Identity Theft Cost Pegged at $548 Million.(reports on identity theft)

Providence, RI -- Lenders need to spend more time developing employee training and awareness regarding fair lending and privacy laws, especially since Americans lost at least $548 million to identity theft and consumer fraud in 2004, attorney David Hadlock told attendees at the regulatory compliance panel at the 18th Annual New England Mortgage Banking Conference here last month.

Mr. Hadlock, compliance counsel to the Massachusetts Mortgage Association, said the Federal Trade Commission received 636,000 consumer complaints last year. Identity theft topped the list with 247,000 complaints, up 15% from 2003. Fraud is up as the Internet provided new victims for age-old scams, he said, which is why businesses should come up with specific action plans to make sure they are in compliance with state and federal laws.

The FTC has become the new industry regulator with a "privacy law sweep" of "typical, small" companies, he said. "The mom-and-pop shops with six, eight, 10 employees must prove they are in compliance or they will be forced to shut their doors."

Lenders need to spend more time developing employee training and awareness regarding the fair lending and privacy laws. Businesses should come up with an action plan for problem areas, said Mr. Hadlock.

"More training will have to take place on policy requirements. There needs to be more of a focus on best practices, not only for compliance, but for sales and management structure," he said.

Mr. Hadlock also told conference attendees to be careful about backup tapes with records dealing with financial information of customers. In May, personal information for 600,000 current and former Time Warner employees was declared lost. This case is just the latest in a series of data theft cases to rock corporate America, he said.

In February, a small number of backup tapes for Bank of America were lost in a shipment to a backup center. The tapes contained information on the customers and accounts of the U.S. government's SmartPay charge card program, which has more than 2.1 million members and annual transactions totaling more than $21 billion. Reports have pegged the number of cards affected at 1.2 million, Mr. Hadlock said.