Identity theft solutions are a big step towards eliminating the problem

The problem of identity theft has become increasingly serious in recent years, as people do more business using the Internet. While a useful tool, the Web provides opportunity for all kinds of Internet financial scams. When someone has his or her identity stolen, the thieves can often spend tens of thousands of dollars before the victim even knows about it, ruining their credit report in the process. And if an Internet hacker manages to steal thousands of credit card or Social Security numbers, then the whole problem is magnified tremendously.

A recently passed piece of legislation in New Jersey, which went into effect on January 1, 2006, hopes to put a dent in some of this fraud. The Identity Theft Prevention Act will attempt to close a number of loopholes that currently make it easier, if not downright simple, for criminals to take advantage of people.

Among the provisions of the new law are these:

• It will no longer be permissible to use a Social Security number as an identification number by any business entity. Schools that use the Social Security number as a student identification number, for instance, will have to find another solution. Identity thieves covet the Social Security number because if you have that number you can often obtain access to an individual’s entire credit record, personal history and home address and phone number.
• Further, no company may publicly post a customer or applicant’s Social Security number, nor may they issue any card, such as a health insurance card with the number on it. Such information may also not be included on any document sent by mail in a business transaction.
• Any breaches of these Social Security related provisions must be promptly reported to the consumer.
• New Jersey residents will now have the opportunity, as do residents of California, to put a freeze on their credit reports. This will prevent anyone from opening a new account in that person’s name as long as the account is “frozen.” The downside is that there may be a delay of several days before the freeze can be lifted if the resident wants to apply for credit.
• Businesses must destroy any customer records containing personal information that is no longer needed. This may include shredding or erasing magnetic media. This promises to create a booming business for those companies that offer to shred documents for hire. There will be a lot of shredding going on in New Jersey in 2006.
• Anyone who thinks he or she has been victimized by identity theft should contact their local police, who must provide them with a copy of the report.

This strikes us as a great start towards preventing these problems in the future. So many companies have decided to use the Social Security number as a de facto identification number over the past few decades, despite the fact that Congress never intended that the numbers be used for that purpose. New Jersey’s new legislation should go a long way towards protecting the consumer. All we need now is for the remaining forty something states to do the same thing.

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