Criminal masterminds like Bernie Madoff and stage magicians like David Copperfield have relied upon carefully crafted "artful dodges" to deceive their target audiences over the years and achieve their desired results-fraud or entertainment. Now, Identity Theft Secrets peels back the curtain of mystery that allows criminals to steal our most precious resources-our financial assets and reputation. Minimize your vulnerabilities and maximize your defenses using the strategies provided by author and expert Dale Penn, who comes to the subject with a unique background in insurance and risk-management training as well as personal experience fighting financial crime. You can protect your family, your business, and your credit rating through thoughtful, effective preparation. With clarity and vivid detail, Identity Theft Secrets will explain how you can . identify and secure the private information that thieves want most; . isolate areas of your life or business that need enhanced privacy protection; . close personal security loopholes that are still leaving you vulnerable; . secure the wireless technology devices that you depend on most; . create a plan to safeguard or restore your most valued private information and maintain a personal information safety zone; . navigate the Internet without the constant fear of malicious attacks. Learn to protect yourself, your business, and your loved ones from painful financial fraud; Identity Theft Secrets will show you how. "Dale Penn demystifies identity theft. This book is not just an easy read; it is a must read!" -Deborah Call, Associate Dean, USC School of Law

Identity Theft Secrets

Exposing the Tricks of the Trade!By Dale Penn

iUniverse, Inc.

Copyright © 2011 Dale Penn
All right reserved.
ISBN: 978-1-4620-0859-9

Contents

Acknowledgments......................................................................................xiIntroduction.........................................................................................xiiiChapter 1 A Rampant Crime: The Disturbing Statistics.................................................1Chapter 2 Falling Into the Shadows of Identity Theft.................................................17Chapter 3 Tricks for Making Yourself a Smaller Target................................................33Chapter 4 Fighting Back with the Three Ds............................................................51Chapter 5 Home Improvement: Shelter Your Home from Identity Theft....................................61Chapter 6 The Shocking Identities of Identity Thieves................................................83Chapter 7 Take Action! A Step-by-Step Resolution Plan for Identity Theft Victims.....................95Chapter 8 Guarding Your Habit Habitat................................................................111Chapter 9 A Long Walk to Financial Freedom...........................................................123Chapter 10 Identity Theft Resources..................................................................133Bibliography.........................................................................................141

Chapter One

A Rampant Crime: The
Disturbing Statistics

* * *

For five immature years, I lived a life of illusion
and tricks.
—Frank W. Abagnale,
author of Catch Me If You Can

How it all Began

According to the Federal Trade Commission, identitytheft is "when someone appropriates your personalinformation (like your social security number or creditcard account number) to commit fraud or theft."

Many people assume that identity theft emerged withthe dawning of the Internet—but this insidious crimehas been around for decades, possibly centuries.Fraudsters have stolen identities, staged elaboratecons, and swindled unsuspecting victims since thebeginning of time.

Obviously, the game has changed over the years.Hundreds of years ago, identity theft was a muchgrislier crime. What made it so ghastly? The identitythief often had to murder a victim in order to take overhis identity.

In days gone by, stealing an identity involved massiveamounts of scheming, dramatic disguises, and thethreat of severe punishment for the thieves caughtin the fraudulent act. Because identity theft wassuch a complex crime to commit, it was relativelyuncommon.

But things have changed. These days, identity theftrarely involves murder or any physical harm at all, forthat matter. As a matter of fact, the modern identity thiefnever even has to come into contact with you to stealyour identity. All he needs are just a couple of personaldetails about you. Lucky for him, this information isreadily available in a mailbox, a dumpster, or online.More often than not, the victim doesn't even know thathe or she has been hit.

"In the age of instant credit and preapproved creditoffers, identity thieves require little more than yourname and social security number, plus your date ofbirth if they get lucky, to assume your identity," Mari J.Frank, Esq. writes in her book Safeguard Your Identity:Protect Yourself with a Personal Privacy Audit.

In 2010, Mari also authored The Complete Idiot's Guideto Recovering from Identity Theft. A respected leaderin the fight against identity theft, Mari Frank is anauthor, identity theft advocate, attorney, and CaliforniaState University professor. In Safeguard Your Identity,she wrote, "These fraudsters are skillful at using avariety of low-tech and high-tech methods to obtainyour personal identity."

In other words, identity theft is a much easier crimeto commit in modern times. So easy, in fact, that ateenager could pull it off. Take Frank W. Abagnale, forexample. He famously practiced the art of identity theftback in the 1960s—when he was only sixteen yearsold.

Abagnale's Infamous Tale

Unless you were living under a rock in 2002, you probablysaw or at least heard about the Oscar-nominated movieCatch Me If You Can, starring Leonardo DiCaprio. Basedon the autobiographical book of the same title, thiswildly popular film follows the fascinating life of a youngbut internationally renowned con artist.

