Obama launches initiative to cut identity theft

Calling identity theft a “heartbreaking” crime that robs Americans of their financial security, President Obama on Friday signed an executive order to put in place new protections for consumers who receive government benefits.

Speaking at the Consumer Financial Protection Bureau (CFPB), formed three years ago in response to the 2008 financial crisis, Mr. Obama announced that moving forward, all government-issued benefits cards will contain a microchip rather than the traditional black magnetic strips. The cards also will require an individual PIN number to better protect privacy and ward off identity theft and fraud.

“Identity theft is now America’s fastest growing crime. These crimes don’t just cost companies and consumers billions of dollars every year; they also threaten the economic security of middle-class Americans who worked really hard for a lifetime to build some sort of security,” he said. “The idea that somebody halfway around the world could run up thousands of dollars in charges in your name just because they stole your number or just because you swiped your card at the wrong place at the wrong time — that’s infuriating. For victims, it’s heartbreaking. As a country, we’ve got to do more to stop it.”

Mr. Obama also announced private-sector commitments to battle identity. Companies such as Target, Home Depot and others have agreed to use microchips and PIN numbers on cards they issue, the president said. Credit-card firms such as American Express have pledged millions of dollars to replace outdated card readers at businesses across the country.

Industry groups lauded the move.

“We applaud the administration for taking proactive and positive steps by adopting PIN and chip technology for government-issued debit and credit cards, among other things,” said Matthew Shay, president and CEO of the National Retail Federation. “From insisting on PIN and chip cards to facilitating greater information sharing among retailers and others sectors, we are committed to finding the right answers with the latest technologies to stop these cyber thieves.”

While the president focused on his new program, critics took at the CFPB itself, and the Dodd-Frank financial reform bill that created. They allege both have hurt the economy and held back the middle class.

“It’s now harder for low and moderate-income Americans to buy a home, services like free checking are being eliminated, credit card fees are going up and fewer low-income Americans can afford to access traditional banking services,” a spokesperson for the House Financial Services Committee said in a statement. “The intended beneficiaries of Dodd-Frank and the CFPB are worse off. Dodd-Frank has proved to be the financial equivalent of Obamacare.”

Also on Friday, Mr. Obama said he’ll call a summit on consumer protection and cybersecurity later this year to help develop new ways to fight identity theft. He also directed federal law enforcement agencies to share information with the private sector when they uncover identity-theft rings sophisticated fraud schemes.