Putting Identity Theft on Ice: Freezing Credit Reports To Prevent Lending to Impostors

Privacy and Security

Article Snapshot


Chris Hoofnagle


Chapter in Securing Privacy in the Internet Age; Chandler, Radin, Gelman eds., Stanford University Press, 2002


This paper talks about new rules to help consumers avoid identity theft.

Policy Relevance

Allowing consumers to freeze their credit report accounts will prevent loan fraud.

Main Points

  • Identity theft happens when one person uses another person’s personal information to commit fraud.

  • Changes in the credit reporting system are necessary to prevent identity fraud.

  • Frequent issuance of credit cards to dog, babies, and others show that standards are too lax. The Fair Credit Reporting Act allows credit reports to be sent to lender if the lenders certify they will use it lawfully, but this standard is not enough.

  • Lenders have failed to check information on loan applications carefully enough to catch impostors.

  • Today the default rule is that credit reports can be sent out freely and new loans granted.

  • The rule should be changed so that the credit system is “frozen” and new loans and credit are granted only when the consumer authorizes the grant and can recite a secure password.

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