Date: Apr 1, 2005
Identity theft is becoming easier and easier as more and more people shop online. Find out how to protect yourself from identity thieves in this sample chapter.
Maybe Shakespeare was right when he said in Othello, "Who steals my purse steals trash; 'tis something, nothing; but he that filches from me my good name robs me of that which not enriches him and makes me poor indeed."
Let's say you are at a car dealership and the salesman comes back with a long face and tells you the financing on the car you wanted to buy has been turned down, or the dealership has had to go to another loan source that means higher interest and payments. "But I have great credit," you say.
In another scenario, you apply for another credit card and are turned down. In both cases, you are shown a copy of your credit report and find late payment notices or applications for credit cards in other cities. Someone has stolen your identity.
According to a survey of the Federal Trade Commission, 27.3 million Americans were victims of identity theft within a five-year period. Fifty-two percent of identity theft victims first learned that they had been victimized by monitoring their own accounts. Twenty-six percent of victims first learned from credit card issuers, banks, or other companies with which they did business that they had been the victims of identity. theft while eight percent of the victims first found out their identity had been stolen when they applied for credit and were turned down. The survey also revealed that most identity thieves use personal information to buy things; however, fifteen percent of all victims were victimized in non-financial ways, such as when an identity thief used the victim's identity when apprehended for another crime by police. Sixty-seven percent of identity theft victims found that their already existing credit card accounts were improperly accessed while nineteen percent of identity theft victims said that their checking or savings accounts had been looted. California was the state with the highest number of identity theft victims proportionate to its population, followed by Arizona, Nevada, Texas, Florida, New York, Washington, Maryland, Oregon, and Colorado. The states with the lowest frequency of identity theft in proportion to population and in descending order were Wyoming, Montana, Maine, Kentucky West Virginia, Iowa, Vermont, South Dakota, and North Dakota. North Dakota had only 12.6 victims of identity theft for every 100,000 of population during 2002.
The FTC has been helping identity theft victims since 1998 and has an excellent Identity Theft Program to help victims and provide information to help combat this problem. If you are the victim of identity theft you can file a complaint with the FTC by calling them at 1-877-IDTHEFT or online at www.consumer.gov/idtheft. When a complaint is made, the information is stored and made available to law enforcement agencies around the country. Victims should not be concerned that the information will make them susceptible to further identity theft; the database is safe and secure.
A Big Problem
Frank Abagnale is a former identity thief who has left, as they say in Star Wars, the dark side of the force and is now a recognized expert on personal security matters. His exploits were described in his book, Catch Me If You Can, which was later made into a hit movie starring Leonardo DiCaprio and Tom Hanks.
In an interview with bankrate.com he spoke about one of the major problems in fighting identity theft: "Visa and MasterCard have losses amounting to $1.3 billion a year from stolen, forged, altered cards or those applied for under false pretenses. In the end they will probably raise fees and service charges to recoup these losses."
Abagnale went on to say, "Banks and corporations have found it is easier to write off a loss than it is to prosecute it. Most district attorneys have a benchmark set and do not prosecute forged checks under $5,000. Most U.S. attorneys have a benchmark of $250,000 before prosecuting white-collar crimes, and the FBI is under a directive not to investigate crimes under $100,000. The problem for the government agencies and municipalities is the lack of manpower and resources to prosecute these crimes."
Treasury Secretary John W. Snow on Identity Theft
In a speech in June of 2003 Treasury Secretary John W. Snow said, ""The wretched depravity of some identity crimes defies the imagination. In a ring stretching from New Jersey to California, a healthcare worker in cahoots with bank insiders and mortgage brokers got the names of terminally ill hospital patients, forged their identities, drained their bank accounts, and then bought houses and cars in their names&8212;stealing their identity and looting their finances. Another recent case involved a rash of scammers posing in military uniforms who visited the wives of soldiers deployed in Iraq. They falsely informed the wives that their husbands had been seriously wounded. The con artists then tried to collect personal information about the soldiers from the distraught wives, to enable the scammers to use the soldiers' identities and steal the families' savings."
Terrorism and Identity Theft
Although the connection between terrorism and identity theft might not be immediately apparent, it is very real and threatening.
