Warm Up: Identity Theft: Quick Write

1. What is Identity Theft?

2. What is Fraud?

Identity Theft and FraudIdentity Theft: A crime in which

someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain. 

Examples:◦Phishing◦Skimming◦Credit Card theft

Fraud: Deliberate deception usually for economic gain.Examples of Fraud: Ponzi Schemes Pyramid Schemes On line scams

Types of Fraud and Identity TheftA: Phishing: attempt to acquire identity of

someone by asking for sensitive information i.e. username, password, credit card number.

Phishing email will direct the user to visit a website where they are asked to update personal information, such as a password, credit card, social security number.

** A legitimate business will always ask for the information on a secure website or in person.

B: Pyramid SchemeA form of investment (illegal in the US

and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.

Usually involve Get rich quick types of advertising.

People at the top make money by getting people at the bottom to join or pay for products.

The main characteristic of a pyramid scheme is that participants only make money by recruiting more members.

Product based: a product is sold

Naked scheme: a no fail investment opportunity is sold.

C: Credit and Debit Card Theft Identity theft: the unauthorized use

of personal identification information to commit credit fraud or other crimes

Identity assumption: long-term victimization of identification information

Fraud spree: unauthorized charges on existing accounts.

Hackers can steal account information from personal computers or company computers.

Credit card fraud schemes generally fall into one of two categories of fraud: application fraud and account takeover.

Application fraud refers to the unauthorized opening of credit card accounts in another person's name. This may occur if an offender can obtain enough personal information about the victim to completely fill out the credit card application.

Account takeovers typically involve the criminal hijacking of an existing credit card account. Here an offender obtains enough personal information about a victim to change the account's billing address. The perpetrator then subsequently reports the card lost or stolen in order to obtain a new card and make fraudulent purchases with it.

There are many ways that credit thieves can steal your information- Using lost or stolen credit cards- Stealing from your mailbox- Looking over your shoulder during

transactions- Going through your trash- Sending unsolicited email- Making false telephone solicitations- Looking at personnel records-Taking your number down or rubbing

the number on paper

D: Ponzi SchemeA Ponzi scheme is a scam investment

designed to separate investors from their money. It is named after Charles Ponzi, who constructed one such scheme at the beginning of the 20th century, though the concept was well known prior to Ponzi.

The investment always has extraordinary return potential.

The scheme is designed to convince the public to place their money into a fraudulent investment. Once the scam artist feels that enough money has been collected, he disappears - taking all the money with him.

How do they work? Convince a few people to invest. After the specified time return the investment money to

the investors plus the specified interest rate or return. Pointing to the historical success of the investment,

convince more investors to place their money into the system. Typically the vast majority of the earlier investors will return. Why would they not? The system has been providing them with great benefits.

Repeat steps 1 through 3 a number of times. During step 2 at one of the cycles, break the pattern. Instead of returning the investment money and paying the promised return, escape with the money and start a new life.

Bernie Madoff former NASDAQ Chairman notorious Ponzi Scheme fraudster. Arrested in

2008. Stole over 64 billion-largest in history.

E: On line FraudOn line fraud can happen in multiple ways. Some

examplesWork at Home Ads: These are usually too good to

be true ads that tell people they can make lots of money working from home.

The scam artist sets up a legitimate looking website. The person is asked to handle donations for a natural disaster.

The worker’s bank account is used to handle the funds and when a large sum of money is deposited the scammer drains the account.

“Be part of one of America’s Fastest Growing Industries. Be the Boss!Earn thousands of dollars a month from home”

Internet fraud can occur in chat rooms, email, message boards, or on websites.

Malware is short for “malicious software."  It includes viruses and spyware that get installed on your computer, phone, or mobile device without your consent. These programs can cause your device to crash and can be used to monitor and control your online activity. Criminals use malware to steal personal information, send spam, and commit fraud.

F: Identity TheftIdentity Theft occurs when

someone steals a person’s Social Security card, or gains enough personal information on the person to gain access to financial information.

http://www.consumer.ftc.gov/media/video-0023-what-identity-theft

G: SkimmingCard skimming' is the illegal copying

of information from the magnetic strip of a credit or ATM card. It is a more direct version of a phishing scam.

Skimming takes place when scammers place skimming machines at ATM’s that take the customers card number and then use it.

Watch for unusual devices on the ATM swipe .

machine