KYL-LEAHY SUBSTITUTE TO S. 512, "THE IDENTITY THEFT AND ASSUMPTION DETERRENCE ACT OF 1998"

July 9, 1998

Protecting the privacy of our personal information is a challenge, especially in this information age. Every time we obtain or use a credit card, place a tollfree phone call, surf the Internet, get a driver's license or are featured in Who's Who, we are leaving virtual pieces of ourselves in the form of personal information, which can be used without our consent or even our knowledge. Too frequently, criminals are getting hold of this information and using the personal information of innocent individuals to carry out other crimes. Indeed, U.S. News & World Report has called identity theft "a crime of the 90's".

According to a recent GAO report on "Identity Fraud," a myriad of methods are used to obtain personal identifying information. Such methods "can range from basic street theft to sophisticated organized crime schemes involving the use of computerized databases or the bribing of employees access to computerized information on customer or personnel records." [GAO Briefing Report, "Identity Fraud: Information on Prevalence, Cost, and Internet Impact is Limited," May 1998, at p. 1.]

In particular, Secret Service officials interviewed for the GAO report relate that "numerous instances of identity fraud have been perpetrated using the Internet." Significantly, these Secret Service officials further "opined that, without effective encryption measures, Internetrelated identity fraud will increase." Id. At p. 51.

While Senator Kyl and I do not see eyetoeye on the best way to encourage the widespread use of strong encryption to protect privacy and prevent the theft of personal information, I am pleased to join him in offering this substitute to address the problem of identity theft when it occurs.

As introduced, this bill would have made it an offense, subject to 15 years' imprisonment, to possess "with intent to deceive" identity information issued to another person. I was concerned that the scope of the proposed offense would have resulted in the federalization of the status offenses of underage teenagers using fake ID cards to gain entrance to bars or to buy cigarettes, or even the use of a borrowed ID card without any illegal purpose. In addition, the original bill included in the definition of "means of identification" an element of the offense, namely the requirement that the identifying information not belong to the perpetrator using it. These problems, and others identified by the Department of Justice, have been addressed in the KylLeahy substitute that we consider today.

Specifically, the substitute refines the scope of the offense and the definitions, provides a nuanced penalty structure, and drops originally proposed statutory sentencing enhancements that are already part of the Sentencing Guidelines. The substitute would make it a crime knowingly to possess, transfer or use, without lawful authority, someone else's personal identifying information with the intent to commit a federal crime or a felony under State or local law.

If, as a result of the offense, the violator obtains over $1000 in value during a oneyear period, the penalty is up to 15 years' imprisonment. An offense involving the use or transfer of the false identifying information that does not meet the monetary and time frame threshold, would result in a penalty of up to three years' imprisonment. The mere possession of someone else's personal identifying information to commit an offense is a misdemeanor.

The consequences for the victims of the identity theft can be severe. They can have their credit ratings ruined and be unable to get credit cards, student loans, or mortgages. They can be hounded by creditors or collection agencies to repay debts they never incurred, but were obtained in their name, at their address, with their social security number or driver's license number. It can take months or even years, and agonizing effort, to clear their good names and correct their credit histories. I understand that, in some instances, victims of identity theft have even been arrested for crimes they never committed when the actual perpetrators provided law enforcement officials with assumed names.

The substitute amendment to S. 512 would provide important remedies for victims of identity fraud. Specifically, the bill would make clear that these victims are entitled to restitution, including payment for any costs and attorney's fees in clearing up their credit histories and having to engage in any civil or administrative proceedings to satisfy debts, liens or other obligations resulting from a defendant's theft of their identity.

In addition, the bill would direct the Federal Trade Commission to keep track of consumer complaints of identity theft and provide information to victims of this crime on how to deal with its aftermath.

This is an important bill on an issue that has caused harm to many Americans. I commend Senator Kyl for his efforts to address the crime of identity theft. I am glad that we were able to join forces to construct a substitute that goes a long way towards our common goal.