To understand the crime of identity theft and to see why it is such a rapidly
growing problem you need to go back a few years. At that time here were criminal
gangs that needed to launder the proceeds of their crimes. In the seventies
and early eighties the banking industry with its centuries old code of secrecy
was just what any self-respecting criminal needed. To open a bank account was
a simple matter and the banks were keen to gain new customers. The days when
it was a privilege to be allowed to have a bank account went out in the early
seventies and the banks were fighting each other for business.
At this time the country was seeing a massive growth in the smuggling of illegal
drugs. Before the war, the use of cannabis and cocaine was legal but limited
to the middle and upper classes. After the war the use of these drugs was banned
and for a while the problem seemed to go away. In the sixties, the use of recreational
drugs started to become widespread among the youth of the day and the suppliers
of these illegal drugs needed to legitimise the proceeds of their trade. They
were able to open bogus bank accounts very easily.
For a while there seemed little that the Police could do about this growth
industry so the Government of the day introduced legislation to try to combat
the massive problem of money laundering. With the growing threat from terrorism,
the laws were tightened further to the point where it became extremely hard
to create a false identity and open a bank account. It is these restrictions
that we all have to accept when we want to use the financial services available.
A good example here is when a bank and its staff know us, yet we have to again
prove our identity when we wish to open another account.
WHERE WE ARE TODAY
With the massive restrictions placed on criminals attempting to open false
bank accounts for money laundering purposes, they naturally took the next easiest
route open to them; they looked at stealing existing identities. Stealing is
not the right term since they only copy the identity of a victim, along with
any credit rating, reputation and standing that the victim may have built up
over the years and it is for this reason that for the victim the effects can
be extremely serious.
Unfortunately the criminals have a well-funded ally with almost limitless resources
- the banking industry itself! What has happened with the rapid growth of computers
is the corresponding increase in the sophistication of the marketing industry.
The banks, credit card and finance companies no longer waste money sending out
blanket mail-shots to a town or area, they have well researched and selective
marketing campaigns aimed at respected customers with decent credit ratings
who are a good target for new financial products.
It is a fact that anyone who gets financial junk mail is almost certain to
have a decent credit rating. (Remember the old adage of the bank lending you
an umbrella when the sun is shining). In fact the term "junk-mail"
should no longer apply to these mass-mailings.
These are not “junk” to the criminals, they are a godsend and every
single piece of mass-mail is valuable, in fact they all say something about
the addressee. So, how do the criminals take advantage of this situation?
HOW TO CLONE A HUMAN!
There are large organised gangs of criminals working the dustbins of our towns
and cities every week of the year. They will employ the homeless and unemployable
to search through the black-plastic bags that are put out for rubbish. People
will throw away the most valuable of documents. In fact a recent survey by a
leading Credit Agency found that only 14 per cent of household rubbish bins
contain absolutely no information of interest to fraudsters.
That means that 6 out of every 7 bins contain information that is useful to
a criminal who wants to steal your identity! Researchers have found all junk
mail, receipts, credit-card bills and even bank-statements. These are passed
on to the "foreman" who will pay a bounty to the collector depending
on what has been retrieved.
So, how hard is it to clone a person? It is surprisingly simple. For a start
you need some basic information about your intended victim. There is little
point in copying someone who has a poor credit rating or who has been declared
bankrupt, however, due to the way that most of the financial services industry
will vet potential customers, the junk-mail tells the criminal enough about
Once they have some junk mail, they will look closely to see which target fits
the bill. They will probably need addition documents, maybe an old phone bill
or a letter from a company dealing with an existing account. Once the criminal
has two pieces of documentation, then creating a utility bill for example can
be a simple process with modern scanners, inkjet printers and common software.
Why some companies even make it easier by creating the address panel with a
white background for clarity!
Criminals (or anyone who is reasonably competent with a PC and word processor)
can take a letter from one person, scan this into a computer and print an identical
letter for another person. Suddenly they have enough information to convince
the post office that they are that person and tell them that they have moved
house and need to have their mail forwarded.
