Are you acting like yourself these days?
The answer could be no. Someone might have stolen your identity -- using your name, address and Social Security number to open accounts, withdraw money and purchase items. Identity theft is expensive, often unknown to victims and increasing rapidly.
Identity theft was the No. 1 consumer complaint logged in 2001 by the Federal Trade Commission. Of 204,000 complaints, 43% were due to identity fraud, more than the number of complaints about Internet auctions, deceptive trial offers and overcharging from Internet companies combined. The FTC estimates that more than 750,000 people a year are victims of identity theft. Even Oprah Winfrey, Tiger Woods and Warren Buffett have been victims.
The crime is expected to rise sharply in the next three years. According to a study from researcher Celent Communications, the number of identity fraud victims will climb past 1.5 million by 2005. "We're just seeing the tip of the iceberg," says Sang Lee, author of the Celent report.
This is one expensive iceberg. On the corporate side, Lee says that identity theft cost corporations $2.5 billion in 2001, which he expects to increase to more than $8 billion in 2005. Consumers spent $12.9 million in out-of-pocket expenses due to identity fraud in 2001, an average expense of $1,173 per victim, according to the FTC.
It's So Easy
More than anything else, experts said that the ease in which criminals can get vital information was the leading factor in the explosion of identity theft. "It's too easy to commit identity fraud," says Allan Trosclair, executive director of the Coalition for the Prevention of Economic Crime.
Often, that information is lying around an office. The FTC estimates that more than half of all identity theft results from compromised business records. An employee, be it a janitor, temporary employee or executive, will steal and use the information you jot down on a car application, a doctor's form or even a job application, says Joanna Crane, senior attorney with the FTC's identity theft program. Criminals will even bribe back-office employees to get access to information, she says.
Some criminals will root through your mail in search of credit card offers, preapproved credit cards and bank statements. For example, criminals will intercept credit card solicitations and apply for cards in your name. While waiting for the card, the thieves can file a change of address form with the post office and have it sent elsewhere. Or, they intercept the card, activate it and go on a shopping spree.
"There are organized groups that go out there and steal mail from your mailboxes," says Norm Willox, chairman of the National Fraud Center.
Indeed, the massive amount of credit card solicitations could be a major factor in the explosion in identity theft. According to market researcher BAIGlobal, year 2001 is on track to shatter the record 3.5 billion solicitations sent in 2000. Halfway through 2001, 2.4 billion were already sent.
Not only is it easy to commit identity theft, it's an attractive option for criminals who can score big and serve little or no jail time. On average, identity thieves stole $17,000 and served a maximum one-year jail sentence, says John Foley, director of consumer/victim services at the Identity Theft Resource Center in San Diego. Foley adds that the average armed robbery netted $3,500 with a seven- to 10-year jail term. "Judges still look at identity fraud as a white-collar crime," he says.
World Wide Web of Deceit
Technology aids these criminals, who can anonymously charge thousands of dollars in just minutes on the Internet. But while the Internet facilitates committing fraud, it's not the largest source of the identity theft itself. Only 10% of all identity theft originated from the Internet in 2001, according to Celent. But that number is expected to increase to 25% by 2005.
Currently, the Internet may be a minor source of identity theft, but, in certain cases, the amount of damage has been large. For example, in December 2000, a hacker stole 60,000 credit card numbers from Creditcards.com and tried to extort $100,000 from the company. When Creditcards.com didn't pay up, the hacker posted the numbers to the Web and fraudulent activity was recorded on some of the cards.
The Internet also can be used to round out missing gaps. "There are sites on the Web that you can punch up someone's Social Security number and get a date of birth or of death, and it's 100% accurate," says Trosclair, the executive director of the Coalition for the Prevention of Economic Crime.
Also, many Internet companies aren't doing enough to make sure the person using your identity is really you. Only 51% of the online companies polled in January 2002 by Jupiter Media Metrix said they send back a confirmation email to make sure that an email address is valid. Even fewer, just 42%, said they check to see that a credit card number matched a billing address.
Because of this, online shoppers, especially the affluent, are at risk. Eight percent of online shoppers have been the victim of identity theft, says a January 2002 report from Gartner. But for those online shoppers making more than $100,000 a year, the number jumps to 11.6%. "Technology has made transactions more anonymous, and criminals leverage that technology against us," says NFC's Willox.
Despite the rising danger, three out of five Americans said they were not worried about identity theft when polled by eFunds, an online financial services company, in December 2001. But they should be. It can take years to fix your credit rating once it's been tarnished by a criminal; you'll have to settle with individual creditors on a case-by-case basis. "It's your job to clean up the mess," says Trosclair.
While it's difficult to prevent criminals, especially those in back offices, from stealing your information, there are ways you can protect yourself.
"Buy a shredder," says Trosclair. Get in the habit of shredding documents before throwing them out. Also, never leave outgoing mail in your mailbox.
Don't put your Social Security number on checks. One-fifth of people polled by eFunds printed their Social Security number on their checks, right alongside their name, address and bank account -- everything needed to start committing fraud.
"Make sure you get all your credit card receipts back," says Willox. "And don't carry multiple credit cards." Retail counter clerks can easily steal your information if you're not paying attention. And if your wallet is stolen or lost, a thief will hit the jackpot if you're carrying a half-inch of plastic.
When shopping online, stick to the larger, more reputable Internet retailers like
. Many times, consumers don't know where they're sending their credit card information, Trosclair says. "Don't fall for the ink-cartridge sellers and those PC cameras. Who are those guys? Not
Willox's best advice is to register for a credit-tracking service like Privista.com, which sends you weekly credit report updates for a $50 annual fee. If you're unwilling to sign up for a service, you should still check your credit report. According to the FTC, the average identity-theft victim doesn't know about it for 13 months. "It's a few bucks to get a credit report, but it's worth the money," says Trosclair.
Don't be like Oprah, Tiger and Warren. Be yourself.