One type of fraud that is receiving a great deal of attention these days is identity theft over the Internet. This occurs when someone uses your personal information to steal money, commit fraud, or launch another crime. Department of Justice figures from 2006 indicate an estimated 3.6 million families were affected by some sort of ID theft in the first half of 2004, and the portion of those thefts committed over the Internet is increasing daily. The same study estimated annual losses from ID theft at 6.4 billion dollars.

By using information such as your credit card number or social security number, someone else can open a bank account in your name to write bad checks, open a credit card account and run up the bill, or establish cell phone service and make thousands of dollars worth of calls. Identity theft can wreak havoc on your life. It can cost thousands of dollars and years of your time to undo what an identity thief has done to your credit history and overall financial situation. Fewer than 5 percent of reported cases result in an arrest of the identity thief.

Whether you lose your wallet, leave a credit card receipt in the trash can, or enter too much personal information into a disreputable Web site, it is possible that someone will use that information in a negative way. The Internet is a strong conduit for identity theft because personal information is not always kept private. Most victims do not even know their identity has been stolen; their first clue may be a call from a collection agency regarding an account they did not know existed.

The Identity Theft and Assumption Deterrence Act of 1998 makes it a federal crime when anyone “knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable State or local law.” When complaints of identity theft are reported to the Internet Crime Complaint Center (IC3), they may be assigned to the Secret Service, FBI, and/or U.S. Postal Inspection Service for investigation. The Department of Justice is responsible for prosecuting identity theft cases. In 2004 President Bush signed the Identity Theft Penalty Enhancement Act, which boosts penalties for those using stolen credit card data and other personal information to commit crimes.

The IC3 advises consumers not to be paranoid but to be careful. They also provide a number of helpful tips to consumers for avoiding identity theft, including:

• Don’t trust a site just because it claims to be secure.
• Be cautious of scams requiring you to provide your personal information.
• Promptly reconcile credit card statements to avoid unauthorized charges.
• Never throw away credit card or banking statements in usable form.
• Monitor your credit statements monthly for any fraudulent activity.
• Report unauthorized transactions to your bank or credit card company as soon as possible.
• Review a copy of your credit report at least once a year.

Source: http://www.ic3.gov, Internet Crime Prevention Tips

Activity
Visit the ID Theft Center Web site and take the Identity Quotient test (www.idtheftcenter.org/idthefttest.shtml) to assess your risk for identity theft. Think of two things you can do to lower your risk and describe these actions in a brief report. Then e-mail your quiz score and recommended action steps to your instructor.