The final three chapters in our book discuss various fraud schemes that, unfortunately, we are all too likely to experience personally, if we have not already.

The final three chapters in our book discuss various fraud schemes that, unfortunately, we are all too likely to experience personally, if we have not already. Far too many of these fraud schemes permeate our society and daily experiences. Most of you, your families, or loved ones will be touched in some way by one or more of the fraud schemes covered in these chapters. We certainly can’t stop this fraud, but we can educate ourselves and those around us on these schemes, their signs and symptoms, and means of prevention and protection.

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In this light, our final discussion of the semester (which will run from Monday, 4/22 to Friday, 5/3) will create an open discussion of many of these schemes, helping to educate all of us and raise our level of awareness. In this way, we are better prepared to avoid these situations, educate others, and help to protect ourselves and those we care about.

For this discussion, choose a fraud scheme from Chapters 15, 16, or 17. Educate yourself on your particular selected scheme, including some outside research to broaden your understanding. Post a 2 to 4 paragraph summary of the following:

Summary description of the fraud scheme
Educate us regarding the symptoms and warning signs of the particular scheme
Summarize a case study example of the fraud scheme, either from research or from personal experience, of the fraud in your life or that of someone close to you
Discuss methods of prevention for your selected fraud scheme, including how you can educate others in your life to help protect them
Please be sure to cite any outside resources that you may use
You will not see other posts until after your initial post

Main content
15-2aHow Identity Theft Occurs
Perpetrators of identity theft follow a common pattern after they have stolen a victim’s identity. To help you understand this process, we have created the “identity theft cycle.” Although some fraudsters perpetrate their frauds in slightly different ways, most generally follow the stages in the cycle shown in Figure 15.1.
Stage 1. Discovery
1. Perpetrators gain information.
2. Perpetrators verify information.
Stage 2. Action
1. Perpetrators accumulate documentation.
2. Perpetrators conceive cover-up or concealment actions.
Stage 3. Trial
1. First dimensional actions—Small thefts to test the stolen information.
2. Second dimensional actions—Larger thefts, often involving personal interaction, without much chance of getting caught.
3. Third dimensional actions—Largest thefts committed after perpetrators have confidence that their schemes are working.
Figure 15.1The Identity Theft Cycle

Stage 1: Discovery
The discovery stage involves two phases: information gathering and information verification. This is the first step in the identity theft cycle because all other actions the perpetrator takes depend upon the accuracy and effectiveness of the discovery stage. A powerful discovery stage constitutes a solid foundation for the perpetrator to commit identity theft. The smarter the perpetrator, the better the discovery foundation will be.
During the gaining information phase, fraudsters do all they can to gather a victim’s information. Examples of discovery techniques include such information-gathering techniques as searching trash, searching someone’s home or computer, stealing mail, phishing, breaking into cars or homes, scanning credit card information, or using other means whereby a perpetrator gathers information about a victim.
During the information verification phase, a fraudster uses various means to verify the information already gathered. Examples include telephone scams, where perpetrators call the victim and act as a representative of a business to verify the information gathered (this is known as pretexting), and trash searches (when another means was used to gather the original information). Although some fraudsters may not initially go through the information verification process, they will eventually use information verification procedures at some point during the scam. The scams of perpetrators who don’t verify stolen information are usually shorter and easier to catch than scams of perpetrators who verify stolen information.
Step 2: Action
The action stage is the second phase of the identity theft cycle. It involves two activities: accumulating documentation and devising cover-up or concealment actions.
Accumulating documentation refers to the process perpetrators use to obtain needed tools to defraud the victim. For example, using the information already obtained, perpetrators may apply for a bogus credit card, fake check, or driver’s license in the victim’s name. Although the perpetrator has not actually stolen any funds from the perpetrator, he or she has now accumulated the necessary tools to do so. Any action taken by the perpetrator to acquire information or tools that will later be used to provide financial benefit using the victim’s identity fall into this category.
Cover-up or concealment actions involve any steps that are taken to hide or cover the financial footprints that are left through the identity theft process. For example, in this stage, a fraudster might change the physical address or e-mail of the victim so that credit card statements are sent by the financial institution to the perpetrator rather than the victim. These concealment actions allow the perpetrator to continue the identity theft for a longer period of time without being noticed.
