Consumers are still wary of placing their personal information or credit card number on the Net, and with good reason. Although we hear much about encryption and security, breaches do happen. The problem has become so severe that the FBI has set up a division to focus solely on identity theft and high-tech fraud against financial institutions.
It has always been possible for someone to go through a dumpster and find a discarded credit card receiptóremember the old carbons? So, how come now it's such a huge problem? Because now technology is doing the hard work for the criminals. "Without the technology to manipulate and transfer that data easily and inexpensively, we wouldn't have this problem," according to Ed Howard, attorney for the Center for Law in the Public Interest.
As proof, Trans Union established a fraud victim hotline in January 1992. They received about 300 complaints. Seven years later, in January 1998, 42,300 calls were received. According to Trans Union, about 14,000 of those calls represented identity theft.
While some thieves are still rummaging through the garbage or stealing wallets, some are simply signing onto the Web and taking advantage of all it has to offer. For example, a résumé or personal home page probably lists a phone number, address, and a social security number. All of these help a thief assume an identity. "Some families put their whole family tree out there," said Beth Givens, executive director of the Privacy Rights Clearinghouse. "You get dates of birth and maiden names, which is pure gold to identity thieves."
But, since perpetrators face just one year in jail, maximum, the disincentive to steal is minimal. And even if they are caught, many financial institutions find it cheaper to write off the loss than to take the case to court, so usually charges are dropped.
Which means, when the case never gets to court, consumers may have their money refunded, but they do not have the opportunity to clear their names in a court of law. Therefore, the financial institution is the perceived victim, rather than the individual. "That's where it unravels," said Werner Raes, an expert on economic crimes at the Anaheim Police Department in California. "Law enforcementówe're here. We're willing to investigate the cases. We want to assist the publicÖbut we need the cooperation and the buying in from the financial industry."
Until the financial industry is willing to admit that there is a problem, it doesn't look like that cooperation will be any time soon.
