By: Accident attorney Michael P. Ehline, Esq. After Google Places had merged our business law firm listing with a competitor about 40 miles away, and refused to fix it, we started doing research on identity theft. Hence, we created this pretty comprehensive treatise.
Definition of Identity Theft: Identity theft occurs when another person assumes an individual’s personal identity. This is done to access financial resources of the individual, obtain credit and other benefits, using the person’s name.
Identity theft makes a victim of the individual. So it is he who can suffer the adverse consequences of the thief using their credit when they are held responsible for the financial costs. This type of theft is done by using the individual’s information. This can include their name, Social Security number, credit card or bank account number without permission. Criminals do this to commit crimes or fraud.
Understanding Just What Identity Theft Is
The term identity theft has been used since 1964, and while it is not possible to steal a person’s identity, rather they are impersonating or assuming their financial identity to commit fraud. Identity theft and data breaches can be difficult to recognize since in most cases the individual does not know that anyone else has their personal or financial information.
According to a report done by the Federal Trade Commission, when it is clear that there has been a breach, the person often does not know how their information was obtained by someone else. They also found that identity fraud was not always a consequence of identity theft, since it is possible for an individual to steal or misappropriate personal information, without committing fraud.
This can occur when there is a major data breach. Most data breaches, according to a U.S. Government Accountability Office study determined they did not result in detected occurrences of identity theft. The report did state that the full extent data breaches are unknown.
An unpublished study by Carnegie Mellon University reported that most cases of identity theft are unknown. But the probability of becoming a victim of identity theft as a result of a data breach is approximately 2%. One of the largest data breaches consisted of about 4 million records and according to the association of consumer information companies; it resulted in approximately 1800 instances of identity theft.
In an article entitled “Cyber Crime Made Easy,” this discussed the level that hackers are using the malicious software. Security specialist Gunter Ollmann said “Interested in credit card theft? There is an app for that.” What he was alluding to is the ease that hackers are accessing information online. One of the newer programs that are infecting computers is called Zeus, which is hacker friendly, making it easy to use even for a new hacker to operate. It might be easy to use, but it is devastating for the computer user it affects.
The article said that programs like Zeus could be used to steal credit card information and relevant documents, even those necessary for homeland security use. Hackers gaining this information could not only use it for identity theft but for possible terrorist attacks.
Types of ID Theft
The non-profit Identity Resource Center has divided identity theft into five categories.
Criminal Identity Theft: This is posing as another person for financial or personal gain, which is a crime.
- Financial Identity Theft: This is the use of someone else’s identity to obtain goods, services, and credit.
- Child Identity Theft: This is the use of a child’s information to obtain credit, services, and goods or assume their identity.
- Medical Identity Theft: This is the use of another person’s identity to obtain medical care or drugs.
- Identity Cloning Theft: This is the use of someone else’s identity with a view to assume their identity in life. It means using the person’s name in meeting people, employment, and other activities.
Cases of identity theft can be used to fund other crimes, such as phishing, illegal immigration, terrorism, and espionage. The use of identity cloning can be used in attacking payment systems, such as online credit card processing and medical insurance.
Criminal Identity Theft
This occurs when an identity thief impersonates another individual to conceal their real identity. People that do this could be a person hiding from creditors, other persons, an illegal immigrant or a person that just wants to become anonymous for personal reasons. Another type of identity theft is known as a poser.
A poser is a person that uses another individual photos and information on social networking sites, they further relay credible stories. And many involve friends of a real person they are attempting to intimidate. One of the other things this type of thief does is to acquire false credentials that will pass authentication in daily life, and this can continue indefinitely, without detection.
This is an identity thief that who assumes another individual’s name to conceal their real identity. This is their form of witness protection program, and they may be hiding from creditors, an illegal immigrant, or just want to be anonymous for personal reasons, like to avoid being found by an ex-spouse or partner. This can continue for an indefinite amount of time, especially if the person can obtain false credentials in the assumed name that appear authentic.
Another type of identity cloning is the person that is a “poser,” this is a person that assumes the identity of an individual on social networking websites, using photos, information and even creating stories that are believable including friends of the person in an attempt to intimidate the person.
Synthetic Identity Theft
This is a type of identity theft that has become familiar, with the use of characters that are either partially or wholly fictitious. Commonly the way this is done is by using a real social security number, with a birth date and name that is not attached to this figure. The person, whose social security number is used, can have negative credit effects from this kind of identity theft, as well as any creditor who issues a credit to the thief.
