Good morning Chairman Greenwood and distinguished members of the House Subcommittee on Oversight and Investigations. On behalf of the Pennsylvania Attorney General Mike Fisher, I am honored to be here this morning to testify on the important topic of identity theft. My name is John Abel and I am a Senior Deputy Attorney General in the Philadelphia Regional Office of General Fisher's Bureau of Consumer Protection.

Identity theft is a serious crime and growing problem across the country with Pennsylvania's experience being no exception. Victims of this crime face devastating economic repercussions and oftentimes spend countless hours undoing the harm in order to get their finances back in order. This can be a very stressful experience for the ordinary consumer who in many instances does not realize until much later that their identity has been hijacked by an unknown perpetrator. By this time, hundreds, if not thousands, of dollars in unauthorized charges have been made in their name from any number of sources.

I am here today to speak on behalf of the Bureau of Consumer Protection of the Attorney General's Office that is housed within the Public Protection Division. Along with the Bureau of Consumer Protection, a number of other offices are located within Public Protection including the Health Care Section, Anti Trust Section, Charitable Trusts and Organization Section and the Civil Rights Enforcement Section.

II. Background

Before I begin to talk about this problem, let me start by giving you a brief background of the Bureau of Consumer Protection. By law, the Attorney General's Bureau of Consumer Protection is authorized to perform the following duties:

* Investigate commercial and trade practices in the distribution, financing and furnishing of goods and services for the use of consumers;

* Conduct studies, investigations and research into matters affecting consumer interests and make such information available to the public;

* Advise the Pennsylvania Legislature on matters affecting consumer interests, including the development of policies and the proposal of programs to protect consumers;

* Investigate fraud and deception in the sale, servicing and furnishing of goods and products, and strive to eliminate such illegal actions;

* Promote consumer education and publicize matters relating to consumer fraud, deception and misrepresentation.

The Bureau of Consumer Protection has seven regional offices which handle more than 40,000 written complaints annually from consumers throughout the Commonwealth. Over the past couple of years, the number of complaints has risen dramatically by more than 30 percent. This increase is due to a number of factors, one of which includes a growing wave of bankruptcies of a number of large retail establishments. Each of these consumer complaints is assigned to an individual agent and in most instances, that agent will seek to mediate the case with the business with hopes of achieving a satisfactory resolution. Should the Bureau detect a patten or practice of consumer fraud, based on complaint history or other sources, the Bureau may then commence a formal investigation.

Under the law, the Bureau is authorized to file a formal legal action where it has reason to believe that a business has engaged in such a pattern of illegal practices and it is in the public interest to do so. On average, the Bureau files 150 actions per year. Legal actions take the form of a lawsuit filed in the Commonwealth Court or local Court of Common Pleas. These actions also include a settlement agreement permitted by law which is known as an Assurance of Voluntary Compliance. Through these actions, the Bureau can seek injunctive relief, such as prohibiting a company from doing business in the Commonwealth, as well as consumer restitution. The Bureau is authorized to seek a penalty of $1,000 per violation and $3,000 per violation where the consumer is of age 60 or older.

With regard to the issues of identity theft, I will focus on the efforts of the Bureau of Consumer Protection in educating consumers to avoid these thieves and in assisting consumers with restoring their credit. Although our Office is vested with criminal authority to pursue perpetrators of identity theft, as a civil law litigator with the office, I will not be able to speak specifically to the details of any criminal investigations or prosecutions. However, I would be happy to provide later any further information that the subcommittee might desire.

III. Scope of Problem

According to the Social Security Administration, more than 750,000 incidents of identity theft occurred nationwide last year. One study found that on the average, it takes victims 175 hours and over $800 in out of pocket to clear their name. The Federal Trade Commission reports that in 2002 they received 161,819 identity theft complaints. This national figure is almost double that which was reported in 2001, when the FTC tracked 86,198 complaints of identity theft. We have every reason to believe that the trend is increasing this year.

Allow me to share with the Committee some recent numbers which pertain specifically to Pennsylvanians. Statistics on identity theft are maintained by the Federal Trade Commission which established an Identify Theft Hotline and Data Clearinghouse in 1999. These records show that in 2002, Pennsylvania had reports of victims in 5,080 cases. The overwhelming majority, 46 percent, specifically experienced credit card fraud. Next to credit card fraud, the most common instance involved unauthorized use of phone or utility services. Almost 1 in 4 of these crimes occurred in Philadelphia. However, every region in the Commonwealth has experienced this brand of crime.

With statistics such as these, which have been steadily increasing, identity theft is a problem that certainly warrants the continued attention of the Subcommittee.

Data shows that the typical victim of identity theft is between 30 and 40 years old and does not notice the crime until roughly a year after they have become a victim. At this age, people generally have an established credit history and a steady income. Similarly, with children, work, and other commitments, there are a lot of priorities and responsibilities to tackle. It is often easy to take your financial privacy and security for granted. Particularly disturbing is the increasing victimization of our seniors who, with their good credit, retirement nest eggs and trusting nature, are often targeted by scam artists. Only the state of Florida has a higher percentage of citizens over the age of 65 than Pennsylvania, and Attorney General Fisher's efforts to protect the Commonwealth's citizens includes a special commitment to protection of our seniors.

