What is Identity Theft?
Identity theft is the wrongful taking of someone else’s “real world’
identity for the purpose of committing fraud. Typically the thief gets their hands
on enough information to pretend to be someone else. The thief may open up fraudulent
credit card accounts, apply for loans, or try to secure other property using the
stolen identity. Some may even go as far as using your name to land a job and
stick you with the taxes from the I.R.S. Perhaps the scariest aspect is that you
could actually be arrested for a crime that someone else committed while using
The Federal Trade Commission released a survey in September of 2003 showing
that 27.3 million Americans have been victims of identity theft in the last five
years, including 9.9 million people in the last year alone. That equates to approximately
4.6% of the U.S. population! According to the FTC survey, 2002 identity theft
losses to businesses and financial institutions totaled nearly $48 billion and
consumer victims reported $5 billion in out-of-pocket expenses. This is a growing
Real World Scenario
We talked to a victim of identify theft to get a first hand look at what happens
when identify theft strikes. For purposes of anonymity we will refer to our interviewee
as Kim Smith. Kim explains that a few years ago she and her spouse applied for
a mortgage on a home the planned to use as a summer vacation property. The house
was modestly priced and the Smith’s didn’t foresee any problems getting
the mortgage. They had stellar credit, good paying jobs, plenty of money in the
bank and the amount of the mortgage was relatively small. They were told by their
banker that getting their mortgage should be easy but at closing time they ran
into major problems.
“It was scary and embarrassing”, said Kim, “We went to close
on the home when the mortgage officer asked if us if we had any outstanding loans
or credit card payments. To the best of our knowledge we didn’t have a single
outstanding balance. We always paid our bills on time and we had no credit card
The mortgage officer then began asking Kim about various credit card accounts
that had outstanding balances, an account at a hunting supply store and many other
miscellaneous accounts. The balances ranged from a few hundred dollars to several
thousand on major credit cards.
“This thief had real gall. He actually applied for the credit cards using
the name Kimball, a derivation of my own first name. To add insult to injury he
actually paid the minimum balance of some of the accounts for a couple of months.
At first this made the investigators skeptical, after all why would a thief pay
anything on the balance?”
Fortunately the story has a happy ending. The Smith’s did manage to get
their mortgage and immediately contacted authorities after learning of the identity
fraud. The individual who had stolen her identity was later apprehended and received
a prison term. According to authorities she was only one of more then a dozen
identities they had assumed in order to open up fraudulent credit card accounts.
“It has certainly caused us a lot of time, effort and money to track
down this thief and cleaning up our credit report has taken years. The most frightening
thing about the incident was that it was going on for months and we had no idea.
It made me feel violated.” According to the FTC it cost the average victim
more than $1,000 to cope with the damage from identity theft.
Identity Theft and Spyware
Obviously one of the latest and most dangerous threats to privacy in the digital
age lies at the doorstep of spyware. Spyware can be used to surreptitiously gather
all types of confidential information and in most cases the user has no idea the
information is being taken. This form of “snoopware” lets the spy
access everything you do online including usernames, passwords, online shopping
purchases and e-mail or chat correspondence. In the hands of an identity thief
this type of information is a deadly treasure trove.
Many of today’s most popular spyware applications promise the ability
to execute via “remote installation”. Remote installation is the ability
to put a spyware program on a computer without having physical access to the machine.
Obviously this is crossing a thin line into illegal behavior and this type of
software should be classified as a Trojan horse. Nevertheless, these programs
are sold every day to consumers who want to monitor their kids, employees, or
spouse and perhaps to people that have more nefarious purposes in mind. While
there are certainly legitimate uses for monitoring software we find it hard to
believe there is any legitimate scenario where a parent or employer would need
to use remote installation to install a monitoring program. Make no mistake that
spyware can certainly be used to illegally obtain your personal information