Identity Theft

“The crime of identity theft undermines the basic trust on which our economy depends. When a person takes out an insurance policy, or makes an online purchase, or opens a savings account, he or she must have confidence that personal financial information will be protected and treated with care. Identity theft harms not only its direct victims, but also many businesses and customers whose confidence is shaken. Like other forms of stealing, identity theft leaves the victim poor and feeling terribly violated” (Remarks by the President at Signing of Identity Theft Penalty Enhancement Act, White House, 2004).

Summary

Identity theft and identity fraud are terms used to refer to types of crime in which someone wrongfully obtains and uses another individual's personal data in a way that involves fraud or deception, typically for economic gain. Unlike fingerprints, which are unique to an individual and cannot be given to someone else for their use, personal data—especially Social Security numbers, bank account or credit card numbers, telephone calling card numbers, and other valuable identifying data—can be used by someone to personally profit at the victim's expense (Identify Theft and Fraud Web page, U.S. Department of Justice).

Unauthorized persons take funds out of others' bank or financial accounts or take over their identities altogether, running up debts and committing crimes while using the victims' names. A victim's losses may include not only out-of-pocket financial losses, but additional costs associated with trying to restore his reputation in the community and correcting erroneous information about his financial or personal status (Identify Theft and Fraud Web page, U.S. Department of Justice).

According to the U.S. Federal Trade Commission (FTC) report ID Theft: What's It All About (2003), identity thieves use a variety of methods to gain access to your personal information. For example:

• They get information from businesses or other institutions by:

  • stealing records from their employer,

  • bribing an employee who has access to these records, or

  • hacking into the organization's computers.

• They rummage through your trash or the trash of businesses or dumps in a practice known as dumpster diving.

• They obtain credit reports by abusing their employer's authorized access to credit reports or by posing as a landlord, employer, or someone else who may have a legal right to the information.

• They steal credit and debit card numbers as your card is processed by using a special information storage device in a practice known as skimming.

• They steal wallets and purses containing identification and credit and bank cards.

• They steal mail, including bank and credit card statements, preapproved credit offers, new checks, or tax information.

• They complete a “change of address form” to divert your mail to another location.

• They steal personal information from your home.

• They scam information from posing as a legitimate business person or government official.

New methods of identity theft continue to appear. During 2003 and early 2004, for example, a form of identity theft called phishing gained prominence. Phishing involves creating and using e-mails and Web sites designed to look like those of well-known, legitimate businesses, financial institutions, and government agencies to deceive Internet users into disclosing their personal information (e.g., bank and financial account information, usernames, passwords). The phishers then take that information and use it for criminal purposes, such as identity theft and fraud (Special Report on "Phishing", U.S. Department of Justice, 2004).

Various Federal and numerous State and local law enforcement agencies are responsible for investigating identity theft crimes. The Identity Theft Assumption and Deterrence Act of 1998 (Public Law 105-318) made identity theft a separate crime against the person whose identity was stolen, broadened the scope of the offense to include the misuse of information as well as documents, and provided a maximum sentence of up to 25 years.¹ Increased penalties were later prescribed for aggravated identity theft, an offense established in the Identity Theft Penalty Enhancement Act of 2004. Also, most States have enacted laws that criminalize identity theft (Identity Theft: Greater Awareness and Use of Existing Data are Needed, U.S. General Accounting Office, 2002).

Despite these actions, multijurisdictional issues—such as when a perpetrator steals personal information in one city and uses the information to conduct fraudulent activities in another city or state—and lack of training and resources, have presented challenges to law enforcement in the investigation and prosecution of complex identity cases. Because identity theft is still a “nontraditional” crime, some police departments may be unaware of the importance of taking reports of identity theft or initiating investigations (Identity Theft: Greater Awareness and Use of Existing Data are Needed, U.S. General Accounting Office, 2002).

The passage of Federal and State identity theft legislation indicates that this type of crime has been widely recognized as a serious problem across the Nation. Now, a current focus for policymakers and criminal justice administrators is to ensure that these laws are effectively enforced (Identity Theft: Greater Awareness and Use of Existing Data are Needed, U.S. General Accounting Office, 2002).

