My pet solution has been to make the credit reporters liable for transmitting false information to the CRAs.
Chase tells Experian I opened a new line of credit with them, but it later is demonstrated that it was a scammer with my SSN? Congratulations, $5,000 fine.
Of course this all gets priced in to the cost and availability of consumer credit. Good! Now the lenders have an incentive to drive those costs down (cheaper, better identity verification) to compete.
Right. This is a problem between the lenders and the people who stole from the lenders. The person whose name/number was used shouldn't even be part of the transaction or part of the problem.
They call it "Identity Theft" instead of what it should be called: Bank fraud. The term "Identity Theft" 1. needlessly pulls an otherwise uninvolved person into the mix, suddenly making it their problem too, and 2. downplays the bank's negligence.
If someone uses my name to take out a loan, and the bank stupidly lets them, this shouldn't even remotely be my problem. I shouldn't even have to know about it. This is the bank's problem from their own stupidity.
Who bears the consequences of their home being robbed? Or mugged on the street? Or a contractor taking payment for services and then disappearing?
Why are we subsidizing lenders’ by putting this ridiculous burden on people who have nothing to do with the lender’s business?
The lender can pay to appropriately verify their borrower’s identity, or go to court and sue for damages like everyone else has to.
The solution is much simpler. Put all of the consequences of being defrauded by a borrower onto the lender.
If a lender wants to be repaid, then they need to show the borrower all the evidence they have for proof that the borrower entered into the contract.
If all a lender has is the fact that a 9 digit number, date of birth, name, and address were entered online, then the borrower simply has to say “I did not enter that information”, and the lender can go pound sand.
Guarantee all the lenders will tighten up their operations very quickly, and consequently, so will the loans that appear on one’s credit report.