How Identity Theft Works

Have you ever eaten at a restaurant, paid with a credit card, and forgotten to get your copy of the credit card receipt? Did you know that many of these receipts have your credit card number printed right there for anyone to see (and use)? And, if you've signed them, your signature is also right there for someone to carefully copy. This can lead to the most simple form of identity theft. With this bit of information, some unscrupulous person can be well on his way to making purchases either by phone or on the Internet using your credit card number. You won't know about it until you get your statement (a good reason why you should always study the charges on your credit card statements!). All they have to have, in most cases, is your mailing address, which can be looked up in a phone book or easily found on the Internet.

Credit card fraud is identity theft in its most simple and common form. It can be accomplished either through a scenario like the one we just mentioned, or it can happen when your pre-approved credit card offers fall into the wrong hands. All a person has to do is get these out of your mailbox (or trash can) and mail them in with a change of address request and start spending. Someone can even apply for a credit card in your name if they have the right information. You won't know a thing about it until the credit card company tracks you down and demands payment for the purchases "you" have a racked up.

With a person's name, social security number and date of birth, someone can get loans, access the person's existing bank accounts, open new bank accounts, lease or buy cars, get insurance, you name it. Think about the things you throw in the trash. Do you throw your pay stubs away once you've recorded the amount in your checkbook? Take a look at some of the information on that seemingly unimportant piece of paper:

• Your full name
• Your address
• Your social security number
• Your complete bank account number (if you have direct deposit)
• Your employer and its address
• Your rate of pay

Now, think about the types of information you have to provide in order to get a credit card or a loan or lease a car. There is very little additional information that is needed in order to get that loan. I recently got a home equity loan and did all but the final signing of the documents over the phone, and faxed all of my financial information directly to the loan officer. It would not have been that difficult to "create" those documents using someone else's social security number, bank account numbers and other personal information. That's a scary thought! Imagine finding out that someone had gotten a mortgage in your name. Clearing that up with the bank and getting it off of your credit history would be quite a battle. You are left with the time-consuming task of repairing your credit and getting your finances back on track.

Your personal information can be found in many places. It can be:

• Dug out of trash cans and dumpsters, known as "dumpster diving"

• Memorized or copied by sales clerks and waiters
• Removed from your mailbox in the form of tax notices, financial account statements and other bills before you have a chance to get them or even know they are there
• Removed from your employer's files, either secretly or with the help of an inside accomplice
• Removed from your hospital records, usually with the help of an inside accomplice
• Removed from your financial lender's files
• Removed from your landlord's files
• Purchased (or found free) in online (or offline) databases
• Collected from "cloned" Web sites (Someone may recreate a legitimate merchant Web site in order capture your personal information and credit card information when you place an order.)
• Stolen from a merchant database through computer hacking (This is not as simple as other forms of theft.)
• Stolen through hacking into commercial Web sites or your personal computer and using software to mirror keystrokes to capture credit card account information
• Collected from "cloned" chat rooms that include links to outside Web sites that offer services or products (None of these are real merchants; your information is simply gathered so the criminals can make purchases elsewhere.)

Basically, anywhere you've provided that information can be a target. Often, employees who have access to the information are bribed or offered a cut of the profits in exchange for personal information about other employees. The more sophisticated the perpetrator, the more money is stolen and the more people scammed. Clerks can even put skimmers on the credit card machines that will record credit card information for later use. Temporary employees seem to be more frequently involved in identity theft scandals than permanent employees, simply because fewer background checks are done on them.

What about all of the publicly available information someone can access about you? Sources for this information include:

• Public records - These records that are open for public inspection include driver's license information, real estate records, business records, vehicle information, certain types of professional certifications and licensing information, and any other types of data collected by public entities.
• Information that is publicly available - This means non-government information that is found in newspapers, such as classified advertisements and reports, as well as phone book entries.
• Open-source information - This refers to information about you that may be found in periodicals and on Web sites.

