Identity Theft!
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Hey, that's where I put my sunglasses.
Identity theft has officially hit the comedy circuit. Humor columnist Andy Borowitz spoofed the current headlines with his "Identity Thief Returns Identities Deemed Worthless":
"An identity thief who has stolen over half a million identities over the past two years returned all but four of them today, declaring the identities 'totally worthless' and 'an enormous waste of my time and hard work.'
"He said that he had spent months hacking through the security firewall of one of the nation's largest financial institutions, hoping to reap billions of dollars for his efforts, but after sifting through the stolen identities he found that they were 'little more than a garbage dump of unpaid college loans and overdue Blockbuster bills.'
"'Everybody's running around worried about identity theft these days,' he added. 'All I can say is, don't flatter yourself by thinking you have an identity that's worth my time.'"
Identity theft: It's a lot funnier than you thought it was. The number of high-profile security breaches has reached such comical proportions that it's only a matter of time before it knocks Michael Jackson jokes from the top slot on Jay Leno's gag list. (Probably a long time at the going rate.)
I put a moratorium on ID theft scare stories early last year, because I didn't want to be one of those alarmist financial journalists accused of blowing the problem out of proportion. ("Scams! Danger! Everywhere!") Then again...
Captain we've got a problem
Earlier this year data warehouse ChoicePoint (NYSE: CPS) made headlines after it admitted unwittingly giving database access to fraudsters, who then used the information to get into a reported 144,000 individual files and rip off at least 700 people. Last month more than 300,000 files were breached at LexisNexis (owned by Reed Elsevier Group (NYSE: ENL), a company that compiles and sells consumer personal and financial data. And just last week, Time Warner (NYSE:TWX) said a cooler-sized container filled with 40 computer backup tapes with the names and Social Security numbers of 600,000 current and former employees and contractors, as well as the information of some of their dependents and beneficiaries, was misplaced by an outside storage company it had hired.Oopsy-daisy
My conversation three years ago with Joel Albert, a victim of what was then the largest identity theft racket in U.S. history, seems so quaint now. He was one of 30,000 individuals whose credit information was sold for a song. Crooks drained nearly 90 grand of equity from his home. (Details here.) "It's a great way to rob a bank without a gun," he said.Heck, it's not like potential thieves weren't invited by a friend of a friend of a friend. To extend the bank robber analogy for another paragraph, you could say that financial institutions are practically putting up "Open House" signs on their vaults. You know those flyers you get in your credit card, insurance and mortgage documents -- the ones that you skim over and ignore? Here's the gist of what they say:
Dear customer
Thank you for banking with First Bank of Firstness. As a service to our valuable customers and a lucrative revenue stream for us, we are now offering your financial information -- including full access to your credit file! -- to service providers that have a marketing relationship with us. We are sure you will enjoy the product mailings and phone calls you will be receiving from them. As always, we thank you for choosing First Bank of Firstness for all of your banking needs. P.S.: If you want to be a party pooper and prevent us from spreading the word about your deep pockets, dig out your stationary, stamps and/or rotary telephone and let us know via legally correct verbiage. Oh, and while you're at it, please let us know if you spot any funny business with your account.At your service,
First Bank of Firstness
The bottom line: You'd better hope your neighborhood watch is alert, since it seems you, as an individual, are in charge of keeping the bad guys out during and after business hours.
Honey, lock the screen door
Companies like ChoicePoint, Time Warner and LexisNexis -- our employers, our credit card processors, the keepers and sellers of our secret stuff -- feel so very bad about those little privacy glitches that they're giving violated individuals free subscriptions to an identity guard service. It's the least they could do.Actually, it is. As far as I'm concerned, we should all get free identity guard subscriptions until the organizations that track our most sensitive financial information find a way to bulletproof their data. That's not going to happen anytime soon. The path to profits is paved with paranoia. You'll pay anywhere from $40 to $120 to one of the credit reporting agencies to keep tabs on suspicious movements. (Yeah, our Credit Center sponsor sells one, too.) You can put a free fraud alert on your files, which will require a waiting period and verbal confirmation for new lines of credit applied for in your name, but in many instances those expire after a few months.
In the meantime there are less formal measures to cocoon your credit file. Here are our tips (as well as the FTC's) on how to avoid ID theft and what immediate actions to take if you do find that some bad guys got hold of your good name.
That is, if you have a credit file worth stealing. According to Borowitz's faux ID theft report:
In San Diego, at the annual convention of the National Association of Hackers and Identity Thieves, some of the nation's most prominent cyberthieves complained about what they called a serious decline in the number of identities worth stealing.
