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Federal Reserve Bank

D. M C T E E R , J R .


January 6, 1997

752 6 5-5 9 06

Notice 97-02


T he C hief Executive O fficer of each
financial institution and others concerned
in the E leventh F ederal R eserve D istrict

Request for Public Comment on
Issues to be Addressed in a Proposed
Consumer Information Study
T he B oard of G overnors of the F ederal R eserve System is requesting public
com m ent on issues to be addressed in a proposed consum er inform ation study required
by the Econom ic Growth and R egulatory Paperw ork R eduction Act o f 1996.
T he study will determ ine the public availability of sensitive identifying
inform ation about consum ers (such as social security num bers, m others’ m aiden nam es,
prio r addresses and dates of birth), the possibility th a t such inform ation could b e used
for financial fraud, and the potential for fraud or risk of loss, if any, to insured
depository institutions.
T he B oard m ust receive com m ents by January 31, 1997. Please address com­
m ents to W illiam W. W iles, Secretary, B oard of G overnors of the F ed eral R eserve
System, 20th Street and C onstitution Avenue, N.W., W ashington, D.C. 20551. A ll
com m ents should refer to D ocket No. R-0953.
A copy of the B oard’s notice (F ederal R eserve System D ocket No. R-0953) is

For additional copies, bankers and others are encouraged to use one o f the following toll-free numbers in contacting the Federal
R eserve Bank o f Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; H ouston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San A n tonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

F or m ore inform ation, please contact D e an Pankonien at (214) 922-6154.
F or additional copies of this B ank’s notice, please contact the Public A ffairs D ep artm en t
at (214) 922-5254.
Sincerely yours,

[Docket No. R-0953]
Fair Credit Reporting

Board of Governors of the Federal Reserve System (Board)
Notice; request for comments.

SUMMARY: The Board solicits comment on issues to be addressed in a study concerning the
public availability and use of social security numbers and other sensitive identifying
information about consumers. The Board’s study is required by the Economic Growth and
Regulatory Paperwork Reduction Act of 1996.
DATES: Comments must be received on or before January 31, 1997.
ADDRESS: Comments should refer to Docket No. R-0953, and may be mailed to William W.
Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and
Constitution Avenue, N .W ., Washington, DC 20551. Comments also may be delivered to
Room B-2222 of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the
guard station in the Eccles Building courtyard on 20th Street, N.W . (between Constitution
avenue and C Street) at any time. Comments may be inspected in Room MP-500 of the
M artin Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided in 12 CFR
261.8 of the Board’s rules regarding the availability of information.
FO R FU R TH ER IN FO RM A TIO N CONTACT: Jane Jensen Gell or Sheilah Goodman, Staff
Attorneys, Division of Consumer and Community Affairs, at (202) 452-2412 or (202) 4523667; for users o f Telecommunications Device for the Deaf (TDD) only, please contact
Dorothea Thompson at (202) 452-3544.
I. B ackground
On September 30, 1996, the President signed into law the Economic Growth
and Paperwork Reduction Act of 1996 ( Pub. L. No. 104-208, 110 Stat. 3009) (the 1996 Act).
The 1996 Act amends several consumer credit laws, including the Fair Credit Reporting Act
(FCRA). An amendment to the FCRA directs the Board of Governors of the Federal Reserve
System (Board), in consultation with the Federal Trade Commission (the Commission) and the