­While some information about your life is pretty well protected, such as medical, financial and academic records, your other identifying information (social security number, home address, etc) is not so protected. One scary statistic: According to the Federal Trade Commission (FTC), in 2000, 19 percent (as opposed to 13 percent in 2001) of all victims of identity theft who completed that section of the FTC complaint form had a personal relationship with the thief; 10 percent of those thieves were family members.

Protecting yourself from identity theft takes proactive effort. You can't simply assume it's not going to happen to you and go on about your life -- it can happen to anyone. It even happens to celebrities. Oprah Winfrey, Tiger Woods, Robert De Niro and Martha Stewart have all had their identities stolen. While you can't ever totally protect yourself from these thieves, you can at least make yourself less attractive as a victim by doing what you can to make it more difficult for them to access your information. Here are some things you can do to protect yourself:

• DON'T give out your Social Security number unless it is absolutely necessary. Many companies collect more information than they really need. Make sure that it's something they have to have and make sure they'll protect your privacy.
• DESTROY any unwanted credit card offers. This means rip, shred, burn, whatever you can do. These pre-approved offers come almost daily. If you don't want the three major credit bureaus to sell your name to these companies, you can "opt out" by either writing to the three major credit bureaus or by calling (888) 5OPTOUT (567-8688). This will remove your name, for two years, from mailing and telemarketing lists that come from TransUnion, Equifax, Experian, and INNOVIS. You can also write to the Direct Marketing Association's mail preference service to have your name removed from some mailing lists.
• DON'T put any other information besides your name and address on your checks, and keep a close watch on your checkbook both when you're writing checks and when it is lying around. Someone can memorize your name, address and phone number during the short time it takes you to write a check.

• SHRED (cross-cut) any sensitive documents before you throw them into the trash. This may seem like an extreme measure, but dumpster diving happens all the time and turns up a lot more personal information than you may realize.
• DON'T carry your Social Security card, passport, or birth certificate in your wallet or purse. Also, only carry as many credit cards as are absolutely necessary. It has also been suggested that you photocopy everything you carry in your wallet to make canceling things easier in the event that your wallet is stolen.
• REVIEW your credit report every year to make sure there haven't been any new credit cards or other accounts issued (to someone other than you) and to make sure there haven't been inquiries by people you haven't initiated business with. There are also services you can subscribe to (such as CreditExpert) that will alert you to any changes in your credit file.
• NEVER give out personal information on the phone to someone you don't know and who initiated the call. Often, scam artists phone unsuspecting victims pretending to be their financial services company and request information to be provided over the phone. Usually, the story is to "update records" or sell a product. Get their name, phone number and address, and then call them back at the number you have on file or that is printed on the statements you receive.
• REVIEW your monthly credit card st atement each month to make sure there aren't any charges showing up that aren't yours. Also, make sure you get a monthly statement. If the statement is late, contact the credit card company. You never know when someone may have turned in a change-of-address form so they could make a few more weeks of purchases on your credit card without you noticing.
• DON'T mail bills or documents that contain personal data (like tax forms or checks) from your personal mail box. Take them directly to the post office or an official postal service mailbox. It's too easy for someone to take mail out of your mailbox on the street. From there, they can dip your checks in special chemicals to remove the ink and then rewrite them to themselves!
• If you're ever denied credit, FIND OUT WHY, especially if you haven't reviewed your credit report lately. This may be the first indication you get that someone has stolen your identity and is racking up charges in your name.
• REACT QUICKLY if a creditor or merchant calls you about charges you didn't make. This too may be the first notice you get that someone has stolen your identity. Get as much information from them as you can and investigate immediately.
• GUARD deposit slips as closely as you do checks. Not only do they have your name, address and account number printed on them, but they can also be used to withdraw money from your account. All a thief has to do is write a bad check, deposit it into your account and use the "less cash received" line to withdraw your money.

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