You have touched a nerve, sir(or madam).
I heartily agree with what you say about "identity theft." I had an episode a few years ago where someone used my name etc. to open a cell phone account. I heard nothing about this until the phone co. turned "my" account over to a collection agency. The fact that I had no dealings with the phone co., that they had no signature, picture, no physical proof that I had ever agreed to anything -- this was next to useless and not proof against harassment and the necessity for ME to produce documentation (i.e. spend money) proving/swearing that I had no such agreement.
I did/do not have the nerves of steel that it would have taken to do what, in retrospect, would have been correct, that is to simply ignore the harassment and let them sue me. I was annoyed and my peace disturbed because the phone co. in question has, in my opinion, sloppy business practices. That they will extend credit to a person based on a telephone call is their (questionably intelligent) decision; it should not become my problem. But it was.
As you say: when the banks and/or credit card companies (and other businesses that extend credit) are made to take responsibility for bad debts incurred in this way the game will change, and quickly.
There are those who will say that this would be bad for business. I will remind them of the "Crunchy Dead Frog" sketch from Monty Python, in which the confection company is asked why they don't reveal on the package label that the food therein contains a dead frog with bones in it. "It would affect sales!" is the horrified answer.