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WHAT IS IDENTITY THEFT? Two Primary Types of Consumer Fraud

IDENTITY & FRAUD CRIMES Victim and Prevention

WHAT IS IDENTITY THEFT? q Identity theft is used describe those

circumstances when someone uses another person’s name, address, Social Security number (SSN), bank or credit card account number, or other identifying information to commit fraud or other crimes.

Identity Theft Cycle

1. Identity Theft – most common type

of consumer fraud, affecting thousands of people everyday.

WHAT IS IDENTITY THEFT? q 40% of the frauds reported to the

FTC over the last few q years have involved some type of identity theft.

Identity Theft Cycle How Identity Theft Occurs Stage 1: Discovery Gain Information Phase: "   Searching trash "   Stealing mail "   Phishing "   Scanning credit card information

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Identity Theft Cycle

Identity Theft Cycle

How Identity Theft Occurs

Stage 2: Action

Stage 1: Discovery cont.

Accumulating Documentation Phase: "   Perpetrator gets the tools to commit the fraud (applying for credit cards, a driver’s license, or fake check in the victim’s name)

Information Verification Phase: "   Telephone scams (Pretexting) "   Trash searches

Identity Theft Cycle

Identity Theft Cycle

Stage 2: Action

Stage 3: Trial

Cover-up or Concealment Actions Phase: "   Perpetrator takes steps to cover or hide the financial footprints left throughout the identity theft process. "   Example: Changing the billing address on a credit card so that the statements go to the fraudster.

1st Dimensional Actions Phase: "   First attempts to test the stolen information. "   If the test works, the fraudster attempts more

Identity Theft Cycle

Identity Theft Cycle

Stage 3: Trial

Stage 3: Trial

2nd Dimensional Actions Phase: "   Actions taken after the tests are successful "   The fraudster usually attempts faceto-face transactions

3rd Dimensional Actions Phase: "   Fraudster opens bank accounts, establishes phone accounts, secures auto loans, etc.

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Identity Theft Cycle

Identity Theft Cycle

Personal Information  Financial Gain

Stealing a Victim’s Identity

The perpetrator may… "   Buy large-ticket items "   Take out car, home, or other loans "   Establish phone or wireless services "   Use counterfeit checks or debit cards "   Open new bank accounts "   Open new credit card accounts

* Dumpster diving

* Phishing

* Social engineering

* Steal mail

Identity Theft Cycle Minimizing the Risk "   Guard your mail from theft "   Opt out of preapproved credit cards "   Check you personal credit information

at least annually "   Guard Social Security card and

* Stealing wallets/purses * Sneak into a victim’s home and steal information * Shoulder surfing

Identity Theft Cycle Minimizing the Risk cont. "   Safeguard all personal information "   Guard trash from theft "   Protect wallet and other valuables "   Protect the home, computer, passwords

number

Identity Theft

Identity Theft "   Prosecution of Identity Theft "   For prosecution, it is necessary to

show the perpetrator acted with intent to defraud—usually easy to prove if evidence of the fake identity used to purchase an item, open an account, or obtain a credit card is collected.

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Identity Theft

Identity Theft

Once Identity Theft Occurs

Once Identity Theft Occurs

Victims should… "   Contact Federal Trade Commission "   Contact local FBI and/or US Secret Service agencies "   Contact the credit reporting agencies "   Contact the local Postal Inspection Service

Victims should… "   Contact the Internal Revenue Service "   Contact the Social Security Administration "   Contact personal financial institutions "   Change personal identification information

Consumer Fraud

Consumer Fraud

2nd Primary Type of Consumer Fraud

Seriousness of the Problem ² Nearly 30 million adults—13.5% of the

2. Consumer Scams – fraudsters use various schemes to earn consumer’s confidence and then use that confidence to get the consumer to pay or invest money or provide personal information.

Consumer Fraud Pyramid Scheme A type of financial fraud in which people pay to join an organization in exchange for the right to sell memberships to other people.

adult population—were victims of fraud during 2005. ² 20% - African American. ² 18% - Hispanics. ² 12 % - non-Hispanic whites.

Consumer Fraud Ponzi Scheme Closely related to a pyramid scheme but the promoter generally has no product to sell and pays no commission to investors who recruit new members.

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Consumer Fraud

Consumer Fraud

"   TOP STRATEGIES TO AVOID

"   TOP STRATEGIES TO AVOID

SCAMS

SCAMS •  Don’t become a victim. •  Investigate strangers who have deals too

good to be true.

•  Watch out for salespeople who prey on

fears. •  Monitor your investments.

•  Always stay in charge of your money.

•  Report fraud or abuse.

•  Don’t be fooled by appearances.

•  Do your homework. •  Be wary of door-to-door solicitations.

THE END

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