When this has been done, they can then contact a credit card company (probably
as a result of another mail-shot) and get a credit card. The same survey stated
above also found information that connected credit card numbers, with individuals
along with an expiry date! With this, they can get some motor or home insurance
and then a new bank account. All of the documents will be sent to the victims
"real" address but as all of the mail has been forwarded, the criminal
can simply remove the letters they are waiting for and place the rest of the
mail in the letterbox of the victim.
Once the new identity has been created, the criminal will then write to the
new bank and credit-card company and tell them they have moved to a new address.
This will be a mail-drop that is used for tens of people. Before the bank knows
what has happened the criminals will have take out loans for tens of thousands
of pounds and run up thousands of pounds in credit-card debts.
Buying goods is even easier. Using a stolen, cloned or bogus credit card you
can go online to any of the stores, (Littlewoods, Tesco’s, Argos etc)
order goods AND have them delivered wherever you want. This can go on for a
long as the original victim is not contacted by the companies concerned or receives
a credit card bill.
Sooner or later something has to give. The victim will receive notice that
his identity will have been stolen in the form of paying for goods or services
that they have no knowledge of. The first reaction of the bank and other authorities
is to blame him. In all cases financial you are guilty until proven innocent
and the bank will be chasing the original, innocent, victim for the money.
If the victim manages to convince the bank that the crime is one of identity
theft the bank will suffer the loss, right? Well not exactly, the banks simply
pass on their costs to you, the customer. The banks and credit-card companies
only have the money that you have paid in charges. When a credit-card company
gives you an on-line guarantee, they are spending the money that they charge
you! One way or another, you, the customer, will pay for the crime!
SO HOW DO WE STOP THIS
Fact: - The financial services industry makes more money from this type of
Junk-Mail marketing than it costs them in fraud. Remember complaining about
the cost of fraud is a good reason for these companies to justify their high
charges. Imaging the outcry if a bank said, "I have to raise my charges
because I am spending too much money on marketing!!"
Fact: - Identity Fraud is not really considered stealing. In the final analysis
many consider that stealing from large anonymous companies is acceptable. BUT
we forget that in the end it’s us that PAY!
Fact: - The Banks do not swap information. They may supply information separately
to Credit Agencies who conveniently sell it back to them en-masse in the form
of credit checks – but they all have different databases and different
Identity Checking routines.
The only way to cut this source of easy funds for criminals and terrorists
is for the entire financial services industry to put in place standards and
procedures that guarantee the correct privacy and protection of the individual.
- It must be made illegal for companies to send you mail that you are not
expecting that contains private and personal information about you.
- We need a central database that is securely controlled that can be referenced
to absolutely confirm a person’s true identity.
- Individuals (the silent honest majority) have to agree to a level of central
information (i.e. populate a database) that can be used to verify their identity.
This may in time contain biometric information on the individual in the form
of fingerprint or voiceprint)
- Banks and Financial institutions have to come clean on the level of fraud
they manage, who pays for it and where the responsibility lies.
- It is important that we have the privacy of our personal data respected
by those who have been entrusted with it.
Of course before we get there (and the opponents will quote Big Brother, Minority
Report and other examples) we have a lot of pain to go through, not the least
of which is the effect on the individual.
I only have to imagine the effect on a elderly person who has struggled all
their life to maintain their dignity self-respect and financial independence
of credit, overdrafts and debt when they find that their good name is being
used by an uncaring and callous criminal to run up huge debts and blacken their
name. Simply the effect of receiving a “pre-printed” debt letter
from an automatic Bank process causes them sleepless nights.
If the custodians of our sensitive personal data can’t or won’t
get their collective act together the lawmakers will force them to. If that
happens the financial services industry will bitterly complain about “Government
interference”. The trail of devastated victims will barely get a thought.