As part of its series on problem-specific guides for police, the Center for Problem-Oriented Policing has available a guide to help law enforcement professionals determine what they can do to prevent identity theft and help victims in their jurisdictions. The guide addresses identity theft, describing the problem and reviewing factors that increase the risks of it. It then identifies a series of questions to help police analyze their local problem. Finally, it reviews responses to the problem and what is known about them from evaluative research and police practice (Identity Theft, Center for Problem-Oriented Policing, 2004).

TRAINING

Association of Certified Fraud Examiners

Interviewing Techniques for Auditors: Eliciting Information

January 22-23, 2006
Grand Hyatt Tampa Bay, 2900 Bayport Drive, Tampa, FL 33607

18th Annual ACFE Fraud Conference and Exhibition

Orlando, Florida

Tampa Bay Chapter

Dinner Meetings

October 17, 2006
Thomas Palermo - Assistant State Attorney
Florida State Attorney's Office
"Identity Theft: Prevention, Detection, Prosecution"

January 9, 2007
Jean Joanne Perrino
J.J. Berrie & Associates, Inc

February 13, 2007
Melody Shimmell
Century Bank

March 13, 2007
Darrin Morgan, Assistant Vice President, Special Investigations Unit, Fifth Third Bank, Cincinnati, OH

April 10, 2007

8th Annual Fraud & Computer Crimes Seminar

May 8-9, 2007
Ruth Eckerd Hall
Clearwater, Florida1111 McMullen Booth Road
Clearwater, FL 33759

2005 - 2006
OFFICERS & DIRECTORS

PRESIDENT
Christine Dever, CPA, CFE
Accountabilties Consulting Services
(813) 417-1825

VICE PRESIDENT
Gary Chapman, CFE, CGAP
City of Tampa, Internal Audit
(813) 274-7163

SECRETARY
William H. Miles, CFE
Florida Department of Law Enforcement
(863) 701-1474

TREASURER
Laura Krueger Brock, CPA, CFE
Cherry, Bekaert, Holland, LLP
(727) 822-8811

DIRECTOR
Mark Dubina, CFE
Florida Department of Law Enforcement
(813) 878-7366

DIRECTOR
Ellen Wilcox, CFE
Florida Department of Law Enforcement
(727) 298-2482

DIRECTOR
Steve Hooper, CIA, CFE, CCSA
Clerk of the Circuit Court Hillsborough County, FL
(813) 276-2029 x3703

CHAPTER TRAINING
Wayne Boytim, CFE
City of Tampa, Internal Audit
(813) 274-7167

¹See the United States Sentencing Commission Report,  Identity Theft: Final Report for details on the Identity Theft Assumption and Deterrence Act's impact upon sentencing guidelines.

Source: http://www.ncjrs.gov/spotlight/identity_theft/summary.html

News from the ACFE

ACFE Founder and Chairman Joseph T. Wells Named Among Most Influential People

For the ninth year in a row, Joseph T. Wells, CFE, CPA has been named among Accounting Today's Top 100 Most Influential People. The annual feature, published as an insert in the October 2006 issue, recognizes the ACFE Founder and Chairman's distinguished career in fighting fraud: "Long one of the country's leading authorities on Fraud, Wells has also branched out to encourage the study and prevention of fraud abroad."

ACFE Members: Download the 2006 Compensation Guide

Proportionally more CFEs than non-CFEs participate in contract work, are self-employed, and occupy higher position levels - these are just a few of the findings in the new 2006 Compensation Guide for Anti-Fraud Professionals. The Guide is a comprehensive report on compensation for anti-fraud professionals in multiple industries, functional areas and levels of seniority. The newest Guide includes compensation and career trends for the past three years, based on a survey of more than 4,000 U.S.-based anti-fraud professionals. Read more.

Important ACFE Request - Call for Content

As members of the ACFE, each of you possesses unique insight and knowledge in different areas of fraud prevention, detection and investigation. The ACFE would like to extend an invitation for you to submit content for their newsletters, The Fraud Examiner and/or FraudInfo. Both e-newsletters have extremely high readership numbers and are helpful resources for both members and non-members.

The ACFE does not have set criteria for articles, giving you the freedom to address topics of your choice. A few ideas are listed below. 

• Have recent fraud-related new stories or scandals captured your attention as they indicate a growing fraud-related trend or challenge we all face?

