Creditors may skim over applications, leading to identity theft
A recent paper shows the potentially lax practices of some institutions may lead to consumers having to deal with identity theft.
Chris Jay Hoofnagle, of the University of California, Berkeley, wrote a study recently based on a small sample size of six identity theft victims. He found that the fraudulent credit applications made in these people’s names all had incorrect information that could have stopped the crimes from happening.
In order to obtain the information, Hoofnagle relied on rules in the Fair and Accurate Credit Transactions Act, which gives consumers the right to examine fraudulent credit applications made in their name. Of the applications obtained, errors included incorrect addresses, Social Security numbers, dates of birth or even misspelled names.
One problem identified by Hoofnagle is that creditors have an incentive to approve credit applications as quickly as possible.
"These incentives drive credit grantors to make decisions quickly and forgo some basic identity theft prevention strategies," Hoofnagle wrote.