Credit Bureaus

The Federal Trade Commission reported that identity theft complaints nearly doubled in 2002, accounting for 43% of all fraud complaints and leading a list of consumer frauds for the third consecutive year. The number of consumer complaint the FTC received regarding identity theft ballooned from 3,350 a week in December 2001 to 4,655 a week during December of last year. Identity theft occurs when someone acquires your personal information without your knowledge to commit fraud or theft. It's clear that identity theft is a growing crime. There were 700,000 to a million victims last year, and we're anticipating a 25% to 35% growth rate this year.

All a person needs is your name, address, SSN (Social Security number), and sometimes your date of birth and mother's maiden name, and he can open an account in your name or even access existing accounts. In some cases, when a thief opens accounts using bogus addresses, the major credit reporting bureaus switch your contact information over to the new address, so you may not even know what's happening until it is too late. Criminals are getting more sophisticated and are utilizing several methods to steal your identity such as:

Credit Bureaus Information

Skimming - The criminal scans and records the information on your credit card's magnetic stripe using a small electronic device about the size of a pager. Criminally minded retail employees swipe customers' credit cards twice, once through the merchant's point-of-sale device, and once through their skimming device. Skimming devices have often been used in restaurants and bars, where credit cards are briefly out of a customer's sight.

This is a difficult crime to prevent, however setting up an online credit card account that lets you monitor purchases made with your card. If you see an unauthorized purchase, you can close the account before further damage is done.

Fictitious Web Sites - Computer-savvy identity thieves have created Internet sites that closely resemble legitimate retail sites. Shoppers, believing they're ordering goods from a retailer, unwittingly provide their credit card numbers to the criminals who run the site. Some criminals have created fraudulent sites that claim to be affiliates of a big retailer, offering big discounts. All legitimate sites should provide a phone number and address for the company and always check out a site's security features before you enter your credit card number. They also send email messages that appear to come from a bank, a gift award center, the government, or another official-sounding source, requesting a person's Social Security number for “verification” or other imaginary purposes. Some fabricated email messages even threaten the recipient with an electronic IRS audit.

Aside from giving identity thieves wider access to potential victims, the Internet helps criminals in ways you wouldn't expect. The Internet also makes it much easier for them to apply for credit cards and other accounts in their victims' names. The volume of information you can collect about people by doing simple Internet searches is frightening. Type a name and ZIP code into any of the online white pages and you can get addresses and phone numbers for millions of people. If you have only a phone number, you can do a reverse number lookup to get a person's basic information.

Viruses - Identity thieves have created computer viruses designed to steal credit card numbers or personal identification numbers from your computer. Some of these viruses arrive in e-mails purporting to offer a computer game. Virus-protection programs can offer some protection against these scams, but they must be updated frequently. If you use a high-speed connection, install a firewall program. Don't download files or click hyperlinks sent by strangers.

Personal Checks - If you go to the grocery store and write a check for $60, the check has your full name and address, maybe your phone number. It also has the full name and address of the bank where the check is drawn and your account number. The clerk may ask for your driver's license number, which in 19 states is your Social Security number. They write your Social Security number on the face of the check, and then they ask for a date of birth and a work phone number. Now they can call and find out where you're employed. Hundreds of people can see this check including people at the grocery store, the check-clearing house and the payee bank.

How to Protect Yourself from Credit Card Fraud

Criminals then call your credit card issuer and, pretending to be you, change the mailing address on your credit card account, runs up charges on your account and because your bills are being sent to the new address, you may not immediately realize there's a problem. They may open a new credit card account, using your name, date of birth, and Social Security number. When they use the credit card and don't pay the bills, the delinquent account is reported on your credit report. They open a bank account in your name and write bad checks on that account or establish cellular phone service in your name.

Employment Records - Employment records also are a source for identity theft. Anybody who has access to employment files can turn you into a victim. Thieves who use the information to steal workers' identities are instead taking personnel records and other employment data that should be safely filed in company offices or computers. Information from personnel records is being used to establish credit card accounts.

Employees who get company credit cards have had their information stolen by employees of the vendors that provide the cards. The major cause of identity fraud is now theft of records from employers or other businesses that have records on many individuals, according to a 2002 report by credit information provider Trans Union. And about 90% of business record thefts involve payroll or employment records, while only about 10% are customer lists according to the FTC.

There's little employees can do on their own to keep records safe as there are myriad ways to get the information needed to carry out an identity theft. Often, Social Security numbers, addresses and other data are kept in paper files or on computers. Anyone who has access to those files, either online or otherwise, has the means to carry out an identity theft. Often, the thief is a fellow employee working for human resources, payroll or another department with access. Some companies use ID badges that are actually employees' Social Security numbers — meaning anyone seeing the badge has what is needed to carry out an ID crime.  

The crime of ID theft using employment records is growing for several reasons including the sluggish economy. Identity theft wasn't considered a federal crime until 1998. Now, companies are beginning to take such defensive steps as privacy audits or removal of Social Security numbers from worker ID badges.

The most important thing an individual can do is to guard your Social Security number and monitor your credit report. Monitoring your credit is the only way you can prevent yourself from being a victim. A monitoring service, such as Privacy Guard, will notify you whenever someone applies for credit in your name or checks your credit history. You should also shred account documents before tossing them in the garbage and do not put outgoing mail in your mailbox. It's best to mail bills and other financial information at a post office mailbox.

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If you're are a victim of identity theft, we recommend that you:

• Contact the fraud departments of each of the three major credit bureaus and report that your identity has been stolen. Ask that a "fraud alert" be placed on your file and that no new credit be granted without your approval.
• For any accounts that have been fraudulently accessed or opened, contact the security departments of the appropriate creditors or financial institutions. Close these accounts. Put passwords (not your mother's maiden name) on any new accounts you open.
• File a report with your local police or the police where the identity theft took place. Get a copy of the report in case the bank, Credit Card Company or others need proof of the crime later on. 

We recommend that companies take the following steps to control Identity theft:

• Don't use Social Security numbers as ID numbers on badges, payroll or other documents.
• Audit who has had access to employment records and why.
• Consider hiring a third party to conduct a privacy audit, which will help determine how well protected your records are.
• Keep all paperwork secure and locked.

The real downside to identity theft is no matter how many tips you follow or steps you take to protect your identity, ultimately there's little you can do to prevent the crime. Identity theft doesn't start with the consumer it starts with the businesses. Every employee at every company you've provided with personal information is a potential identity thief. Even if those people are honest, you have to worry about an identity thief breaking into a computer and stealing all of that information from a central database.

In the end, most of the cost of identity theft is absorbed by credit card companies, banks, and businesses, and you'll eventually get your money back and clean up your credit, but the bad news is that it takes a lot of time and effort to put it completely behind you.

If you want to be proactive about protecting your good name, consider identity theft insurance. Several providers offer policies for relatively low premiums that provide thousands of dollars of coverage, so you can more easily get your life back if you've been victimized by identity theft. It may seem like a scam because in nearly all cases of identity theft and account takeovers, banks and other creditors refund the victims' money. Identity theft insurance is designed, however, to cover the expenses you incur in restoring your credit, including long-distance phone charges and lost wages. This protection is important because in many cases, it can take weeks or months to sort out an identity theft crime. Ask your insurance provider if it offers the coverage and how much it costs.

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