• In your professional experience, have you noticed a shift in the demand for CFEs? Are companies more aware of the credential today than they were a few years ago? How has this awareness impacted you personally?

• Can you share details about a fraud you recently discovered? What techniques did you use to find it? What was the outcome? What are the lessons learned?

If you are interested, please contact Cathy Hale at chale@ACFE.com for more information.

Chapter News

16th Annual Business Ethics Breakfast

The University of Tampa's Center for Ethics honored John B. Ramil with the Tampa Bay Ethics Award. This award celebrates integrity, virtue and character by recognizing outstanding individuals in business, professional services or government who exemplify moral qualities and the highest standards in their daily activities.

Mr. Ramil is noted for serving the community as chairman of the Greater Tampa Bay Chamber of Commerce, where he focused on bring a new appreciation for diversity and emphasis on collaborative leadership into the Tampa Bay Community.

During his 27-year career at TECO, his leadership roles have included vice president-finance and chief financial officer, vice president-energy services and planning, and a variety of positions in engineering, operations, marketing, customer service and environmental support. Under his leadership, TECO is recognized as one of the nation's leading environmentally concerned companies.

Representing the Tampa Bay Chapter at the event were (from left to right): Christine Dever, president; Gary Chapman, vice president; Ellen Wilcox, Director; Roger Strout, Audit Director, City of Tampa; and Wayne Boytim, Chapter Training Director. Chapter Members also in attendance were: Laurie Prindle, AEGON, and Thomas Crowley, North American Investigations.

CFE NEWS Award Presentation

At the September Dinner Meeting, Christine Dever presented the Newsletter of the Year Award to Gary Chapman for the Chapter's newsletter - CFE NEWS.

CFE Exam Prep Course and Study Group

Many of you know there is no better way to prepare for the CFE exam than by studying with the prep course.  Chapters that have five or more Associate members interested in using the prep course to prepare for the exam can get 25% off the member price. 

All you need to do is contact our Chapter Training Director, Wayne Boytim, and let him know you are interested. He will send the names to the ACFE, which will invoice you with the discounted price. Once the ACFE receives payment from the interested members, the prep courses will be shipped.

This offer is available until December 31, 2006, and a group is forming now. There has also been some interest in forming a study group. To register for the prep course or show interest in the study group, please contact Wayne at Training@TampaBayCFE.org.

Dinner Meeting News

Our next Dinner Meeting is scheduled for October 17th

Thomas “Tom” Palermo is the Deputy Chief of the Economic Crime Unit in the Thirteenth Judicial Circuit State Attorney’s Office. Tom's presentation will cover "Identity Theft: Prevention, Detection, Prosecution."

Tom came to the State Attorney's Office from a federal judicial clerkship in the Middle District of Florida A prosecutor in Hillsborough County for three years, he started in the Domestic Violence Unit (two tours), did one tour in Misdemeanor and Traffic, served in Felony Division G, and now handles complex thefts, frauds, public corruption, and racketeering charges in the ECU.

Tom received a Bachelor of Arts from American University, his juris doctorate from Florida State University where he graduated cum laude and a Master of Law from the University of London King’s College in Banking & Finance.

Tom is a Board member of the Hillsborough County Sheriff’s Hispanic Advisory Council, a member of the 2nd District Court of Appeal Judicial Nominating Commission, a member of the Florida Bar, and a member of the Middle District of Florida, United State District Court.

The dinner meeting will be held at the Westshore Hotel (Best Western), located at 1200 N. Westshore Boulevard in the Hyde Park Room (first floor). The hotel is just north of I-275 and Cypress Avenue on the east side of Westshore (map). Evenings will begin with a social at 6:00 P.M., followed by a buffet dinner at 6:30 and a presentation at 7:00. The cost is $20, payable at the door.

To make your reservation, please use the following link Chapter Meeting Reservation and complete the form at the bottom of the page.  You can also make your reservation by emailing Wayne Boytim or calling him at (813) 274-7167 by the Friday before the meeting date. Reservations will be accepted after that date and walk-ups are always welcome. Please remember that cancellations are accepted up to the afternoon of the meeting. No shows will be billed after the second missed meeting. Please help us keep our costs down by letting us know if you are unable to attend.

September 12th Dinner Meeting

The September Dinner Meeting was the first to be held at our new venue, the Best Western Hotel located on Westshore Boulevard. Comments from the forty or so in attendance concerning this location was very favorable.

