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The onus of who is responsible, the consumer, the private institutions, or even the government will come into question. A brief revue of the history of the credit card is also in order since the use of "plastic" money has certainly contributed to the identity theft crisis. Past and current legislation will be analyzed regarding this new crime in both its cyber and analog presentations. Lastly, an opinion and possible suggestions for the consumer to help safeguard their identity as well as what government and corporate institutions can do to not only help the consumer avoid identify theft, but if it has occurred, to assist them in rectifying the situation before too much damage is done.
What is Identity Theft? The encyclopedic definition of identity theft is the use of another person's identity, i.e. financial, personal, geographic or other source, to commit fraud or other types of misrepresentation. By using another person's social security number, driver's license number, date of birth, address, online information one may open bank accounts, apply for loans and credit cards, get a cell phone and so on. In addition to financial loss that can result from identity theft, by using another's identity the credit history and even the legal history of the victim can be damaged in the extreme. ("Identity Theft," 2007)
According to the Identity Theft and Assumption Act of 1998, identity theft (ID theft), occurs when someone is "knowingly transferring or using, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, in the unlawful activity that constitutes a violation of federal law." It is a federal crime. (Alt, 2007, p. 67)
Another form of identity theft that is for the most part non-financial is referred to as Criminal Identity theft. This occurs when someone gives another person's ID to a policeman or other law enforcement official when they are being arrested. This allows the perpetrator to use a clean citizen's record to make it appear as if they are committing a first offence. This often reduces the punishment but also goes on the arrest record of the honest citizen who is the victim. The frequency of identity theft increased markedly beginning in the late 1990s due to the computerization of records and the ability to use another's personal information anonymously and virtually without any prosecution at the time over the Internet. ("Identity Theft," 2007) until very recently, the only loss likely to occur -- the financial sort -- was a crime without a face, unless you happened to be a hapless, also somewhat invisible, victim. Known as identity theft, it's the practice of taking over another's financial life that's bilking the system out of millions -- and it shows no signs of stopping. Last year , there were an estimated 500,000 cases annually at an average cost of $17,000 per victim, according to statistics compiled by the Federal Trade Commission. (Bielski, 2001, p. 27)
That number has been on the rise.
Other forms of Identity Theft are bank fraud, phone & utilities fraud, job related misrepresentation, consumer fraud, government documents and benefits fraud. Medicare, Medicaid and other health insurance related fraud is also on the increase. (Alt, 2007, p. 68) Furthermore, once someone has stolen an Identity, the victim usually experiences more than one type of fraud regarding their personal information as the following figure illustrates:
The areas of overlap indicate multiple intrusions of identity theft. Furthermore, 58.9% of all victims experienced the misuse of an existing credit card. A total of 48.6% of victims experienced the misuse of existing accounts other than existing credit card accounts and 21.9% of victims had their personal information used to open a new account or commit some other kind of fraud. 38.1% of all victims the misuse of an existing credit card was the only form of ID theft suffered, and approximately one-third of victims who experienced the misuse of an existing credit card also experienced another type of ID theft. (Federal Trade Commission, 2007 13)
Identity theft, as has been mentioned, is an old crime. Prior to computers and most forms of organized governments and the science of photography, it was also a quite violent crime. Nefarious persons would murder and then assume the identity of their victims, move to another district or country where their victim was not known and use their good name to settle into a new life. As time went on certain forms of ID were standardized, passports adopted, etc. And it became harder to completely impersonate another human being. It could still be done, but with a bit less impunity. In fact Identity Theft is becoming prevalent among the influx of illegal aliens in the United States. Passports and other forms of ID are finding their way into black market vendors who sell them to aliens seeking ingress into other countries
Another issue in identity theft is the problem of the time to discovery of the crime. In many cases the crimes may not be discovered until a great deal of damage has been done. The following chart illustrates the different types of fraud and their subsequent discovery times:
Nearly 40% of all ID theft victims discovered the misuse of their information within one week of the start of the misuse. However, the discovery period was significantly different depending on the type of fraud experienced. Victims in the Existing Credit Cards Only (22%) and the Existing
Non-Credit Card Accounts (21%) categories were about twice as likely as those in the New Accounts & Other Frauds (10%) category to find out about the misuse the day it started. Nearly one-quarter (24%) of New Accounts & Other Frauds victims did not find out about the misuse of their information until at least 6 months after it started - compared to just 3% of Existing Credit Cards Only and Existing Non-Credit Card Accounts victims. Where discovery of the misuse occurred more quickly, victims reported lower out-of-pocket losses and thieves obtained less. (Federal Trade Commission, 2007 p. 23-24)
In his book, Credit Card Nation: The Consequences of America's Addiction to Credit, Robert D. Manning postulates that the rise in Identity Theft is in direct relation to the rise of America as a Credit Card nation. It began as a paradigm shift in the economy of the world began to occur. While the industrial revolution certainly changed the world economy from agriculture to manufacturing as the predominant sector, there was a shift in the twentieth century that shifted the focus from industry to banking and financial products. This became a trend that meant that financing consumption was now a more lucrative business than traditional goods-producing industries. (Manning, 2000, p. 4) With this new mentality, the finance industry would search for more and more ways to introduce new products and services to its consumers. In many ways this also required a change in perspective from the traditional "Puritan Ethic" of the American psyche.
Installment credit was the first to make the scene and initial critics of the system stated "that consumer credit (as a repudiation of Puritan thrift) not only tempted people to sin, it provided the means for sinning as well." (Manning, 2000, p. 3) but as time wore on the consumers needs outweighed their original philosophy and another attitude became prevalent.
A the extension of consumer installment credit historically served to enforce rather than undermine the moral virtue of hard work, budgeting, and saving. This leads to the assertion that increased consumer consumption has served to discourage moral laxity by rewarding strict adherence to installment contracts with additional sources of credit for financing new forms of consumption. (Manning, 2000, p. 3-4)
With this change in consciousness now accomplished a myriad of new ways for consumers to spend money they did not yet have came into being. Paper or Plastic? This query from your local grocery store takes on a whole new perspective when applied to the financial shift taking place by the mid twentieth century.
While paper currency was also a representational form of commercial exchange, it was at least tangible, analogous to wealth and savings. The advent of credit and credit cards made this currency of debt a bit too intangible, digitizing it and creating an appearance of available money to spend, when in fact it was unearned and often came with the high price of interest.
This tangible difference was all part of the paradigm shift in money and economics in the twentieth century. Identity Theft was certainly wrapped up in this shift as well. While someone could feasibly steal your cash by ripping out of your cold dead hand, it was quickly discovered that it was certainly going to be easier to appropriate a credit card in you name to do so without you even knowing about it for some time.
The first items that resembled credit cards were called shopper plates and came into use at department stores, oil companies…[continue]
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