1 IDENTITY THEFT Targeting a Modern Problem with Modern Solutions Developed by Greg Nelson, CPCU and...

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IDENTITY THEFTIDENTITY THEFT

Targeting aModern Problem

with Modern Solutions

Developed by Greg Nelson, CPCUand Lynn Davenport, CPCU

For the CPCU Society’s Information Technology Interest Group

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OverviewOverview

• Understand the implications of identity theft.• Describe methods that thieves use to steal

identities.• Understand the financial and non-financial losses

resulting from identity theft.• Discuss the insurability of and availability of

insurance for identity theft.• Understand ways to reduce risk of identity theft.

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What is Identity Theft?What is Identity Theft?

“Identity theft occurs when someone uses your name, address, Social Security number (SSN), bank or credit card account number, or other identifying information without your knowledge to commit fraud or other crimes.”

- Federal Trade Commission

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Unfortunate VictimsUnfortunate Victims

Sample Case Studies:

Michelle Brown: (More than $50,000)

• Thief stole apartment rental application from her landlord.

• Used her personal information to spend more than $50,000: new car, liposuction, to rent properties, and to participate in drug trafficking.

• Perpetrator went to prison under Michelle’s name.

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Lt. Col. John Stevens: ($27,000 Jeep in Dallas) ($113,000)

• Got a call one day from creditors wondering why he hadn’t paid for his new $27,000 Jeep in Dallas, where he had never lived.

• Discovered 33 fraud accounts in his name after someone stole his PIN number, leaving him with $113,000 in unpaid debt.

• Took 3 years and $6000 to straighten things out, unable to secure credit to buy a vacation home.

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Tracey Thomas: (“Only” $500)

• SS number stolen from health insurance card by a hospital employee.

• Rented an apartment, set up utilities, opened credit card accounts. Imposter defaulted on almost $15,000 worth of goods and services.

• Out of pocket loss was only $500 but she had to use 400 hours of vacation to work on clearing her name, and she was unable to get a legitimate mortgage.

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Linda Trevino: (Could not get a job)

• SS number stolen from health insurance card by a hospital employee.

• Rented an apartment, set up utilities, opened credit card accounts. Imposter defaulted on almost $15,000 worth of goods and services.

• Out of pocket loss was only $500 but she had to use 400 hours of vacation to work on clearing her name, and she was unable to get a legitimate mortgage.

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The ProblemThe Problem

• Identity theft = Number 1 consumer complaint

• Annual victims = 9 million

• 1 in 23 people = victims of ID theft

• Average fraud per victim = $6383

• Average out of pocket cost to fix = $440/1180

• Average time to fix problem = 40 hours

• Between 2003 & 2006, number of victims decreased but cost and time to resolve the problems have increased.

• Cost to buy a stolen identity???

BBB & Javelin 2006 Identity Fraud ReportUpdated from 2003 study

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Are You at Risk?Are You at Risk?

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Look in your wallet . . .Look in your wallet . . .

• Did you find your Medicare card in your wallet? The identification number on your Medicare card is your Social Security number. Only carry this card when you are going to a doctor's appointment or know you will need it.

• How many cards have your Social Security number? Thieves love your Social Security number. With your number, they can impersonate you and obtain new credit accounts. Make sure your SSN is not listed on your driver’s license or bank checks. Do not carry your Social Security card with you.

• Which of these is a safe place in your home to store all the pieces of paper that have personal information about you?

• On the table just inside the front door• In the kitchen junk drawer• Next to the telephone• In a secure desk drawer• On the piano

• In a locked file cabinet

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Myths & MisperceptionsMyths & Misperceptions

Internet increases the risks of identity theft.

• Only 9% of identity theft is from online activity.

• The 2005 ChoicePoint scandal is an example of a situation where identity thieves posed as authorized clients to access information that impacted 51 million consumers. This impersonation enabled them to gain access to ChoicePoint’s customer data. No one hacked into ChoicePoint’s system to steal identities; this was an old-fashioned scam. So online transactions really aren’t any riskier than the paper shuffle in

terms of ID theft.

