ZDNet: Story: How we can stop identity theft--for good
The bigger issue here is that we automatically trust the companies we patronize to keep our personal information safe and secure--not only from outsiders, but also from company insiders--whether they deserve that trust or not. But when you think of all the people who have access to, for instance, a loan application for a new car, you start to see how vulnerable you are. Given that doing any business these days--whether in person or online--often requires giving out some personal information, what can be done?

the Federal Trade Commission should step in and mandate strict new policies regarding the handling of credit bureau information. Such rules might resemble the Health Insurance Portability and Accountability Act, which sets forth guidelines for the handling of medical information by healthcare providers, and the Gramm-Leach-Bliley Act, which outlines privacy rules for customer information at financial institutions.

In addition, companies that access credit bureau reports should be held liable for any abuses and thus be encouraged to audit their employees' activities.

If you want more information about protecting yourself from identity theft, the Federal Reserve Bank of Boston offers a comprehensive brochure on the topic. http://www.bos.frb.org/consumer/identity/index.htm It's full of useful tips and resources, such as how to contact each of the three major credit bureaus to monitor your credit reports. The brochure recommends you do this twice a year.
http://www.zdnet.com/anchordesk/stories/story/0,10738,2910503,00.html