When the meeting was called to Order, President Christine Dever presented Gary Chapman with the National trophy for Best Newsletter. This honor was bestowed on our Chapter and first announced during the National Conference held in Las Vegas, Nevada in July of this year. Local chapter members already knew that our Newsletter was the best and now National has confirmed this fact. Next year our local Chapter will be aiming for the best Local Chapter award.

President Dever introduced and turned the meeting over to guest speaker George Tselentis of Control Solutions, Inc. Mr. Tselentis, Manager with Control Solutions International, presented "Technology Fraud." A lot of information was presented during the time allowed and Mr. Tselentis covered topics including Sarbarnes – Oxley controls, GLB, HIPPA, Financial Fraud, Bank Compliance under OCC (Office of Comptroller of Cash), Security issues spanning credit card theft and ID thief, Computer fraud and the relationship to internal controls and case examples of past Insurance cases worked. Mr. Tselentis also explained the two major roles of Control Solutions, Inc., the Security side and the Audit side and gave examples of investigations in each area. Mr. Tselentis’ comments were well received and it was immediately obvious that he is a professional in his field.

Submitted by Bill Miles, Chapter Secretary

New Research Shows Identity Fraud Growth Is Contained and Consumers Have More Control Than They Think

• Survey Focuses on Four Key Misperceptions and Recommendations Surrounding Identity Fraud

• One Surprising Finding: the Core Demographic - 25 to 34 - Has the Highest Rate of Identity Fraud Rather Than Seniors

For Immediate Release
Contact: James Van Dyke, Javelin Strategy and Research
jvd@javelinstrategy.com
925-462-6599

Contact: Holly Cherico, Council of Better Business Bureaus, Inc.
hcherico@cbbb.bbb.org
703-247-9311

SAN FRANCISCO, January 31, 2006 - The 2006 Identity Fraud Survey Report - released by the Council of Better Business Bureaus and Javelin Strategy & Research - provides new facts on how identity fraud occurs, counterintuitive insights that challenge conventionally accepted beliefs about these crimes, and steps consumers can take to further protect themselves against this problem.

Identity fraud is defined as access to personal account information that leads to fraud.

The comprehensive, longitudinal survey, independently produced by Javelin Strategy & Research, is believed to be the largest ever on identity fraud, with an increased 2005 sample size of 5,000 telephone interviews with consumers. The survey was, in part, made possible by CheckFree, Visa and Wells Fargo & Company. The findings show that despite growing fears the growth of identity fraud is contained and that data compromise through the Internet is actually less severe, less costly and not as widespread as previously thought.

Identity fraud victims as a percent of the United States adult population have declined slightly from 4.7% to 4.0%, between 2003 and 2006. Consumers need to be aware of the 63% of potential identity fraud that is under their primary control.

"Our numbers clarify four key misperceptions about identity fraud," says James Van Dyke, Javelin's founder and principal analyst, who oversaw the Identity Fraud Survey Report for the second consecutive year. "Most importantly, people are not helpless in protecting themselves from identity theft. Contrary to popular belief, consumers do not bear the brunt of financial losses from identity fraud, Internet use does not increase the risk of identity fraud; and that seniors are not the most frequent targets of fraud operators. Our findings will help people learn about specific important steps they can take to better protect themselves.

10 Key Data Points on Identity Fraud

The 2006 Identity Fraud Report offers 10 key data points on identity fraud:

Identity fraud trends

• The number of adult victims of identity fraud within the past 12 months has declined marginally between 2003 and 2006, from 10.1 million people to 8.9 million people, in the United States.

• The average fraud amount per case has increased from $5,249 to $6,383, over 2 years. As a result, the total one-year cost of identity fraud in the United States has remained relatively flat between 2003 and 2006, increasing from $53.2 billion to $56.6 billion.

• The vast majority of identity fraud victims (68%) incur no out-of-pocket expenses. This points out that businesses are victims of fraud as well.

• Victims are spending more time to resolve identity fraud cases, which has increased from 33 hours in 2003 to 40 hours in 2006.

