ID Theft

 

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ID theft is rarely a stand-alone crime. It's almost always a component of one or more crimes, such as bank fraud, credit card fraud, access device fraud, or the use of counterfeit financial instruments.

The Fraud

The Federal Trade Commission (FTC) reports that identity theft was the number one cause of consumer fraud complaints for the past seven years. The FTC received 813,899 complaints (out of an estimated total of 10 million U.S. victims) in 2007, and consumers reported over $680 million (out of an estimated total of $5 billion) in losses from fraud.

ID thieves have a long menu of methods for stealing your ID.

• Dumpster Diving -- They dig through your trash for bills or other items with personal information on it.
• Traditional Stealing -- They steal mail, wallets, and bank and credit card statements, or they steal personnel records by bribing employees who have access to them.
• Skimming -- They steal credit/debit card numbers by using a pocket-sized storage device when processing your card.
• Phishing -- They mock up websites identical to financial institutions or companies, and then send spam messages to lure you into revealing personal information.
• Pharming -- Similar to phishing, but no spam involved here. The fraudster illegally acquires the domain of a legitimate financial institution and gets the victim to enter passwords and other vital information.
• Address Changing -- They divert your bills to another location by completing a change of address form.
• Pretexting -- They get financial institutions, telephone companies or other utilities to reveal your personal info by pretending to be you.

The Flaw

Our information-age society relies on electronic data storage in large measure, and security vulnerabilities in these technologies continue to be exploited by fraudsters. Even low-tech opportunities exist for crooks, such as unlocked mailboxes holding pre-approved credit card mailings and dumpsters holding all kinds of other sensitive information!

The Fix

As a small business person, you know that it's hard to be in business and not collect or hold personally identifying information -- names and addresses, Social Security numbers, credit card numbers, or other account numbers -- about your customers, employees, business partners, etc. And if this information falls into the wrong hands, it could put these individuals or other businesses at risk for identity theft.

If your business suffers a computer breach or information theft or in some other manner customer info is compromised, the FTC recommends calling your local police first. They can decide if they or you will contact the FBI about the incident. You must also notify those individuals or businesses who you think may be affected.

If you discover that information has been misused, you should file a online complaint with the FTC or phone them at 1-877-ID-THEFT (877-438-4338). Information entered into the Identity Theft Data Clearinghouse, the FTC's database, is made available to law enforcement.

And if the criminal is caught, be sure to prosecute. Not doing so lets the person continue criminal activities in the belief that there are no consequences.

The Federal Trade Commission website will give you very specific rules for safeguarding customer and employee information from ID theft.

Individuals can do the following to protect themselves:

• To protect against the unauthorized use of your personal information, you may want to consider placing a security/fraud alert with these credit bureaus.
• Equifax -- 1-877-478-7625
• Experian -- 1-888-397-3742
• TransUnion -- 1-800-680-7289
• Get your free annual credit report online at the site sponsored by the three credit bureaus listed above. If you see any suspicious activity on your credit report, contact your local law enforcement agency and file a police report. And be sure to always closely review any Explanation of Benefits form that you receive from your health or casualty insurance carriers.
• Photocopy everything in your wallet, especially the back of credit cards, so you have the emergency number to call in case of theft.
• Shred everything to defeat dumpster divers.
• Think about having an unpublished phone number.
• Be sure you have a locked mail box (or a door slot . . . better your dog should eat your financial information than it fall into the hands of a fraudster!)
• Don't base passwords on your birthday, your pet's name, or your kid's name.