Identity Theft: The Prelude to Fraud

What is Identity Theft?                                                                                    

Identity theft unfortunately doesn’t just happen in the movies – it could happen to you. Despite the variety of methods, a criminal can use to commit this unlawful act, each one shares a similar purpose. That purpose being to illegally obtain personal information belonging to another individual. When deciding to commit identity theft, the culprit requires the possession of this stolen information. More often than not, this is only the beginning of the criminal’s plan.

The next step likely involves using this stolen information for fraudulent activities. These deceitful activities refer to crimes that involve the impersonation of the identity theft victim. After all, the stolen information is considered to be confidential and can be used to verify one’s identity. If this identity-bearing data were to fall into the wrong person’s hands, they could use the information as their own. This is one of the last things anyone wants to have to worry about – having an unidentified individual running around pretending to be you. Have you ever wished you could take on another identity and get into all the trouble you’ve ever dreamed of? Well in this case, the perpetrator’s dream would have come true – at the expense of the victim.

Now you might be thinking that this will never happen to you, but consider this common situation. You’re on the phone with a company representative whether it be related to your banking, mobile phone account or some other service. Typically, these representatives ask you a series of questions to confirm your identification. Imagine if someone else knew what the answers should be, then what? This means that they would be able to verify your presence and access your account. Not only can they grant themselves access to your account, but they may be able to extract further information upon entry.

As scary as it may sound, hackers really only need one access point since they can get creative to draw out further information. At DEF CON, one of the biggest hacking conferences in Las Vegas, a hacker demonstrates exactly this. Watch as she essentially grants herself access to a victim’s telephone account. The only information used was the victim’s and his girlfriend’s names. Of course this is an extreme example, but it goes to show how creative and persuasive these individuals can be.

Commonly targeted information typically relates to your personal identification, financial information and confidential passwords. This includes the following items:

• Name and address
• Date of birth
• National Insurance Number 
• Banking information (i.e. account numbers, credit card information, etc.)
• Passwords to online services (i.e. social media, PayPal, etc.)
• Driver’s license number
• Signatures
• Passport information
• PINs (personal identification numbers) used for various services
• Any other information that could be useful for answering your account security questions

To obtain the data listed above, schemes can vary from extreme deception and complexity to simple, straightforward tactics. At its most basic form, this would involve digging through people’s trash cans in search for personal information found on discarded bills and other documents. Whereas another tactic could be stealing someone’s mail. Stepping it up a notch, the perpetrator could use online phishing methods to steal confidential information.

We’ve seen all sorts of tactics used by people when trying to lure out personal information that should otherwise be kept confidential. Often, services that deal with sensitive information (i.e. banks) will notify you from the start about the methods they will use to collect personal information. That way, you have a better chance of avoiding traps and detecting when a request for sensitive information seems out of place. Further on in the article, we will discuss potential warning signs of identity theft, so you can stop in your path before it’s too late.

Identity Theft Definition

Identity theft is the act of stealing confidential information that can be used to identify an individual. A pickpocket may do so by physically taking someone’s credit card details or any other sources of personal information. In other cases, online tactics are used to gain access to this same information. Identity theft is not an act of fraud itself, but usually occurs prior to an act of fraud. It becomes fraud when the perpetrator uses stolen personal details to convince unknowing bystanders of their newly acquired identity.

Despite being criminally punishable, identity theft occurs all over the world and to many degrees of seriousness. After stealing your identity and other personal information, perpetrators can carry out all sorts of schemes. Some different scenarios that criminals may use your information for include:

• Making unsolicited payments through your banking or PayPal accounts
• Applying for financial products and other loans under your name
• Registering vehicles or other assets under your name
• Racking up a series of unknown charges on your credit or debit cards
• Using your personal information to implicate you in a separate crime
• Accessing your financial and other personal information for immoral and illegal use

Each of these scenarios are an example of fraud and is what can be expected. Identity theft is typically the means of obtaining any necessary information to conduct fraudulent activities. As you can see from the list, the consequences vary in degree of repercussions and severity. Obviously, one time transactions for bulk purchases are quite different from being implicated in another crime. Luckily, banks and other financial institutions usually offer some form of liability coverage to protect you from these unfortunate situations. That being said, it is still your duty to report the situation as soon as you become aware of it.

Just a few years ago in 2013, the Telegraph reported on what experts declared as one of the most severe cases of identity theft in the UK. This British couple’s nightmare started back in 2003 after Adrian Richards either lost or had his passport stolen whilst on a trip. Years later, Adrian and his wife Cathy received a bill for unpaid taxes in Germany at the amount of £130,000. The strangest part is that the couple claims to never having any business affairs in Germany.