federal financial regulatory agencies, to conduct a study to determine the availability to the
public of sensitive identifying information about consumers, the possibility that such
information could be used for financial fraud, and the potential for fraud or risk of loss, if
any, to insured depository institutions. By March 31, 1997, the Board must report the results
of the study to the Congress, including any suggestions for legislative change. The Board
solicits the comment of interested parties on these issues. The comments received will be used
in the Board’s study. Because of the short time frame the Congress gave the Board to study
this matter, all comments must be received by January 31, 1997.
II. Availability o f Sensitive Consumer Information
The Congress became concerned about the availability of sensitive identifying
information about consumers after a widely-publicized incident in which a large database
service offered personal information for sale-including individuals’ social security num bersfrom one of its electronic databases. After a few days, the service discontinued the practice of
making social security numbers available but continued to permit users to search for
information by social security number. At about the same time, members of Congress learned
of situations in which such identifying information was being used for financial fraud. In
addition, testimony at a recent Federal Trade Commission hearing highlighted how easy it is to
obtain identifying information about a consumer and to use that information to fraudulently
receive credit in the consumer’s nam e-w ithout the knowledge of the consumer or the credit
granting institution. This practice is often referred to as “identity theft.” Armed with such
information, criminals can request and receive credit or negotiate checks in the consumer’s
name, with devastating results for the consumer.
Sometimes identity theft begins with the use of publicly available information.
A government employee who participated in the Commission hearings related such an incident.
General information about this witness was listed in a publicly-available government directory.
Using that information, an unknown individual was able to obtain a copy o f the employee’s
college transcript, which showed his social security number. The individual was able
subsequently to get a copy of the employee’s birth certificate using the social security number.
The thief then had all he needed to “assume” the employee’s identity and use the information
to commit fraud.
III. Request for Comment
In response to concerns about the availability of identifying information about
consumers, and anecdotal evidence suggesting an increase in identity theft and financial fraud,
the Congress has directed the Board to conduct a study regarding the availability to the public
of sensitive information used to identify consumers. The Board is to determine whether there
are organizations “engaged in the business of making sensitive consumer identification
information, including social security numbers, m others’ maiden names, prior addresses and
dates of birth, available to the general public.” To help make this determination, the Board




solicits comment on the following issues:

What is or should be considered sensitive consumer information for purposes o f the


What information is currently used, or might be used in the future, to identify
individuals, and what types of public or private organizations, repositories, or
databases make such information available to certain entities or to the general public?


How is the information obtained (for example, by phone, through the mail, or on the
Internet), what costs are associated with obtaining the information, what are the
specific uses for which the information is obtained, and does the furnisher place any
restrictions on the distribution or use of this information on the purchaser? If so, how
does the furnisher ensure that use of the data is limited to its intended purposes?


Is the compilation, sale, and use of sensitive identifying information about consumers
subject to industry guidelines or regulations, and if not, what guidelines, regulatory or
legal requirements might be appropriate?

If sensitive information about consumers is available, the Board must determine
whether the availability of the information creates “undue potential for fraud and risk of loss
to insured depository institutions.” In order to make this assessment, the Board seeks
comment on the following issues:

How is sensitive identifying information about consumers used for financial fraud (for
example, to obtain a credit card in another person’s name)?


What types of identifying information about consumers are most meaningful in granting
and verifying credit, and how can consumers, financial institutions, and others control
the fraudulent use of this information?


What magnitude of financial loss do institutions attribute to fraudulent use of consumer
Finally, if the Board determines that additional laws are needed to lessen the

risks of fraud and loss to the banking system, the Board is directed to make legislative
recommendations to the Congress. Accordingly, the Board is seeking comment on the
following issues:

What, if any, legislative changes should be considered to help protect sensitive
identifying information about consumers?



What, if any, legislative changes should be considered to limit the use of such
information and reduce the risk of fraud or other loss to the banking system?


Form of Comment Letters
Comment letters should refer to Docket No. R- 0953, and, when possible,

should use a standard courier typeface with a type size of 10 or 12 characters per inch. This
will enable the Board to convert the text to machine-readable form through electronic
scanning, and will facilitate automated retrieval of comments for review. Also, if
accompanied by an original document in paper form, comments may be submitted on 3 Vi inch
or 5 % inch computer diskettes in any IBM-compatible DOS-based format.
By order o f the Board o f Governors o f the Federal Reserve System, December 17, 1996.

William W. Wiles
Secretary o f the Board