The project addresses the various aspects of identity theft, a menace that has increased with the continued adoption of novel technologies. It delineates the causes of identity theft as well as the security loopholes that make it easy for the vice to occur. The project then analyses the impact of identity theft on the society and individuals, while also proffering solutions to the problem. It is recognized that a lot of people who transact business online such as shopping are more vulnerable to identity theft, and this is the group that the project addresses. The paper then explores the issue of creating awareness for the masses on the issue of identity theft as well as the issues likely to be encountered in such an endeavor. Lastly, the paper articulates the ways in which prior victims of identity theft can be counseled and taken though the healing and precautionary process.
Keywords: Identity Theft, Hacking, Credit Freezes, Phishing, Awareness
Identity theft is currently the fastest growing crime which involves the utilization of another person’s identification data such as the name, PIN, and credit card number to access various services fraudulently or to commit a crime without the explicit permission of the owner of the said identities (Davies, 2013). The coming of digital media has proliferated the vice, especially as many people store their personal details online and without much encryption or safety procedures. Personal details stored online are vulnerable to numerous security threats and can be retrieved without the user knowing, which makes identity theft even more dangerous in the present day. Many people are unaware of this security threat, how it occurs, its consequences, and ways to safeguard personal information from security threats. While identity theft has become prevalent with the coming of the digital age, there are various measures that can be used to secure the information.
Types of Identity Theft
As earlier defined, identity theft is the utilization of another person’s identification data such as the name, PIN, and credit card number to access various services fraudulently or to commit a crime without the explicit permission of the owner of the said identities. There are numerous forms of identity theft including criminal identity theft, financial identity theft, identity cloning, medical identity theft, child identity theft, and tax identity theft which involves the fraudulent use of someone else’s social security number to file tax returns and claim tax refunds. Online shoppers are, however, likely to face two types of fraud as a result of identity theft.
In account fraud, the perpetrators of the crime open new lines of credit such as mortgages, utilities, and credit card accounts using the victim’s social security number. Usually, the impostor utilizes the victim’s real name, but a novel development has seen perpetrators utilizing the victim’s social security number but using a fake name. This type of synthetic identity fraud is largely unknown, presenting difficulties for both experts and victims to detect.
Another type of fraud involves taking over the account of the victim usually by phishing, a practice of tricking victims into revealing sensitive personal data that then allows the criminal to access the victim’s existing account. The level of sophistication and damage depends on the type of account being taken over. Since it is one of the oldest and most common types of identity theft, there are already rules in place that protect the consumer against liability for financial account takeovers.
Prevalence of Identity Theft
The threat of identity theft cannot be questioned, but what many fail to agree on is its prevalence. There is very little data available on the prevalence of identity theft largely because many people do not realize that their information has been stolen until it is used for sinister motives that attract a criminal liability. Moreover, very few cases of identity theft are ever disclosed for fear of the damage it would do to reputations or that it would expose the weaknesses in the security systems of users. Identity theft was not as pervasive today as it was a decade ago, but thanks to developments in technology, everyone has become a target. Most fraudsters target households earning an income of more than $70,000 a year as well as the elderly who have little experience with online security.
In 2014 alone, the US witnessed around 17.6 million people or roughly 7% of the population aged over 16 years fall victim to some form of identity theft (Harrell, 2015). Of these victims, 38% cited having information on an existing bank account misused while 42% cited having their credit card information accessed. The Consumer Sentinel Network also reported that in the same year, 14% of all consumer complaints it received were related to identity theft. The same organization reported that the most prevalent form of theft was government documents/benefits fraud that accounted for 34% of all cases while followed by credit card fraud at 17%, mobile phone fraud stood at 14%, and banking fraud at 8%.
Types of identity theft in 2014
Causes of Identity Theft
There are numerous reasons as to why identity theft is so rampant in the present day, one of them being the ease in which offenders can acquire personal information on victims. Most cases involve the utilization of social security numbers (SSNs) which are utilized as identification and account numbers by various private and public corporations. Retail trade has also evolved and currently relies more on consumer data while becoming even more anonymous meaning that anyone with enough data to impersonate another person can easily make purchases.
Another cause is the current credit industry practices that make it easy for people to obtain credit without the relevant background and identity checks being done. This laxity by financial institutions to check identities as well as their eagerness to obtain new clients is especially attractive to identity thieves. Financial institutions have become too competitive that they even send pre-approved offers of credit to clients, making it easy and relatively safe for criminals to commit fraud (Sanders, 1999).
Identity theft has also not received the attention given to other types of violent crimes, which allows for criminals to conduct the offense relatively unabated. Law enforcement authorities lack the expertise to investigate such crimes, and many people are not even aware of how it occurs. Perhaps the biggest cause of identity theft is a lack of awareness by the masses on how to protect themselves and their personal information against such attacks, a trend this paper hopes to negate.