Stage 3: Trial
The trial stage involves those activities of the identity theft that provide perpetrators with financial benefits. There are three phases of the trial stage: first dimensional actions, second dimensional actions, and third dimensional actions. The trial stage is considered to be the most critical stage of the identity theft cycle because this is where the fraudster’s work starts to pay off.
First dimensional actions are the first frauds committed, mostly to test the effectiveness of fraud schemes and the stolen information. For example, a fraudster might go to a gas station and use a stolen credit card to determine if the card really works. If the card works, the fraudster gains confidence in the theft and moves on to bigger scams. However, if the card does not work, the fraudster faces no immediate threat of consequences and can quickly discard the card without any consequences.
Second dimensional actions are actions taken by a fraudster once initial trials have been successful. These actions often involve face-to-face interactions with others. For example, if the card used at the gas station was successful, the fraudster may try using it to purchase bigger items. The perpetrator may go to a mall and buy clothing, stereo equipment, or other “large-ticket” items.
Third dimensional actions are those actions that provide significant benefits to the perpetrator and occur after the perpetrator has considerable confidence in the identity theft. For example, a fraudster may establish telephone accounts, open bank accounts, secure an auto loan, or engage in other significant transactions. Third dimensional actions are the most risky for the identity thief. The likelihood of a fraudster being caught while undertaking third dimensional actions is greater than at any other period in the identity theft.
Once a fraudster has committed third dimensional actions, he or she often discards the information of one victim and starts over with the discovery stage using another victim’s information.
The following actual identity theft represents a third dimensional theft :
15-2bHow Fraudsters Convert Personal Information to Financial Gain
Once fraudsters have accessed personal information, they use that information to their financial benefit. Some of the common purchases made by identity theft perpetrators are as follows:
• Buying large-ticket items, such as computers, stereos, or televisions. Using a fake credit/debit card, a fraudster will often buy items that are quite expensive and can easily be sold. Fraudsters then spend the stolen money very quickly, usually on drugs or other vices.
• Taking out car, home, or other loans. Once a fraudster has confidence that the identity theft (through other successful small purchases) is working, he or she often takes out a loan using the victim’s identity. The most common type of fraudulent loan is for an automobile. Because automobiles can easily be traced [using the license plates or vehicle identification number], the car is usually quickly sold so that it cannot be traced to the fraudster.
• Establishing phone or wireless service in victim’s name. Fraudsters often set up a phone or wireless service in the victim’s name. This is done so that the perpetrator can more easily convince banks, businesses, and others that he or she is the person he or she claims to be. Fraudsters also use telephones as a form of communication to buy or sell drugs, gain information to steal more identities, begin telemarketing schemes, and/or support other fraud schemes.
As an example of this type of identity theft and the grief it can cause, consider the following case :
Drew found out that someone had stolen his identity when he received a phone call from his wireless provider. After some investigation, Drew discovered that the thief had racked up cell phone debts at other providers too and had incurred other debts that he was delinquent on. Drew contacted the numerous businesses that showed him delinquent and notified them of his situation. After he filed a police report he began the painful process of disputing the many problems that showed up on his credit report.
• Using counterfeit checks or debit cards. Using debit cards or counterfeit checks, fraudsters often drain victims’ bank accounts. As discussed later in the chapter, one of the biggest risks of debit cards is the lack of insurance to cover fraudulent transactions. This makes it extremely important that consumers only have a reasonable amount of cash in their checking and/or debit accounts. That way, if a fraudster drains a victim’s checking account, the loss will be minimal.
• Opening a new bank account. Fraudsters often use victim’s personal information to open new checking accounts under their name. Using the checks received from the new account, they then write checks that will not only cause problems such as nonsufficient funds [NSF] (bounced checks) transactions, but in the process, they destroy the person’s name and credit.
• Filing for bankruptcy under the victim’s name. Fraudsters sometimes file for bankruptcy under a victim’s name. Such filings keep victims from knowing that their identity has been stolen. In the process, the victim’s credit report and reputation are damaged, a problem that can take years to repair.
