The Senate has advanced the Protecting Children from Identity Theft Act, bipartisan legislation that would augment the ability of financial institutions to prevent synthetic identity fraud.
The Protecting Children from Identity Theft Act was introduced today by Senators Bill Cassidy (R-LA), Claire McCaskill (D-Mo.), Tim Scott (R-SC), and Gary Peters (D-Mich.). Last month, FSR commended
The legislation is intended to help prevent children’s identity being stolen by a type of theft known as “synthetic ID fraud.”
Synthetic identity fraud differs from more traditional identity theft in that it involves the use by a fraudster of a valid Social Security number (most often that of a minor) and fictitious information to create a “synthetic” credit file. That credit file is used over time to apply for credit and commit fraud.
Many years later, the child will often be forced to clean up the mess created by the fraudulent use of their SSN when she was very young. This fraud can be prevented if financial institutions were able to validate with a source of truth—in this case, the Social Security Administration—whether or not the given information on an application matches. This legislation would make that possible, with the electronic consent of the consumer.
A recent study found that one in every ten children had their Social Security Number used by someone else to fraudulently open bank accounts or credit card accounts, negatively impacting a child’s credit before they become adults.
“It is simply inconceivable that a criminal would seek to exploit a child’s identity and personal information for their own financial gain, and we must look to utilize all of our resources to stop these crimes from continuing to negatively impact our families,” Scott in a statement. “This upgrade to Social Security Administration procedure is a commonsense and effective way to cut down on synthetic ID fraud and help prevent millions of people from having their identity stolen.”
“Some children have their identities stolen before they can even talk,” Cassidy said. “This bill protects them and modernizes fraud detection to stop more people from becoming victims.”
Scott’s added amendment aims to stop this illegal activity by directing the Social Security Administration to accept electronic signatures as consumer consent for financial institutions trying to verify customer ID and root out synthetic ID fraud.
Last month, the group of senators sent a letter to SSA’s Acting Commissioner urging that the agency accept individuals’ consent electronically in order to help financial institutions better prevent identity theft and fraud. They also asked Senate Banking Committee Chairman Mike Crapo (R-ID) for inclusion of this bill in S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, currently under debate.
U.S. Rep. Carlos Curbelo (R-Fla.) has sponsored similar legislation in the House with reps. Randy Hultgren (R-Ill.), Kenny Marchant (R-Tex.), and Kyrsten Sinema (D-Ariz.). Their proposal also empowers the Social Security Administration to “accept electronic signatures as consumer consent for financial institutions trying to verify customer ID.”
The Financial Services Roundtable which represents large banks and other financial firms, has praised Senate bill.
“The financial industry is continually looking for new ways to enhance its ability to better protect children from synthetic identity fraud,” said FSR’s Vice President of Government Affairs, Jason Kratovil. “This bipartisan and common sense bill, which would modernize an existing system to allow financial companies to validate an applicant’s name, date-of-birth and Social Security number, should be added to Sen. Crapo’s regulatory modernization package and quickly advanced to the President’s desk.”