The Form of Application:The Start of the ID Theft Problem

[David A. Szwak]

THE FORM OF THE APPLICATION:

An application should reflect the tone of the relationship sought between the issuer and the consumer. A long form application stresses formality, responsibility by the creditor to gather important information, and the serious nature of undertaking a credit extension. A short form application stresses informality and cost savings, the desire to build goodwill with the consumer, and a desire for rapid handling. Short form creditors rely heavily on outside sources of data, mainly credit bureaus. If a business is serious about combatting fraud and minimizing such losses, the long form application is the only solution.

In combatting fraud, passwords must be developed and used within the application process and these passwords must be considered in the application review process. Mother's maiden name is one simple and commonly used password. Place of birth is another. Of course, any fixed, yet uncommonly known, item of information will work. It should be an item of information not readily available in commonly used/held public records.

Some creditors suggest using application which require the applicant to have their signature notarized. After all, creditors frequently and improperly request credit fraud victims to sign a detailed fraud affidavit before a notary. Why not require the same formality on the front end. This seems to highlight the care-free attitude about fraud.

Some creditors suggest requiring submission of applications at a fixed location where identification must be presented. This could be coordinated through a designated, local card distribution center or postal center or local credit bureau [would allow consumer interaction with industry member and allow bureau an opportunity to offer consumer a chance to insure proper information is contained in their files and even shift cost of credit report, if bureau reduced fees].

Customers are much more willing to disclose assets in the application process than after the account goes bad or collection efforts begin.