They called out for financial institutions to institute measures that would warn or "tag" particularly worthless identities, enabling hackers to focus their energies elsewhere.
Dayana Yochim has plenty of experience with grand theft auto but so far has kept her identity intact. The Motley Fool's disclosure policy is secured by The Club.
Identity theft
Identity theft is a term used to refer to fraud that involves stealing money or getting other benefits by pretending to be someone else. The term is relatively new and is actually a misnomer, since it is not inherently possible to steal an identity, only to use it. The person whose identity is used can suffer various consequences when they are held responsible for the perpetrator's actions. In many countries specific laws make it a crime to use another person's identity for personal gain.Identity theft Types
According to the non-profit Identity Theft Resource Center, identity theft is sub-divided into four categories:financial identity theft (using another's identity to obtain goods and services) criminal identity theft (posing as another when apprehended for a crime) identity cloning (using another's information to assume his or her identity in daily life) business/commercial identity theft (using another's business name to obtain credit) Identity theft may be used to facilitate crimes including illegal immigration, terrorism, and espionage. Identity theft may also be a means of blackmail. There are also cases of identity cloning to attack payment systems, including medical insurance.
Some individuals may impersonate others for non-financial reasons - for instance, to receive praise or attention for the victim's achievements. This is sometimes referred to as identity theft in the media.
Identity theft Elaboration
Financial identity theft
A classic example of credit-dependent financial crime (bank fraud) occurs when a criminal obtains a loan from a financial institution by impersonating someone else. The criminal pretends to be the victim by presenting an accurate name, address, birth date, or other information that the lender requires as a means of establishing identity. Even if this information is checked against the data at a national consumer reporting agency, the lender will encounter no concerns, as all of the victim's information matches the records. The lender has no easy way to discover that the person is pretending to be the victim, especially if an original, government-issued id can't be verified (as is the case in online, mail, telephone, and fax-based transactions). This kind of crime is considered non-self-revealing, although authorities may be able to track down the criminal if the funds for the loan were mailed to them. The criminal keeps the money from the loan, the financial institution is never repaid, and the victim is wrongly blamed for defaulting on a loan s/he never authorized.In most cases the financial identity theft will be reported to the national Consumer credit reporting agency or Credit bureaus (U.S.) as a collection or bad loan under the impersonated person's record. The victim may discover the incident by being denied a loan, by seeing the accounts or complaints when they view their own credit history, or by being contacted by creditors or collection agencies. The victim's credit score, which affects one's ability to acquire new loans or credit lines, will be adversely affected until they are able to successfully dispute the fraudulent accounts and have them removed from their record.
Other forms of bank fraud associated with identity theft include "account takeovers", passing bad checks, and "busting out" a checking or credit account with bad checks, counterfeit money orders, or empty ATM envelope deposits. If withdrawals or checks are made against the impersonated person's real accounts, that person may need to convince the bank that the withdrawal was fraudulent or file a court case in order to retrieve lost funds. If checks are written against fraudulently opened checking accounts, the person receiving the checks will suffer the financial loss. However, the recipient might attempt to retrieve money from the impersonated person by using a collection agency. This action would appear in the victim's credit history until it was shown to be fraud.
Identity theft cloning and concealment
In this situation, a criminal acquires personal identifiers, and then impersonates someone for the purpose of concealment from authorities. This may be done by a person who wants to avoid arrest for crimes, by a person who is working illegally in a foreign country, or by a person who is hiding from creditors or other individuals. Unlike credit-dependent financial crimes, concealment can continue for an indeterminate amount of time without ever being detected. Additionally, the criminal might attempt to obtained fraudulent documents or IDs consistent with the cloned identity to make the impersonation even more convincing and concealed.Criminal identity theft
When a criminal identifies himself to police as another individual it is sometimes referred to as "Criminal Identity Theft." In some cases the criminal will obtain a state issued ID using stolen documents or personal information belonging to another person, or they might simply use a fake ID. When the criminal is arrested for a crime, they present the ID to authorities, who place charges under the identity theft victim's name and release the criminal. When the criminal fails to appear for his court hearing, a warrant would be issued under the assumed name. The victim might learn of the incident if the state suspends their own drivers license, or through a background check performed for employment or other purposes, or in rare cases could be arrested when stopped for a minor traffic violation.It can be difficult for a criminal identity theft victim to clear their record. The steps required to clear the victim's incorrect criminal record depend on what jurisdiction the crime occurred in and whether the true identity of the criminal can be determined. The victim might need to locate the original arresting officers, or be fingerprinted to prove their own identity, and may need to go to a court hearing to be cleared of the charges. Obtaining an expungement of court records may also be required. Authorities might permanently maintain the victim's name as an alias for the criminal's true identity in their criminal records databases. One problem that victims of criminal identity theft may encounter is that various data aggregators might still have the incorrect criminal records in their databases even after court and police records are corrected. Thus it is possible that a future background check will return the incorrect criminal records.