It’s hard to track this type of identity fraud since it does not usually show on the real person’s credit report directly. This could even show as a new file at the credit bureau or as a sub-file on the victim’s credit record. Creditors that have permitted or issued a credit to the identity thief can suffer also. This is because it is almost impossible to determine who they are.
Medical Identity Theft
This is a type of identity theft that a person uses an individual’s name and some of their information to obtain medical care, services or drugs. The information they may use can include insurance information, and the individual has no clue their name or information is being used. When this type of event occurs, it can cause the real owner of the insurance to receive improper medical care or potentially life-threatening medical decisions, since there has been incorrect information placed in their medical records.
Child Identity Theft
This is identity theft of a minor child’s social security number that is used to gain credit and other personal advantages. The child has no credit history, which makes this social security number valuable to the person that wants to steal it. They can obtain credit, get a driver’s license, and make large purchases, like buying a house, all under the guise that the social security number is their own.
This is a crime that is usually done by a family member or friend, in some cases, it can be done by a stranger that targets children. The fraud can continue for years, without being detected, since the victim is a minor who will not be using their number for years. According to Carnegie Mellon Cylab, Richard Power, using data from All Clear ID, it was discovered that approximately 10.2 percent of children were identity theft victims. This is about 40,000 children, whose information has been used by another person.
How Thieves Get Personal Information
These criminals need to obtain personal information to use another person’s identity, to appear authentic. Some of the methods they use, most people are aware of, and other methods are less commonly known.
- Digging in dumpsters or garbage cans for personal information is one way they get stuff.
- Using public records to gain personal information.
- Skimming credit card or bank card information with the use of hand-held card readers in general retail location and making clone cards.
- Using contactless credit card readers to obtain data from RFID-passports wirelessly.
- Mail theft, breaking into homes or pick-pocketing checks, bank cards, credit cards, passports and identification cards.
- Theft of checks to obtain account numbers and routing numbers.
- Gaining personal and banking information with the use of malware, like Trojan horse keystroke logging programs, spyware, and breaches in browser security.
- They hack computer networks, databases and systems to gain access to large amounts of personal data.
- Acting fraudulently as customer service representatives or help desk employees to con individuals into disclosing personal information, login information or changing the password access.
- Account verification and compromise questions, these are commonly used, and one of the most used is “What is Your Mother’s Maiden Name.”
- Use of social media sites to befriend individuals and gain trust to get their personal information.
- Social media photos that are clickable and downloaded, which have low security and privacy protection.
- They use information gained from an individual typing login and other personal information at public IT equipment locations. This is known as shoulder surfing.
- Use of breaches that result in the publication of personal information, which may include name, address, credit card numbers and social security number.
- Impersonation of a trusted organization in emails, telephone calls, SMS text messages or other forms of communication to have an individual provide personal information or login information. This is often done as a form of data collection known as phishing or on a fake corporate website. Many corporations explain they will never ask for this type of information on the phone or their website.
- Browsing social network sites, such as Facebook, Twitter or MySpace for personal information that users have published.
- Attacking weak passwords and reset password questions.
- They divert email or a post to gain personal information, credit card numbers, banking or credit statements and other personal information. And this can delay the individual from finding out their account has been compromised.
Personal Identity Protection
The person is often unaware of how naïve they are, with their personal information or login information. Identity thieves count on this, and they can steal information like credit cards, checkbooks, utility bills, bank statements and other things from a person’s vehicle, office, snatched purse or home.
The US Federal Trade Commission, websites and the Canadian Phone Busters organizations address identity theft and offer recommendations on how to prevent personal information from reaching another person’s hands.
An individual can partially eliminate identity theft by not using identifying information unnecessarily. They imply that IT systems and organizations should not require an excessive amount of personal information for identification and authentication purposes.
The requirement and data storage of personally identifying information such as social security numbers, driver’s license number, credit card, national identification number and other information, will increase the risk of identity theft unless it is adequately stored all the time.
- Hacking and phishing electronic identity theft or using malware, the individual is advised to have and keep updated computer security. Keeping the operating system and browser secure, patched and running antivirus software can help avoid unwanted theft. The individual should be cautious of their IT use.
In some cases, the thieves use obituaries, gravestones and other sources to use the identity of a deceased person, between their passing and the closing of their accounts. This is a combination of a grieving family being lacking concentration and the credit checking process. This crime can continue for an undetermined amount of time until a family member or credit company notices the events and take action.
