notify you if the company gives thieves access to your personal information.

• The bill limits the use of your social security number; requires thorough document destruction when personal information is discarded; and requires notification if New Jerseyans' personal information is compromised.

The Identity Theft Prevention Act Helps Victims Clear Their Names
ID Theft victims need a police report to prove their victimization to credit card companies and others. Well intentioned police departments often refuse to take such reports because the crime did not occur in their jurisdiction, creating a bureaucratic nightmare for victims.

• The bill requires police departments to take ID theft police reports from people living in their jurisdictions without requiring that police assume jurisdiction of the crime.

Table 1: Identities Reported Compromised by Careless Companies Since Jan. 1, 2005

Note: "Identities Compromised" is the number of people whom the companies involved deemed to be sufficiently at risk to warrant notifying; in some cases that number reflects only a portion of the database accessed by the identity thief. For example, the T-Mobile incident involved a thief taking 400 identities from a database of 16.3 million. The fact that only 400 people were seriously affected reflects the fact that the thief was caught before he could steal more; the thief had the opportunity, if not apprehended, to steal all 16.3 million identities.