Identity Theft - Regulation is the Answer.

Last night, NBC News had yet another of its numerous reports on 'identity theft' which seems to become a huge problem in the U.S.

On Wednesday, the public policy think tank Privacy and American Business released a study saying 1 in 5 Americans identify themselves as a victim of identity theft. Researchers there estimated the crime has hit a staggering 44 million people.

In the end, it could even impact e-commerce and on-line banking as the news reports are becoming more and more alarming Now what I find interesting is that the NBC report seems clueless about possible solutions and that this does not seem to be an issue in Europe. Why is that?
Well, the reason is quite simple - most western European countries have tougher regulations which do not allow the "financial records and other data obtained on people for one purpose to be sold or shared without their consent." France for instance has one of the toughest privacy laws protecting the right of the indivual as a consummer.

"We're behind much of the developed world," said U.S. Sen. Charles Schumer, D-N.Y., who is pushing a broad bill aimed at impeding the crime. "The major European countries are doing more than we are doing, and somebody can feel safer about giving information about themselves there than in America."(.../...)
Meanwhile, countries with less restrictive data rules – and wider use of credit – such as Canada and Great Britain have struggled more with identity theft.

This is a good illustration of one of the many reasons why some regulation is needed and why capitalism is good only if kept in check - a good lesson for Mr Thomas Friedman. But it seems pretty clear that while the people are increasingly concerned, businesses are reluctant to accept tighter regulations... but it will happen once the fear starts affecting business.