Protecting Yourself Against Identity Theft - And How To Fight Back, Part One

It’s the scourge of the Information Age, and a crime that ruthlessly affects more than nine million people each year in the United States alone. For families struggling to make ends meet or provide their future, identity theft amounts to no less than a ransacking of their financial security. And the ease with which even the most personal information can be illegally obtained is often chilling.

Identity theft, or the illegal use of someone else’s personal and financial information for personal gain, amounts to 42 percent of the complaints received by the US Federal Trade Commission – their single biggest source of complaints. Identity thieves use their stolen information for an entire spectrum of crimes, ranging from illegal immigration to wide-scale fraud and even for terrorism. Yet despite its myriad dangers, for victims and potential victims alike, there’s hope.

An identity theft cautionary tale

The US Department of Justice reports probably the most notorious identity theft case study, in which a convicted felon was able to incur more than $100,000 of credit card debt, obtain a federal home loan, and even bought guns, motorcycles, and homes with the illegally-gotten money.

Adding insult to injury, the criminal called the victim to taunt and mock his plight, boasting that he wouldn’t serve time for his actions since there was - at the time - no federal anti-identity theft legislation. And indeed the felon eventually only served a minor jail related to the guns, while the victim and his wife spent four years and $15,000 of their own money clearing their name. Shortly thereafter, in 1998 Congress created the Identity Theft and Assumption Deterrence Act, which made identity theft a federal offense.

The high cost of identity theft

Identity theft and ensuing credit card and other forms of financial fraud contributed to over fifty six billion dollars in fraud damages during 2006. While the total number of identity theft victims decreased, the damage per victim rose to more than $6200 dollars between 2003 and 2006.

And the problem is not purely an American issue. The Home Office of the United Kingdom asserts that identity theft and fraud have cost the UK more than 1.7 billion pounds, while in Australia the effect is believed to cost more than one billion dollars each year. While these statistics are sometimes believed exaggerated because of hazy definitions of identity theft as a crime, it points nevertheless to growing international concern.

Besides, financial costs, there is no way to estimate the emotional damage caused by identity theft. More than a third of all identity theft cases take more than three months to resolve, at a cost of sometimes countless hours and thousands in additional expenses. In addition, victims often find credit problems and misunderstandings plaguing them for years afterward.

The four kinds of identity theft

The non-profit consumer organization known as the Identity Theft Resource Center classifies four types of identity theft:

Financial identity theft involves stealing one’s banking or other financial information, usually with the purpose of fraudulently obtaining a loan or line of credit. Other forms include forging checks, raiding private checking and savings accounts, and counterfeiting money orders.

Criminal identity theft entails physically posing as someone else - that is, using another’s identity - when committing or getting arrested for a crime. In many cases the criminal will have counterfeit identification documents naming themselves as their identity theft victim.

Identity cloning involves duplicating another person’s personal information, financial information, or other data to use in everyday life. This is possibly the most notorious form of identity theft, as it involves "becoming" someone else over an extended period of time.

Business & Commercial Identity Theft is committed when an individual uses someone else’s business name or reputation to obtain credit.

How identity thieves obtain information.

Identity thieves obtain information through means and techniques ranging from the most erudite to the simplest forms of snooping and prying. Unfortunately, many times a consumer will unwittingly volunteer even their most valuable data.

The Federal Trade Commission lists the following ways thieves steal an identity:

- Dumpster diving: stealing or raiding trash cans for credit card information.

- Skimming credit card numbers by using a special storage device when a card is swiped.

- Phishing involves using a phony email or online pop-up advertisement to obtain someone’s personal information. The duped consumer will respond to the email or bulletin and unwittingly offer their information to thieves.

- Changing an address: thieves will use change of address forms to illegally divert a bill to another location.

- Stealing and "shoulder surfing:" This is the traditional stealing and prying in the real world that’s nonetheless hard to detect. Some thieves raid or lift purses, wallets, and mail; others will hover surreptitiously over ATM’s, public computer terminals, and other electronic machines in order to espy information.

In addition, many times thieves will sometimes impersonate bank or debtor officials, research groups, survey takers, or other information gatherers as a means to solicit information from consumers. This technique is known to law enforcement officials as pretexting. Thieves will also sometimes use false documentation to obtain records or personal information from creditors or financial institutions.

In Part Two we’ll discuss how to protect yourself against identity theft and what to do if you become a victim.

Michael Kabel is Senior Staff Writer for http://www.cornerstorkbabygifts.com. Stop by for parenting and baby resources, unique baby gifts, baby gift baskets and baby shower favors.