The problem of identity theft has been a growing concern in recent years, and both ordinary people and law enforcement officials have taken notice of this growing problem. The motives behind identity theft vary somewhat, but they are invariably financial in nature, and those who fall victim to this growing scourge can expect to spend many hours, and often hundreds of their hard earned dollars, to get recover their good names.
Even after the initial problems with identity theft have been resolved, many victims find themselves dealing with the repercussions for many years to come. The insidious nature of identity theft makes it difficult for banks and other potential lenders to determine if negative events in a credit history are legitimate or the result of identity theft. That is one of the reasons why it is so very important for consumers to be vigilant and to be always on the lookout for signs of identity theft.
Credit Card Fraud vs. Identity Theft – There is a Difference
Many people are of course familiar with the problem of credit card fraud, and many of us take great pains to protect our credit cards from improper use. There are many ways that fraudsters gain access to credit card information, from the old fashioned method of fishing receipts out the trash to more up to date practices such as using specially designed card readers to capture credit card numbers.
While there is no doubt that credit card fraud is a serous problem, and that it costs banks, credit card issuers and merchants millions of dollars in losses every year, the problem posed to actual consumers pales in comparison with the more serious problem of identity theft. It is important, therefore, for credit card holders and ordinary consumers to protect their identities just as carefully as they protect their credit card information.
One of the most insidious aspects of identity theft is that it can go undetected, sometimes for long periods of time. While a careful review of the monthly credit card statement can reveal a problem with credit card fraud right away, victims of identity theft often do not realize their personal information has been compromised until many months after the fact. This can make the process of cleaning up the mess, and determining which transactions were fraudulent, a great deal more difficult.
What is Identity Theft?
Identity theft differs from credit card fraud in that the perpetrators are not necessarily seeking information on the credit cards already held by the victim. Instead, these criminals are seeking to use the actual identity of the victim in order to take out bank loans, open credit card accounts or even obtain mortgage loans. Sometimes the perpetrator is an ordinary consumer whose own credit has been ruined, and so they seek to use a clean credit account for their financial transactions.
Increasingly, however, identity theft is being perpetrated by sophisticated gangs of organized criminals, who use their ill gotten gains to finance all manner of criminal activity. In some parts of the country, for instance, police have found a link between identity theft rings and clandestine methamphetamine labs. The money gained through identity theft is, in those cases, being used to further this additional criminal activity.
Identity theft occurs when an individual, or an organized criminal gang, gains access to the personal information of a consumer. The information gathered will vary from case to case, but in most cases it will include at least the victim’s Social Security number and date of birth. This may not seem like much information, but this basic information is often all that is needed to open a credit card account, a bank account, or other financial instrument. In many cases the compromised information is also used to obtain loans, and even mortgages, in the victim’s name.
When the identity thief defaults on the payments due for these new accounts and loans, it is the victim who receives the demands for collection. In fact, a series of collection calls is often the first notification the victim receives that he or she has been victimized. This delayed notification of a problem is one of the most dangerous aspects of identity theft.
How is This Personal Information Compromised?
In order to protect yourself from this growing threat, it is important to understand how identity thieves operate, and which methods they use to gain access to this highly personal and confidential information. While there are many different ways identity thieves gather the information they use to victimize consumers, three of the most common are phishing schemes, capturing information from insecure wireless connections and good old fashioned dumpster diving. We’ll take a look at each method in detail
Identity Theft Trick #1 – Phishing Schemes
Unlike traditional fishing, which is only designed to snare fish, phishing with a “ph” is designed to instead snare consumers and trick them into revealing information they would otherwise carefully protect. These scam artists use a variety of psychological and technological tricks to fool even cautious consumers into parting with such vital information as Social Security numbers, credit card numbers, bank account numbers and account passwords. With this information, the identity thieves have all they need to open fraudulent accounts and wreak financial havoc on the victim.
The typical phishing scheme begins with an email that appears to be from a legitimate source. Many of the earliest phishing scams targeted eBay, the popular online auction site, with emails warning members that their accounts would be suspended if they did not verify their information. Many eBay members were fooled by these bogus emails, and after they had surrendered their account ids and passwords the scam artists quickly took over the account, often using it to sell thousands of dollars worth of merchandise that was never delivered.
The legitimate owners of the accounts, of course, were left holding the bag, dealing with hundreds or even thousands of angry customers and demands for refunds of money they did not have. Law enforcement soon recognized this new threat, and eBay and its members began taking steps to protect themselves.
There are of course still plenty of phishing attempts targeting eBay, but these days the trick is also used to target customers of banks, credit card companies, mortgage companies and brokerage firms as well. No matter what the target, these phishing scams have a few things in common. One is that the email will generally include a link, which the victim is instructed to click on. When the victim takes the bait, he or she is whisked to what appears to be a legitimate site, where they are asked to confirm or verify their information.
In fact, however, the site is run by a scam artist, and as the victim types his or her Social Security number, date of birth, account number, password and other information, the keystrokes are captured and then used to commit identity theft.
Consumers, therefore, must always be on the lookout for these phishing attempts, and they should be suspicious of any unsolicited email from banks, brokerage firms, online auction houses and the like. Having a good firewall and virus scanning program in place can help cut down on the volume of phishing emails, but it is still important to trust your intuition and use lots of common sense to avoid becoming a victim.
If you are unsure of the legitimacy of an email, the best thing to do is call the company to verify it. If the email is legitimate, you will gain peace of mind. If the email is an attempt at fraud, you will have avoided being victimized, while at the same time giving the company advance notice that the bad guys are targeting their site.
Identity Theft Trick #2 – Insecure Wireless Connections
With the proliferation of wireless hot spots around the country, and the falling of laptop prices, more and more people are staying connected to the internet wherever they go. This convenience can come as a price, however, since many wireless networks have little security built in.
It is important, therefore, for computer users to refrain from doing an sensitive business while online from a wireless hotspot, or from a wireless network that they do not control. There are ways to lock down a wireless network to prevent unauthorized access, and it is important for consumers to work with their wireless providers to secure their home networks.
These security measures are important, since there are many tools that scam artists have at their disposal to tap into unsecured wireless networks. The scam artists then use these connections to steal vital information, making identity theft easier and more of a problem.
The best defense against this form of identity theft is simply to avoid performing any sensitive transactions, such as paying bills, checking bank balances or credit cards and trading stocks, when connected to an insecure wireless network. Waiting until you get to a more secure location to perform these transactions can save you a lot of time and trouble down the road.
Identity Theft Trick #3 – Dumpster Diving
While it certainly lacks the glamour and technological flair of browsing wireless networks for weak spots, a surprising amount of identity theft still takes place the old fashioned way – through dumpster diving. Dumpster divers may steal trash left out at the curb, or cruise neighborhoods stealing mail out of mailboxes while the homeowners are at work. This decidedly low tech approach can be surprisingly effective, and a great deal of personal information is lost in this manner.
The solutions to the problem of dumpster diving identity thieves is just as low tech as the problem itself. Investing a little bit of money in a personal mail shredder can potentially save you hundreds of dollars, and countless hours of hassle, by helping to prevent identity theft at the source. No documents that contain your Social Security number, date of birth, credit cards numbers, bank account numbers or other personal information should be put into the trash without being shredded. Shredding this personal information will render it useless to identity thieves, giving you much needed peace of mind and saving you lots of potential hassles.
Many consumers also prefer to mail their sensitive items from the office instead of leaving it in the mailbox. Mailing credit card statements, bank correspondence, brokerage deposits and the like from the office, or directly from the post office, can eliminate yet another venue used by identity thieves.