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Homeland Security

Prepared Witness Testimony
The Committee on Energy and Commerce
W.J. "Billy" Tauzin, Chairman

Identity Theft: Assessing the Problem and Efforts to Combat It.
Subcommittee on Oversight and Investigations
December 15, 2003
10:00 AM
Middletown Township Municipal Building, 3 Municipal Way, Langhorne, Pennsylvania

Ms. Milissa J. Lenahan
Assis. VP/Assis. Operations Officer
First National Bank and Trust Co. of Newtown
40 South State Street
Newtown, PA, 18940-0158

My name is Milissa J. Lenahan, I have been employed by The First National Bank and Trust Company of Newtown for 20 years. My current position is Assistant Vice President, Assistant Operations Officer, Security Officer and Custodian of Records. One of my primary functions as a Security Officer is researching and responding to fraud. I am currently working 20 cases of fraud that involve some form of Identity Theft. 20 cases may not seem like a large number however, First National Bank is a Community Bank with our service area being within Central and Lower Bucks County. To us one fraud is too many.

Identity Theft is on the rise and no one is exempt from the possibilities of having their identity compromised. Identity Theft takes several forms from a stolen piece of mail to a wealth of counterfeit documents with unknowing victims information. My definition of Identity Theft is any time a persons information is used by someone other than them self. You don't have to have a fake Drivers License to impersonate someone and purchase something online with their stolen credit card. It has been my experience that retail locations rarely check the signature on the back of a credit card. Our bank takes pride in it customer service and we will use our abilities and resources to assist our customers who have been victimized by Identity Theft. We provide what ever assistance is necessary to stop any further damage to our customers good name. The following is a summary of the steps we take: Once notified by the customer, a hold is placed on all accounts . Notification is broadcasted to every computer, tellers as well as back offices as an alert throughout the bank. It is our practice to close the customers account and open new to prevent any further loss. We work with the customer in making sure legitimate payments are honored. We assist our customers with the paperwork necessary to credit back any funds missing as a result of the fraud. In addition we provide the customer with information on each credit reporting agency with the appropriate phone numbers so that they can have an alert placed on their credit report. We recommend that the customer file a police report. We will cooperate with police in an attempt to catch the "Fraudster" and bring them to justice. Training and education is a large part of what we do. It is an on going process and we will pull any and all resources available to us that is put out by organizations such as American Bankers Association. We will use these resources in training as well as providing them to our customers in their monthly statement. We post security alerts on our web site as another type of warming to our customers, and will speak to organizations and schools when asked. The tellers on the front line are the most vulnerable to a perpetrator of Identity Theft, split deposit fraud is one of the more common ways to pass yourself off as a customer by using a counterfeit or stolen check and presenting a portion for deposit and receiving a larger portion in cash back. The "Fraudster" is usually prepared to present identification. The problem is there is no way for the teller to know if this identification is legitimate or not.

Our new accounts people are also at risk. Technology has broadened the spectrum for someone intent on committing fraud. The only equipment you need is a home computer and a printer. A fake ID on the street would cost maybe $50.00. Check stock is readily available at stores that sell office supplies. All you need now is to take information off of someone's check. That check alone is a wealth of information, name, address, phone number, bank name, bank routing number and account number. When I started my career in banking in 1983, the only way you could get a supply of checks was by submitting your order to your bank. A bank would have the tools necessary to determine if this order is fraudulent as would the check printing company they contracted their business with.

Unfortunately resources necessary are not always available or practical. We no sooner put new tools and policies in place and then you are hit with a fraud with a new twist. Prevention is the key, but how do you prevent someone from stealing? If you are lucky enough to get an arrest, what is the punishment, credit for time served and restitution that could take years? Our bank has a very good working relationship with local Police departments. But Police also have limited resources and tools to pursue these types of criminals. When our customer needs to file a Police Report it is not clear which department they need to file with. Do you file in the municipality you live in or do you have to file in each location that an item was negotiated.

One example of this I had recently was our customer had to file a report in three separate municipalities after being turned away by his home municipality. The consumer is depending on the Police to help. Identity Theft leaves consumers with the feeling of total personal violation regardless of the dollar amount. The consumer spends countless hours trying to repair the damage. That is why we depend on organizations such as the ABA, FBI, FTC and local Law Enforcement to communicate and provide new tools to assist us in educating not only ourselves but consumer as well.

Identity Theft is one form of fraud that is extremely hard to prevent without access to certain tools only available to Law Enforcement. We can't call the Police every time someone presents us with a drivers license to verify the validity of the document and the picture to the person in front of the teller. New technology is being made available in some States for this type of verification, unfortunately not in all States.

New regulations and policies such as the Patriot Act and Customer Identification Program will help in the prevention of new account Identity Theft but for how long? If the people responsible for the crime are not punished for their actions regardless of the dollar amount, it is only a matter time before a new type of fraud surfaces. Government, Organizations, Law Enforcement, Financial Institutions and Consumers all need to work together to stop this growing fraud trend.

The Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515
(202) 225-2927


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