These criminals use a variety of methods to access your information. They steal purses and wallets for personal information; they complete change of address cards to have personal information forwarded out of the victim's hands. Other practices include "dumpster diving," where criminals steal discarded statements and pre approved credit offers from the victim's trash. "Shoulder surfing" refers to the practice of stealing PIN numbers and account numbers over the person's shoulder while they are using an ATM. Of course, the Internet is fertile ground for these thieves. A fraudulent e mail can be sent promising some benefit in exchange for personal information. A surprising number of people quickly sent out the information without taking any steps to determine the validity of the offer.

IV. Efforts to Combat Problem

The old saying that "an ounce of prevention is worth a pound of cure" is particularly true in the case of identity theft. Attorney General Fisher has taken action to educate Pennsylvanians on how to avoid these tactics. Through various forms of outreach and public speaking, representatives from the Bureau of Consumer Protection help to spread the word on the rather simple and easy steps that consumers can take to avoid becoming a victim. We appear before church and other community organizations, senior groups, as well as numerous civic associations. We staff information booths at shopping malls and county fairs throughout the state.

Just this last year, the Bureau joined in National Consumer Protection Week by participating in consumer education fairs and activities throughout the Commonwealth. The theme was "Consumer Confidential: The Privacy Story." As part of this event, the Bureau rolled out a new brochure titled "Consumer Privacy: Protecting Your Personal Information."

Consistent with what I had mentioned about the seriousness of these crimes against seniors, the Attorney General's Office has also launched a program known as the Senior Crime Prevention University to educate older Pennsylvanians and their families on crime prevention. The Senior Crime Prevention University is presented in conjunction with other law enforcement agencies who provide training to help stop the multitude of crimes, including identity theft, against the senior citizens of Pennsylvania.

The Bureau has also specially published a brochure which offers specific tips to protect personal identifying information. For instance:

* Minimize the identification information and cards you carry. Don't carry your social security card with you and carry other cards that list your social security number (such as prescription cards or insurance cards) only when necessary.

* Purchase a shredder. As I said earlier, identity thieves commonly sift through garbage seeking discarded mail such as pre approved credit card offerings and bank statements.

* Be mindful of billing cycles if it seems like one of your bills didn't arrive, follow up with the business. Remember, that in addition to containing your name, address and other information, monthly statements also contain account numbers.

* Don't give out personal information over the phone, through the mail, or over the Internet unless you have initiated the contact, or know with whom you are dealing. To get your information, identity thieves may pose as representatives of banks, Internet services providers, even government agencies.

* Order a copy of your credit report.

If, despite taking these precautions, a person's information does end up in the wrong hands, our Office recommends taking the fallowing steps immediately:

* Call the fraud departments of the credit bureaus and request that a "fraud alert" be put on your file. This lets creditors know to call you before they open any new accounts in your name. You should also ask for a copy of your credit report and follow up with these credit bureaus by asking that they remove any fraudulent or incorrect information.

* Contact banks, credit card companies and all other creditors who issued credit in your name and/or permitted access to your existing account and close all affected accounts.

* Finally, contact your local police department and file a criminal report on the incident. Such a report can help in clearing up your credit records and, or course, may lead to the arrest of the thief.

As I mentioned before, each consumer complaint that the Bureau receives is assigned to an individual agent. In cases of identity theft, this agent is available to direct the consumer to the appropriate agencies. Additionally, the agents are available to work with, and provide information to, other parties in an effort to address some of the problems created by the theft.

The Bureau has also taken action within the context of legal actions to protect consumer privacy and avoid identity theft. For instance, when an online retailer of children's education materials announced that it would cease operations and sell off its assets, Pennsylvania, along with a majority of other states, filed an Objection in the Bankruptcy Court to prevent that company from selling its customer list as an asset. Ultimately, through the efforts of Pennsylvania, the FTC and 42 other states, this company agreed to destroy the customer list.

In another case where the Bureau took action against a Bucks County based national seller of computers, the Office made certain that the settlement prohibited the sale or other disclosure of customer information.

In another legal action, this Office reached an Assurance of Voluntary Compliance with a Bucks County developer and distributor of computer games to resolve alleged violations related to the company's use of "spyware" in its computer games. Customers who purchased the product were unaware that the games included a computer file attachment which allowed third party advertisers to secretly interact with the consumers' computers and trace their steps on the Internet. Asserting that this conduct violated consumer privacy rights, the Commonwealth secured an agreement from the business barring the inclusion of such programs in its products and requiring the company to provide a means for customers to remove the software program from previously purchased products.

Once again, thank you for the opportunity to comment today on the Bureau of Consumer Protection's efforts to assist consumers in preventing the growing problem of identity theft and I want to commend Congress for its recent enactment of the Fair and Accurate Credit Transactions Act which should further assist consumers in combating this problem.

I would be happy to take any questions.