Types of Identity Theft & How to Avoid Them

By Aug 03 , 20090 Comments

identity-fraudAccording to the non-profit Identity Theft Resource Center and other sources, identity theft can be sub-divided into five categories:

  • Business/commercial identity theft (using another’s business name to obtain credit)
  • Criminal identity theft (posing as another when apprehended for a crime)
  • Financial identity theft (using another’s identity to obtain goods and services)
  • Identity cloning (using another’s information to assume his or her identity in daily life)
  • Medical identity theft (using another’s information to obtain medical care or drugs)

Identity theft may be used to facilitate crimes including illegal immigration, terrorism, and espionage. Identity theft may also be a means of blackmail. There are also cases of identity cloning to attack payment systems, including online credit card processing and medical insurance.

Some individuals may impersonate others for non-financial reasons – for instance, to receive praise or attention for the victim’s achievements. This is sometimes referred to as identity theft in the media.

Individual identity protection
The acquisition of personal identifiers is made possible through serious breaches of privacy. For consumers, this is usually due to personal naiveté about who they provide their information to. In some cases the criminal obtains documents or personal identifiers through physical theft (e.g. vehicle break-ins and home invasions). Guardianship of personal identifiers by consumers is the most common intervention strategy recommended by the US Federal Trade Commission, Canadian Phone Busters and most sites that address identity theft. Personal guardianship issues include recommendations on what consumers may do to prevent their information getting into the wrong hands.

The strongest protection against identity theft is not to identify at all – thereby ensuring that information cannot be reused to impersonate an individual elsewhere. As such, identify theft is often a question of too little privacy or too much identification. Many activities and organizations in a modern society require people to provide personal identifiers (Social Security number, national identification number, drivers license number, credit card number, etc), and in some cases the knowledge of personal identifiers is treated as proof of identity. This is sometimes done as a convenience or to enable transactions by telephone or the internet, however it can also make it more difficult for individuals to protect themselves from identity theft.

To protect an individuals from online identity theft by phishing, hacking or Zero day attacks online consumers are advised by e-retailers to ensure their computer security and operating systems are fully up-to-date.

In some cases an identity thief will attempt to impersonate a deceased individual. Frequently credit checks or other types of verification are not cross referenced with death certificates, so the crime may go unchecked for some time unless the deceased’s family detects it and takes steps to prevent further fraud.

In recent years, many commercial identity theft protection services have been started by companies in the United States. These services purport to help protect the individual from identity theft or help detect that identity theft has occurred in exchange for a monthly or annual membership fee. The services typically work either by setting fraud alerts on the individual’s credit files with the three major credit bureaus or by setting up credit report monitoring with the credit bureaus. While identity theft protection services have been heavily marketed, their value has been called into question.

According to a recent survey, an estimated 9.9 million Americans were the victims of identity fraud in 2008, an increase of 22 percent over 2007. At the same time, the actual cost to consumers went down 31 percent.

What Is Identity Fraud?
Identity fraud is defined as the unauthorized use of another person’s personal information to achieve illicit financial gain. The 2009 Identity Fraud Survey Report–produced by Javelin Strategy & Research, sponsored by Intersections, Inc., and Wells Fargo & Company and supported by the Better Business Bureau–identified important findings about the impact of fraud and how consumers can protect themselves.

“The good news is research shows consumers have more control than they may think and more of them are actively taking steps to protect themselves,” says James Van Dyke, president and founder of Javelin Strategy & Research. “Additionally, the industry has made significant strides to resolve fraud incidents for their customers and put stronger controls in place to limit fraud, which is lessening the impact of this crime.”

Tips to Prevent Identity Fraud
Keep personal data private. Do not provide sensitive financial information over the Internet or phone, including social Security numbers, passwords, PINs or account numbers, unless you initiated the interaction.

Online is safer than offline. Move your financial transactions online to eliminate many of the most common avenues fraudsters use to obtain personal information. Moving online includes turning off paper invoices, statements and checks, including paychecks, and replacing them with electronic versions. Consumers should also install and regularly update anti-virus and anti-spyware software, and keep operating systems and browsers updated.

Be aware of those around you. Be mindful of your environment and others who may be in proximity of overhearing sensitive financial or personal information or watching you text.

Be vigilant. Monitor your accounts regularly and request a free credit report. The survey found that those who took more than six months to detect fraud saw four times higher average costs.

Ensure credit and debit cards are protected. Obtain credit and debit cards from financial institutions that provide you zero liability if your card is ever lost, stolen or used without authorization.

To take an identity fraud safety quiz and download a free consumer version of Javelin’s identity fraud report, visit the Web site at http://www.idsafety.net or visit http://www.identityguard.com or wellsfargo.com/privacy_security/fraud_prevention/.