Cybertelecom Federal Internet Law & Policy An Educational Project

Fraud: ID Theft

But he that filches from me my good name
Robs me of that which not enriches him
And makes me poor indeed.
- Shakespeare, Othello, act iii, scene 3.

The telephone rings. It’s the Repo Man. He’s coming for your car. That nice cruiser you just bought and have been cruising around Los Angeles in. Problem: you didn’t buy a cruiser. You haven’t bought any cars. And you live in New York City.

The phone rings again. This time it’s the mortgage company. That nice house you just bought in Santa Monica, they want to know why you are late on your payment. You’re beginning to get a sinking feeling.

The next call is from the credit card company. It occurs to you that you have not seen a bill in a while. Your card is maxed, you are two months late, and they are courteously telling you that they are canceling your card.

The next time the phone rings, you just can’t pick up the line. Over the answering machine you can hear Uncle Fred’s voice – the uncle you are in the business deal with. He is screaming! His father and your father go back – oh well, you know the story. He wants to know what the heck you are doing declaring bankruptcy on him.

Sinking into your chair you get the final call. If the first four were not enough, the last is the best. Over the answering machine – remember, you’re not answering the phone anymore – you hear a voice you do not recognize. It is a nasty voice. The person introduces himself – as you, and laughs. This stranger knows about your new car, your new house, your credit cards, and your bankruptcy. This stranger has stolen your identity and has called you up to taunt you.

This story is based on a true and notorious case. The thief claimed that he could pose as the victim for as long as he wanted because, at that time, identity theft was not a crime. Ultimately, the thief made a mistake. He made a false statement in order to procure a firearm and got caught, receiving a brief sentence. The victim, in the mean time, spent four years and a few buckets of money to restore credit and reputation. This is one of the cases that prompted Congress in 1998 to pass the Identity Theft and Assumption Deterrence Act

The Theft

As a part of the new law, the Federal Trade Commission was directed to conduct a study and issue a report on identity fraud. The FTC set up a clearing house for ID theft information and in October 2000 released its first report. The information collected indicated that the most common complaint concerned credit card fraud. Other problems included, in the order of the magnitude of complaints, unauthorized phone or utility service, bank fraud, fraudulent loans, and government documents or benefits. 86.5 percent of the time the victim had no relationship with the perpetrator. When it could be determined how the perpetrator had obtained the information, the most common method was the loss of a wallet or purse (47 percent). The second most common method was theft of mail which included having someone fraudulently submit a change of address for the victim to the post office, directing the victim’s mail to the wrong address (23 percent). Thirty percent of the victims knew about the theft within one month. Some, however, did not realize the theft for as long five years. The biggest problem incurred by victims of ID theft was harm to their credit rating. Other injuries included the time and resources lost recovering from the theft and harassment by debt collectors. The average loss from identity theft was $2000 in 2002.

Identity Theft is not particular to the Internet. It was around before the Internet and even now does not necessarily involved the Internet. It can be as simple as a waiter pinching your credit card number at dinner. What is different is the new ease of access that the Internet brings to your personal information. One website helps to find your address and phone number. Another will reveal your date of birth. A poorly designed government site, such as a Department of Motor Vehicles, will reveal a bit more information about you then it should. And before long, someone has developed a full and accurate profile of you. As an individual, you may be concerned with what personal information is available about you online. As an Internet Service Provider or Internet network, you may be concerned with how you secure your confidential customer data and what to say to your subscribers if they fall victim to such a situation.

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Broadband Plan Recommendations

• Recommendation 4.17 The federal government, led by the FTC , should put additional resources into combating identity theft and fraud and help consumers access and utilize those resources, including bolstering existing solutions such as OnGuard Online.
• Put more resources into OnGuard Online. The federal government should put additional resources into OnGuard Online, ensuring that it is easily accessible to consumers and provides them with information on risks, solutions and who they can contact for further action. Federal agencies should connect their existing online websites to OnGuard Online and direct consumers to its resources.
• Maintain and publicize a database of agencies with responsibility. The FTC should maintain and publicize a database of agencies responsible for identity theft and fraud information, with clear information and directions available to consumers.
• Continue education efforts around identity theft and fraud. The federal government should continue educational efforts that clarify for consumers and businesses that personal information should only be collected when necessary and that entities should take reasonable measures to protect information from unauthorized access.
• Encourage broadband service providers to link to OnGuard Online. All agencies should encourage broadband service providers to link to OnGuard Online to direct potential victims of identity theft or fraud to necessary resources.