Means of Access

• Most data compromise - 90 percent - takes place through traditional offline channels and not via the Internet, when the victim can identify the source of data compromise.*

• Lost or stolen wallets, checkbooks or credit cards continue to be the primary source of personal information theft when the victim can identify the source of data compromise. (30 percent).*

• Almost half (47 percent) of all identity theft is perpetrated by friends, neighbors, in-home employees, family members or relatives - someone known - when the victim can identify the perpetrator of data compromise.**

• Nearly 70 percent of consumers are shredding documents, so that trash as a source of data compromise is now less than 1 percent.

Note:   * 47% of victims could identify the source of the data compromise.
         ** 36% of victims could identify the person who misused their information.

Demographic differences:

• The 65+ demographic age group has the smallest rate of identity fraud victims (2.3%).

• The 35-44 demographic age group has the highest average fraud amount ($9,435). (Note: victims' age was not found to be statistically related to Internet usage as compared to traditional types of fraud.)

Clarifying Four Key Misperceptions Surrounding Identity Fraud

• Misperception #1: "Consumers are helpless to protect themselves"

  • In 63% of fraud cases, the point of compromise was either theft by close associates of the consumer (friends, family, neighbors, etc.), lost or stolen wallets, cards and checkbooks, breached home computers or stolen mail or trash.

  • Consumers detect almost half (47%) of identity fraud cases. Self-detection is faster (averages 67 days vs. 101 days), results in smaller average fraud amounts ($4,431 vs. $8,466) and smaller consumer costs ($347 vs. $538).

  • A key way to detect fraudulent accounts is through credit monitoring / reports. Eleven percent of fraud cases were caught via this means.

• Misperception #2: "Consumers bear the brunt of the financial losses from identity fraud"

  • Average out-of-pocket cost for identity fraud victims is $422 (7% of the average fraud amount of $6,383) down from $675 last year and $555 in 2003.

• Misperception #3: "Internet use increases the risks of identity fraud"

  • Data compromise through the Internet is statistically unchanged from last year (11% to 9% today).

  • Internet use can lead to lower damages from identity fraud. Electronic account monitoring is the fastest way to detect fraud and leads to lower losses - (22 days and $3,806).

• Misperception #4: " Seniors are most frequent targets of fraud operators"

  • Generation X (ages 25-34) has the highest rate of identity fraud at 5.4 percent. The average fraud amount for this demographic is $6,270 as compared to the average fraud amount for the 65+ segment which is $2,665.

Identity Safety Tips That Can Protect Consumers

"This new research offers a very different but accurate and helpful perspective about identity theft fraud and it shows how we can stay on top of this problem," says Steven J. Cole, president and CEO of the Council of Better Business Bureaus. "Consumers can do a lot to make sure they cut down the risk associated with this fraudulent activity."

Based on the latest findings, the Better Business Bureau, Wells Fargo, Visa and CheckFree have issued the following tips for consumers to protect themselves against financial identity fraud:

PREVENT access to your personal information

• Do not release Social Security or account numbers in response to e-mail, phone or in-person requests. When responding to e-mail, ignore any Internet links provided and type the full address instead.

• Keep all sensitive documents, checkbooks and credit cards securely locked away at home and at work.

• Carry only those credit cards that you need in your wallet.

• Before discarding, shred all private documents.

• Retrieve paper mail promptly and place outgoing checks or other sensitive documents in a U.S. Postal Service mailbox.

• Sign up for automatic payroll deposits.

• Replace paper bills, statements and checks with online (paperless) versions.

• Keep passwords hidden (even in your own home) and change them frequently.

• Use and regularly update firewall and anti-virus software.

• Do not respond to suspicious e-mails. Delete them, and if there is any doubt contact the company to determine if the e-mail is real.

• Don't discard a computer without completely destroying the data on the hard drive.

DETECT unauthorized activity

• Review bank, credit card and biller statements weekly - available through online account access.

• Contact your financial provider if you fail to receive statements in a timely manner.

• Review your credit information regularly (free annual reports are available at www.annualcreditreport.com or call 1-877-322-8228).

• Use e-mail-based account "alerts" to monitor transfers, payments, low balances, withdrawals, or detect any out-of-pattern activity.

• Visit your bank's, credit card issuer's or biller's web site(s) frequently to monitor regular account activity.

RESOLVE fraud promptly, minimizing losses and protecting your credit record

• Ask your financial provider about zero-liability guarantees against fraud and dedicated resources to help you resolve and recover from any potential losses.

