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Identity

Theft in the United States


Tiffany Rad Master 2LCE UFR-STGI

Identity Theft in the United States of America Table of contents INTRODUCTION....................................................................................................................3 1. What is identity theft?...............................................................................................3-5 1.1 Definition..................................................................................................................3 1.2 Types of identity thefts in the U.S. .......................................................................3-4 1.3 Perpetrators...............................................................................................................4 1.4 Victims...................................................................................................................4-5 1.5 How do they get personal information?....................................................................5 2. Responding to identity theft......................................................................................5-6 2.1 Detecting................................................................................................................5-6 2.2 Reporting...................................................................................................................6 2.3 Identity restitution.....................................................................................................6 3. Preventing identity theft............................................................................................7-8 3.1 Role of government..................................................................................................7 3.2 Law enforcements..................................................................................................7-8 4. 2010 and identity theft...............................................................................................8-9 4.1 Figures.......................................................................................................................8 4.2 Recent cases...........................................................................................................8-9 CONCLUSION.........................................................................................................................9 Bibliography/Webography........................................................................................................10

Introduction Identity theft in the United States is a controversial topic. In fact, as identity theft reports gradually increase, the Federal Trade Commission took the initiative to draft the Identity Theft and Assumption Deterrence Act in 1998. Approximately 9 million U.S. residents get their identity stolen once a year; a figure that shows that preventive measures as well as harsh penalties need to be issued in order to slow down this ever-growing type of fraud. This paper provides a thorough overview of identity theft in the United States and informs us of the various actions the government takes to address identity theft issues. 1. What is identity theft? 1.1 Definition of identity theft According to the Federal Trade Commission (FTC), whose role is to ensure consumers protection and to assist victims, the term identity theft can be defined as the following: A fraud committed or attempted using the identifying information of another person without authority. Identifying information can include credit card numbers, ID cards, checks, immigration fraud, counterfeiting, Social Security Numbers, etc. Therefore, identity theft is a form of fraud when perpetrators steal and then use personal information to commit fraud or other serious crimes. 1.2 Types of identity theft There are various types of identity thefts that can be divided into 5 categories: Criminal identity theft: a suspect in an investigation gives another persons identity to a law enforcement officer. Financial identity theft: a fraud, which consists of using another persons identity to get loans or credits. Identity cloning: the impersonation of another person in order to hide the thief true identity because of criminal records or the fact that he is just an illegal immigrant. Medical identity theft: the use of somebody elses Social Security Number and health insurance to receive medical treatments. This type of identity theft can result in the presence of inaccurate information on the victims medical record, which can later have devastating effects on the victims health. Child identity theft: a person uses a childs unused Social Security Number. It has now become one of the most common types of fraud, as children are easy targets and do not realize that their identities have been stolen until years later. 3

In 2010, the FTC reported that credit card frauds, the stealing of drivers licences or any other government documents and the setting up of new cell phones were the most common types of identity thefts. In 2010, victims aged 20 to 29 years old and residents of Florida were the main targets of identity theft. All of these types of identity thefts can result in some serious injuries to the victims emotional health, financial, medial and juridical records. In general, the most common type of identity theft is financial, mainly credit card frauds. 1.3 Perpetrators A 6-year study conducted by the Center for Identity Management and Information Protection and funded by the American Government came up with a typical profile for identity thieves. More than half of the offenders were between the ages of 18 and 34 years old and 75% of them were male. Furthermore, 25% of thieves were not American citizens and 80% of the cases involved a single man job. It has also been noted that less than 20% of cases used the Internet to steal personal information. However, it is a just a rather brief overview because only 517 cases were analyzed. In addition, we can establish some personality traits that can be found in identity thieves: People who are seeking attention: They enjoy spending money and have a history of stealing parents money. Strangers: a research1 showed that 50% of identity thieves do not know their victims. 16% of cases involve trusted individuals such as family members, partners or friends. It can even involve employees.

In other words, identity thief profiles are not as typical as we may think. There are of course a vast majority of individuals who show some similarity but we should not underestimate even our closest friends. 1.4 Victims According to a study published by Experians Fraud and Identity Solutions Group, victims are essentially living in wealthy suburbs and neighborhoods. This study demonstrates that there is a 43% risk that identity thieves will target affluent individuals. If you are an active couple receiving an income superior than the average population, there are then 22% chances that your personal information will get stolen and then used. In comparison with the general population, it is more likely that victims will have an income 11% higher than the average

From the Javelin Strategic & Research annual survey of customer fraud that was released on February 2011.