In his testimony of September 9, 2003, before the Senate Committee on Finance regarding the homeland security and terrorism threat from document fraud, identity theft, and Social Security number misuse, FBI acting Assistant Director of the Counterterrorism Division, John S. Pitole said, "Advances in computer hardware and software along with the growth of the Internet has significantly increased the role that identity theft plays in crime. For example, the skill and time needed to produce high-quality counterfeit documents has been reduced to the point that nearly anyone can be an expert. Criminals and terrorists are now using the same multimedia software used by professional graphic artists. Today's software allows novices to easily manipulate images and fonts, allowing them to produce high-quality counterfeit documents. The tremendous growth of the Internet, the accessibility it provides to such an immense audience coupled with the anonymity it allows result in otherwise traditional fraud schemes becoming magnified when the Internet is utilized as part of the scheme. This is particularly true with identity theft related crimes. Computer intrusions into the databases of credit card companies, financial institutions, online businesses, etc. to obtain credit card or other identification information for individuals have launched countless identity theft related crimes."
"The methods used to finance terrorism range from the highly sophisticated to the most basic. There is virtually no financing method that has not at some level been exploited by these groups. Identity theft is a key catalyst fueling many of these methods. For example, an Al-Qaeda terrorist cell in Spain used stolen credit cards in fictitious sales scams and for numerous other purchases for the cell. They kept purchases below amounts where identification would be presented. They also used stolen telephone and credit cards for communications back to Pakistan, Afghanistan, Lebanon, etc. Extensive use of false passports and travel documents were used to open bank accounts where money for the Mujahadin movement was sent to and from countries such as Pakistan, Afghanistan, etc."
A particularly insidious identity theft scam uses the Patriot Act as a ruse to get your personal financial information. Again, it starts with an e-mail, this time purporting to be from the Federal Deposit Insurance Corporation (FDIC) that says that Department of Homeland Security Director Tom Ridge has notified the FDIC to suspend all deposit insurance on your bank accounts due to possible violations of the Patriot Act. After luring you into the trap, the criminal sending the e-mail then tells you within the e-mail that all your FDIC insurance will be suspended until you provide verification of personal financial information, such as your bank account numbers.
What Do Identity Thieves Do?
Identity thieves take your personal information and use it to harm you in a number of ways including:
- Gaining access to your credit card account, bank account, or brokerage account.
- Opening new credit card accounts in your name.
- Opening new bank accounts in your name.
- Buying cars and taking out car loans in your name.
- Buying cell phones in your name.
- Using your name when committing crimes.
Although you may not be responsible for fraudulent charges, the damage to your credit as reflected in your credit report can affect your employment, insurance applications, and loan applications as well as any future credit arrangements you may wish to establish.
You may remember the commercials by Citibank about its identity theft protections in which the voice of a young woman describing the bustier she bought with her credit card comes out of the body of an overweight, slovenly man. The ads made their point, but unfortunately so did the identity thieves who targeted Citibank and other companies through a tactic known as "phishing" in which they sent e-mails to unsuspecting consumers telling them that they needed to click on a hyperlink to update their information with the companies. When unsuspecting victims clicked on the hyperlink, they came to a website that looked like the real McCoy, or Citibank for that matter, but it was a phony. When the consumer entered his or her personal information, such as Social Security number or a credit card number, the identity thief had all he or she needed to either use the information to steal the identity of the victim or sell the information to other thieves. In the last two months of 2003, Citibank issued fourteen alerts to its customers warning them of this dangerous scam.
The term "phishing" goes back to the early days of America Online (AOL) when it charged its customers an hourly rate. Young Internet users with an addiction to their computers, not very much cash, and bit of larceny in their hearts sent e-mails or instant messages through which they purported to be AOL customer service agents. In these phony e-mails under those false pretenses they would ask for the unwary victim's passwords in order to stay online on someone else's dime. After a while, this phony fishing expedition for information came to be known as "phishing."
Phishing with a Pal
PayPal is a company with which anyone who has ever bought something on eBay is familiar. PayPal is an online payment service, owned by eBay, used to securely transfer money electronically. Through the popularity of eBay's online auction site, PayPal has gathered forty million customers who use its services to make sure that the exchange of funds for auctioned items is done safely and securely. But for many people that safety and security are an illusion. Through phishing, a con man sets up a website that imitates a legitimate website, such as PayPal, but whose sole purpose is to obtain sensitive personal financial information that can be used to facilitate identity theft. With the computer and software technology so readily available to pull off such a crime, the skill and artistry of the forgers of yesterday are not needed by the identity stealing phishers of today.
