Identity Theft

What is Identity Theft?

Identity theft refers to the crime of fraudulently obtaining an individual’s personal information in an attempt to receive financial gain or other benefits. Although this particular crime has escalated with the rise of technology, it is not a contemporary concept and has been claiming victims for hundreds of years.

Identity theft can be achieved through a wide range of methods, which are generally categorized into five parts: (1) criminal identity theft, (2) financial identity theft, (3) identity cloning, (4) medical identity theft, and (5) child identity theft. An instance of identity fraud occurs at the alarming rate of once every two seconds. In 2016, 6.15% of consumers became victims of identity fraud, which totals to 2 million more victims than were documented the previous year.

Identity Theft: A Brief History

In early American history identities were stolen for political gain, with candidates running for public office stuffing ballots in what were the nation’s first instances of voter registration fraud. The repeal of Prohibition in the 1930’s birthed fake ID’s, the influx of illegal immigrants in the mid 60’s spurred identity theft, and in 1964 the term “identity theft” was officially entered into the Oxford English Dictionary.

Before the Internet, criminals resorted to more primitive methods of identity theft such as phone scams or dumpster diving. In an attempt to steal personal information criminals would often call households and congratulate them on winning a prize, only retrievable via an exchange of personal information. After receiving the information, the scammer would hang up with all the necessary components to commit fraud. Dumpster diving occurs when a criminal scours trash for personal documents containing delicate information such as Social Security or bank account numbers.

During the 1990’s, the free exchange of personal information became prevalent through the use of computers and electronics. This incited a dramatic increase in identity theft as cyber activity became a widespread phenomenon.

Identity Theft: Punishable by Law

The U.S. government was initially slow to react to cases of identity theft, but the crime soon reached a level of severity impossible to ignore.

In 1998, Congress stood up to cybercriminals by passing the Identity Theft and Assumption Act. This legislation allows federal agencies such as the FBI, Secret Service, and US Postal Inspection Service to investigate suspected ID fraud cases. Additionally, the Fair Credit Billing Act, the Electronic Fund Transfer Act and others have been enacted in order to protect the consumer from this now federally acknowledged offense.

Philip Cummings: ID Felon

Despite the government’s recognition and punishment of these crimes, identity theft was still running rampant, as evidenced by Philip Cummings in 1999. Cummings began his job as a help desk worker at Teledata Communications, Inc. in Bayshore, New York. Teledata provided special software to its client companies, allowing them to download consumer credit reports from the three major commercial credit-reporting agencies. Cummings was employed with Teledata for a short two months but when he left in 2000 he took all of his clients’ codes and passwords with him. This provided him with virtually unlimited access to credit reports at all three credit bureaus.

Philip Cummings sold passwords and codes for downloading consumer credit reports to a co-conspirator who then passed them along to a network of 20 cyber criminals. Cummings made approximately $30 dollars per stolen report, resulting in tens of thousands of victims and losses of between $50 million and $100 million.

The Singh Fraud

About 10 years later, another high profile identity theft case manifested itself as Amar Singh and his wife Neha Punjani-Singh plead guilty to ID theft and enterprise corruption charges regarding their involvement in a $13 million scam. Singh was one of four criminal bosses implicated, thriving on stolen information provided by illegal identification-gathering websites. Singh and his associates also had statewide suppliers feeding him data retrieved via a skimming device, used to swipe consumer credit card information at retail or food establishments.

Financial, Medical, and Insurance Identity Theft

Categorizing identity theft into subtopics helps to hone in on case-specific symptoms and solutions. The most common type of identity theft is financial identity theft. This category encompasses criminal activity wherein identities are stolen for economic gain, often through credit reports and bank accounts.

Medical identity theft, often said to be the most dangerous, occurs when someone seeks medical care under the identity other than his or her own. If a thief successfully obtains healthcare under a victim’s name the victim’s medical records become inaccurate, potentially leading to fatal consequences. This type of theft overlaps with insurance theft; if a thief has insurance information in their possession they can max out benefits, leaving the victim without coverage for necessary treatment.

Medical identity theft can happen virtually by hackers who access an insurance company’s or health care provider’s database, seeking fraudulent reimbursement from an insurer for treatment never provided or received.

Child and Criminal Identity Theft

Child identity theft is a common practice among cybercriminals, as children present especially easy targets. For example, a thief can relatively easily obtain employment and avoid arrest on outstanding warrants by using a child’s identity, as the child is not likely to be closely monitoring their SSN or credit.

Criminal identity theft is when a criminal is arrested and identifies as someone else and presents a fake ID or stolen state-issued identifying documents. Victims may go for years without knowing that they have fallen subject to this type of identity theft and the process of expunging records is difficult and time-consuming.

Identity Cloning and Synthetic Identity Theft

Identity cloning occurs when someone’s personal information is stolen and the thief assumes the victim’s identity in daily life. This impersonation is driven by a need to be anonymous, most often committed by illegal immigrants or those who are hiding from creditors.

Synthetic identity theft is the final category and the latest of all the ID fraud trends. This type of ID theft finds perpetrators using information from multiple stolen identities and amalgamating the information to form a new identity profile. While the created profile is unrepresentative of any one victim, all the victims stand to be affected when its identity is used.

Understanding the history and forms in which identity theft may be exhibited is important in taking the precautionary action necessary to avoid ID theft victimization.