Friday, Nov. 29, 2002 | 8:55 a.m.
Identity theft has been around for some time now, long enough for companies dealing in personal finance to have developed effective safeguards. Yet it's not safeguards and credit security that is making the news. The news is that identity theft is rampant and that it will only grow in the foreseeable future. This week's breakup in New York of an identity-theft ring that, at last count, victimized roughly 40,000 people around the country underscores the seriousness of this crime. Potential victims include anyone who has a bank account, credit card, mortgage, rent payment, utility bill, car loan or Social Security number -- which means just about everybody is at risk.
The New York case was traced back to 1999, the year that one of the alleged identity thieves was hired by a company that produces specialized computer hardware and software. The computers are bought by companies that have legitimate reasons to access reports on individuals from credit bureaus. From May 1999 to March 2000, the employee is alleged to have stolen passwords and codes and sold them to as many as 20 other people, enabling them to pose in the cyber world as officers of legitimate companies and download confidential credit information on consumers. The U.S. attorney in New York said consumers are known to have lost $2.7 million and that a final count of the damage will be "many, many millions" above that.
In this era of instant credit, with cards and accounts being approved over the phone and through the mail, a little personal information about their victim can enable identity thieves to electronically pose as that person, get a line of credit in the person's name, change the person's address so he doesn't get a bill right away, and spend a small fortune. They can get cell phone service in a victim's name. They can even open a bank account in someone else's name and write bad checks. Victims can usually restore their credit, but only after a lengthy and expensive ordeal.
Financial institutions were eager to save money and attract more business through electronic transactions and mail solicitations. Consumers enjoyed the convenience. And thieves began enjoying the ease at which they could ply their trade. With the federal government now planning to gather extensive personal information about everyone in the name of homeland security, it's time for software writers, financial institutions and government at all levels to upgrade their security procedures.
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