ID Theft

By Frederick Jerant

We’ve all heard about people in the Federal Witness Protection program: the government gives them completely new identities, including appropriate documents, help in finding employment and housing and other services.

But identity (ID) theft is quite the opposite—someone steals the victim’s name, social security number, and other crucial information as a means to apply for mortgages, open new banking or credit card accounts, attempt to gain citizenship, or cover up their criminal histories. Victims might be unaware that they’ve been compromised until they receive bills for those purchases, or are detained by law enforcement officials for crimes they didn’t commit.

The Federal Trade Commission has reported that ID theft was the top consumer complaint nationwide in 2010 (19% of the total received)—and it’s been in that position for the preceding 11 straight years. A report from claims that about 15 million U. S. residents are hit annually, with losses in excess of $50 billion.

How can it happen? In more ways than you think—some simple, some sophisticated. Here are a few common approaches.

Lost wallets and purses are perhaps the simplest way to gain info, because they typically hold a driver’s license, credit cards, debit card and lots more useful data.

Dumpster diving is simple and low-tech. Thieves rummage through trash looking for credit card bills, bank statements and pre-approved loan offers.

Ever receive an e-mail like this? “Dear Credit Card Customer: Because your account has been compromised, you must go to <this site> and…” That’s phishing, in which the victim is directed to a seemingly legitimate site and practically gives his identity away.

Think about what passes through your home’s mailbox: bank statements, medical correspondence, credit card bills and payments…

Skimmers are electronic gadgets that steal data from ATM cards, credit card readers, gas pumps, and other card-reading devices.

In addition, says Patrick Iampietro, vice president-deposit operations and security officer for Merchants Bank, Bangor, various types of spyware (such as keystroke loggers) and even social media can play into thieves’ hands. Many people post full names, birthdays, addresses, home and cell phone numbers in their profiles.

And there have been numerous examples of stolen corporate and government databases, such as the 26 million records lost by the Veterans Administration in 2006.

The scope of identity theft goes far beyond savings accounts and credit cards. Targets of fraud now include phone, cable and satellite TV services; public utilities; mortgages; financing and loans, and plenty more.

Obviously, ID theft is a huge business. Eleanor Jacobs, CPA, president of Jacobs, Kenneson Co. (a CPA and consulting firm in Allentown) and a Certified Fraud Examiner, suggests that organized gangs turn to the crime because of the big potential payoffs. In addition, “Your credit card might be used for a $5,000 or $10,000 purchase by one person. But your personal information is still out there, and you never know who else has it,” Jacobs says.

She adds that one prevalent scam involves dishonest HR staffers providing information to illegal immigrants, who then attach the data to their own addresses.

Iampietro says that the stolen information can be sold and re-sold; because it’s electronic, it can be used almost anywhere in the world. Crooks can use it “to make ‘card not present’ purchases [such as online airline tickets], and sell the items for quick cash,” he says.

So what are the penalties for identity theft? According to the Lehigh County District Attorney’s office, if the monetary value is under $2,000, the crime is a first-degree misdemeanor, carrying a maximum penalty of five years in prison and a fine of up to $10,000. Over $2,000, it becomes a third-degree felony, with a possible sentence of 3-7 years and a $15,000 fine. And if a crook’s been convicted of ID theft three or more times, the offense is second-degree felony (up to 10 years/$25,000).

Stiffer penalties apply if the victim is over 60 years of age or is care-dependent; the offense is a degree higher. If it’s done as part of a criminal conspiracy, it’s an automatic felony Fortunately, there are many ways to secure your identity. Banks, for example, have many stringent rules and procedures.

“We’re required by law to limit the information we provide to anyone, and to have a document disposal procedure. We also authenticate customers who want to open new accounts by striving to validate the address and Social Security number they provide,” Iampietro says.

He adds that the bank also uses encrypted software and watches for potential “red flags”, including late payments, unusual activity patterns, altered documents, credit-bureau alerts and inconsistent customer ID.

You can take your own security measures:

• Don’t provide account numbers unless absolutely necessary

• Don’t carry your Social Security card with you

• Get electronic statements, or shred paper documents

• Put outgoing mail in only official collection boxes

• Report missing mail and suspicious inquiries

• Question bills you can’t identify

• Use updated anti-virus and anti-spyware protection on your computer

And check your credit scores regularly. The Fair Credit Reporting Act enables you to get a free report from each of the three national reporting companies (Equifax, Experian and TransUnion) each year. Contact the companies four months apart, and you’ll have free year-round updates.

ID theft doesn’t just happen to “other people”— here’s the story of a local victim who chose to share it with us.

Lehigh Valley resident “Ginny*” returned home from a vacation with her husband and discovered statements from new accounts with American Express, Kohl’s and Toys “R” Us—none of which they’d opened.

Further, the thief had opened an account with Costco, and a fake Connecticut driver’s license (with the crook’s face and Ginny’s data).

“We felt so violated,” Ginny says. “It might have been different if she had been buying food for her children, but she bought an expensive purse and toys.”

The couple quickly filed a police report, called the major credit bureaus to alert them and closed all of their credit accounts and followed through with the Federal Trade Commission as well.

Ultimately, the thief racked up about $5,000 in charges, but “Each card did its own investigation, and we weren’t held liable for the purchases,” Ginny notes. “It took a couple of billing cycles, but everything’s cleared up now.”

The couple’s new credit accounts have extra security measures. For example, “When I use my Kohl’s card, I must first call customer service and provide my password,” Ginny says.

ID theft will not go away, but with caution, proper software, and a liberal application of common sense, you can reduce your chances of becoming a statistic.

*Last name has been withheld to protect privacy.

Eleanor Jacobs
Jacobs, Kenneson Co.

Patrick Iampietro
Merchants Bank

Ginny Mahr

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