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The fraudulent use of an individual’s personal identifying information.
Often, identity thieves will use another individual’s personal information such as a social security number, mother’s maiden name, date of birth, or account number to fraudulently open new credit card accounts, charge existing credit card accounts, write checks, open bank accounts or obtain new loans. They may obtain this information through a number of means, including:
• Stealing wallets or purses that contain personal identification information and credit cards;
• Stealing mail, including financial institution and credit card statements, pre-approved credit offers,
• telephone calling cards, and tax information;
• Diverting mail from its intended recipients by submitting a change of address form;
• Rummaging through trash for personal data;
• Stealing personal identification information from workplace records; or
• Intercepting or otherwise obtaining information transmitted electronically.
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According to the Federal Bureau of Investigation, identity theft is one of the fastest growing white-collar crimes in the nation. Reasons cited for this increase in identity theft include the increased availability of personal information in the marketplace, the ability of identity thieves to use this information to, for instance, apply for credit under cover of anonymity afforded by remote channels, and the nearly instantaneous and ready availability of credit.
More than 500,000 consumers are victimized each year by identity theft. This growing crime has a devastating effect on financial institution customers and a detrimental impact on the banks. Four of the top five consumer complaints regarding identity theft involve financial services — new credit card accounts opened, existing credit card accounts used, new deposit accounts opened, and newly obtained loans.
On November 1, 1999, the Federal Trade Commission (FTC) established a toll-free telephone hotline, 1-877-ID-THEFT (438-4338), for consumers to report identity theft and seek counseling. Information from complainants is stored in a central database and used as an aid in law enforcement and prevention. The FTC reported that its identity theft hotline received over 1000 calls a week in July and August 2000. More recent public statements by FTC officials indicate that the number of calls to the hotline have more than doubled since then, to over 2000 calls a week. Information in the FTC database collected from hotline calls for the year 2000 indicate the most common forms of identity theft reported to the FTC include:
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Credit card fraud - Fifty percent of complainants reported that a credit card account had been opened in their name, or an identity thief had taken over their existing account. Seventy-one percent of these complaints involved the establishment of a new account; twenty-five percent involved the takeover of an existing account.
Checking or savings account fraud - Sixteen percent of complainants reported a savings or checking account had been opened in their name or fraudulent checks had been written on existing accounts. Forty-nine percent of these complaints involved using unauthorized checks; twenty-seven percent involved establishing new checking accounts; seventeen percent involved unauthorized electronic fund transfers.
Loan fraud - Nine-and-a-half percent of complainants reported the identity thief had obtained a loan in their name.
Identity theft may go undetected for months and even years. Victims of identity theft may not realize that someone has stolen their identity until they are denied credit or until a creditor attempts to collect an unpaid bill.
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PRETEXT CALLING
A fraudulent means of obtaining an individual’s personal information.
Pretext callers may contact financial institution employees, posing as their customers, in order to access customers’ personal account information. Information obtained from pretext calling may be sold to debt collection services, attorneys, and private investigators for use in court proceedings. Identity thieves may also engage in pretext calling to obtain personal information for use in creating fraudulent accounts.
Pretext calling is also difficult to detect. While information brokers and private investigators routinely advertise on the Internet and elsewhere their ability to locate and provide specific information about individual bank accounts, banks and their customers are likely to be unaware that they have been the victims of pretexting (i.e., the use of some form of pretext to obtain customer information). Unless the pretexting ultimately leads to identity theft, it may go undetected altogether.
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Pretext callers use pieces of personal information to impersonate an account holder in order to gain access to that individual’s account information. Armed with personal information, such as an individual’s name, address, and social security number, a pretext caller may try to convince a bank's employee to provide confidential account information.
