If someone takes out a loan from Foo Bank while pretending to be me, the borrower has committed a crime and Foo Bank has foolishly let themselves be robbed. It's got nothing to do with me, and I don't want an unpaid job correcting other people's mistakes.
The right solution would be a "innocent until proven guilty" approach to debt. If Foo Bank says I owe them money that I didn't borrow, I should be able to say "nope that wasn't me" and unless they have proof otherwise, that should be the last I hear of it.
It shouldn't be my responsibility to prove I didn't borrow the money; it should be theirs to prove I did.
Put that into law, and identity theft would no longer exist. Banks could decide whether they want to actually verify identity in a way that stands up in court ("well actually here's video of you standing in our office and stating that you want to borrow this money in your own voice, reading aloud the SHA of the contract you signed and giving us your fingerprints"), or just let their money be stolen. Either way, not my problem.
Unfortunately, that appears not to be consistent with the dreary reality we find ourselves in :-(
"Don't let banks ruin people's finances via incompetence" is a good goal.
[1] - https://www.thebalance.com/how-to-freeze-your-credit-report-...
"Pay $10 and follow onerous procedures to unfreeze" and "receive a notification on my phone when my file is opened" are really not in the same class of interaction.
I would like to be able to alert the company that just issued fraudulent credit account in my name, directly, that they have done a bad job at KYC, to tell them they have just interacted with a person who wasn't me ASAP after the event. The best I can get right now is to check with the credit report provided by my CC issuer once a week, and hope they get the signal, and that I read it on time.
A week later on-demand is still not anything like a notification on my phone when the file is opened. If this loop is tight enough, I might even be able to call the company who has been contacted by the phony applicant and get them to stop the process before any loss occurs!
By comparison I really have no desire to freeze my credit through the agencies, if it means I'll have to go through an extra hassle and pay a fee (and fwiw to some companies I really consider to be bad actors and not trustworthy at all) every time I move, or sign up for a utility account, or open a credit card.
It's not really the job of credit reporting agencies to verify identities, and just like that it's not my job to "own" the credit file. Even though it's ostensibly my personal information, that is actually the fact in question here, and next step in the dispute resolution process is up to the credit issuer to verify the debt (which they won't be able to do properly, if they have done a poor job at KYC.)
If they were consumer focused, like say a bank, they would make it easier to control. If the credit bureaus had to pay for the fraud, they'd try to control it more intelligently, like banks. If they did that it would hurt their business somewhat, because it would make it harder for people using their services, businesses trying to sell me a car or whatever.
The banks are their customers, and I would think that market forces would drive banks to choose the CRA that will enable this workflow, but I know that market forces don't always work out the way you'd expect. Banks should be driven (by the cost of fraud) to ensure that they don't open fraudulent accounts, where CRAs probably just report on it when it happens (whether or not it is fraud.)
If none of the CRAs will do this, the banking companies don't really have a choice, other than to choose not to participate (AKA to choose to go out of business...)
Those banks are all heavily insured too, so they are probably not really incentivized to make waves in order to lower the fraud rates. This is really where my informed opinion ends, but ultimately we, the consumers, are the paying customers of the system. The debt system cannot exist without debtors.
It does seem a bit baffling that this major secondary industry springs up to service the other major industry of lenders and credit services, and then so many actors are in a position to grant or deny credit based on hidden calculations, ... but there's just no way for the consumer to come in, step up and self-identify, and become a willing participant and part of that process (so I could simply receive, and optionally deny, a request for credit to be established in my name.)
Maybe it wouldn't actually scale, or maybe it would invite fraudsters. How many businesses are going to risk losing the sale by deferring to close the deal, until after this loop has been completed? I could sign up, meet a bad actor, and coordinate attacks with them. There are probably some ways this system could go wrong. (It would certainly be expensive to find out how, and we are not their customers.)
Hit me up with the unintended downsides :-)