The classic American identity theft scam works like this: the thief convinces some bank or credit card company he’s actually you and borrows God knows how many dollars in your name. Once you discover and report this, you’re not liable for money the bank lost, but neither are you entitled to compensation for the time and effort you spend straightening the matter out. Bear in mind that when I say "the thief convinces the bank he’s you", I’m not talking about a brilliant actor and master of disguise who imitates your voice and mannerisms well enough to fool your own mother. No, all that’s necessary to fool a bank is your birth date and US social security number, or just discarded credit card offer taken from your bin.
Why are lenders so careless with their money The snarky answer is: because they know taxpayers will bail them out. But identity theft was a problem in America long before phrases like "too big to fail" entered our vocabulary, I became an identity-theft statistic nine years ago, when I opened my mail to find a bill for a maxed-out credit card I never knew I had. I spent over two weeks cleaning the mess: filing police reports, calling the company, sitting on hold, getting disconnected and calling back to sit on hold again. Considering my salary back then, I spent over a thousand dollars’ worth of my time — and wasn’t entitled to a penny in damages.
It all could easily have been avoided, had the company made a minimal effort to ensure they were loaning money to me rather than my dishonest doppelganger. So why didn’t they Because that would take time — at least a day or two. And if people had to wait a day between applying for and receiving credit, on-the-spot loans would be impossible. Every major retail chain in America pushes these offers: "Apply for a store credit card and receive 15% off your first purchase!" From the lenders’ perspective, writing off a few bad ID-theft debts is cheaper than losing the lucrative "impulse buyer" market.
But that would change if companies had to pay damages to identity theft victims. Should they have to The supreme court of the state of Maine is currently pondering that question. In March 2008 the Hannaford supermarket chain announced that hackers broke into their database and stole the credit card information of over 4 million customers, some of whom sued Hannaford for damages. None of the customers lost money, of course, but they felt — as I did — that their time and effort are worth something too.
It’s too early to know how the court will rule, but I’ll make a prediction anyway: nothing will change from the consumers’ perspective, and protecting lenders from their own bad habits will continue to be our unpaid job. When the worldwide economic meltdown started, I naively thought the subsequent tightening of credit lines would at least make identity theft less of a problem than before. But I was just being silly. By saying "too big to fail" (Line 3, Para.2), the author implies that