In October 1998 Congress enacted the Identity Theft and Assumption Deterrence Act to directly target identity and credit theft. Violations are investigated by federal law enforcement agencies, including the FBI and the Postal Inspection Service, and are prosecuted by the U.S. Department of Justice.
According to information on the Federal Trade Commission Web site, a conviction carries a maximum penalty of 15 years imprisonment, a fine and forfeiture of any personal property used or intended to be used to commit the crime.
Schemes to commit identity theft and or fraud may also involve other violations such as credit card, computer, mail, wire or Social Security fraud. Many states have also passed related laws regarding identity theft.
The United States Secret Service, which has jurisdiction over many financial crimes, has found that identity and credit theft have become the top crimes of the new millennium. Secret Service numbers from 1997 show that identity theft cost consumers and financial institutions $745 million.
According to the FTC, a consumer’s liability for unauthorized use of a credit card cannot be more than $50, and if the consumer promptly notifies the issuing company within two days of discovery, this liability may be waived or forgiven.
“It’s very easy for criminals to obtain the information needed – in particular, Social Security numbers,” Beth Givens of the Privacy Rights Clearinghouse said. “Social Security numbers are used as identification and account numbers by many entities including insurance companies, universities, cable TV companies, banks, and in about a dozen states, the number is used as the driver’s license number.”
Givens said that the Internet has become one of the most popular resources for identity thieves. “There are Web sites that sell individual’s Social Security numbers. For example, you can visit www.infoseekers.com and www.fastbreakbail.com, where Social Security numbers can be purchased for as little as $20,” she said.
The consensus so far is that the bad guys have the advantage. For companies, card issuers and consumers the best bet seems to be damage control.
Capital One Bank a major issuer of credit cards has offered its cardholders the options of cyberizing their cards. By cyberizing at CapitalOne.com, cardholders can take advantage of online account management, 100% fraud protection, a refund guarantee and purchase replacement protection on qualifying purchases, online and offline.
American Express and Master Card have begun using smart cards to protect their cardholders. These cards have integrated circuit chips embedded into them, which empower them to perform many different functions and store up to 80 times more information than magnetic strip cards.
A spokesperson for American Express said that smart cards offer greater security protection to the consumer than today’s magnetic strip cards because smart cards have the consumer’s electronic proof of identity carried on the card and not on their PC.
But research conducted by the Massachusetts based research firm Meridien Research, said that online credit card fraud will total $9 billion this year, despite the success of Visa and MasterCard in reducing the total volume of credit card fraud to $0.06 in every $100.
There is an alternative for those online consumers still having doubts about giving out their credit card number over the Internet. A number of companies on the Internet now provide an instant and secure online payment service for individuals and business.
PayPal [www.paypal.com] and Billpoint [www.billpoint.com] are two such companies. Their payment services are being used in online auctions and through the online community. The services eliminate the hassles of manually handling and delivering paper checks and money orders.
Recommendations for consumers:
* Always take credit, debit and ATM card receipts.
* Never leave bill payments in mailbox.
* Tear up pre-approved credit card solicitations and convenience checks.
* Check monthly statements for unauthorized usage.
* Never carry social security card or have it printed on checks.
* Never use easily available information (i.e. mother’s maiden name, birth date or last four digits of social security number) for passwords.
* Use a secure browser with 128 bit strong encryption.
These are recommendations from the FTC and state departments of consumer affairs.