Commercial identity theft protection services are available in many countries and claim to help protect individuals from having their identity stolen. This is done for an annual or monthly membership fee. The service will typically either set fraud alerts on the individual’s credit files with each of the three major credit bureaus or use credit report monitoring. These services are heavily advertised, but the actual value of them has been questioned.
Identity Protection Organizations
The Federal Trade Commission testified in May of 1998 in front of the United States Senate, discussing the sale and use of personal identifiers and Social Security numbers, by data miners and credit raters. They agreed to self-regulating by the industry to restrict access to information on credit reports. The industry restrictions vary according to the category of the customer, since credit bureaus gather, disclose personal and credit information on a wide business range.
Inadequate security by organizations of personal data, results in unauthorized access and puts the individuals at risk of theft. According to Privacy Rights Clearinghouse, they have documented more than 900 data breaches, since January 2005 by U.S. government agencies and companies. This has involved over 200 million records that contained sensitive personal information, including many that had social security numbers. When a company has poor standards of data security it can include:
- Failing to have adequate network security.
- Failing to shred confidential documents before putting them in dumpsters.
- Brokering personal information to another business, without the assurance of the other company maintaining security.
- Government failure in registering sole proprietorships, corporations, and partnerships to determine the article of incorporations officers are who they claim to be. This failure can result in criminals having access to personal information through credit ratings and data mining services.
- Credit card numbers that are stolen by call center agents or individuals that have access to the recorded calls.
- Laptop computer or portable media theft or carried out of the location that contains personal information. Use of encryption on these devices can reduce the chance of personal data being obtained or used.
There was a decrease in the number of victims in the United States between 2003 and 2006, which decreased the dollar amount of identity fraud from $47 billion in 2003 to $15.6 billion in 2006. This resulted in an own personal loss of $4789 in 2003 to $1882 in 2006. According to the Identity Theft Resource Center in a 2003 survey:
- Approximately 73% of the surveyed individuals said the crime involved the thief gaining access to a credit card.
- Approximately 15% of the people found out about the theft, due to action that was taken by a business. It took the victims about 330 hours to resolve the issues.
- Victim of identity fraud Michelle Brown testified in a U.S. Senate Committee Hearing and said that between January 1998 and July 1999 a person used her identity to acquire more than $50,000 in goods and services. Brown said not only did the individual damage her credit but escalated in crimes, including drug trafficking. This resulted in a warrant for Brown’s arrest; she had an erroneous arrest record and prison record, when the woman was booked into the Chicago Federal Prison under her name.
- In the United Kingdom identity fraud costs are estimated at £1.2 billion annually, with experts believing the figure is much higher. Privacy groups do not believe the numbers to be correct an argue the figures are being used as a bargaining chip in the introduction of national ID cards.
- Microsoft Research in 2011 claimed the estimates of identity fraud were largely exaggerated, and surveys are compromised and biased. They said that no faith could be placed in the findings. Australia says identity theft was estimated at between $1 billion and $4 billion in 2001.
The United States Legal Answers
In the United States the increase in this crime has led to the enacting of the Identity Theft and Assumption Deterrence Act. The Federal Trade Commission appeared before the U.S. Senate to discuss FTC crimes, in which consumer credit was exploited to gain lines of credit, loan fraud, mortgage and credit card fraud, along with commodities and services fraud.
The Identity Theft Deterrence Act amended U.S. Code Title 18, § 1028. This statute changed from fraud related to activity in connection with identification documents, information and authentication to include any means of identification an individual knowingly possess, with or without lawful authority. It is a federal crime, but the crime must include an identification document that is issued by the United States or intended to be used to defraud the United States to be tried on a federal level.
This is outlined in 18 U.S.C. § 1028 and can carry a 5, 15, 20 or 30-year prison sentence in federal prison. The laws were also strengthened by unlawful means of identification in § 1028 (aggravated identity theft), which permits consecutive sentencing.
This act provided the Federal Trade Commission with authority to track incidences and dollar losses. Their body mainly focuses on consumer financial crimes and does not include the range of all identification crimes. Charges brought by states or local law enforcement agencies will have different penalties, then charges on a federal level. It will depend on the state laws, which each state can differ in their penalties.
California and Wisconsin have created the Office of Privacy Protection, which helps citizens to avoid issues with theft and those who are recovering from identity theft. Other states have followed the California mandatory data breach notification laws. This has resulted in all companies reporting data breaches to their customers.
The IRS created the IRS Identity Protection Specialized Unit to assist taxpayers who have become victims of federal tax-related identity theft. The taxpayer will be required to submit Form 14039, which is their Identity Theft Affidavit.