Restitution

Reuters reported today on a Senate bill that would let victims of ID theft “seek restitution for money and time they spent repairing their credit history.” The article omits some pertinent questions, such as how you document the time spent, how you put a value on that time, how ID theft is defined, and most importantly where the restitution would come from.

ID theft has come to encompass a range of crimes, including simply using a stolen credit card. Correcting wrong charges on your credit card statement is a breeze, however, compared to dealing with new credit accounts opened in your name with thousands of dollars in charges. To restore your credit rating, each of those new accounts has to be cleared and closed properly. You have to get a police report, fill out piles of paperwork, get forms notarized, and follow up for months with letters and phone calls. In the meantime, your newly lowered credit rating can raise your interest rate for buying a car, buying or refinancing a home, or obtaining a business loan. Your credit rating affects how you’re viewed by many potential landlords and employers, determines your car insurance premiums in many states, and really has an amazing number of ways it can screw up your life. If the ID theft extends to someone else’s health care, insurance claims, or even criminal charges being attributed to you, good luck ever getting it all fully straightened out. Restitution would be nice for some of that, too.

The Senate bill probably suggests that the restitution come from either some sort of public fund or from the criminal in the rare case that someone is actually caught. It would be easy to suggest that the restitution come from the companies and government agencies who are cavalierly collecting and then accidentally revealing our Social Security numbers and other personal information. I’d prefer that the restitution come from the banks and stores that open new credit lines despite fraud alerts on the credit bureau accounts, or from the insurance companies who use credit ratings as a proxy for racial discrimination, or from the police departments who write off thefts of thousands of dollars as a victimless crime, or from the credit bureaus themselves who trade so irresponsibly in error-ridden personal information. But the ultimate solution cannot be restitution. When 8.4 million people have their identities stolen in a year, the solution has to be to stop pretending that Social Security numbers are secret. We need better data protection policies and practices, but we also need to stop treating a Social Security number as a magic password that unlocks vast riches and creates vast headaches.

The vast whirling ballet of credit card shopping that comes crashing to a halt in the television commercial when someone tries to write a check isn’t portraying individual purchases. It’s portraying the vast whirling ballet of opening credit accounts that lenders and retailers are afraid will come crashing to a halt if we implement any sort of rational security policies. From the vantage point of the corporate box in the balcony, that ballet is beautiful. It’s not so beautiful for the 8.4 million people who got trampled last year.