Today, news broke that an Equifax security breach exposed 143 million people to identity theft.
Identity fraud is one of the fastest growing crimes in America. In the past six years, identity thieves have caused damages of over $107 billion in the United States alone. In 2016, more than 6% percent of US citizens were victims of identity fraud, a 16% increase from the year prior.
The security of personal information is critical for safety and privacy. Yet, if you have ever applied for a loan in the US, opened a bank account or started a new job, chances are you were asked for your Social Security Number (SSN) to identify yourself. Ironically, that number was never intended to be a form of identification due to the risks of sharing it openly. It was meant to serve as an account code for everyone covered by the Social Security program. Of course, many people have now learned to be careful when sharing their SSN.
Once fraudsters obtain your SSN, they can use this number to open financial accounts, steal your identity, and even compromise your credit.
A Broken System
Despite these obvious flaws, your SSN serves as one of the fundamental keys to your life. Imagine if you were forced to divulge your Facebook password every time you applied for a loan, just so the lender could double check that you were really who you say you are. Virtually everyone would scoff at the obvious insecurity in that. Even so, this is the SSN system as it exists in America today.
These cracks in the United States identification system don’t always expose themselves. Most people aren’t victims every year. After all, the fact that only 6% of people get their identity stolen every year means that 94% of citizens do not have to face the issue.
Borrowers must divulge all of their personal information when applying for a loan — the same info an attacker can use to open new lines of credit. While it’s problematic that this information is used for identity verification, the primary issue is how that information is handled. This information is handled and stored in a vulnerable manner by the big three credit bureaus.
Hackers exploited a security flaw in Equifax, allowing them to access to files including credit and Social Security information on 143 million Americans. Everything a fraudster needs to authenticate themselves for most loans: SSNs, birth dates, driver’s license numbers, and home addresses are now in the hands of criminals.
The flaws aren’t just with Equifax. Experian, one of the other big bureaus, was hacked in 2015, causing the personal data of 15 million Americans to be exposed.
The entire identity system of the United States is held in the centralized and vulnerable databases of the big 3 credit bureaus. While better solutions to identity verification exist, these companies should, at the very least, transfer your information more securely.
We believe security and the improvement of identity is fundamental for the growth of our economy. This is why we are creating Bloom. Bloom creates a protocol to bring the future of credit to the Blockchain. In addition, Bloom implements globally federated, secure ID’s on the blockchain, dramatically mitigating the risk for identity theft due to data breaches by reducing our reliance on single-source forms of identity verification.
To learn more on how we do this, please read our whitepaper and join our community.
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