Sunday, November 2, 2003

Smart thieves
steal your identity

According to the Federal Trade
Commission, last year's identity theft
losses to businesses and financial
institutions nationwide totaled
nearly $48 billion and consumer
victims reported $5 billion in
out-of-pocket expenses

Dmitry Krupitsky, a Waikiki resident, isn't surprised that Hawaii's rate of identity theft is the 15th highest in the United States, with thousands of cases reported each year.


And he understands why the problem is a growing concern for individuals and businesses that must bear the costs.

Krupitsky, who works as a researcher for the University of Hawaii, became one of the contributing statistics after deciding to leave his wallet and keys in the car while visiting the beach on a warm summer's day. While he frolicked in iridescent ocean waters, thieves broke into his car and took the personal goods he left behind. A day later, they used Krupitsky's keys and the address from his driver's license to access his Waikiki apartment. Then they used his used his credit to make gas purchases.

Krupitsky had a similar experience a few months ago when he visited Maui on business and his credit card was stolen from a rental car he had parked in a store lot.

Seven police reports and thousands of dollars later, Krupitsky, who estimates that he missed anywhere from 40 to 100 hours of work to sort out the mess, said he's well aware that identity theft in the Islands is out of hand.

But Krupitsky wasn't the only loser in this scenario. Businesses are impacted each time an identity thief misuses an existing account or opens a new account in the name of an identity-theft victim to purchase goods and services, rent apartments and homes, obtain medical care, seek employment, obtain fake government documents or commit other fraud.

According to a study recently released by the Federal Trade Commission, last year's identity theft losses to businesses and financial institutions nationwide totaled nearly $48 billion and consumer victims like Krupitsky reported $5 billion in out-of-pocket expenses.

Identity theft also costs businesses employee productivity. According to a study published by the nonprofit Identity Theft Resource Center based in San Diego, Calif., on average victims of identity theft spend 600 hours trying to resolve the crime, which can impact their morale and productivity at the workplace. The study estimates the lost hours translates into an employee loss of $16,000 in potential or realized income.

According to the study, when an identity thief opens a new account using stolen information, the loss to businesses and financial institutions is just over $10,000 and the loss to individual victims is about $1,200.

When identity thieves use a victim's established accounts, the loss to businesses was roughly $2,000 per victim. For all other forms of identity theft, the loss to businesses was about $4,800.

"These numbers are the real thing," said Howard Beales, director of the FTC's Bureau of Consumer Protection. "For several years, we have been seeing anecdotal evidence that identity theft is a significant problem that is on the rise. Now we know. It is affecting millions of consumers and costing billions of dollars."

That's why the Hawaii Better Business Bureau is joining forces with the national Better Business Bureau to launch a campaign to alert and educate the business community about the importance of preventing identity theft, said Anne Deschene, president and chief executive of BBB Hawaii.

Speakers from BBB Hawaii are available for identity theft presentations and the office has stocked an educational video and other materials that teach consumers and businesses how to minimize their risks.

"BBB Hawaii is pleased to join in this effort by providing helpful tools to small- and medium-sized businesses that may lack the time or technological know-how to tackle identity theft and other cyber security issues on their own," Deschene said.

Deschene noted that in 2002, the rate of identity and account theft in Hawaii was significant -- 49 victims per 100,000 people -- the 15th highest rate in the United States. Of the fraud complaints reported to Internet Fraud Complaint Center, 43 percent are linked to identity theft, said Deschene, adding that it's a growing crime that needs to be prevented.

Dave Thomas, vice chairman of Retail Banking for Bank of Hawaii and chairman of the Consumer Bankers Association, said identity theft is a huge concern nationally and a growing concern locally.

"It's already a big problem on the Mainland and it's a growing problem here," said Thomas, adding identity theft and fraud of all types far exceeds costs incurred by banks and other financial institutions from robberies.

Although identity theft hasn't been a frequent customer complaint at Bank of Hawaii, Thomas said when it happens to bank customers it's frustrating for all parties. The crime is going to cost the customer time and could affect their short-term credit report. It also ends up costing the bank and other consumers.

"Ultimately whoever has issued the credit is going to have to write that credit off and that spreads costs throughout the industry and increases the cost of doing business," he said.

Police and FBI records indicate the number of identity theft and fraud cases in Hawaii has grown steadily, jumping to 7,200 in 2002 from 5,001 in 2001, said Arnold Laanui, FBI spokesman. In 1999, identity theft cases numbered 3,245 and 4,377 were recorded in 2000, he said.

Now more than ever, people must guard their personal information to avoid being the victim of what the FBI calls the fastest growing crime -- identity theft, Deschene said.

