Re:Severe penalties (Score 2, Insightful)

Prevention would be better than a cure. Credit companies on receipt of a credit/loan application should write to the employer asking for confirmation the person is employed there. The letter should ask the employer to pass on to the employee an attached letter that tells the employee he/she has applied for credit and how to contact the credit company if he/she hasn't made the application.

Only when employer confirms and employee doesn't complain is it safe to advance any money.

Current practice of lending money without properly verifying the identity of the applicant is the real crime here.