Online Identity Theft

The Internet can be a scary place, especially if you aren’t aware of different warning signs that call for caution. It is a common arena for identity theft and fraud since it eliminates the need for face-to-face interaction. Without the physical presence of an individual to confirm their identification, perpetrators use this to their advantage. For reasons like this, the Internet is gaining popularity as an environment for committing these types of crime. Specifically, it allows for anonymity and false identification, while providing many other technological benefits. For instance, hackers can now easily send a phishing email to your inbox (given that it doesn’t end up in your Junk folder), pose as a fake individual on social media or pretend to be representatives from services you use (i.e. banks). It’s now more important than ever to be able to spot potential traps for online identity theft. Consider some of the following tactics used by hackers:

• Imitation of a well-known company’s website with inconsistencies in design and contact information from the original
• Someone you don’t know is asking you to send personal information via email or phone
• An unrecognized sender wants you to download a file with an unfamiliar format extension

Keep these in mind as you browse your emails and the web. It’s an invaluable skill to be able to recognize these warning signs and avoid potential scams. Here are a few specific examples of deceptive online schemes used today:

1. You receive an email from a lawyer stating that a distant relative of yours has left an absurdly large inheritance in your name – these are usually sent by people claiming to be a lawyer in a Third World country.
2. Being invited to apply for a mystery shopper job – these typically offer an enticing financial incentive relative to the amount of work required. Don’t be deceived! The first task typically involves having you test out a money transfer service. Somewhere along the lines of this task, you will be asked for your banking information. This should be an immediate warning sign for you to run and hide.
3. Requesting your personal information before any viewing or testing of a good that is advertised online – sometimes people selling high ticket items like rental properties for example, will ask you to provide personal information before allowing you to view the property. Also, the price is usually significantly lower than comparable goods to help incentivize you to share your information. If people are hesitant in showing you the physical version of whatever they’re advertising, you should be suspicious and proceed with caution, if at all.

Just remember that if something seems too good to be true, then it usually is. This especially applies in situations where you receive an offer from an individual or business that you don’t know or recognise. It’s up to you to protect yourself and to not fall for these commonly used traps. In the unfortunate case that you are vulnerable, it’s important that you know the necessary steps to reduce any further negative impact.

How to Report Identity Theft

 If you end up falling victim to an act of identity theft, you will want to act immediately. We have outlined the necessary steps to limit any negative impact of having your identity stolen. By doing so, you will also help to protect yourself from being held liable. Just follow these steps:

1. Take the necessary precaution of notifying any institutions which may become involved (i.e. banks, PayPal, etc.) so they can make note of suspicious activity before anything happens. Even if something already has happened, you will want to notify these institutions immediately. It will be to your benefit by having representatives document the situation.
2. Notify the local authority of any stolen information and explain the context in which it likely happened. The more information you can provide about what may have led to this crime will assist investigators. Typically, these schemes are rinsed and repeated on new, naïve victims. There’s a chance that investigators are already familiar with the tactic being used and may be able to provide useful information to prevent further damage.
3. Analyze all of your financial statements and account histories for unauthorised transactions. You may also want to check your credit report to see if there have been any applications issued in your name. This will help to prevent any negative consequences to your credit score caused by fraudulent use of your personal information.
4. Luckily in the UK you can turn to CIFAS, the nation’s fraud prevention service. They will flag your name, so members like financial institutions will know to conduct a more thorough and detailed review of any applications in your name. However, if you do try to apply for something, the process will take a little bit longer since they take the extra steps necessary in verifying that you are who you say you are. After all, security comes at a price. A price that is definitely worth the potential headache and hardship caused by crimes stemming from identity theft.

https://youtu.be/xi0DgEuBp1E

But wait, how can you report identity theft if you don’t know how to detect it in the first place? Well, here are some ways you can detect whether you’ve fallen victim to identity theft. There are all sorts of warning signs depending on the type of crime committed. For financial matters, you may notice suspicious charges on bank statements, PayPal accounts and other funds. You may even notice applications for loan-based products that you never initiated. The most obvious sign may be a call from your bank wondering about random transactions that seem out of place – this could be an immediate indicator given that your bank is taking the time to call you. Although, be careful if they ask for too much personal information since this in itself could be a scam.

Ideally, we urge you to take preventative measures to limit the likelihood of this happening in the first place. That being said, it’s very important to protect yourself from identity theft. You can help reduce the chance of falling victim to this crime by:

• Not carrying important pieces of identification with you unless necessary (i.e. passport, birth certificate, etc.)
• Not entering your personal information into suspicious websites or forms
• Not sending personal information to suspicious emails and unknown recipients
• Shredding and destroying documents or bills that contain personal information

All in all, it’s important that you recognize the potential consequences of having your identity stolen. Be sure to take the necessary precautions in protecting your personal and confidential information. Avoid becoming the next victim of this ever so prevalent problem.