Identity Theft: Are You Vulnerable?
Originally published at www.aiada.org
December 23, 2004
It started with ugly shoes. Within days, it had progressed to even uglier gold jewelry on the Home Shopping
Network. And though I tried to stop it immediately, the purchases continued for days.
Compulsive shopping habit? Nope. Try identity theft, a crime that strikes 1440 times a day in the US,
according to VALID Auto, a Texas-based firm that helps dealers protect themselves, and their customers,
from identity theft and related crimes. Participating dealers simply swipe a customer’s driver’s license, and
the VALID Auto proprietary software scans more than 500 databases and checks more than 30 billion records
in seconds. According to VALID Auto’s website (www.validauto.net), “No other solution on the market can
verify that a Social Security number and license are being presented by their rightful owner.”
It’s an expensive crime. In my case, I escaped pretty cheaply—the woman who stole my identity spent about
$2000 before she was stopped. However, it took me hours of anguish, three police reports in jurisdictions
across the country, and more than six months to clean up my credit report. And to this day, I still receive
catalogs from the ugly shoe company.
Others aren’t so lucky. A September 2003 Federal Trade Commission (FTC) report states that there were
9.91 million identity theft victims in the US last year—with individual losses reaching more than $5 billion. But
the impact on businesses and financial institutions hit $47.6 billion.
Experts believe the true numbers are even worse. Less than half of victims report their experiences to local
police, and just 22% notify credit bureaus.
More than half of identity theft victims don’t know how the thief obtains their information. I suspect the woman
who stole my name and credit card number worked at one of my credit card companies. Two days after I
called to change my home address, the charges began. When I pursued the matter with the credit card
company, I was referred to the employee fraud department more than once. And though the company did not
seem overly concerned that she was sprinting through the online malls with my information, I was told that
her details, and the disposition of the case, were “none of your business.”
For thousands of unsuspecting consumers in 2002, the answer was a Ford Motor Credit authorization
number for Experian, one of the nation’s three most prominent credit bureaus. With the authorization code in
hand, thieves obtained information on more than 15,000 victims and wreaked havoc on their financial lives.
That spread as the criminals went on to steal information on 30,000 individuals through Long Island-based
Teledata Communications Inc., where one of the thieves worked as a help desk employee. He was charged
with wire fraud and conspiracy for selling access to the Ford Motor Credit passwords and codes to download
the reports, said an FBI source.
The FTC report claims identity theft may be the fastest-growing white-collar crime in America. Just as
troubling is the possibility that it may have a more sinister role in the hands of terrorist organizations. Senator
Diane Feinstein (D-California) recently reported that an Al-Qaeda associate testified that the organization
trained operatives on obtaining stolen licenses, credit cards, and social security numbers. It’s widely known
that at least two of the hijackers on September 11 had entered the US on stolen passports.
VALID Auto’s software may counter that threat as well. It verifies that a customer is not a Specially Designated
National by cross checking records with a list maintained by the Office of Foreign Assets Control. The feature
allows dealers to meet the requirements of the USA Patriot Act.
The terrorism aspect may bring new attention to the problem, although one police officer posts on Privacy
Rights Clearinghouse (www.privacyrights.org) that identity theft goes largely unpunished. “I have worked
cases involving thousands of dollars and watch as (perpetrators) get probation and twenty years to pay it
back. The courts do not take fraud as a serious matter. Until something is done, the cost of doing business is
only going to go up so businesses can recover the money they have lost to fraud.”
Auto dealerships may be doubly vulnerable. In addition to the possibility that they may unknowingly sell a
vehicle to someone with a forged identity, they have an even more attractive asset to identity thieves:
information. Legitimate buyers usually complete detailed financial profiles in order to purchase a vehicle—
profiles that thieves can use to set up new accounts. And since many thefts of this nature go undetected for
six to 12 months, the potential for serious financial damage is high.
The Gramm-Leach-Bliley Federal Safeguards Rule, enacted in 2003, offers some protection to consumers in
that it charges financial institutions, including dealerships, to protect customer information. Dealerships that
do not comply can be fined $11,000 for each infraction. The Identity Theft and Assumption Deterrence Act,
passed in 1998, makes identity theft a federal crime that carries a prison sentence of up to 15 years and fines
of up to $250,000. Additionally, the Identity Theft Enhancement Act creates a separate federal crime, known as
aggravated identity theft, when a stolen identity is used to commit crimes and imposes a mandatory two-year
prison sentence in addition to any penalties for the related crime.
So what could the 27 million identity theft victims have done to prevent the crime? “Not a lot,” says one New
York City police officer. “Use common sense.”
That common sense starts with protecting your own privacy:
- Don’t give out your social security number unless it’s absolutely necessary. When you must give it out,
ask for a copy of the company’s privacy policy.
- Shred or destroy documents that contain sensitive financial information. Don’t just toss out credit card
offers or statements—often the information they contain is enough for a thief to open a new account in
your name.
- Check your credit reports at least once a year, and report anything unusual.
- Don’t give out your bank account or credit card information on the phone or internet, unless you are
absolutely certain you are dealing with the right company. I get emails nearly every week that appear to
be from my bank, claiming that they need me to update my information. They’re fraudulent. They look
legitimate, but if you move your mouse over the link you’ll see that it doesn’t lead to the bank at all.
Never, ever respond to these—other than to hit the delete key.
- Change your pin numbers and passwords at least once a month, and don’t carry them in your wallet
or purse.
- Don’t carry extra credit cards with you. Bring only what you need, and keep the others locked in a
secure location.
For those who discover they’ve been targets, work with law enforcement, the affected institutions, and the
major credit bureaus to help resolve the issue. Although it can take months, fraudulent charges will eventually
be removed. Some credit card companies now monitor accounts for unusual activity and stop charging
privileges if fraud is suspected. “That didn’t help me much this summer when someone in Dublin, Ireland
charged $6700 on my MasterCard for computer equipment,” complained one New York City advertising
executive. “The company kept asking me if I was sure I hadn’t forgotten the purchase. It irked me, but they
reversed the charges within a week. I’ve never even been to Europe. My credit card gets around better than I
do.”