Detecting, preventing, and solving identity theft cases is faced with numerous challenges largely due to the nature of the crime and also due to limitations of the current definition of the crime, the fragmented response of law enforcement personnel, and difficulties with existing data sources (White & Fisher, 2008). While numerous victim studies on identity theft have been conducted, for example, they do not capture the case of synthetic identity theft which is difficult to detect. Since the combination of names, addresses and social security number in synthetic fraud do not correspond to that of a particular person, such fraud goes undetected and unreported, even if it accounts for about 73.8% of dollar losses (White & Fisher, 2008).
Financial institutions fail to report many cases of identity theft and misclassify the crime as non-fraudulent to evade reputational injury, meaning that concrete data that allows for the institution of preventative measures is hard to find. Additionally, law enforcement authorities usually fail to investigate some cases especially when they do not exceed a certain degree of severity due to an inadequacy of resources. One of the best ways to curb this data challenge is to require all financial institutions to report all forms of identity theft as well as their severity. Such reporting is, however, difficult since financial institutions may fail to detect fraud, reporting may enable the perpetration of more crime, and it may pit financial institutions against victims.
How Identity theft occurs
Criminals utilize diverse tools to acquire information which ranges from complex methods to simple ones such as stealing wallets and purses which usually contain a lot of identifying information. As earlier mentioned, criminals also fish for information from the trash, which is often not shredded. Dishonest employs with access to sensitive personal data can also use the information themselves or sell it to criminals who may also hack into computer terminals. Currently, cybercrime is gaining tractions with hackers entering government websites and accessing vast amounts of information, which they sell online.
Other methods include changing the address routine for a person’s mail so that sensitive mail goes to the criminal’s mailbox. Filling out applications in another person’s name is also popular, although measures have been put in place to curb this. Sadly, most of the identity theft is perpetrated by people familiar or close to the victim including friends, relatives, and household workers (Givens, 2000). Due to the various methods used to acquire data, most victims are unaware of how their information leaked, although some may willingly give out their information in cases such as medical identity fraud.
Impacts of Identity Theft
Besides actual dollar losses, there are other negative impacts that include paying higher rates on interest and insurance as well being denied access to lines of credit. Financial distress may occur in various ways as outlined. Firstly, credit card fraud usually involves the criminals calling the credit card issuer and changing the billing address on the account so that one cannot detect charges running up on their account. It may thus take a while before one realizes that there is a problem, by which time the credit rating is already damaged.
In some instances, criminals may open a bank account in the victim’s name and write bad checks on that account, which affects the ability of the victim to write and cash checks. When fraudulent checks are written on that account, the victim may also be open to criminal prosecution. Criminals also obtain authorization for electronic transfers to and from an account and then go on to drain that account of money and in some cases, they may take out a loan or insurance policy in the victim’s name.
There are numerous costs associated with identity theft, and these range from the costs of preventing, detecting, and identifying identity theft as well as direct losses incurred as a result of the crime. The average cost of resolving an ordinary identity theft crime is approximate $500 due to the lengthy process and outside counsel it needs, especially since proving the crime is difficult. A report released by the House of Representative Standing Committee on Economics in Australia identified that in 2001-02, the cost of identity theft in the nation was approximate $1.1 billion. In a report by the Bureau of Justice Statistics, it was found that about 14% of identity theft victims experience financial losses of over $1 or more (Harrell, 2015). In 2014, the financial losses arising from identity theft in the US totaled to $15.4 billion, down from $24.7 billion in 2012.
While most identity theft incidences involve the seeking of financial gain, individuals may also seek to commit a crime under the victim’s name thereby reducing their chances of getting caught or evading a negative criminal record. Victims can thus run a long list of criminal prosecutions that are unbeknown to them until an inopportune time comes when the victim finds out in the worst ways. Many victims of criminal identity theft often find out that they have a list of criminal records when they are called for missing a court hearing or are stopped over for a minor offense only to be treated like a criminal. It is very difficult for victims to prove that they did not perpetrate prior crimes, and the consequences of having a criminal record are dire.
Identity theft has a heavy emotional toll on victims which usually persists even after the incident has been remedied. Victims report feeling overwhelmed, stressed, and unsure of how to proceed once they find out that they have been victimized. On finding out about a particular incidence, victims also worry about what else has been compromised and toil over how to rectify the situation and prevent future incidences.
Suffering financial loss also can take an emotional toll on victims, especially if the loss is substantial. Detecting and solving a case of identity theft also has a heavy emotional toll as one is unsure of whether the issue will be rectified. When one is labeled a criminal or faces jail time for crimes they did not commit, such a victim faces depression and in some cases, suicides have been reported. The emotional impact that identity theft has on victims, however, depends on the severity and the nature of the theft. Overall, an estimated 36% of identity theft victims report experiencing some moderate to severe emotional distress as a result of the crime (Harrell, 2015).
Perhaps one of the best depictions of the emotional impact of identity theft is illustrated by the story of Hayley, an Ivy League student out to campaign for the student council president as well as serve as the editor-in-chief of the school newspaper. Just before the elections, however, a series of inappropriate photos and incriminating updates posted on a fake Facebook profile threaten to tarnish her good name. While the book is a thriller centered on two twins, it shows the extent to which identity theft can tarnish one’s name and even rob them of their identity (Davies, 2013).