• Victims of theft: notify your financial providers, begin monitoring your accounts more frequently, and place an "alert" at all three credit bureaus (Equifax, Experian or TransUnion).

• Alert federal and local law enforcement if you suspect or detect identity fraud.

For more information on the methodology used for this study and visuals of key findings, visit www.idsafety.net.

Source: http://www.bbb.org/Alerts/article.asp?ID=651

ADVANCE FOR RELEASE AT 4:30 P.M. EDT
SUNDAY, APRIL 2, 2006

3.6 MILLION U.S. HOUSEHOLDS LEARNED THEY WERE IDENTITY THEFT
VICTIMS DURING A SIX-MONTH PERIOD IN 2004
 

     WASHINGTON, D.C. –– An estimated 3.6 million households, or about 3 percent of all households in the nation, learned that they had been the victim of at least one type of identity theft during a six-month period in 2004, the Justice Department’s Bureau of Justice Statistics (BJS) announced today. Forty-eight percent had experienced an unauthorized use of credit cards; 25 percent had other accounts, such as banking accounts, used without permission; 15 percent experienced the misuse of personal information and 12 percent experienced multiple types of theft at the same time. These findings represent six-month estimates based on interviews conducted from July through December 2004 for the BJS National Crime Victimization Survey.

     Households headed by young people (18-24 years old), those in urban or suburban areas and those with incomes of $75,000 or more were the most likely to experience identity theft. Victimization did not differ by race or ethnicity.

     About one-third of households that were identity theft victims discovered the loss by noticing missing money or unfamiliar charges on an account, and about one-quarter were contacted by a credit bureau. The estimated loss during the 6-month period was about $3.2 billion. This included losses that may have been reimbursed by credit card companies, insurance companies or other financial institutions.

     About two-thirds of the households said they lost money. The average loss was $1,290. Some households for which misuse was still ongoing at the time of the interview may have continued to suffer losses.

     About one-quarter of all victimized households said the misuse had not stopped. The misuse was more likely to have stopped for households experiencing credit card theft (78 percent) than those experiencing theft of other existing accounts (65 percent) or the misuse of personal information (54 percent).

     One-third of the victimized households experienced one or more problems caused by identity theft. The most common problem was being contacted by a debt collector (34 percent), followed by problems with bank accounts (31 percent) and credit cards (26 percent)

     About one in five households spent at least one month resolving their problems. One-third said the problems were resolved in one day. At the time of the interview about one-sixth said the misuse was still causing problems.

     The survey questions were asked of one household member, who provided information about other property crimes the entire household may have suffered. The survey did not obtain information on which household members were victims.

     Identity theft questions were added to the BJS crime survey in July 2004. Only 6 months of data were available for analysis. Annual prevalence estimates will be published when data are available for 2005.

Source: http://www.ojp.usdoj.gov/bjs/pub/press/it04pr.htm

President's Message

Our first meeting at our new facility had good ratings all across the board - room, food, and presentation. Please continue to fill out the surveys as we truly use your feedback. We are always trying to ensure that we cover topics that you feel are critical so please let us know via these surveys or email any of the board members with topics or contacts.

We hope to have excellent attendance at our next meeting on 10/17/06 where Thomas Palermo will present "Identity Theft: Prevention, Detection, Prosecution." Please make sure that you reserve your space ahead of time so that we may accommodate everyone with the proper size meeting room and enough food. We continue to encourage you to bring a colleague and introduce them to our organization in a continued effort to increase our membership for fighting fraud.

If you are interested in sitting for the CFE exam and using the ACFE's prep course - now is the time. Chapters that can submit 5 names to the ACFE will be able to get them a 25% discount on the cost of the course. For the first time, we are trying to put people in contact with each other who want to study together in a group setting. Contact Wayne for more information on either of these programs.

We will be awarding student scholarships this year, please continue to visit our website for details.

Our primary chapter goal for this year is to enhance the community's understanding of "Who we are as a Chapter" and "What we can do for the community in the fight against fraud." We will be approaching members for participation in certain committees to achieve that goal and many more. Please be open to participation so that we can achieve more with more involved.

Look forward to seeing you at our next meeting.

Thank you.

Christine A. Dever, CPA, CFE
President