Lenders need identity theft code
OPINION: Falling prey to identity thieves is an experience you wouldn’t wish on your worst enemy. It’s not, however, just the criminal acts that cause hurt to the victims.
The amount of help victims can get from lenders who have unwittingly lent money to crooks posing as them can leave victims feeling abandoned to their fate.
In recent months, Iwrote about the experiences of three men who fell prey to crookswho managed to fool lenders, and take out loans in their names.
In each case, it appeared, crooks had got their hands on some of the victims’ personal information, possibly as a result of cyber security breaches at another company they had dealt with.
The waters of identity theft are often quite muddy. From the outside, it is genuinely hard to tell how good lenders’ systems are at identifying identity fraud.
My experience of banks is that their fraud systems are quite good at picking up suspicious transactions, and blocking them. I am not at all certain smaller, newer lenders have especially good identity-checking systems.
Neither is Commerce and Consumer AffairsMinister David Clark, who surprised me the other day. Buy now, pay later lenders (BNPL) have asked him to let them self-regulate.
‘‘Several BNPL providers submitted that they would commit to verifying identities of customers and undertake upfront and ongoing checks as part of any industry code,’’ Clark told me.
Thiswas, he said, required by our anti-money-laundering laws already.
Confusing stuff. It almost seems like some BNPL lenders are not meeting their legal obligations.
Our ordinary lives are increasingly digital. This brings huge opportunities for lenders. They can grow like topsy when borrowers can sign up for loans, and extend loans online.
The quid pro quo has to be that the defences are strong enough to protect the public, and that when we fall victim to identity thieves, they act proactively, and fast, in our interests.
Over the years, I’ve lost confidence in lenders to selfregulate, and Iwould be surprised if the minister lets them.
But any industry code (or regulation) he accepts would need to require BNPL lenders to meet minimum legal standards on verifying the identities of the people they lend to, and to monitor accounts for suspicious transactions.
It would need to commit them to proactively contacting people who have their identities stolen, even if it took a bit of work.
It seems lenders may sometimes suspect someone has been the victim of identity theft, or attempted identity theft, and not even tell them, or endeavour to contact them to tell them.
In one of the three cases I mentioned, the victim found several other unsuccessful attempts to take out loans had happened, and as far as he knew the lenders hadn’t tried to alert him.
This is not good enough.
It’s not entirely clear that lenders are committed to proactively alerting the credit reporting bureaus to protect identity theft victims’ credit scores.
There seems to be little in the way of advice given to victims on how to secure their identities again, and there seems to be no minimum time frames for doing all of this.
Iwould like to see lenders provide details of the crimes against them to identity fraud victims, so they could use them to police.
The three men I spoke of were all left scratching their heads at how they had fallen victim, and how the crooks fooled the lenders.
There’s a very profitable business model in loans delivered online.
We, the public, should expect to see some of that profit invested into protecting us, and the commerce minister should demand it.