citizen. Perpetrators tend to look for victims with hobbies such as tennis (85%) or travel abroad (65%). Furthermore, common victims also include children and deceased persons. Family members are also easy targets. As a result, victims suffer financial losses and according to a survey, it has been estimated that the total cost for repair accounted for more than $17 billion in 2008.2 1.5 How do perpetrators get personal information? Thieves can steal your identity using different methods including: Rummaging: they look for personal information such as billing statements by thoroughly searching through trash and garbage bins. Skimming: they scan credit card numbers by using an electronic device and then transferring the information to a blank card. Phishing: a method via the Internet where thieves pretend to be part of a trusted company asking individuals to give out confidential information. Mailing address change: a method by which they fill out a change of address form in the victims name and will then receive your credit card statements. Regular stealing: they steal wallets, mail, new checks and anything else that would be useful for them. Pretexting: pretexters use excuses in order to obtain information. They may call or ask for confidential information saying that are working for a financial institution. After retrieving the information they want, they can now become involve in any part of the identity theft categories described above. 2. Responding to identity theft 2.1 Detecting Many different ways can help individuals detect if someone is using their personal information. By closely monitoring bank statements and accounts and constantly checking credit reports, individuals can help prevent identity thefts and avoid damages. The online services provided by the banks now make it easier for individuals to access their bank accounts at least once a week. However, observing unusual transactions on your bank account, or loans that you did not apply for are common signs of identity thefts. It is important

Lynn Langton & Michael Planty, Victims of Identity Theft, 2008.(Washington DC : Bureau of Justice Statistics, 2008).

to file a fraud alert as soon as possible before too many damages have been done to your credit score3. 2.2 Reporting Once you detected that you are a victim of identity theft, it is important that you report it as soon as possible in order to avoid irreparable damages made to your credit score. A detailed record journal of all of the conversations with thieves or all of the bank statements is essential to be kept. The first step is to place a fraud alert on your credit report so that thieves under your name cannot open any more accounts. There are many institutions that you can contact such as the Equifax Consumer Credit Reporting Agency or the TransUnion Credit Score Report Company. 2.3 Identity restitution Identity restitution is a long process but is nevertheless necessary in order to restore your credit. The first step is to contact the Federal Trade Commission and to request a credit report. Once you receive this document, it is essential to underline all the changes that you did not request, look for all the loans or credit inquiries that you did not apply for, and note down all the accounts that the thieves opened using your identity. The second step is to fill out a fraud alert as well as to contact all of the companies and financial institutions to close your affected accounts or file a complaint for your current account. The third and final step involves the Federal Trade Commission and the state police; the injured party needs to fill out a report saying that he/she is a victim of identity theft. The victim should allow between 175 to 600 hours for his identity and credit score to be fully restored. 4 However, there are a small percentage (around 25%) of victims that were not able to get their identity back and therefore future loans or mortgages cannot be approved. If this is the case, victims should consider getting a new Social Security Number. There is a high probability that your old Social Security Number will be linked to your new one and therefore you will not appear as a creditworthy individual.

The FACTA (the Fair and Accurate Credit Transactions Act) defines credit score as a numerical value derived from a statistical tool used by a person who makes a loan to predict the likelihood of certain credit behaviors and will determine if this person can be trusted if asks for a credit. 4 The Identity Resource Center studies.

3. Preventing identity theft 3.1 Role of government Since 1998, many financial institutions, federal departments and private agencies have taken various actions to prevent identity theft. Also, many states consider identity theft to be a crime and enacted mandatory data breach report laws as a way to inform customers when companies report a data breach in their organisations5. Recently, banks have decided to secure their customers credit cards by improving their systems. The American government advises its citizens to change passwords on a monthly basis; to keep their Social Security Numbers card at home in a safe place and to protect any confidential information. First of all the United States Department of Justice plays a key role in the prevention and fight against identity theft. The Department of Justice is responsible for taking legal actions against thieves and to judge them before the states court. The Federal Bureau of Investigation and the United States Secret Services work closely together with the Department of Justice. Together, they act against identity theft cases. The Federal Trade Commission as well as all other departments of the United States Government are taking great initiatives in order to secure citizens personal information and to reduce the number of identity thefts in the country. Concerning state law, California and Wisconsin have set up an Office of Privacy Protection to provide assistance to citizens in the restitution of their identity. 3.2 Law enforcement In the United States, in 1998, it was deemed necessary to draft a text about identity thefts because the number of frauds gradually started increasing. This paper will provide you with the main laws drafted by the U.S. Congress in a chronological order. The Identity Theft and Assumption Deterrence Act of 1998 states that it is a crime to steal and then use without consent any types of identification which belongs to another individual. This act allows the victims to get their identities restored and to seek compensations. This legislation enacts a mandatory maximum sentence of 15 years, a fine and a criminal sentence for any personal information used to commit the offence. Identify theft crimes can also involve violations of any other types of frauds such as credit card frauds, identification frauds, internet frauds, mail frauds and financial institution frauds. Each of these violations are considered as felonies, which can carry a maximum of 30 years of imprisonments.

Specific state laws can be found on the FACTA website.