If you missed out on the book and the movie, here'show this captivating tale goes: At the age of sixteen,Frank Abagnale ran away from home and jumpedheadfirst into a magical web of lies, cons, and thievery.He quickly became a world-famous imposter and checkfraud artist who was sought after by law enforcementofficers across the globe.

"I had enjoyed a misguided and regrettable run as oneof the most successful con artists the world has everknown," he writes in his second book, The Art of theSteal. Here was a kid who had not even made it pastthe tenth grade, but he successfully posed as a Pan Ampilot, a stock broker, an assistant district attorney, asociology professor, and even a pediatrician.

But it was the check fraud that eventually put thecon man behind bars. "Through my various hustles, Ipassed something like $2.5 million worth of checks,"he says. "I was proficient enough at cashing fraudulentchecks that I earned the distinction of becoming one ofthe most hunted criminals by the FBI."

Luckily, after serving his time, the criminal switchedsides. As a "white-collar crime specialist," he beganspeaking to banks, businesses, and law enforcementagencies about check fraud. Now regarded as oneof the leading experts on counterfeiting and securedocuments, he has taught at the FBI Academy andlectures audiences throughout the world.

"In a certain sense, I'm still a con artist," he writes. "I'mjust putting down a positive con these days, as opposedto the negative con I used in the past. I've applied thesame relentless attention to working on stopping fraudthat I once applied to perpetuating fraud."

Identity Theft Reaches All-Time Highs

Although fraudsters, con artists, and hustlers havealways been around, identity theft only surfaced as awidespread problem in the mid-1990s. The media firststarted throwing around the phrase "identity theft" in1996, when financial crimes against consumers reachedan all-time high.

At the time, financial crimes, including loan, mortgage,and credit card fraud, were becoming commonplacethroughout the nation—affecting thousands of un-suspecting consumers. Identity theft has continued togrow, spreading like a financial wildfire and taking itsvictims by surprise.

A Raging Epidemic

"For five immature years, I lived a life of illusion andtricks," Abagnale writes. And that's exactly what theseperpetrators do—they put on a flashy little magic showand hide behind a series of diversions to throw victimsand law enforcement off their tracks. That's why it'sso difficult to catch these sharks and extinguish theflames of the identity theft firestorm.

We truly are facing an epidemic here—the magnitude ofthe nation's identity theft problem is absolutely mind-boggling. It's a train wreck. I know I've said it before,but it's worth pointing out again: identity theft is thefastest-growing crime in the United States.

But don't take my word for it. Just look at the ever-climbing statistics on this pervasive crime.

Growing, Growing, Still Not Gone ...

In response to the mounting number of consumerfraud and identity theft cases, the Federal TradeCommission set up an online fraud-fighting databasecalled Consumer Sentinel in 1997. The FTC encouragesconsumers to report fraud and identity theft complaintsto this database.

Hundreds of law enforcement agencies throughout theworld have access to Consumer Sentinel, which allowsthem to investigate fraud on a massive scale. Thedatabase also helps the FTC keep track of the numberof consumers affected by identity theft.

The ever-growing number of complaints reportedto Consumer Sentinel each year is absolutely mind-blowing.

• In 2001, the FTC received 204,000 complaints
from consumers saying that they had beenthe victims of fraud. The number one type offraud reported was identity theft, representing42 percent of the complaints.

• In 2002, fraud complaints nearly doubled to403,688. Identity theft was number one againat 40 percent.

• In 2003, fraud reports jumped to 542,378. Nosurprise, identity theft topped the list again at40 percent.

• In 2004, the FTC received 635,591 fraudcomplaints—triple the number of complaintsfrom just three years before. Of these reports,38 percent involved identity theft.

• In 2005, fraud complaints reached an all-timehigh of 693,519. Of those, 37 percent wereidentity theft reports.

• In 2006, there were 674,354 fraud complaints.Identity theft topped the list for the seventhyear in a row at 36 percent.

• In 2007, the FTC testified before Congress,stating that stepped-up authenticationtechniques were needed to protect thesocial security numbers of over 300 millionAmericans.

• In 2008, the FTC announced the resultsof a roundtable attended by experts fromgovernment, business, technology, andconsumer advocacy groups, as well asacademic circles. The roundtable identifieda broad range of strategies to immediatelyeducate the public regarding the latest financialself-defense strategies.

• In 2009, the FTC published guidelines for anew Breach Notification Rule requiring theprotection of electronic health records.

• In 2010, the FTC will complete a commissionedidentity theft study by year's end.

More Eye-Openers

If you're still not convinced that identity theft is growingout of control, here are some more shocking statistics.While each research group uses a different strategy incalculating identity theft, the numbers are astoundingany way you look at them.

• Fifteen million people were victims of identitytheft in 2006, according to a Gartner Researchstudy. One person falls victim to identity theftevery two seconds—that's thirty people everyminute!

• In 2006, the total of consumer losses fromidentity theft was estimated at $1.1 billion,and the median consumer loss was $500 perconsumer, according to the FTC.

