With bank losses from identity theft continuing to mount, bankers in Colorado are leading an effort that would put them on the front lines in the ID-theft fight.
They are pushing for legislation to create a statewide ID-theft task force that would be the first of its kind in the country to include bankers. Other states have similar coalitions but they are made up largely of law enforcement officials.
"Fraud from identity theft is a huge issue," said Don A. Childears, the president and chief executive officer of the Colorado Bankers Association. "We estimate that our banks lose up to $150 million each year to fraud, so we're very motivated to find a solution."
The bill would create an Identity Theft and Financial Fraud Board funded by surcharges on financial service companies. The board would consist of two bankers, the state's attorney general, a representative from the Colorado District Attorneys Council, and three representatives from state and local law enforcement agencies.
The board would oversee a task force that would monitor scams in and outside of Colorado. The task force would then disseminate information and recommendations to local law enforcement officials and prosecutors.
It would also give financial institutions updates on new scams and develop public awareness campaigns.
Mr. Childears said bankers could contribute a lot because they best understand bank operations and how identity thieves could breach their systems.
"By uniting the knowledge of bankers and law enforcement … this task force would provide expertise to all of the local jurisdictions to help them better fight these crimes," he said.
Along with consumers, financial institutions are hit hardest by fraud from identity theft because they have to assume most of the losses. Javelin Strategy and Research, a Pleasanton, Calif, consulting firm, estimates that consumers and financial firms lost $56.6 billion in ID-theft related fraud last year, up from $53.2 billion in 2003.
Jay Foley, co-executive director of the Identity Theft Resource Center in San Diego, said that in most parts of the country, law enforcement officials have formed coalitions to fight identity theft, but he knows of none that include bankers.
"I applaud the bankers for doing this. This kind of collaboration with law enforcement could really help put a lot of these thieves behind bars," Mr. Foley said. "I think this should be repeated nationally."
Mr. Childears said banker groups in other states would watch the Colorado law closely to gauge its success.
Bankers could form a task force without legislation, of course, but they want a law because it would create a designated funding source.
If the bill is passed, banks would pay $3 for every Uniform Commercial Code filing they make on property to be used as collateral for commercial loans; consumer finance companies such as mortgage companies and pawn shops would pay an annual $100 surcharge on their business licenses; and money transmitters such as Western Union and PayPal would pay an annual $500 surcharge on their licenses.
Mr. Childears said it would take about $600,000 a year to fund the board and task force.
The bill has been approved by two House committees and referred to the House appropriations committee. Colorado's legislative session adjourns May 10.
Mathew Street, the deputy general counsel at the American Bankers Association, called Colorado's bill "innovative."
Though roughly a dozen states have enacted identity-theft laws over the past several years, most of those have dealt with strengthening penalties for such crimes.