• Reporting a victim’s name to the police in lieu of their own. Fraudsters have been known to use the victim’s name and identity to keep their own records from being blemished. Furthermore, if a perpetrator has a criminal record, he or she might use a victim’s name to purchase guns or other difficult-to-obtain items. If a fraudster does have an encounter with the police and uses a victim’s identity, many times, the fraudster will be released because the victim has no previous criminal record. However, if the perpetrator is summoned to court and does not appear, a warrant for the victim’s arrest may be issued. Again, it may take years to clear a victim’s name and reputation from federal, state, local, and business records.
• Opening new credit card accounts. Fraudsters often open new credit card accounts enabling them to spend money in a victim’s name with no immediate consequences. This is one of the easiest ways for perpetrators to defraud a victim once his or her identity has been stolen.
• Changing victim’s mailing address. Fraudsters often change the mailing address on a victim’s credit card accounts. This prevents the victim from knowing that there is a problem and enables the fraudster to continue using the credit card and identity. Because the perpetrator, not the victim, receives the billing statements, the fraudster can continue the scheme.
15-2cStealing a Victim’s Identity
Stealing a victim’s identity isn’t as difficult as it may seem. Fraudsters can obtain the information required to commit identity theft in several ways. The U.S. Department of Justice Web site lists some of the following methods as common ways for one’s identity to be stolen.
1. Fraudsters gain personal information by posing as a legitimate employee, government official, or representative of an organization with which the victim conducts business.
2. Fraudsters watch or listen to you enter a credit card number in what is known as shoulder surfing.
3. Fraudsters rummage through consumers’ trash—an activity sometimes called dumpster diving. Once a garbage container is in the street it is considered public property and anyone can rummage through it. Preapproved credit card applications, tax information, receipts containing credit card numbers, Social Security receipts, or financial records are valuable sources of information for identity thieves.
4. Fraudsters skim victims’ credit cards for information when they pay their bills. Skimming is a process where fraudsters use an information storage device to gain access to valuable information when a credit card is processed. Skimming is a hi-tech method by which thieves capture personal or account information from a credit card, driver’s license, or even a passport. An electronic device used to capture this information is called a “skimmer” and can be purchased online for under $50. A credit card is swiped through the skimmer, and the information contained in the magnetic strip on the card is then read into and stored on the device or an attached computer.
Skimming is predominantly a tactic used to commit credit card fraud but is also gaining in popularity among identity thieves. Skimming is a problem globally. Some foreign countries are considered high risk for travelers making credit card purchases. One traveler in France recently reported that his credit card had been used to purchase thousands of dollars of goods from Thailand, Kuala Lumpur, Hong Kong, and Malacca.
Skimmers are quite creative; since the skimming devices are so small and easy to hide, it is not difficult for them to skim your card without you noticing. The following are some examples of how cards can be skimmed:
• Skimming at restaurants. Many skimming rings have been known to employ restaurant staff to capture credit card information. An example of such an incident occurred in Charlotte, North Carolina, where two waiters of a well-known steak house were accused of skimming more than 650 credit card numbers from unsuspecting patrons and selling them for $25 each.
• Skimming at ATM machines or gas stations. It is not uncommon for a thief to be bold enough to tamper with an ATM machine. Typically, a “card trapping” device is inserted into the ATM card slot or a card reader is inserted into a gas station pump. ATM skimming has been a major problem in Britain with estimates that one in every 28 ATM machines has been equipped with skimmers from thieves. Gas station skimming is a growing problem in the United States.
• Skimming by store clerks. A very common form of skimming involves store clerks skimming a credit card when a consumer makes a purchase. The clerk scans the card twice, once for the expected transaction and another in a skimmer for later retrieval. There have also been reports of clerks skimming driver’s licenses when customers who are writing checks supply the license for verification.
Stealing the identity of many victims is also quite easy. Fraudsters use numerous ways to get the information required to commit identity theft. Some of the more common types of information gathering techniques include:
1. Gathering information from businesses. Perpetrators steal information from their employer, hacking into organizations’ computers, or bribing/conning an employee who has access to confidential records.
Thousands of Hotels.com customers could have been put at risk for identity theft after a laptop computer containing their credit card information was stolen from an auditor. The password-protected laptop belonging to an external auditor was taken from a locked car in Bellevue, Washington.
2. Stealing wallets or purses to gain confidential information or identification. Valuable information is contained in almost every wallet.
3. Breaking into victims’ homes and stealing their information.
4. Stealing mail, including bank information, checks, credit card information, tax information, or preapproved credit cards.