Identity theft Techniques for obtaining personal information
In most cases, a criminal needs to obtain personally identifiable information or documents about an individual in order to impersonate them. They may do this by:Stealing mail or rummaging through rubbish containing personal information (dumpster diving)
Retrieving information from redundant equipment, like computer servers that have been disposed of carelessly, e.g. at public dump sites, given away without proper sanitizing etc.
Researching about the victim in government registers, internet search engines, or public records search services.
Stealing payment or identification cards, either by pickpocketing or surreptitiously by skimming through a compromised card reader
Remotely reading information from an RFID chip on a smart card, RFID-enabled credit card, or passport
Eavesdropping on public transactions to obtain personal data (shoulder surfing)
Stealing personal information in computer databases (Trojan horses, hacking)
Advertising bogus job offers (either full-time or work from home based) to which the victims will reply with their full name, address, curriculum vitae, telephone numbers, and banking details
Infiltration of organizations that store large amounts of personal information
Impersonating a trusted company/institution/organization in an electronic communication to promote revealing of personal information (phishing)
Obtaining castings of fingers for falsifying fingerprint identification.
Browsing social network (MySpace, Facebook, Bebo etc) sites, online for personal details that have been posted by users
Changing your Address thereby diverting billing statements to another location to either get current legitimate account info or to delay discovery of fraudulent accounts.
Individual identity protection
The acquisition of personal identifiers is made possible through serious breaches of privacy. For consumers, this is usually due to personal naiveté about who they provide their information to. In some cases the criminal obtains documents or personal identifiers through physical theft (e.g. vehicle break-ins and home invasions). Guardianship of personal identifiers by consumers is the most common intervention strategy recommended by the US Federal Trade Commission, Canadian Phone Busters and most sites that address identity theft. Personal guardianship issues include recommendations on what consumers may do to prevent their information getting into the wrong hands.The strongest protection against identity theft is not to identify at all - thereby ensuring that information cannot be reused to impersonate an individual elsewhere. As such, identify theft is often a question of too little privacy or too much identification. Many activities and organizations in a modern society require people to provide personal identifiers (Social Security number, national identification number, drivers license number, credit card number, etc), and in some cases the knowledge of personal identifiers is treated as proof of identity. This is sometimes done as a convenience or to enable transactions by telephone or the internet, however it can also make it more difficult for individuals to protect themselves from identity theft.
In some cases an identity thief will attempt to impersonate a deceased individual. Frequently credit checks or other types of verification are not cross referenced with death certificates, so the crime may go unchecked for some time unless the deceased's family detects it and takes steps to prevent further fraud.
Identity theft protection by organizations
In their May 1998 testimony before the United States Senate, the Federal Trade Commission (FTC) discussed the sale of Social Security numbers and other personal identifiers by credit-raters and data miners. The FTC agreed to the industry's self-regulating principles restricting access to information on credit reports. According to the industry, the restrictions vary according to the category of customer. Credit reporting agencies gather and disclose personal and credit information to a wide business client base.Poor stewardship of personal data by organizations, resulting in unauthorized access to sensitive data, can expose individuals to the risk of identity theft. The Privacy Rights Clearinghouse has documented over 900 individual data breaches by US companies and government agencies since January 2005, which together have involved over 200 million total records containing sensitive personal information, many containing social security numbers. Poor corporate diligence standards which can result in data breaches include:
failure to shred confidential information before throwing it into dumpsters
failure to ensure adequate network security the theft of laptop computers or portable media being carried off-site containing vast amounts of personal information. The use of strong encryption on these devices can reduce the chance of data being misused should a criminal obtain them. the brokerage of personal information to other businesses without ensuring that the purchaser maintains adequate security controls
Failure of governments, when registering sole proprietorships, partnerships, and corporations, to determine if the officers listed in the Articles of Incorporation are who they say they are. This potentially allows criminals access to personal information through credit-rating and data mining services.
