Scoring to Combat Identity Theft
The , a non-profit organization dedicated exclusively to the understanding and prevention of identity theft, defines identity theft as “a crime in which an impostor obtains key pieces of personal identifying information such as Social Security numbers and driver’s license numbers and uses them for their own personal gain.
“It can start with lost or stolen wallets, pilfered mail, a data breach, computer virus, phishing, a scam or paper documents thrown out by an enterprise which result in ‘dumpster diving.’ The crime varies widely, and can include check fraud, credit card fraud, financial identity theft, criminal identity theft, governmental identity theft and identity fraud.”
ccording to Javelin Strategy and Research, a firm dedicated to researching financial service areas, nearly 8.4 million people were victims of identity theft in 2007, totaling $49.3 billion in fraudulent charges with the average victim spending at least 25 hours trying to resolve the issue. Identity theft is one of the fastest-growing crimes in the nation, accounting for as much as 25 percent of all credit card fraud loss each year. Though victims may not be liable for charges made on fraudulent accounts, it can be extraordinarily difficult to improve credit reports. There’s no doubt that the theft of identity can leave an individual with a poor credit rating and a ruined reputation, which may take months or even years to correct.
DAMAGE TO AN ENTERPRISE’S REPUTATIONBut it is also important to realize that some incidents of identity theft can create reputation-damaging headlines and lawsuits for enterprises ranging from government and healthcare to financial and college organizations.
To make the situation worse, thieves want more than just money. In 2007, the Federal Trade Commission reported that credit card fraud accounted for 23 percent of the reported identity theft cases. However, the non-financial types of fraud including employment fraud accounted for 14 percent and government documents/benefits fraud accounted for 11 percent. Non-financial types of identity theft include utilities and phone fraud, medical, criminal, employment and government benefits fraud and synthetic identity theft where the identity is fictional rather than stolen.
Criminals can readily obtain personal data without having to break into a person’s home. The United States Department of Justice reports that “in public places, for example, criminals may engage in ‘shoulder surfing,’ watching from a nearby location as a person punches in a telephone calling card number or credit card number or listen in on a conversation if a person gives a credit card number over the telephone to a hotel or rental car company.” Applications for pre-approved credit cards in the mail, that are discarded without shredding the enclosed materials, roll out the welcome mat to predators who may retrieve them and activate the cards for their use without the recipient’s knowledge. The World Wide Web has opened up a global village for criminals seeking to obtain identifying data, such as passwords or banking information, as many people respond to unsolicited official-looking spam.
Once the predator has enough identifying information, they can take over that person’s identity by falsely completing applications for loans and credit cards, making bank account withdrawals using the victim’s information, and other unscrupulous activities, and inflict substantial damage on the victim’s assets, credit and reputation.
THE ANSWER FOR ID THIEVERY?
People are bombarded by offers of free credit card monitoring that claim to reduce identity theft.
Enterprises that are compromised by data break-ins generally offer free credit report monitoring to potential victims.
Are there limitations to the protection from these free offers? Unfortunately, there truly is no “free lunch.” A study conducted by Gartner, the information technology research company, revealed that “identity scoring and monitoring is more effective than credit report monitoring to watch for potentially fraudulent activity.” According to the U.S. PIRG, the federation of state public interest research groups, 79 percent of credit reports contain some type of error. With so many errors, credit monitoring is not a reliable solution for identity theft prevention.
Notebook computers filled with confidential employee information are stolen on a frequent basis, and data breaches and criminal accesses also occur at retailers, payment processors and other types of companies all the time. Following a compromise, affected enterprises generally offer potential victims free credit report monitoring from one of three major credit bureaus -- Experian, Equifax and TransUnion – implying that credit report monitoring will protect customers from criminal use of their identity records for subsequent crimes.
There are major deficiencies in relying on credit card monitoring for ID theft.
An ID theft victim with a stolen Social Security number that was used in concert with other data, such as a different address or date of birth, may not be alerted. Potential victims are only contacted if their exact identity including full name, date of birth, etc. was used to apply for a new mortgage, credit or other loan. Most importantly, any credit monitoring report will arrive days after the criminal activity has transpired. One has to hope that the criminal hasn’t done too much damage in those few days. Credit card monitoring also does not catch the non-financial use of stolen identity and can, in fact, damage a credit rating even further while also damaging an enterprise also involved in the incident.
IDENTITY SCORING MAKES A HIT
With identity scoring, victims and companies also involved get an accurate and comprehensive picture of the complete credit-related activity. Identity score systems tap into a broad set of consumer data that judge a person’s authenticity. Identity score components used by identity scoring companies include government and public records, corporate data, credit records and predicted behavior patterns based on empirical data.
Gartner Research defines identity scoring as “scoring the behavior of an identity’s or a criminal ring’s activities over time and across enterprises. Suspect patterns of behavior that show up across different organizations would not necessarily appear if the activity within only one organization was being monitored.”
Credit report monitoring is not able to identify criminal activity or individual records linked by stolen data. Identity scoring considers far more attributes that clearly define the individual and their behavior over a significant period of time.
The basic identity score components a company uses in ID scoring include name and address components; Internet monitoring of personal information found online on Web sites, newsgroups and blogs; fraud information such as that found with stolen credit cards; behavioral pattern analysis; synthetic identity information which is the information used to create a fake identity; and predictive analytics which weighs behavioral data against earlier set patterns of behavior.
A Gartner Research report, “Limit ID Fraud: Use Identity Scoring, Not Credit Monitoring,” indicated that “identity scoring and monitoring was explicitly architected to look for identity theft-related fraud. Credit scores were designed to help lenders make good credit decisions. Direct-to-consumer credit reports and monitoring evolved several years ago when consumers wanted to know the content of their credit score. Consumer credit report monitoring further developed as a way for consumers to directly monitor inquiries about their credit reports to determine if such inquiries were made for either legitimate or potentially criminal purposes.”
Recovery after an identity is stolen is very important and very complex. There are many calls to make and steps to take and unfortunately for the victims, identity theft is often much simpler, and quicker, than the recovery. It’s the same for the companies involved.
LOW COST EMPLOYEE BENEFIT
In today’s recessionary environment, and with medical insurance very expensive, not every business can afford to offer healthcare and disability insurance to their employees. More and more businesses are looking for lower cost, yet high value employee benefits that will give their workforce peace of mind. As a security program, identity protection is a value added benefit that companies can offer to their employees as a low-cost addition to their benefit package.
For more information on identity theft, visit the links below.