Identity Theft Term Paper

Excerpt from Term Paper :

Consumer Beware: The Growing Problem of Identity Theft

American consumers today are increasingly concerned, with good reason, about how to avoid joining the ranks of unfortunate millions who are already victims of the newest, most widespread national financial crime: identity theft. According to the web article "The Crime of Identity Theft": It can happen to anyone. The phone rings and a collection agency demands that you pay past-due accounts for goods you never ordered. The supermarket refuses your checks because you have a history of bouncing them." Stealing (most often by strangers) of personal information about individual consumers (e.g., full name; birth date; social security number; bank account numbers; credit card numbers, and other confidential data) has in recent years become epidemic. Within the United States in particular (one reason for the phenomenon of identity theft in America in particular is that the United States is the only nation with social security numbers) identity theft is, unfortunately, an ugly fact of contemporary life. Consumers, internet users, private companies, public schools, churches, and virtually everyone else, are therefore wise to be vigilant nowadays. According to Sivey et al. (June 2005):

In just the past six months, major security breaches have been reported across the country. At ChoicePoint, data on 145,000 people may have been compromised. At LexisNexis, 310,000. At Time Warner, publisher of this Web

site, perhaps 600,000. At Bank of America, up to 1.2 million. Throw in files at Berkeley, Boston College and Tufts, and just this year more than 2.4 million

Americans may have been left wide open to hackers, scamsters [sic] and, increasingly, gangsters. (p. 42)

Neither are churches immune. Parishioners at Christ Episcopal Church in Las Vegas, Nevada, recently reported identity theft when someone hacked into the church's member database (Krogstad). Personal vigilance over one's own confidential data, such as social security numbers; credit card and bank statements; bank account numbers, and any other information that could be used by another person to make fraudulent purchases or withdraw money in one's own name, is the best defense against identity theft.

The early years of the 21st century are turning out to be an era of identity theft. As Consumer Reports (October 2003) states:

Seven million Americans were victims last year [2002] of ID theft. The fastest-growing financial crime, it involves the fraudulent use of someone else's identity to get credit or merchandise . . . Victims typically lose $800 and spend two years clearing their name. Your best defense: Order your credit-bureau report annually from each of the three major credit bureaus and check for errors and bogus accounts. (p. 12).

The object of identity theft is most often to invisibly (thus the widespread appeal of the internet) steal credit card and/or bank account information, in order to then be able to then make fraudulent credit card purchases in another's name, or to open and use new credit card accounts, or to steal money from unknowing victims' bank accounts, all seemingly in the victim's own name. Also, "Many victims don't learn of the crime for a year or more, only after something goes terribly wrong, because thieves often shield their actions by using a different address when they open new accounts in the victim's name" ("Stop Thieves from Stealing You" p. 12).

However, identity theft does not always stop there. For example, in one particularly egregious case:

Frances Green, a beautician from Jamaica, N.Y., discovered that the house she was about to buy had already been sold -- to an ID thief posing as Green

who, with a phony seller and fake lawyers, defrauded the mortgage company and ruined Green's credit. ("Stop Thieves from Stealing You" p. 12)

The widespread and ever-growing fear of identity theft is, unfortunately, unlikely to abate. Being an identity theft victim often severely compromises one's credit rating and overall financial well being, sometimes for years. "Typically, federal laws cap monetary losses to consumers, but even in routine cases, it takes victims two years on average to clear their names, according to the Privacy Rights Clearinghouse, a nonprofit advocacy group" ("Stop Thieves from Stealing You").

Perhaps equally (or more) harmful, is the huge psychic cost to victims, in terms of their own feelings of safety and well-being, exacted by identity theft, which cannot be measured in time or dollars. One identity theft victim, a personal friend of the author's and a 2004 college graduate, stated "I'm still in shock from it. I'm not [anywhere] near over it."

This interviewee also stated she feels "paranoid" about credit cards, and always pays cash now. She even hesitates to write checks, although her bank account was not disturbed by the identity thief or thieves. She had all her back account numbers changed, canceled all but one necessary credit card, and still avoids surfing the internet, once a favorite pastime.

She feels violated, and worries it could happen again. She also stated that she still has no idea how the identity theft happened. She recalled: "It was five months before I realized it. I think maybe because most of the charges were small Wal Mart, Target, places I shop. But then [they charged] $800 at Robinson-May and $400 at Neiman Marcus, on the same day." This identity theft victim is still working to restore her good name and repair her credit.

One key reason Americans increasingly fear the possibility of identity theft is that, according to researcher Avivah Litan whose company, Gartner Inc., conducted a recent study of 5000 Americans' attitudes about identity theft: "Consumers are really getting scared, and they don't think their government is protecting them'" (qtd. In Sullivan). That news comes on the heels of the Card Systems Company hacker break-in incident. In June 2005, hackers broken into the computer database of Card Systems, a credit card database hub, in Tucson, Arizona, stealing personal information on at least 40 million Mastercard; Visa; Discover; American Express, and other credit card holders.

Further, according to Sullivan the recent study by Gartner Inc.:

found that about half those polled either weren't aware they were entitled to a free credit report or considered them "not effective" in fighting ID theft. The survey, released Thursday [June 23, 2005], also found that one-third of consumers are "very concerned" about being victims of identity theft, and nearly half are altering their online activities as a result.

Perhaps the most frightening aspect of identity theft, in the minds of many consumers, is its initial invisibility, to the point where thousands (and in some cases millions) of dollars worth of purchases may have been charged in one's name, or one's checking or savings account altogether emptied, before it even occurs to a victim that anything at all is amiss. By then, however, it is often too late to avoid sullying one's credit record and good name. According to Consumer Reports (October 2003):

Identity theft -- the fraudulent use of your name and identifying data by someone else to obtain credit, merchandise, or services -- claimed seven million victims in the U.S. last year, according to a recent survey by Privacy &

American Business, a publication of the Center for Social & Legal Research.

(p. 12).

Arguably, businesses and corporations do not do enough to lessen the incidents of identity theft. This is likely because consumer options like "instant credit" are extremely profitable for them, and also because, while identity theft is often financially and otherwise devastating for an individual consumer, it is just the cost of doing business for a large company. As Sullivan states, in "Congress Mulls ID Theft Provisions":

Consumer groups say that credit card companies and the credit reporting bureaus bear some responsibility for the identity theft epidemic because they have been slow to react to it. Victims who end up with pock-mocked credit reports often find it takes years to clean up their credit histories. Advocates have taken aim at the industry, and have been using the required update to the Fair Credit Reporting Act as a chance to force companies to fix their part of the problem.

Recently, some state legislatures, such as Michigan's, have begun introducing bills within their legislatures designed to better protect citizens from identity theft. For instance, in the state of Michigan:

A bill introduced by Sen. Shirley Johnson, R-Royal Oak, would require companies to promptly tell customers about possible breaches. Law enforcement officials also would be notified under terms of the bill, which is being revised after testimony in a Senate committee hearing.

However, consumers do have one free partial safeguard against identity theft, one of which many consumers, according to the Gartner Inc. study, remain unaware. According to that study: ". . . about half those polled either weren't aware they were entitled to a free credit report or considered them "not effective" in fighting ID theft (Sullivan "ID Theft Concerns Grow, Tools Lacking").

In actuality, however, ordering one's free credit report, from each of the three major credit reporting agencies, every four months, or three times a year at four-month intervals,…

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