Identity Theft Fraud
By Brett Newberry
Identity theft is an increasingly frequent type of fraud that is non-discriminatory in nature. Anyone can be targeted; the victim might be a college student, a retiree, a schoolteacher, or a successful attorney. Even corporations are susceptible to identity theft.
According to the 2011 Identity Fraud Survey Report: Consumer Version compiled by Javelin Strategy & Research, losses attributable to identity fraud amounted to $37 billion in 2010. Approximately 8.1 million Americans were victims of identity fraud in 2010 – a decrease of 3 million over 2009. Although there were fewer victims, the frauds that did occur cost consumers more to detect and resolve.
Some of the key findings of the survey were:
• Almost half (46%) of the dollar amount lost to identity fraud is due to new account fraud, which occurs when the fraudster uses the victim’s personal information to open fraudulent new accounts.
• The mean consumer cost of identity fraud rose to $631 – the highest amount since 2007. This rise is attributable in a large part to the rise in new account fraud, which tends to take longer on average to detect than other types of fraud.
• Notification by financial institutions and credit card providers was the most common detection method; 35% of victims reported that their bank notified them of the fraud.
• 14% of all identity fraud was committed by someone known to the victim.
Although there is no universal definition of identity theft, the Department of Justice offers the following definition:
Identity theft and fraud are crimes in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.
Personal identification data includes name, address, Social Security number, date of birth, mother’s maiden name, or other identifying information. The perpetrator exploits this information by opening bank or credit card accounts, taking over existing accounts, obtaining loans, leasing cars or apartments, or applying for wireless telephone and utilities services in the victim’s name without his or her knowledge.
Technological advancements that facilitate the electronic transfer of personal information and the transmission of financial transactions have greatly contributed to the recent increase in occurrences of identity theft. As such technologies continue to develop, this type of fraud will likely remain a serious problem that affects many people.
Unlike some fraudsters who steal as the result of a perceived need, most identity thieves make a living stealing identities for profit or, at the very least, to supplement their incomes generously. Although he or she can be an employee, friend, or relative, generally the fraudster falls into one or more profiles:
• Been convicted, served time in prison, wishes to conceal his or her identity.
• Been convicted, served time in prison and looking for a “safer” way to commit a crime and stay out of prison.
• College student looking for an “easy” way to work his or her way through school.
• Rental car agents.
• Illegal aliens needing an identity.
• Illegal telemarketers.
There are two primary federal laws that address identity theft: The Identity Theft and Assumption Deterrence Act and the Identity Theft Penalty Enhancement Act. In October 1998, Congress passed the Identity Theft and Assumption Deterrence Act to address the problem of identity theft. Specifically, the Act outlaws the intentional and unauthorized use of another individual’s identification, with the intent to commit a crime. In August 2004, Congress passed the Identity Theft Penalty Enhancement Act. This Act strengthens federal law on identity theft by creating a crime of “aggravated identity theft.” Aggravated identity theft occurs when an individual uses a stolen identity to commit other crimes.
What to do if your identity is stolen:
• Start keeping detailed records.
• File a police report with your local law enforcement agency and keep a copy of that report. Many banks and credit agencies require such a report before they will acknowledge that a theft has occurred.
• If your wallet or purse is stolen, immediately cancel your credit and debit cards and get replacements. Put a “stop payment” on all lost or stolen checks.
• Report unauthorized charges and accounts to the appropriate credit issuers and credit bureaus immediately by phone and in writing. Change account numbers or close all accounts that are affected by the fraudulent activity.
• Check for and repair further breaches of your identity.
• Notify law enforcement agencies: Federal Trade Commission, Federal Bureau of Investigation, and local and state agencies.
• Contact the three primary credit reporting bureaus to have a security alert or freeze placed on your report, and request a copy of your credit report and review it for unauthorized account activity.
For further information on identity theft, please visit the Federal Trade Commission’s information page at www.consumer.gov/idtheft.
Until next time,
the Business Doctor