Solving the Problem of Identity Theft

I recently heard, on the CBS Evening News, I believe, that the Congress is finally becoming concerned about identity theft. The best description of this new-found concern is, “a day late and a dollar short.” Can we expect the Congress to find a solution to the problem? Don’t hold your breadth, even though an easy solution exists.

Would you, for instance, lend your car to a perfect stranger even though s/he could show numerous identifying documents? I doubt it, because documents don’t prove anything. They are easily forged, misplaced and found by the unscrupulous, and often stolen. Yet it seems, lenders often do what no sane person would–they lend hundreds of thousands of dollars on the basis of such documentation without ever attempting to verify the identity of the borrower.

A plethora of broadcasts and articles have appeared which tell people how to protect their identities; yet people cannot provide such protection. Social security numbers have been used too long by too many people for too many reasons to make this protection possible.

Anyway the problem is not a people problem, and trying to make it into one is merely another instance of the American predilection to place the onus in the wrong place. Identity theft is a lender problem, and it has a simple solution. All that is required is a law that specifies that lenders who do not verify the true identities of their borrowers have no recourse to the law when such borrowers default. Lenders would have a choice: verify the true identities of their borrowers or lose their money if their borrowers default. Nothing more would be needed.

Such verification would not be difficult either. Lenders could require that loan applications be submitted in person along with a mug shot of the borrower and his/her fingerprints. They could also physically check to see if the person submitting the application actually lived at the address provided. Would this be expensive? Hardly!

Would this make borrowing on-line or by mail impossible. Not necessarily. All that would be required is that the transaction be handled through a notary who would accept the documents along with the required proofs, attach a notarized document attesting that the verification process had been carried out, and submit the documents to the lender.

Identity theft is possible only because lenders utilize lax lending policies and procedures. It’s as simple as that.

Americans are fond of claiming that people ought to be responsible for their actions. This is sound policy only if it is applied universally. Not only people but companies, as well, ought to be made to conform to it.

©2006 John Kozy, Jr.