Through phony e-mails that looked like they were from PayPal, the identity thieves contacted retailers that used PayPal's services and requested confirmation of their passwords and other account information. According to PayPal, the passwords requested provided the criminals with access to sales information, but fortunately the personal financial information of their customers is stored on separate secure computer servers that are inaccessible to merchants or others that use PayPal's services. That is the good news. The bad news is that, armed with customers' names and other information about their previous purchases obtained through this scam, the con men were in a position to contact the customers directly and trick the unwary customers into revealing personal financial information that opened the door to identity theft. In the past, con men have sent e-mails purporting to be from PayPal, telling the customers that their accounts would be put on a restricted status until they completed a credit card confirmation that could be found on the PayPal site to which the e-mail directed the consumer. Unfortunately, the Web site to which the consumers were directed was a phony site used by the criminals to phish for victims. Previously, criminals would just randomly send out millions of e-mail messages, hoping to snag a few unwary victims. However, armed with personal account information surreptitiously obtained from PayPal using merchants, the phony e-mails would appear more legitimate and thus they were more likely to take in more victims.
Former Good Advice
Smug consumers used to be able to identify a phishing expedition by merely looking at the Web browser's address window to determine whether the e-mail purporting to be from some company with which they generally deal was legitimate. If the sender's e-mail address began with an unusual number configuration or had random letters, it indicated that it was phony. The e-mail addresses of legitimate companies are usually simple and direct. Unfortunately, this is no longer the case. Now computer savvy identity thieves are able to mimic the legitimate e-mail addresses of legitimate companies.
Two Things to Look For
When identity thieves mimic a legitimate company's e-mail address using the latest technology, there will be no SSL padlock icon in the lower corner of your browser. SSL is the abbreviation for Secure Sockets Layer, an Internet term for a protocol for transmitting documents over the Internet in an encrypted and secure fashion. In addition, when you type a different URL (the abbreviation for Uniform Resource Locator, the address of material found on the World Wide Web) into what appears to be the address bar, the browser's title will not change from the phony "welcome message."
More Good Advice
Don't fall for the bait. It takes a few moments longer, but if you are in any way inclined to respond to an e-mail that could be phishing to send you to a phony website, do not click on the hyperlink in the e-mail that purports to send you to the company's website. Rather, type in what you know to be the proper website address for the company with which you are dealing.
In a phishing case brought by the FTC and the Justice Department, it was alleged that Zachary Keith Hill sent out e-mails to consumers that looked like they were from America Online. The e-mail address of the sender indicated it was from the billing center or account department, and the subject line contained a warning such as "AOL Billing Error Please Read Enclosed Email" or "Please Update Account Information Urgent." The e-mail itself warned the victim that if he or she did not respond to the e-mail, his or her account would be cancelled. The e-mail also contained a hyperlink to send unwary consumers to a web page that looked like an AOL Billing Center. But it was a phony web page operated by Hill. At the web page, the victim was prompted to provide information such as Social Security number, bank account numbers and bank routing numbers as well as other information. Hill, in turn, used this information to facilitate identity theft. The FTC eventually settled its charges against Hill, who agreed to refrain from ever sending e-mail spam or setting up fictitious and misleading websites. As with just about all FTC settlements, Hill did not admit to violating the law, but he did promise not to do it again.
Phishing with a Large Net
The Phishing Attack Trends Report is published monthly online at www.antiphishing.org by the Anti-Phishing Working Group, an organization dedicated to eliminating identity theft resulting from phishing. In a recent monthly report the report stated that the companies most often imitated by phony phishing websites were eBay, Citibank, AOL, and PayPal.
Phishing Around the World
In an effort to clean up its own house, EarthLink, the Internet access provider, went on a phishing expedition, trying to trace the purveyors of phony phishing schemes, and what they found was both startling and disturbing. Many of the phishing scams they were able to track originated in e-mails from around the world, particularly Russia, Romania, other Eastern European countries, and Asia. In Romania, Dan Maarius Stefan was convicted of stealing almost a half a million dollars through a phishing scam and sentenced to 30 months in prison
For every computer geek or small time phisher, such as convicted identity thief Helen Carr who used phony e-mail messages purporting to be from AOL to steal people's money, it appears that more sophisticated organized crime phishing rings are popping up, posing a serious threat to computer users. This presents a growing problem for law enforcement.
How Do You Know That You Have Been a Victim of Phishing?
The problem is that you may not know that you have been a victim of identity theft through phishing. When a mugger takes your wallet, you know right away that your money has been taken, but when an identity thief steals your identity through phishing, you may not remember what appeared to be the innocuous e-mail that started you on the road to having your identity stolen. As always, an ounce of prevention is worth a gigabyte of cure.
What You Can Do to Prevent Identity Theft
- Do a little spring-cleaning in your wallet or purse even if it is the middle of the summer. Do you really need to carry all the cards and identifications that you presently carry?
- If you rent a car while on vacation, remember to destroy your copy of the rental agreement after you have returned the car. Don't leave it in the glove compartment.