5. Completing a “change of address form” at the local post office and having victims’ mail delivered to a P.O. box or another address.
6. Engaging in shoulder surfing where criminals watch consumers from a nearby location as they give credit card or other valuable information over the phone.
7. Using the Internet to steal important information. This often occurs by phishing, a high-tech scam that uses spam or pop-up messages to deceive consumers into disclosing credit card numbers, bank account information, SSNs, passwords, or other sensitive information. Phishers (i.e., fraud perpetrators who use phishing) will send e-mail or pop-up messages claiming to be from legitimate businesses or organizations that consumers deal with—for example, Internet service providers, banks, online payment services, or even government agencies. The message will usually say that the victim needs to “update” or “validate” his or her account. The message then directs the victim to a Web site that looks like a legitimate site. The purpose of this site is to trick the victim into divulging personal information.
15-2dMinimizing the Risk
There are many ways to minimize vulnerability to identity theft. The harder it is for a perpetrator to access personal information, the less likely a fraudster will try to defraud someone.
There are many proactive means to minimize the risk of identity theft. Some of the most effective ways include:
1. Guard your mail from theft. When away from home, have the U.S. Postal Service hold your personal mail. Consumers can do this by calling 1-800-275-8777. It is also beneficial to deposit outgoing mail at post office collection boxes or at a local post office, rather than in an unsecured mailbox outside your home.
2. Opt out of preapproved credit cards. One common and easy way for a fraudster to commit identity theft is to simply fill out the preapproved credit card applications consumers receive via the mail and send them in. Although many individuals destroy preapproved credit cards, this only protects consumers from having fraudsters go through their trash. Fraudsters still have the opportunity to open a victim’s mailbox and steal preapproved credit card applications even before victims are aware that they have arrived. What most consumers don’t know is that they have the opportunity to opt out of preapproved credit card offers. Consumers can do this by calling 1-888-5-OPTOUT (1-888-567-8688) to have their name removed from direct marketing lists.
3. Check your personal credit information (credit report) at least annually. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies—Equifax, Experian, and Trans Union—to provide you with a free copy of your credit report, at your request, every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The FTC, the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies. A credit report includes information on where you live, how you pay your bills, and whether you have been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or ability to rent a home. Instructions on how to access free credit reports can be found at the FTC’s Web site or by typing key words such as “free credit report” into an Internet search engine. You can also access the credit rating agencies individually by going to their Web sites.
4. Protect SSNs. An individual’s SSN is valuable information for any fraudster. With knowledge of someone’s SSN, fraudsters can open all types of new accounts in the victim’s name. Therefore, consumers should always keep their Social Security card in a safe place. If individuals are living with roommates, it is even more important that they safeguard this information. Although a roommate may never steal an individual’s information, a friend, brother, or sister of a roommate may. Remember, it is those we trust who have the greatest opportunity to commit fraud. Many organizations still use members’ SSNs as a form of recognition that must be used in order gain access to the organization’s intranet. It is important to change this number as often as possible. Many computers automatically remember passwords so that users do not have to enter them again. It is wise to make sure these numbers are not easily accessible. Many states give citizens the option to have their SSN printed on their driver’s license; however, doing so is never required. If an individual’s driver’s license contains his or her SSN, that person should get a new driver’s license as soon as possible. Never keep your Social Security card in your wallet or purse.
Stop & Think
How could a fraudster use only a victim’s SSN to perpetrate a fraud?
5. Safeguard personal information. Safeguarding personal information is very important for every individual. Consumers who have roommates employ outside help to clean or perform other domestic services, or have outside people in their house for any reason need to be particularly careful. One certified fraud examiner recommends that individuals put their most important documents in an empty ice cream container in their freezer. It is his belief that if someone does come in an individual’s house, this is probably the last place he or she will look. For the normal consumer, however, a locked safe may be sufficient.
6. Guard trash from theft. Consumers need to tear or shred receipts, insurance information, credit applications, doctor’s bills, checks and bank statements, old credit cards, and any credit offers they receive in the mail, as well as any other source of personal information. Remember all consumers can opt out of prescreened credit card offers by calling 1-888-567-8688. (See previous section on opting out of preapproved credit cards.) Buying a shredder is one of the wisest purchases individuals can make.
