October 11, 1999 Web posted at: 10:43 a.m. EDT (1443 GMT) by Heather Hayes

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(IDG) -- Identity theft is to the Information Age what rum-running and gangland murders were to the Prohibition era. Few formal statistics are kept, but there is little doubt that this type of fraud-which in many states is not even recognized as a punishable offense-already is the country's fastest-growing financial crime.

Privacy advocates say that the solution to preventing identity theft is a simple, three-step process: Curb the use of the Social Security number as a unique identifier for business use, a measure that has been introduced in Congress and defeated several times over the past decade; force credit-granting agencies to require more identifiers and shore up their credit card policies; and restrict all selling of personal information by credit bureaus, state and federal agencies, and marketing firms.

But few state officials believe that the federal government is going to get involved. Ultimately, the solution that keeps coming to the fore is a full-scale database with cross-matching capability.

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The system, which already has been developed by 3M Corp., would involve a central processing system and a fingerprinting system. When someone wants to renew a driver's license, for example, she would lay her finger on a scanner, and the data would go to the central processing system. If the fingerprint was in the database, it would pull the matching information and a digital photo. If the photo matched the person standing in front of the counter, then a driver's license would be issued. The driver's license would look like a credit card, complete with a magnetic stripe or bar code that contained a digital encryption of the person's thumb print.

But if the person standing at the counter didn't match the digital photo, then that person would be detained on suspicion of fraud.

"Once the system was in place, there would be only one way to fool the system, which would be the first time you applied," Nesel said. "But after that, when you went back to renew under your name or someone else's name, you'd be caught and out of business."

Regardless of how effective such a system would be against fraud, privacy advocates argue fiercely that the information eventually would be misused. They point out that three states-Florida, South Carolina and Colorado-were recently caught selling their databases of digital driver's license photos to Image Data, a company in New Hampshire. The stated use of the photos was to give merchants a way to verify the identity of someone trying to write or cash a personal check. But the ACLU's Steinhardt said that the company's research was funded in part by the Secret Service.

"The real desire there is to create a nationwide photographic database for identification and tracking purposes," he said.

The privacy lobby's strong and united front has sent other states in search of legislative solutions. At least 15 states have introduced legislation that would make identity theft a unique crime with felony-level penalties. Massachusetts passed a sweeping package that provides protections for identity theft victims against having unpaid bills appear on their credit report when the victim has filed a police report and prohibits retailers, credit agencies and the Registry of Motor Vehicles from selling personal information without affirmative consent.

Biometrics Literally, biometrics means "life measurement." It's always been controversial, but as technology continues to march forward, there seems to be no limit to the types of body parts that reveal a person's unique identity. Here are some of the current biometric technologies being considered for use in systems by government agencies, banks and security organizations. Fingerprinting Retina scanning Iris scanning Voice recognition Facial recognition Handwriting analysis Hand print recognition Hand vein geometry

New York also has a number of bills on the table, including ones that would make identity theft a felony, prohibit agencies from selling personal information or digital photos, establish more credit card activation procedures and safeguards, establish new penalties for the misuse of birth and death certificates, and regulate the selling of consumer credit information.

"We are trying to close the loop on certain things that are very obvious," said New York Assemblywoman Audrey Pheffer. "But we'll have to keep adding new laws. Technology is moving so quickly that it's hard for the law to keep up."

Ultimately, privacy advocates and state officials said that states may have to unite and turn up the pressure on the federal government to solve this crime. "It's going to take a federal solution, beginning with changes in the way the Social Security number is used and the free and easy access businesses have to people's credit reports," Abagnale said. "Even with totally secure licenses and biometrics, the best the states can hope for is to Band-Aid the situation. And so the federal government had better take this issue up and soon."

Otherwise, as more and more victims find themselves in the fight of their lives to hang onto and recover their good names, it could end up being too late.