The failure of corporate or government organizations to protect consumer privacy, client confidentiality and political privacy has been criticized for facilitating the acquisition of personal identifiers by criminals.
Using various types of biometric information, such as fingerprints, for identification and authentication has been cited as a way to thwart identity thieves, however there are technological limitations and privacy concerns associated with these methods as well.
Identity theft Legal response
Identity theft Australia
In Australia, each state has enacted laws that dealt with different aspects of identity or fraud issues. On the Commonwealth level, under the Criminal Code Amendment (Theft, Fraud, Bribery & Related Offences) Act 2000 which amended certain provisions within the Criminal Code Act 1995,General dishonesty
A person is guilty of an offence if: a) the person does anything with the intention of dishonestly causing a loss to another person; and b) the other person is a Commonwealth entity. Penalty: Imprisonment for 5 years.Likewise, each state has enacted their own privacy laws to prevent misuse of personal information and data. Federal Privacy Act is applicable only to Commonwealth and ACT government agencies.
Identity theft Canada
Under the section 403 of the Criminal Code of Canada,Every one who fraudulently personates any person, living or dead, with intent to gain advantage for himself or another person, (b) with intent to obtain any property or an interest in any property, or (c) with intent to cause disadvantage to the person whom he personates or another person, is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years or an offence punishable on summary conviction.
In Canada, Privacy Act (federal legislation) covers only federal government, agencies and crown corporations. Each province and territory has its own privacy law and privacy commissioners to limit the storage and use of personal data.
Identity theft France
In France, a person convicted of identity theft can be sentenced up to five years in prison and fined up to 75,000.Identity theft Hong Kong
Under HK Laws. Chap 210 Theft Ordinance, sec. 16A FraudIf any person by any deceit (whether or not the deceit is the sole or main inducement) and with intent to defraud induces another person to commit an act or make an omission, which results either - in benefit to any person other than the second-mentioned person; or (b) in prejudice or a substantial risk of prejudice to any person other than the first-mentioned person, the first-mentioned person commits the offense of fraud and is liable on conviction upon indictment to imprisonment for 14 years.
Under the Personal Data (Privacy) Ordinance, it established the post of Privacy Commissioner for Personal Data and mandate how much personal information one can collect, retain and destruction. This legislation also provides citizens the right to request information held by businesses and government to the extent provided by this law.
Identity theft United Kingdom
In the United Kingdom personal data is protected by the Data Protection Act. The Act covers all personal data which an organization may hold, including names, birthday and anniversary dates, addresses, telephone numbers, etc.Under English law (which extends to Wales but not necessarily to Northern Ireland or Scotland), the deception offences under the Theft Act 1968 increasingly contend with identity theft situations. In R v Seward (2005) EWCA Crim 1941 the defendant was acting as the "front man" in the use of stolen credit cards and other documents to obtain goods. He obtained goods to the value of £10,000 for others who are unlikely ever to be identified. The Court of Appeal considered sentencing policy for deception offenses involving "identity theft" and concluded that a prison sentence was required. Henriques J. said at para 14:"Identity fraud is a particularly pernicious and prevalent form of dishonesty calling for, in our judgment, deterrent sentences."
Increasingly, organizations, including Government bodies will be forced to take steps to better protect their users' data.
Identity theft United States
The increase in crimes of identity theft lead to the drafting of the Identity Theft and Assumption Deterrence Act. In 1998, The Federal Trade Commission appeared before the United States Senate. The FTC discussed crimes which exploit consumer credit to commit loan fraud, mortgage fraud, lines-of-credit fraud, credit card fraud, commodities and services frauds. The Identity Theft and Assumption Deterrence Act (2003) ITADA amended U.S. Code Title 18, § 1028 ("Fraud related to activity in connection with identification documents, authentication features, and information"). The statute now makes the possession of any "means of identification" to "knowingly transfer, possess, or use without lawful authority" a federal crime, alongside unlawful possession of identification documents. However, for federal jurisdiction to prosecute, the crime must include an "identification document" that either: (a) is purportedly issued by the United States, (b) is used or intended to defraud the United States, (c) is sent through the mail, or (d) is used in a manner that affects interstate or foreign commerce. See 18 U.S.C. § 1028(c). Punishment can be up to 5, 15, 20, or 30 years in federal prison, plus fines, depending on the underlying crime per 18 U.S.C. § 1028(b). In addition, punishments for the unlawful use of a "means of identification" were strengthened in § 1028A ("Aggravated Identity Theft"), allowing for a consecutive sentence under specific enumerated felony violations as defined in § 1028A(c)(1) through (11).The Act also provides the Federal Trade Commission with authority to track the number of incidents and the dollar value of losses. There figures relate mainly to consumer financial crimes and not the broader range of all identification-based crimes.