In addition, there are also 10 other federal laws that are applied to identity theft offences and give citizens the right to request compensations. The Identity Theft Deterrence Act of 2003 was established by the Federal Trade Commission and has the power to track the number of identity thefts inquiries and the amount in dollars of the damages caused. This act determinates a minimum punishment of 5 years and a maximum of 30 years sentence in a federal prison. The Identity Theft Penalty Enhancement Act of 2004 is an act that considers identity theft an aggravated crime and provides guidelines for identity theft punishments. This law gives authorities the legislation to increase penalties and redefine the concept of identity theft making sentences tougher for thieves. 4. 2010 and identity theft 4.1 Figures In 2010, the U.S. government observed a 28% decline in identity thefts compared to the previous year, 2009. This change is due to the fact that banks keep taking important preventive measures. This decrease was the most important annual reduction on record but individuals lost more money on average than ever before; losses increased by more than 60%.6 The increase in the cloning of credit cards is the main reason why victims lost more money on an average in 2010. In fact, credit card fraud takes longer to be detected and results in substantial financial losses. According to Javelin Strategic & Research, we can draw a parallel between the economic conditions of the country and identity theft. If we look at the retail sector, as sales decrease, the number of identity theft reports skyrocket. Many factors are responsible for this result such as the increase in security and preventive investments when the state of economy is good and the greater allowance of questionable transactions when the economy is down. In 2010, the number of friendly frauds, meaning that the victim knows the criminal which can be a family member, neighbors or even friends, grew by 7%. 4.2 Recent cases On October 7th 2011, American authorities arrested 111 individuals coming from different ethical backgrounds who were responsible for stealing more than $13 million through the use of stolen credit cards. 5 groups of criminal were arrested and accused of skimming, making

Javelin Strategic & Research study.

cards and buying goods in stores. This headline is known as the identity theft biggest bust in American history. In California, a woman was arrested for stealing a Social Security Number and using it in order to receive thousands of dollars in credit and then finally declared herself bankrupt using her victims identity. In Florida, a woman pleaded guilty for obtaining somebodys else drivers license to withdraw $13000 from the victims bank account and signing up for 5 different department store credit cards in the victims name and putting $4000 on each of them. There are many other serious identity theft cases that will not be addressed in this paper. Conclusion In the United States, identity theft statistics continue to alarm residents. In fact, even though we can observe a one fourth decline in fraud alerts, preventive measures need to be constantly adapted to the evolution of technology and identity theft methods. It is important when identity theft is suspected to respond quickly in order to prevent greater damages. The figures also show that government intervention is necessary to reduce the number of identity thefts.

Bibliography/Webography 1. Aman, A. (7th Oct 2011). Biggest identity theft bust of its type in U.S. history. Available: http://www.reuters.com/article/2011/10/07/us-crime-idtheft-idUSTRE7965TS20111007. Last accessed 5th Nov 2011. 2. Experian Information Solutions Inc. (27th Jan 2010). Portrait of a Fraud Victim. Costa Mesa, CA: Experian Information Solutions Inc. p1-3. 3. Federal Trade Commission. (3th June 2011). Laws. Available: http://www.ftc.gov/bcp/edu/microsites/idtheft/law-enforcement/laws.html. Last accessed 5th Nov 2011. 4. Federal Trade Commission (2006). Take charge: Fighting Back Against Identity Theft. Washington DC: Federal Trade Commission. p5-24. 5. Foley, L. Barney, K.. (20th May 2010). Identity Theft: The Aftermath 2009. Available: http://www.idtheftcenter.org/artman2/publish/m_press/Aftermath_2009.shtml. Last accessed 4th Nov 2011. 6. Gordon, G. Rebovich, D. Choo, K. Gordon, J. (Oct 2007). Identity Fraud Trends and Patterns: Building a Data-Based Foundation for Proactive Enforcement. Utica College: Center for Identity Management and Information Protection. p31-40. 7. Henrix LLC. (2006-2011). Punishment for Identity Theft. Available: http://www.identitytheft-awareness.com/punishment-for-identity-theft.html. Last accessed 3rd Nov 2011. 8. Javelin Strategy & Research (Feb 2010). 2010 Identity Fraud Survey Report: Consumer Version. Pleasanton, CA: Javelin Strategy & Research. p2-21. 9. Javelin Strategy and Research. The Federal Trade Commission. The IRS. (10th July 2011). Identity Theft Statistics - 2010. Available: http://www.creditinfocenter.com/identity/idtheft-stats-2010.shtml. Last accessed 31th Oct 2011. 10. Langton, L (2008). Victims of Identity Theft. Washington DC: The Bureau of Justice Statistics. p1-18. 11. Longley, R. (not available). New Law to Protect Against Identity Theft. Available: http://usgovinfo.about.com/cs/consumer/a/idtheftbill.htm. Last accessed 3th Nov 2011. 12. Sheppard, D. Trotta, D. McCune, G. (8th Feb 2011). ID theft down 28 percent in U.S. in 2010: Survey. Available: http://www.reuters.com/article/2011/02/08/us-id-theft-surveyidUSTRE71748020110208. Last accessed 31th Oct 2011.

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