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Myths & MisperceptionsMyths & Misperceptions

Consumers are helpless to protect themselves.

63% of fraud is created by friends/family, lost or stolen wallets, stolen home computers, and stolen mail.

Consumers detect almost half of ID theft cases and detect them faster. A key part of self-detection is credit monitoring and credit reports.

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How to Steal an Identity:Need Key Info

How to Steal an Identity:Need Key Info

• Social Security number

• Medical ID cards

• Utility bills

• Property taxes

• Student ID cards

• Driver’s license number

• Pre-approved credit cardsolicitations

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Old Fashioned Paper ScamsOld Fashioned Paper Scams

• Steal wallet or purse, steal from your home

• “Dumpster Diving”

• Steal mail from mailbox

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ATM ScamsATM Scams

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Electronic ScamsElectronic Scams

“Pre-texting”, which is the use of false pretenses to get your personal information. They may call you, pretend they are from a survey firm or one of your trusted creditors, and ask you some questions. When they get the info they want, they use it to call your financial institution and pretend they need information about their account.

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Electronic ScamsElectronic Scams

“Phishing” is another scam that is growing with increasing sophistication (grew 13-fold during 2004). Has anyone ever received an email from PayPal warning that your account has been disabled, and you must log on through the link to reactivate your account? It’s a scam! Thieves email you a false link that appears to be from a trusted business such as eBay or your bank. However, when you click on the link and confirm account information or enter passwords, thieves record your personal information and use it later.

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Sample Scam 1Sample Scam 1

Let’s look at a real phishing attempt that was received in an email. You’ll notice it was not addressed to anyone by name, it’s very generic. The person who received this does have a PayPal account, so how would he or she know if this is real?

They went directly to the PayPal website (not through the link) and logged into her account. On the account Resolution page, there were no open cases and no problems were found.

They forwarded this email to [email protected] as directed by the website’s security page, and received the response on the next page.

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This was the response from [email protected]

So, it was definitely a scam! Who knows what would have happened if she’d clicked on the link in the email.

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Phishing Risk TipsPhishing Risk Tips

A few tips to help reduce the risk of phishing:

• Don’t use the link in the email. Log into the

website directly by typing its correct address into

your browser.

• Make sure you’re on a secure website when

submitting sensitive information. Be aware:

• Phishers can now forge both the “https://” and a

legitimate-looking web address. Again, don’t

depend on links.

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Phishing Risk TipsPhishing Risk Tips

More tips to help reduce the risk of phishing:

• They can also forge the yellow lock you see at the bottom of a

secure site. Double click on the lock and you should see the

security certificate for the site. If you get any warning that the

site’s address doesn’t match the certificate, do not continue.

• Monitor your online accounts by regularly logging into them and

checking your statements for accuracy.

• Keep your Internet security patches up to date.

• Report phishing by forwarding the email to:

[email protected] and the FTC at [email protected].

Keep the original email intact, including all headers.

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Types of LossesTypes of Losses

Financial Losses• Credit card bills, loans, contracts, etc.• Cost to clear credit record• Cost of notarizing fraud affidavits & mail• Cost of time off work to handle situation

Non-financial Losses• Time and effort to clear record• Damage to reputation• Emotional impact• Time spent in jail

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Is ID Theft Insurable?Is ID Theft Insurable?

• Loss must be definite• Loss must be accidental and fortuitous• Potential loss must be large enough

that it would cause hardship• Chance of loss must be calculable• Peril must be unlikely to happen to many of the group at

the same time• Cost of insurance must be economically feasible

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Buy Insurance Many companies offer ID theft insurance

Buy Insurance Many companies offer ID theft insurance

• AIG, Allstate, Chubb, Fireman’s Fund, Travelers, Encompass, Farmers, Liberty Mutual, MetLife

• Endorse homeowners policy• Buy separate policy• ISO Identity Fraud Expense Coverage• Third party vendors

• Features: Limit of $15,000 to $30,000• Legal fees• Time off from work• Expenses to clear credit records

• But you still have HASSLE factor!