Caution
Be sure not to set your garbage out too long before the garbage truck comes and, whenever possible, shred all documents before you discard them. Also, never leave your mail in your mailbox any longer than necessary.
7. Protect wallet and other valuables. Consumers should carry their wallet in their front pocket and never leave it in their car or any other place where it can be stolen. It is important for consumers to always be aware of where their wallet is and what its contents are. Individuals should only carry identification information and credit and debit cards that they regularly use in their wallet. Many individuals lose track of the number of credit cards they have. Consumers should limit themselves to only two or three credit cards and keep the 24-hour emergency telephone numbers of all credit cards they possess in their cell phone’s address book. That way, if credit cards are lost or stolen, the victim can quickly call the issuing credit card company and put a block on all transactions. Although debit cards help consumers stay out of debt, most do not have fraud protection insurance. On the other hand, nearly all credit cards now come with fraud protection insurance. Before getting debit or credit cards, consumers should realize the risks involved with each and try to minimize those risks to protect themselves. A good practice is to photocopy both sides of all your credit cards, travel cards, and other personal information you keep in your wallet or purse. Some phone apps also provide an easy way to store this information. This way, if your purse or wallet is stolen, you will have all the information about what was stolen and can quickly notify banks, credit bureaus, and other organizations.
8. Use strong passwords. Individuals should use passwords on credit card, bank, and telephone accounts that are not easily determinable or available. Consumers should avoid using information that can be easily associated with them, such as their birthday, their mother’s maiden name, their spouse’s name, the last four digits of their telephone number, a series of consecutive numbers such as 1-2-3-4, or anything else that is predictable. Many organizations will use a default password when opening new accounts. Consumers need to make sure they change these default passwords as quickly as possible. Many individuals use the same password for all accounts. While this does prevent individuals from forgetting their passwords, it makes it extremely easy for a fraudster to gain access to all the victim’s accounts, once the fraudster has gained access to one account. For example, a fraudster who works for a bank may have access to your bank password. If the password is the same for other accounts, the fraudster will now have unlimited access to much of a victim’s information and financial accounts. Consumers should not use the same password for everything and should change their password periodically.
One method to create a strong password is to use the first letter of each word in a long phrase that you remember. Interspersing numbers and other characters in the password makes these passwords especially strong. For example, the famous phrase from President Lincoln’s Gettysburg address begins: “Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty.” This phrase would lead to the password of “fsasyaofbfotcanncil.” Adding some numbers and other characters will make this password very hard to crack but relatively easy to remember. For example, inserting the numbers from a date that you remember, say February 24, 1992, along with an asterisk and exclamation point and you now have this password: “fsasya2ofbf24otc92ann*cil!” this password is very secure. Even so, it probably shouldn’t be used for multiple accounts, especially if a perpetrator could cause you significant hardship if those accounts were breached. Some software programs can be purchased that will generate strong passwords and encrypt and keep track of them for multiple accounts. These programs can be very useful since the user only needs to remember one password on his or her computer in order to access hundreds of highly secure passwords.
9. Protect your home. Consumers should protect their house from fraud perpetrators. Some fraudsters have been known to break into a home and not steal a single physical object. The victims may not even know someone has been inside their home. The perpetrator will steal all information that is needed to easily commit identity theft and then leave. In order to prevent this from happening, it is important to lock all doors, preferably with deadbolts or double locks, and lock all windows. It is a good idea to have an alarm system. If an alarm system is considered too expensive, consumers can buy an alarm system sticker, sign, or box and set it outside their house to make thieves believe that the house has a security system when it does not. If consumers have an automatic garage door with a code box to open the garage door, they need to pay attention that others are not watching when they press the numbers on the code box. Fraudsters will wait for hours to watch someone enter the code box numbers so that they have easy access into the victim’s home. It is important to periodically change the password to the code box. On a typical code box, it is easy to determine which numbers are used in the password by noticing that the three or four numbers used in the password contain more wear and tear than the numbers that are not used in the password. Finally, if consumers have baby monitors in the house, they should make sure that they are not being monitored by neighbors or anybody else. Much like in the movie Signs, baby monitors pick up frequencies of other baby monitors. Fraudsters have been known to listen to phone calls and intercept valuable personal information because someone has been talking on the phone in a room with a baby monitor.