"Business owners who don't take protective measures to secure their confidential information place their employees, customers, and themselves at risk," she said. "They all but welcome a silent, yet very successful intruder: the identity thief."

Deschene said she believes the state's high numbers of identity theft and fraud may be due in part to the fact that many state shoppers place orders on Internet and or use mail-order catalogs.

"It just creates more opportunity for people to get taken advantage of," she said.

But while identity theft has exploded with the growth of networked computers and high speed Internet access, it cannot be blamed on technology alone, she said.

"Plenty of thieves steal victim's names, account numbers, social security numbers and other vital information the old-fashioned way: by digging through dumpsters, wandering uninvited through offices to scour for unattended purses and rummaging through outgoing mail," Deschene said. "We urge businesses to practice self-defense and secure their information files in the real world, as well as the virtual world."

In the real world, businesses and consumers are finding Honolulu's notoriously high property crime rate has spawned more sophisticated criminals who are turning stolen goods into a second crime: Identity theft.

Thieves preying on Island businesses, residents and tourists are finding that there is even more profit through a black market that deals in credit cards, checks, social security and health information to establish new accounts.

The booty of personal information, obtained from individuals or businesses, is worth more than cash to an identify thief or an enlightened criminal who knows how to market the information, said Honolulu Det. Chris Duque.

"The bad guys know information is powerful," Duque said. "Even if they don't know how to use the personal information themselves, they know there is a huge drug market where they can sell it and make lots of money or trade it for drugs. It's gravy to them."

Thieves and identity bandits meet in game rooms, malls and coffee shops to make deals. They trade information for cash, drugs or a percentage of the take, Once an identity bandit obtains personal information they can assume that person's financial identity and go on a spending spree. Often they use the goods to supplement their lifestyle, but other times, they purchase items to sell for cash at pawnshops and swapmeets around the Island, Duque said.

In April, an Ewa Beach man pleaded guilty to using credit cards and driver's licenses obtained during car break-ins to steal the identity of others. Court records showed that Craig Aoiki, 32, spent more than $116,000 on goods and services and billed it to the people whose identities he had stolen.

And this scenario is playing out nationwide, said FTC spokeswoman Claudia Bourne Farrell.

Although Bourne Farrell can't estimate how many of Hawaii's identity theft complaints are due in part to property crimes or how many are technology related, she said it's clear numbers are rising and so are costs to consumers and businesses.

In 2002, the FTC logged five times the number of identity theft complaints that were reported by consumers in 2000, the first year the FTC began recording identity theft data, Bourne Farrell said.

The number of identity theft complaints rose from about 86,000 in 2001 to about 162,000 last year, she said. Based on preliminary numbers for 2003, the FTC is predicting there will be more than 200,000 complaints, she said.

"The cost to consumers and business is just staggering," said Bourne Farrell.


Fight ID theft

Tips on combating identity theft are available from the Better Business Bureau of Hawaii.

>> Visit:
>> Call: 526-6956

Protecting individuals

1. Don't carry Social Security cards in a purse or wallet. If the number appears on a driver's license, ask the state motor vehicle department to assign another number. Don't give the number to anyone that doesn't have a legitimate need to know it.

2. Don't leave personal information in glove compartments or trash bins. At home, keep personal information locked in a safe. Don't throw away personal information, invest in a shredder.

3. Minimize credit card/bank card abuse by only carrying necessary credit or debit cards. Do not write personal identification numbers on the backs of credit cards or carry that information in a purse or wallet Instead of signing the back of credit/debit cards, write "check photo ID" in the space. Check credit card and bank statements carefully each month looking for suspicious activity.

4. Keep mail safe from identity thieves. Tear up pre-approved credit offers in the mail before discarding or call 1-888-567-8688 to opt out of future pre-approved credit offers. Take outgoing mail either to a local post office or deposit it in a nearby postal service box. Pickup incoming mail as soon as possible and don't have blank check reorders sent to a home mailbox.

Protecting businesses

1. Protect computer servers by placing them in a secure location and limiting access to employees whose duties include responsibility for the computer system. Discourage file sharing.

2. Critical information should be encrypted and password protected. Passwords should use cryptic phrases that combine numbers, upper and lowercase letters. The system should require all users to change passwords and should lock out prospective users who repeatedly fail to enter correct passwords. Employees should back up computer data weekly on floppy disks or CDs.

3. Anti-virus protection should be installed on all computers and scans should be performed on a regular basis. Computers should be equipped with firewalls and filters, which protect a computer by shutting out unauthorized people and letting others go only to areas where they have privileges. Security patches, which correct bugs that allow unauthorized users to attach to computer, should also be installed. Businesses should monitor suspicious activity by regularly checking the audit logs for these programs.

Source: Better Business Bureau Web site,


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