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Your Money Matters

Where Identity Thieves are Now Living

By Your Money MattersFOXBusiness

While you are out shopping, dining, traveling and celebrating this holiday season, you should keep this not-so-jolly fact in mind: there are thousands of your fellow Americans working to steal your identity. And here's the really scary part: You might even know some of them. In fact, they could be the family next door.

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Identity theft has gone mainstream. While a substantial amount of identity theft is still being operated by organized crime groups in major cities such as New York, Detroit, Washington, D.C. and Tampa, the number of scammers operating in rural America has also exploded.

Identifying Identity Thieves

In an effort to discover who is behind the scams and where they are operating, consumer risk management company ID Analytics in San Diego, maker of the software behind fraud protection services such as LifeLock and a half dozen others(1), examined roughly 1.7 billion “identity risk events.” Examples include applications for short-term payday loans, new credit card accounts, utility services and credit cards, which are among the most common strategies ID thieves use to hijack financial identities.

The study also flagged accounts where information such as an individual’s name, date of birth, address or Social Security number was changed, since these are often a tip-off that a criminal is attempting to steal your identity by slightly altering one or two pieces of personal information. For instance, opening a credit card account using your real name and Social Security number, but requesting that statements be sent to your "new" address which, of course, turns out to be their thieve's mailbox.

Location, Location, Location

In three and a half years of research, ID Analytics determined that there are at least 10,000 identity fraud rings operating in the United States.

“When you look at where the fraudsters are, they tend to live in urban locations, where there’s a higher likelihood they can act without being noticed,” says Stephen Coggeshall, chief technology officer. In addition, densely-populated areas offer more opportunities to steal your neighbor’s mail, including letters containing sensitive information (your Social Security check, for instance) or credit card applications.

But Coggeshall says the surprise was that in addition to cities, the research uncovered “this belt, a swath of badness going [through rural counties] from Virginia through North and South Carolina, Georgia, Alabama, the Florida panhandle, Mississippi and into Texas.” Take a look at the map below. Keep in mind that these areas also have a high correlation to tax and other types of fraud, as well.

Source: ID Analytics

Strange Relations

Not only was the location of identity theft rings unexpected, so were the players. “I thought we’d be seeing professional groups and those with Mafia connections,” admits Coggeshall. “We were surprised to find just as many were mom and pop operations. The neighbors next door.”

That’s right. Identity theft is often a family affair involving parents, children and siblings. In one case, five members of the same family- ranging in age from 24 to 37- ran a theft operation out of Florida for three years. They “filed at least 130 fraudulent applications, using more than eight Social Security numbers and 11 dates of birth during that time period.” In some cases, different families are “working together in fraud rings, even using each other’s Social Security numbers” and trading dates of birth, changing one piece of data and hoping to fly under the radar, undetected, says Coggeshall.

Even more common than rings comprised of related individuals are those made up of groups of friends. That is, people with different last names.

Connecting the Dots

By uncovering and understanding the relationships between identity thieves, Coggeshall says ID Analytics can refine its software to prevent its customers- banks, utility providers, cell phone companies, credit card issuers and individual consumers- from becoming victims. While it’s common knowledge that when you fill out an application for credit- from a bank, credit card company, car dealer, retail store, etc., the credit provider checks your credit score. What you probably don’t know is that, according to Coggeshall, they also check your fraud score to see if it’s likely that identity theft is involved. “We invented those fraud scores,” he says.

To determine if fraud might be involved, ID Analytics cross-checks each credit request submitted against more than a billion credit card, cell phone, and retail credit accounts and applications, linking them by Social Security number, address, phone number and other identifying information. “We look for strangeness,” explains Coggeshall, things like different Social Security numbers associated with the same address or an application for credit using the same name, but a different Social Security number and/or dates of birth.  “We can send back the fraud score in less than one second.”

Why Should You Care?

In light of the fact that there are laws that limit the amount you’re liable for if someone fraudulently opens an account in your name, you might be wondering why you need to be concerned. Just ask the victims whose financial and private lives have been destroyed because their Social Security number is tied to an account with an outstanding balance of $15,000 that has gone into collection.

“That bad credit is linked to you,” says Coggeshall. “They’ve used your name and information, run up a bunch of charges. [Creditors] are going to be coming to you to collect.” In addition, there may be crimes associated with your name if an ID thief gets a driver’s license in your name and has an accident.

Clearing your name and credit history can be a nightmare and can prevent you from getting the mortgage you need or even the job you’re applying for. Though your chances of being victimized by identity theft are relatively low, “when it happens, it’s a tremendous hardship,” says Coggeshall.

Even if you’re never directly by this crime, you’re paying for it because banks, retailers, and other credit issuers pass the cost along to their good customers.

An Ounce of Prevention….

To protect yourself, Coggeshall says it’s critical to carefully control your “personal identifying information”- Social Security number, name, address, phone number, date of birth and email address.

He strongly advises subscribing to an I.D. theft protection service that will alert you if something suspicious comes up. For free check on how likely it is that you could become a victim of identity fraud visit this website owned and operated by ID Analytics. After you enter key personal information (Social Security number is optional), you will receive a score between 1 and 999. The higher your number, the higher your risk. (Mine was 293, which is considered “low risk.”)

Despite with this added layer of protection, you need to be constantly on guard. Remember those ads on TV and in newspapers where LifeLock(1) owner Todd Davis gave out his own Social Security number to demonstrate how confident he was in the protection his company offered? He’s stopped doing those ads because scammers started taking him up on the challenge. Which is why, even with a score of 293, I’m not taking any chances.

My (Early) New Year’s Resolution

From now on I’m going to start questioning why every doctor or dentist visit requires me to fill out (yet another) form with my most personal information on it, including my Social Security number.  What happens to that piece of paper once I had it back to the receptionist? Sure, there are laws that require my medical provider to protect this information. Big deal! Have you ever seen the walls of patient files that line your doctor’s office? What would prevent a member of the crew that cleans the office from copying a few pages? Maybe someone has a brother who knows someone who will pay money for this kind of information. What if my form just ends up in the trash?

One more thing. I’m going to be better at checking every single item on my credit card statements. “Look for charges you don’t recognize,” says Coggeshall. “Even if it’s just for a small amount, like $2.31. There have been schemes where millions of people were charged small amounts.” Let’s see, 1,000,000 x $2.31…..

1. ID Analytics is a subsidiary of LifeLock.

Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

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