10. Protect your computer. Remember that legitimate companies rarely ask for confidential information via e-mail. If an individual has a question about his or her account, the person should call the company using a phone number he or she knows is legitimate. If consumers get an e-mail or pop-up message that asks for personal or financial information, they should not reply or click on the link in the message. Fraudsters are even using “cookies” to gather personal and confidential information from consumers’ hard drives.
E-mail is not a secure way to send personal information. If a consumer needs to send information over the Internet, it should be encrypted and the Web site should be checked to verify it is authentic. Many Web sites will have an icon on the browser’s status bar that shows the site to be secure. If a Web site begins with “https:” it is more secure than a Web site that only starts with “http:” The “s” means that the site is secure. However, no matter what anyone says, no Web site is completely secure.
When using credit cards online, consumers need to make sure that they check their credit card and bank statements as soon as possible. Remember that if a statement is late by even a couple days, consumers should contact their bank or credit card company and check the billing addresses and account balances. This could be a red flag that something is amiss.
Although nearly all banks now use the Internet for automatic payments and other purposes, Internet transactions are not completely secure. One of the authors of this book was recently talking to the CEO of a large regional bank. The CEO confessed that although his bank did not feel that it was completely safe to conduct online banking, bank management believed it was necessary to keep up with all the other banks that were using online banking. As a result, this bank also provides Internet banking despite the risk to its customers.
Customers should not open any attachment or download files from e-mail unless they know who sent them and their purpose for sending them. Everyone with Internet access should use antivirus software and keep it up to date. Phishing e-mails contain software that can harm computers and trace activities while consumers are on the Internet. Antivirus software will watch incoming communications for bad files. A firewall is an effective way to block communications from unauthorized sources. Broadband connections are especially vulnerable, and caution should be used with them. If a consumer feels that he or she has received a fraudulent e-mail or a suspicious file, without opening the attachments, it should be forwarded to www.ftc.gov for the FTC’s inspection.
11. Opt out of information sharing. Everyone in America who has an account with a credit union, savings and loan, bank, insurance agency, investment account, or mortgage company will likely have their private information sold to marketing companies, company affiliates, or other third parties. Under the Gramm-Leach-Bliley Act, financial institutions have the right to share personal information for a profit. Have you ever wondered why you get more advertisements for clothing than your roommate? Or perhaps your roommate gets more preapproved credit card applications than you do.
Part of the reason is because banks, credit unions, and financial institutions sell your information to marketing groups. These groups know how much money consumers spend on clothes, food, gas, and travel. These marketing agencies then market to consumers in a way that is most effective. The Gramm-Leach-Bliley Act also gives individuals the right to opt out of having their information sold. However, many individuals are unaware that they have this option. The majority of individuals aren’t even aware that their information is being sold, used, and circulated. To prevent identity theft and protect confidentiality, individuals should go to their financial institutions and opt out of having their information shared.
15-2eProsecution of Identity Theft
When people commit identity theft, they can now be prosecuted criminally and/or civilly. To succeed in the prosecution, it is usually necessary to show that the perpetrator acted with intent to defraud the victim. This is best accomplished by gathering appropriate evidential matter. Appropriate evidential matter consists of the underlying data and all corroborating information available. With most identity thefts, once evidential matter is obtained, such as proof that a credit card, an auto loan, or a large-ticket item was purchased with a fake identity, it is relatively easy to prove intent.
In Chapter 1, we stated that criminal law is that branch of law that deals with offenses of a public nature. Criminal laws generally deal with offenses against society as a whole. They are prosecuted either federally or by a state for violating a statute that prohibits some type of activity. Every state, as well as the federal government, has statutes prohibiting identity theft in its various forms. Table 15.1 lists some of the more common identity fraud federal statutes that every fraud examiner should know about.
Table 15.1
Common Identity Fraud Statutes
STATUTE TITLE AND CODE DESCRIPTION
Identity Theft and Assumption Deterrence Act Title 18 U.S. Code § 1028 This act is one of the most direct and effective statutes against identity theft. This act was passed as a result of many identity thefts that resulted in little or no fines or forms of punishment.
Gramm-Leach-Bliley Act Title 15 U.S. Code § 6801-6809 Passed in 1999, this law prohibits the use of false pretenses to access the personal information of others (before this time it was actually legal to call up the bank and act as someone else to gain his or her confidential personal information).
