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March 28, 2009

2008 a banner year for ID theft

By Brian Boyce

TERRE HAUTE — Believe it or not, people around the world are working this very moment just to be you.

According to the U.S. Federal Trade Commission’s annual Consumer Sentinel Report, 2008 was a banner year for fraud and identity theft rings. And when asked about it, local officials offered the same advice: “If it sounds too good to be true, it usually is.”

“With the economy the way it is, you’re going to see more of the same,” warned Vigo County Prosecutor Terry Modesitt. “People are trying to steal. That’s what it is.”

According to the FTC’s 98-page report released in February, 1.2 million complaints of fraud were lodged between January and December of 2008, with 26 percent categorized as “identity theft.”

In 2007, 1,050,229 total fraud complaints were issued, with 25 percent in the identity theft category, compared to the 2006 figure of 890,066 in 2006, of which 28 percent targeted identities.

Something for nothing is usually a fraud

“If it sounds too good to be true, it usually is,” said Steve Herndon, vice president of compliance and security at First Financial Bank.

Herndon said local banks have been training employees on how to spot the numerous attempts at fraud, which usually run along consistent themes.

“All involve the potential victim receiving a check in the mail and then being asked to deposit it and send some type of wire transfer back,” he said, describing the “secret shopper” scam.

“Secret shoppers” receive a check in the mail with instructions to cash it at a local bank and use the money to purchase a variety of items at local stores, Herndon explained.

After completing a customer satisfaction survey, the shopper then wires back a portion of the money.

But, invariably, the check is counterfeit and bounces at the local bank, leaving the depositor on the hook.

“The person who endorsed the check is ultimately responsible for that item,” Herndon said, noting that once the remaining money has been wired back to the group, it’s extremely difficult to trace.

“The paying agent is somewhat similar,” he said, describing an offer one might receive to serve as an agent for a foreign government needing to exchange currencies. Again, the victim is issued a counterfeit check and asked to wire U.S. funds back to the group in exchange for a commission.

“We’re still seeing some of that lottery stuff going on, too,” Herndon added, again describing a similar concept in which a person receives notification he’s won a foreign lottery and needs to wire money to access the funds. “The key thing is to use common sense. Why, with the way banking transactions are handled these days, would someone outside the country need me to handle the transfer for them? There are a lot of red flags in those scams.”

According to the FTC report, 15,159 cases of fraud were reported in Indiana during 2008. Of those cases, third-party and creditor debt collection was the No. 1 complaint (11 percent), followed by fraudulent prizes and lotteries (7 percent), then Internet services (6 percent), shop-at-home services (6 percent) and foreign money offers with counterfeit checks (5 percent).

Illinois reports a similar pattern with different numbers.

Of the 30,578 fraud complaints issued in “the Land of Lincoln,” third party and creditor debt collection came in first (10 percent), followed by Internet services (6 percent), shop-at-home and catalog sales (6 percent), television and electronic media (5 percent) and foreign money offers with counterfeit checks (4 percent).

According to the report, American consumers reported paying out $1.8 billion to fraudulent offers, with the individual median scam resulting in $440 lost.

After your good name

Identity theft continues to comprise the largest segment of fraudulent complaints, with the FTC labeling credit card fraud as highest in that category, along with frauds related to government documentation, employment opportunities and utilities.

The goal is to obtain personal information for illicit usage.

“We’ve caught some of them,” Modesitt said. “But it’s tough.”

One recent Vigo County case of identity theft involved an individual trying to use another’s name and Social Security number to obtain a store credit card.

Luckily, the potential victim already had a card at that store. This tipped off employees, who called the authorities, Modesitt explained. “We filed felony charges against them,” Modesitt said, noting that identity theft can be a class-D or class-C felony, depending on the situation.

And just within the past week, it would seem the entire eastern side of Illinois has been targeted by an international ring of identity thieves. “It’s the whole community,” Edgar County Bank spokeswoman Carla Wimsett said Wednesday of the automated “phishing” expedition.

Residents of the 217 and 618 telephone area codes are receiving automated messages informing them their debit card has been compromised. The message instructs them to press “1” and input their card number and pin before the card can be reactivated.

The checking accounts of those who follow along are immediately drained, Wimsett said.

“We had people who were getting three or four calls,” she said. “It seems to be an automated dialer that’s just dialing numbers.”

The Federal Bureau of Investigation is investigating the scam, but Wimsett said it’s not all that unique. “They said it’s been happening all over the country.”

The organizations running the scam seem to be based out of Europe, and some connections have been made to terrorist organizations, she said.

The third-party automated dialers are the same groups used by politicians during elections, she said, noting that this places a buffer between the thieves and authorities.

Wimsett reminds people that “the bank will not ask you for your account number; we already know it,” and advised customers to be vigilant with their financial information.

The numbers dialed are random, and some recipients don’t even have accounts at local banks, she said. But if only a handful of the thousands called follow the instructions, the project paid off, she said.

Businesses are becoming more savvy to the attempts, and some banks offer a variety of protection services to help stave off criminals.

“It’s a pain to try and be safe,” Modesitt acknowledged, describing the array of passwords and security measures one can have placed on their accounts.

But, that pain is significantly less than discovering a maxed-out credit card, he said.

Letters and e-mails asking for personal information come across his desk all the time.

“Every time I tell them, ‘no, do not give them information, contact the police department,’” he noted. “If it seems too good to be true, then it probably is not true.”

According to the FTC, 4,589 cases of identity theft were reported in Indiana during 2008. Of those cases, the most common involved telephone or utilities (19 percent) with credit cards right behind (18 percent).

Scams involving government documents and benefits tallied 14 percent, with bank fraud (11 percent) and employment fraud (10 percent) following suit.

Illinois posted 13,726 identity theft cases with a similar pattern as credit card fraud (19 percent) was followed by fraud related to government documents (17 percent), phone or utilities (14 percent), employment (14 percent) and bank fraud (10 percent).

Herndon said individuals posting resumes online make themselves susceptible to scam artists as they often include details such as name, address, birth date and other personal information.

Some of these groups offer to place individuals in jobs in exchange for a fee, or they simply steal the data for other purposes.

All over the map

Age and home state bore little influence in the FTC report, as all demographics were affected.

About 20 percent of fraud complaints came from the 20-to-29 age bracket, with 23 percent in the 30-39 age range, 26 percent in the 40-49 bracket, and 22 percent affecting those 60-69 years of age.

Only 4 percent of the claims came from individuals over 70, according to the report.

Arizona paced the nation in identity theft with 149 complaints per 100,000 population, followed by California with 139.1.

Overall, Illinois ranked eighth in the nation for identity theft with 106.4 complaints per 100,000 population. Indiana came in 31st with 72 per 100,000 population. South Dakota came in 50th with the lowest number of complaints, tallying 33.8 complaints per 100,000.

Brian Boyce can be reached at 812-231-4253 or brian.boyce@tribstar.com.

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