If charges are brought by state or local law enforcement agencies, different penalties apply depending on the state.
Six Federal agencies conducted a joint task force to increase the ability to detect identity theft. Their joint recommendation on "red flag" guidelines is a set of requirements on financial institutions and other entities which furnish credit data to credit reporting services to develop written plans for detecting identity theft. These plans must be adopted by each organization's Board of Directors and monitored by senior executives.
Identity theft complaints as a percentage of all fraud complaints decreased from 2004-2006. The Federal Trade Commission reported that fraud complaints in general were growing faster than ID theft complaints. The findings were similar in two other FTC studies done in 2003 and 2005. In 2003, 4.6 percent of the US population said they were a victim of ID theft. In 2005, that number had dropped to 3.7 percent of the population. The Commission's 2003 estimate was that identity theft accounted for some $52.6 billion of losses in the preceding year alone and affected more than 9.91 million Americans. the figure comprises $47.6 billion lost by businesses and $5 billion lost by consumers.
According to the Federal Trade Commission (FTC), a report released in 2007 revealed that 8.3 million American adults, or 3.7 percent of all American adults, were victims of identity theft in 2005.
Identity theft Spread and impact
Surveys in the USA from 2003 to 2006 showed a decrease in the total number of victims and a decrease in the total value of identity fraud from US$47.6 billion in 2003 to $15.6 billion in 2006. The average fraud per person decreased from $4,789 in 2003 to $1,882 in 2006.The 2003 survey from the Identity Theft Resource Center found that :
Only 15% of victims find out about the theft through proactive action taken by a business
The average time spent by victims resolving the problem is about 40 hours
73% of respondents indicated the crime involved the thief acquiring a credit card
The emotional impact is similar to that of victims of violent crimes
In a widely publicized account, Michelle Brown, a victim of identity fraud, testified before a U.S. Senate Committee Hearing on Identity Theft. Ms. Brown testified that: "over a year and a half from January 1998 through July 1999, one individual impersonated me to procure over $50,000 in goods and services. Not only did she damage my credit, but she escalated her crimes to a level that I never truly expected: she engaged in drug trafficking. The crime resulted in my erroneous arrest record, a warrant out for my arrest, and eventually, a prison record when she was booked under my name as an inmate in the Chicago Federal Prison."
In Australia, identity theft was estimated to be worth between AUS$1billion and AUS$4 billion per annum in 2001.
In the United Kingdom the Home Office reported that identity fraud costs the UK economy £1.7 billion (experts believe that the real figure could be much higher) although privacy groups object to the validity of these numbers, arguing that they are being used by the government to push for introduction of national ID cards. Confusion over exactly what constitutes identity theft has led to claims that statistics may be exaggerated.
Famous Identity Thieves
Nathanael WestPerkin Warbeck
Jocelyn Kirsch and Edward Anderton
Identity theft Cultural references
The public fascination with impostors has long had an effect on popular culture and extends to modern literature.The story of Michelle Brown has been made into a film.
In Frederick Forsyth's novel The Day of the Jackal the would-be assassin of General de Gaulle steals three identities. Firstly, he assumes the identity of a dead child by obtaining the child's birth certificate and using it to apply for a passport. He also steals the passports of a Danish clergyman and an American tourist, and disguises himself as each of those persons in turn.
In the 1995 movie The Net, Sandra Bullock plays a computer consultant whose life is taken over with the help of computer assisted identity theft.
In Jonathan Smith's novel Night Windows the action is based on the horrific and real life theft of Smith's own identity.
In the webcomic Kevin and Kell the character Danielle Kindle dies and is later "replaced" by a double from a parallel world. After an attempt at taking over her predecessor's identity, Danielle Kendall confesses her true nature and gets accepted by the predecessor's family - if not by all the readers.
T. Coraghessan Boyle's 2006 novel Talk Talk describes the theft of Dana Halter's identity, and her and Martin Bridger's chase of the thief across the country.
In Susan Schaab's novel Wearing the Spider a female attorney gets caught in a web of sexual harassment, identity theft and political intrigue.
In the Family Guy episode "Back to the Woods", James Woods, having gotten his hands on Peter's wallet, steals Peter's identity, so Peter retaliates by stealing Woods' identity and angering people.