- Stolen mail is a ripe source of identity theft. When you are traveling, you may want to have a neighbor you trust pick up your mail every day or have your mail held at the post office until your return. Extremely careful people or extremely paranoid people, depending on your characterization of the same people, may prefer to use a post office box rather than a mailbox at home. Identity thieves also get your mail by filling out a "change of address" form using your name to divert your mail to them. If you find you are not receiving any mail for a couple of days, it is worth contacting your local postmaster to make sure everything is okay. A recent preventive measure instituted by the U.S. Postal Service requires post offices to send a "Move Validation Letter" to both the old and the new address whenever a change of address is filed. If you receive one of these notices and you have not changed your address, you should respond immediately because it could well be a warning that an identity thief has targeted you. A careful credit card holder keeps an eye on his or her mailbox for the arrival each month of his or her monthly statement from the credit card company. If a bill is missing, it may mean that someone has hijacked your account and filed a change of address form with the credit card issuer to buy some more time. The sooner you become aware that security of your account has been compromised, the better off you will be. You should also be particularly watchful of the mail when your card is close to expiration. An identity thief may be in a position to steal your mail containing your new card. If an identity thief is armed with enough personal information to activate the card, you could be in trouble.
- Prudent people may wish to use travelers' checks while on vacation rather than taking their checkbook because an enterprising identity thief who manages to get your checkbook can access your checking account and drain it.
- Be wary of who may be around you when you use an ATM machine. Someone may be looking over your shoulder at you inputting your PIN number. That same someone may lift your wallet shortly thereafter. Next step&8212;disaster.
- Make copies of all your credit cards front and back so that you can tell whether a card has been lost or stolen. Also keep a list of the customer service telephone numbers for each card. When copying your cards, you may wish to consider whether you really need that many cards.
- Be careful storing personal information and mail even in your own home. In April of 2004, Shreveport, Louisiana, police arrested a babysitter on identity theft charges. They alleged that she stole a credit application mailed to the people for whom she was babysitting and also opened other accounts using the Social Security number of her employer that she had found while rummaging through their documents.
- After you have received a loan, a credit card, or anything else that required you to complete an application containing your Social Security number, request that your Social Security number be removed from the application kept on record. In addition, if you are feeling particularly paranoid, ask that your credit report used by the bank or other institution be shredded in your presence. They no longer need that information after you have received the loan.
- Make life easier for yourself. Remove yourself from the marketing lists for pre-approved credit cards and other solicitations. You can remove yourself from the Direct Marketing Association's solicitation list by writing to them at Mail Preference Service, Direct Marketing Association, P.O. Box 9008, Farmingdale, NY 11735. Include your name and address, but no other personal information. You can also register for the Direct Marketing Association's Mail Preference Service to opt out of national mailing lists online at www.dmaconsumers.org, but there is a five-dollar charge for doing so. DMA members are required to remove people who have registered with the Mail Preference Service from their mailings. However, because the list is distributed only four times a year, it may take about three months from the time that your name has been entered to see a reduction in junk mail.
- Register with the Direct Marketing Association's E-Mail Preference Service to opt out of national e-mail lists. Again, although this will reduce your spam e-mail, it will not eliminate it because many spammers are not members of the Direct Marketing Association. You can register for the E-mail Preference Service online at http://www.dmaconsumers.org/consumers/optoutform_emps.shtml.
- If you do get unwanted spam e-mails, do not click on the "remove me" link provided by many spam e-mails. All you will succeed in doing is letting them know that you are an active address and you will end up receiving even more unwanted e-mails.
- If you receive spam faxes, you also should be wary of contacting the telephone number to remove yourself from their lists. It is already illegal for you to have received the spam fax. Contacting the sender by its telephone removal number may cost you for the call and will not reduce your spam faxes.
- Sign up for the National Do Not Call Registry to reduce unwanted telemarketing calls. Most telemarketers are legitimate. Almost all are annoying, and many are criminals setting you up for identity theft. In order to sign up for the Do Not Call Registry, you may call toll free 1-888-382-1222 or register online at www.donotcall.gov.
- Check your credit report at least annually and remember to get copies from each of the three major credit report bureaus, all of which independently compile the information contained in their files. Look over your file and make sure everything is in order. Particularly look for unauthorized and inaccurate charges or accounts. Also, check out the section of your report that deals with inquiries. A large number of inquiries that you have not authorized could be the tracks of an identity thief trying to open accounts in your name. A large number of inquiries can also have the harmful effect of lowering your credit score.
- Check your annual Social Security statement as provided by the Social Security Administration annually. It provides an estimate of your Social Security benefits and your contributions and can be helpful in detecting fraud. It is also a good thing to check this statement carefully each year to make sure that the information contained within it is accurate to insure that you are slated to receive all the Social Security benefits to which you are entitled.