• Seventy-three million people reported theirIDs as lost or stolen in 2006, according to thePresident's Identity Theft Task Force. Mostlikely, many more IDs were stolen and notreported. Although not all of these incidents ledto identity theft, this is a relevant number.

• A whopping 8.4 million US adults were victimsof identity fraud in 2007, losing an average of$6,000 each, according to Javelin Strategy &Research.

• In 2007, US consumers and businesses lost$49.3 billion to fraud, according to JavelinStrategy & Research.

• By August 2008, thirty-nine states and theDistrict of Columbia had passed "credit freeze"laws granting consumers the right to protecttheir credit profile by freezing or thawingaccess to their credit report on demand. (Seefull state-by-state credit-freeze referencesat the end of this book.)

• In 2009, a class action suit was filed in USDistrict Court against Heartland PaymentSystems for the way it handled what theWashington Post has called possibly the largestdata breach in history.

• In 2010, hacker Albert Gonzalez was sentencedto twenty years in prison for mastermindingthe largest data breach in the history of theUnited States. This breach resulted in the theftof an estimated 130 million credit and debitcard numbers. Gonzalez and his coconspiratorsused a relatively simple technique known as"SQL injection" to penetrate the firewalls ofseveral major retailers, including HeartlandPayment Systems, T.J.Maxx, and 7-Eleven,Inc. Over $1 million in cash was recoveredfrom a stash buried in the backyard of Mr.Gonzalez's parents' home in Miami, Florida.

• In 2011, the influential website mashable.comreported that the worldwide cost of identitytheft adds up to over $200 billion per year!

• Also in 2011, the growth of cloud-computing,the WikiLeaks saga and the enormousbreaches at Epsilon and Sony have raisedgovernmental, corporate, and personal dataprivacy concerns to alarming new levels.

What's even more disturbing is that these statistics onlyscratch the surface. FTC fraud complaints and identitytheft statistics represent only a fraction of the actualnumber of victims. Why? It is because many victimssimply don't come forward and report the crime, whileothers haven't discovered that they have been "hit"yet.

Stepping Forward to Move Ahead

According to the FTC, as few as 26 percent of identitytheft victims actually report their victimization to police.That means that 74 percent of identity theft victimsnever reported the crime committed against them.Regrettably, I was one of those silent victims.

When I became a victim of identity theft, I didn't go tothe police. I figured that the LAPD was too busy. Afterall, they're dealing with much more important and high-profile problems than my insignificant identity theftissue. I thought it just wasn't worth bothering them.How wrong I was.

As any law enforcement or forensics expert will tell you,all criminals leave a signature—no matter how carefulor crafty they may be. When victims come forward andreport an incident, they increase the likelihood thatinvestigators will pinpoint that criminal's signature andcatch the thief—taking him (or her) off the street.

Here's the thing: if law enforcement gets just oneidentity thief off the street, they've solved not onlyone mystery, but also possibly multiple mysteries. Yousee, identity thieves are habitual criminals.

I lectured recently for the National Crime PreventionCouncil's annual conference. Afterward, an attendingundercover police officer succinctly reinforced theimportance of victims coming forward. "If victimscame forward, we could stop more bad guys in theirtracks." Additionally, law enforcement agencies areoften hampered by a lack of resources, which makes itmore challenging to investigate, identify, and prosecutehabitual offenders.

Perpetrators rarely strike just once after they realizehow easy it is to get away with a scam. So, if they'vestolen your identity, I can almost guarantee that they'vestolen countless others, and they're planning to stealmore.

If you become a victim of identity theft, I stronglyencourage you to report the crime to the police. Isincerely regret that I did not report it myself. By notstepping forward, I probably made my ordeal last muchlonger than necessary. Had I gone to the police, mystruggle may have been a little easier.

Identity theft is not only the fastest-growing crime—it'salso one of the most under-prosecuted crimes. That'snot because these crimes are poorly investigated bylaw enforcement, but because too many victims arestanding in the shadows. Identity theft and fraudare simultaneously the fastest-growing and the mostunderreported crimes in the country. This is a surefirerecipe for copycat replication and financial heartburnfor victims.

If you become one of the millions of identity theftvictims, I urge you to step out of the shadows andreport the crime promptly to local law enforcement.Not only could it help you resolve your personal ordealmore quickly, but it may spare others from facing thesame nightmare in the future.

Technology: Feeding theIdentity Theft Machine?

Many people blame the Internet and technology forthe nation's identity theft crisis. "Technology breedscrime and it always has," Abagnale writes in The Artof the Steal. "Today, sitting at home in an apartmentwith a PC, a scanner, a color printer, and a color copier,you can reproduce just about any type of document,including hard cash."

Continues...

Excerpted from Identity Theft Secretsby Dale Penn Copyright © 2011 by Dale Penn. Excerpted by permission.
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