HOW TO AVOID BECOMING A VICTIM
You probably can’t completely prevent identity theft from occurring, especially if someone is determined to commit the crime. You can, however, minimize your risk by managing your personal information wisely, cautiously, and with heightened sensitivity. Here are some precautionary measures that law enforcement recommends to protect against identity theft and pretext calling:
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Do not give personal information, such as account numbers or social security numbers, over the telephone, through the mail, or over the Internet unless you initiated the contact or know with whom you are dealing
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Store personal information in a safe place and tear up or shred old credit card receipts, ATM receipts, old bank checks and account statements, and unused credit card offers before throwing them away.
Protect your PINs and other passwords. Avoid using easily available information like your mother's maiden name, your birth date, the last four digits of your social security number, your phone number, etc.
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Carry only the minimum amount of identifying information and the number of credit cards that you need.
Pay attention to billing cycles and statements. Inquire of the bank if you do not receive a monthly bill; it may mean the bill has been diverted by an identity thief.
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Check account statements carefully to ensure all charges, checks, or withdrawals were authorized.
Guard your mail from theft. If you have the type of mailbox with a flag to signal the box contains mail, do not leave bill payment envelopes in your mailbox with the flag up. Instead, deposit them in a post office collection box or at the local post office. Promptly remove incoming mail. If you’re planning to be away from home and can’t pick up your mail, call the U.S. Postal Service at 1-800-275-8777 to request a vacation hold. The Postal Service will hold your mail at your local post office until you can pick it up.
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Order copies of your credit report from each of the three major credit bureaus once a year to ensure they are accurate. The law permits the credit bureaus to charge $8.50 for a copy of the report (unless you live in a state that requires the credit bureaus to provide you with one free copy of your report annually).
If you prefer not to receive preapproved offers of credit, you can opt out of such offers by calling 1-888-5-OPT OUT.
If you want to remove your name from many national direct mail lists, send your name and address to: DMA Mail Preference Service P.O. Box 9008 Farmingdale, NY 11735-9008.
If you want to reduce the number of telephone solicitations from many national marketers, send your name, address and telephone number to: DMA Telephone Preference Service P.O. Box 9014 Farmingdale, NY 11735-9014.
WHAT YOU CAN DO IF SOMEONE STEALS YOUR IDENTITY
Following are some steps to take if you are a victim of identity theft:
Contact the fraud departments of each of the three major credit bureaus to report the identity theft and request that the credit bureaus place a fraud alert and a victim’s statement in your file. The fraud alert puts creditors on notice that you have been the victim of fraud and the victim’s statement asks them not to open additional accounts without first contacting you. The following are the telephone numbers for the fraud departments of the three national credit bureaus: Trans Union: 1-800-680-7289; Equifax: 1-800-525-6285; Experian: 1-888-397-3742.
You may request a free copy of your credit report. Credit bureaus must provide a free copy of your report if you have reason to believe the report is inaccurate because of fraud and you submit a request in writing.
Review your report to make sure no additional fraudulent accounts have been opened in your name, or unauthorized changes made to your existing accounts. Also, check the section of your report that lists “inquiries” and request that any inquiries from companies that opened the fraudulent accounts be removed.
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Contact any financial institution or other creditor where you have an account that you think may be the subject of identity theft. Advise them of the identity theft. Request that they restrict access to your account, change your account password, or close your account if there is evidence your account has been the target of criminal activity.
File a report with your local police department.
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Contact the FTC’s Identity Theft Hotline toll-free at 1-877-ID-THEFT (438-4338). The FTC puts the information into a secure consumer fraud database and shares it with local, state, and federal law enforcement agencies.
In addition to the above steps, the FTC’s website, www.consumer.gov/idtheft, is an excellent source of information for consumers, as is a website that has been launched by The President's Task Force on Identity Theft. The intent of IDTheft.gov is to be a one-stop resource for government information about identity theft. The site contains a link to the Task Force's Strategic Plan, which was released on April 23, 2007, and sets out recommendations to prevent identity theft, to assist identity theft victims in recovering from those crimes, and to prosecute and punish identity theft-related criminals. www.idtheft.gov/takeaction.html.
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