A lot of time is taken trying to resolve an incident, time that can never be recovered even though the money may be recovered. A simple incident requires the victim to spend countless hours contacting banks, card companies, as well as retailers to solve the situation. While a majority of identity theft cases are resolved, some are not as highlighted in a report on medical identity theft. In the report, most victims stated that they spent over 200 hours resolving the issue, even though only ten percent were satisfied with the outcome (Peters, 2015).
Other effects of identity theft include the denial of promotion or employment, reputational damage, and being denied access to medical insurance and other services. This kind of fraud has dire lifestyle-impairing consequences that can see one become prosecuted or put on numerous watch lists that impair on their freedom. Being put on a sex offender list, for example, may impact how one relates to their neighbors and friends.
Solutions to the problem
In recent years, there has been an upsurge in the attention given to the legislative and industry solutions to the problem of identity theft primarily due to a lot of media coverage. A lot of people, however, are not aware of how they can protect themselves as individuals from falling prey to the vice. One of the ways to safeguard oneself is by carrying essentials when traveling so that in the case of loss, sensitive information cannot fall into the wrong hands. Tied to this is the practice of shredding paperwork with identifying information and wiping personal information from electronic gadgets before disposing of them.
Staying safe online is also paramount, especially for users who do online transactions and purchases. Providing sensitive information over the internet should be kept at a minimum, and users should also restrict themselves from clicking on links in emails as criminals utilize phishing emails to target their prey. Additionally, using strong passwords that are frequently changed as well as not using one password for multiple sites is advised.
Paying special attention to one’s accounts as well as tax returns will aid in the early detection of theft in case it occurs. Individuals should thus monitor their accounts for irregular activity which can be done easily through various apps created for that purpose. Credit freezes can also be done to prevent other accounts from being opened in one’s name and also gaining access to personal credit reports. Individuals should also institute fraud alerts so that opening of novel accounts will require additional documentation and identification. Irregularities in tax returns are also a major sign of identity theft, and hence, these returns should be reviewed regularly (Mayfield, 2015).
Aiding previous victims of identity theft
Identity theft can be rather traumatizing to the victims especially if they do not receive the support they require. Most victims lament the lack of proper legal mechanisms to address the issue even as they battle with comprehending the issue. Most victims are not equipped to deal with the challenge of identity theft either because they are semi-illiterate or lack the financial muscle.
After much public outcry about the lack of restitution mechanisms for victims, novel legislation has been passed that creates a clearing house where victims can call toll-free and get assistance. These clearing houses also provide personnel to assist victims to deal with the emotional trauma of such theft. These laws have also led to the creation of numerous websites where victims can get information on the necessary steps to take as well as how to safeguard themselves in future.
Upon identifying an incidence of identity theft, a victim should first report the matter usually by first filing a report with the police and then completing an ID theft affidavit (Anderson, Durbin, & Salinger, 2008). The victim should then file a fraud alert with credit rating agencies so that their credit reports are flagged, making it easier for institutions to be aware that one is a victim. The victim should then notify all affected entities of the theft and then ask to be furnished with detailed personal information reports t be able to assess the scope of the damage. Getting certified as a victim of identity theft is then essential as it provides one with enough proof to solving the identity theft issues and preventing future instances.
Identity theft has proliferated in recent years, primarily fueled by an increase in online transactions that rely mostly on data and the fact that the crime has not been given the attention it deserves, meaning that most perpetrators are never caught. Identity theft occurs in various ways, but usually has the same consequences of causing financial and emotional turmoil to the victims. Most of the victims also are not aware of how to resolve the issue or lack the financial muscle to do so. Another challenge is that it is hard to detect identity theft, and most people fail to report it due to fear of reputational damage or the threat of increased crime. Awareness of the need to report such crime as well as the means to protect oneself are necessary. Additionally, more attention needs to be given to victims especially those who lack the means to resolve the issue on their own.
Anderson, K. B., Durbin, E., & Salinger, M. A. (2008). Identity Theft. The Journal of Economic Perspectives , 171-192.
Davies, A. (2013). Identity Theft. New York: Point Horror.
Givens, B. (2000). Identity Theft: How It Happens, Its Impact on Victims, and Legislative Solutions . Sacramento, CA: Privacy Rights Clearinghouse.
Harrell, E. (2015). Victims of Identity Theft, 2014. Washington, DC: U.S. Department of Justice.
Mayfield, J. (2015, October 14). The True Cost Of Identity Theft. Retrieved May 01, 2016, from personalcapital.com: https://blog.personalcapital.com/financial-planning-2/scary-truth-cost-identity-theft/
Peters, S. (2015, February 24). Medical Identity Theft Costs Victims $13,450 Apiece. Retrieved May 01, 2016, from darkreading.com: http://www.darkreading.com/medical-identity-theft-costs-victims-$13450-apiece/d/d-id/1319210
Sanders, E. (1999, June 15). Charges are flying over credit card pitches . Retrieved May 01, 2016, from Los Angeles Times: www.latimes.com
White, M. D., & Fisher, C. (2008). Assessing Our Knowledge of Identity Theft. Criminal Justice Policy , 3-24.