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An Ounce of PreventionWhat you can do to reduce the hassle factor!An Ounce of PreventionWhat you can do to reduce the hassle factor!

• Protect your personal info and ID

• Electronic Safeguards

• Paper Safeguards

• General Safeguards

Check out the detailed Fact Sheet at www.privacyrights.org for information on how to reduce your risk.

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Electronic Safeguards• Use strong passwords

(alpha-numeric-character, at least 8 digits)

• Don’t write your passwords near your computer

• Don’t click on a link in an email that asks for personal info, type in the web address of the institution you already know

• Don’t send credit card or SS # through e-mail, unsecured (sits on up to 30 servers)

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Paper Safeguards

• Protect mail with vacation hold and locking mailbox

Shred paper documents, including credit card

solicitations

• Monitor bills and review listing of items that have

been charged

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General Safeguards• Keep key info out of wallet/purse; keep it in secure place

(no SSN card in wallet!)

• Check credit record periodically, free annually by Federal Law

• Decline free credit card offers (call 888-5 OPT OUT)

• Don’t give info to people you don’t know, by phone, email, internet, or in person

• Photocopy the contents of your wallet, both front and back. If ever lost or stolen, you’ll have copies of account numbers and phone numbers to cancel your cards. Also photocopy your passport when traveling and give a copy to a non-traveling family member. (keep in a safe place)

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Beware and Be AwareBeware and Be Aware

ID Theft can happen to ANYONE.

Know your risk areas!• Lock up confidential documents & files

• Maintain a consistent privacy and document retention policy

• Shred confidential documents appropriately

• Be aware of risks with wireless hot spots and the information you transmit

• Encourage coworkers to do the same!

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Hot Topic: Auto ID TheftHot Topic: Auto ID Theft

Auto Cloning – Theft of your car’s identity!

How common is it?• Been around for a long time, becoming more

popular for organized crime rings. • 225,000+ cloned vehicles seized by National

Insurance Crime Bureau (NICB) in the past three years in U.S.

• 30% of cars purchased online are either flood vehicles or clones.

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How does it happen?• Bad guy copies a Vehicle Identification Number (VIN)

from a car (any car in parking lot or dealer lot)• Creates a fake VIN sticker and title• Steals a similar make/model car and replaces its VIN

with the fake one.• Now the stolen car is a clone of the legitimate car, and

can be registered in another state. • The stolen car is then sold to an innocent purchaser.

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What happens if you bought a stolen car unknowingly?

• Insurance is void, car can be seized by authorities and you’ll be stuck with the car payments.

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Auto Cloning – Theft of your car’s identity!How do you protect yourself?

• Check your VIN numbers in multiple locations on your car to make sure they match. If they don’t, don’t buy it.

• Use resources to check history of the car before you buy.

• Resources

• www.nicb.org

• www.carfax.com

• www.autofax.com

• www.autoconsumerguide.com

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Key ResourcesWhere to go for helpKey ResourcesWhere to go for help

Federal Trade Commission

• http://www.consumer.gov/idtheft/

Credit Bureaus

• Equifax: 1-800-525-6285; www.equifax.com

• Experian: 1-888-EXPERIAN (397-3742); www.experian.com

• TransUnion: 1-800-680-7289; www.transunion.com

Annual Free Credit Report (Federal Law)

• www.annualcreditreport.com

Social Security Administration Fraud Line

• 1-800-269-0271

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Target preventionbefore ID thieves target you!

For more information: http://www.privacyrights.org/identity.htm

Target preventionbefore ID thieves target you!

For more information: http://www.privacyrights.org/identity.htm

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