Health Information Portability and Accountability Act, 1996 Standards for Privacy of Individually Identifiable Health Information, Final Rule—45 CFT Parts 160 and 165 This law came into effect on April 14, 2001. It protects the privacy and confidentiality of patient information.
Drivers Privacy Protection Act of 1994 Title 18 U.S. Code § 2721 This act ensures that personal information contained by departments of motor vehicles is not disclosed.
Family Educational Rights and Privacy Act of 1974 Title 20 U.S. Code § 1232 This act makes it illegal for any agency that receives federal funding to disclose any educational or personal information of any individual.
Fair Credit Reporting Act Title 15 U.S. Code § 1681 This act gives exact procedures for correcting mistakes on credit reports. It also requires that credit reports can only be obtained for legitimate business needs.
Electronic Fund Transfer Act Title 15 U.S. Code § 1693 This act provides some consumer protection for all fraudulent transactions that involve using a credit card or other electronic means to debit or credit an account.
Fair Debt Collection Practices Act Title 15 U.S. Code § 1692 This act protects consumers from unfair or deceptive practices used by debt collectors to collect overdue bills that a creditor has forwarded for collection.
Fair Credit Billing Act Title 15 U.S. Code, Chapter 41 This act limits consumers’ liability for fraudulent credit card charges.

These are some of the more common statutes covering identity thefts. Usually, when perpetrators are convicted, they serve jail sentences and/or pay fines. Before perpetrators are convicted, they must be proven guilty “beyond a reasonable doubt.” Juries must rule unanimously on guilt for the perpetrator to be convicted.
15-2fOnce Identity Theft Has Occurred
Chances are that at some time in the future, you or someone you know will become a victim of identity theft. If you are so unfortunate, it is important to act quickly to minimize the damages. A small amount of time, such as a few days, can make a big difference when identity theft has occurred.
Victims of identity theft should immediately contact the FTC. The FTC is available online at www.ftc.gov or by telephone at 1-877-ID THEFT (877-438-4338). The FTC has the responsibility to work with victims of identity theft. The FTC will not only provide victims with valuable materials, but will also help contact enforcement agencies and credit reporting agencies to minimize damages.
Although the FTC is the primary agency responsible for helping victims of identity theft, a few other agencies are also helpful resources for identity theft victims. The local FBI and/or U.S. Secret Service agencies can help report and investigate different types of identity theft. If a victim believes that some or part of his or her mail has been redirected, the local Postal Inspection Service can help fix the mail and identify if the perpetrator has used mail as a tool to commit the fraud. If a victim suspects that the perpetrator may have used improper identification information and caused tax violations, he or she should call the Internal Revenue Service at 1-800-829-0433. If a victim believes that his or her SSN has been used fraudulently, he or she should call the Social Security Administration at 1-800-269-0271.
Because a victim’s reputation and credit report are directly affected by identity theft, the principal credit reporting agencies—TransUnion, Equifax, and Experian—should be contacted as well. Because of the gravity of identity theft, all three principal credit reporting agencies have developed fraud units to help victims of identity theft. These fraud units can be called at the following numbers: 1-800-680-7289 (TransUnion), 1-800-525-6285 (Equifax), and 1-800-397-3742 (Experian).
Many identity thefts involve fraudulent checks. Therefore, victims of identity theft should contact all major check verification companies. If a victim has had checks stolen or has had bank accounts set up in his or her name, check verification companies can help restore credit as well as clear up financial debts. If a victim is aware of a particular merchant that has received a stolen check, the victim should identify the verification company that merchant uses and contact them. While there are many check verification companies, some of the more popular agencies are listed in Table 15.2.
Table 15.2
Check Verification Agencies
Agency Help Line
Equifax 1-800-437-5120
CheckRite 1-800-766-2748
National Processing Company 1-800-526-5380
Shared Check Authorization Network (SCAN) 1-800-262-7771
TeleCheck 1-800-927-0188
CrossCheck 1-800-552-1900
ChexSystems 1-800-428-9623
In addition to the agencies listed in Table 15.2, identity theft victims should contact all creditors with whom their name or identifying data have been fraudulently used. Victims should also contact financial institutions that they believe may contain fraudulent accounts in their name. Victims will probably need to change personal identification numbers (PIN), bank account cards, checks, and any other personal identifying data.