Identity theft

Approximately 9.9 million Americans were victims of identity theft in 2003, according to the Federal Trade Commission. Over the last five years, this figure is more than 27 million. The crime is no longer limited to stealing a victim’s personal information and using it to obtain a credit card, cell phone, and so on in the victim’s name—now identity thieves are even obtaining mortgages and medical care.

The reason, of course, is that there is a welter of personal information available out there—and it’s easier for banks and corporations to write off a loss than it is to prosecute it. According to identity theft expert Frank Abagnale—the one-time conman profiled in the movie Catch Me If You Can—most district attorneys will not pursue cases under $5,000, most U.S. attorneys will not prosecute white-collar crimes under $250,000 and the FBI will not investigate crimes under $100,000. And the problem of identity theft is only likely to intensify. Short of buying a criss-cross shredder (straight-line shredders are too easy for criminals to decode), you should balance your bank statement and demand that your credit bureau alert you if anyone is checking your credit history.

Most people believe that identity theft insurance protects them— that if a thief drains their account of $5,000, they’ll get that money back. They won’t. You are only reimbursed for out-of-pocket expenses incurred to the problem fixed—what it costs to take time off from work to make phone calls, write letters, and so on—but not the actual loss from identity theft.

The scams are so inventive that it’s easy to see why identity theft is such a burgeoning business. One scam, for example, asks you to pay $100 a month for daily updates on a family member serving in the military. Another gets you to think you’re paying off a debt—on a canceled Visa card. In another you discover that you’re a victim of the advancefee scam. Some scammers send out legitimate-looking emails that claim to be from a company you do business with reporting an account error, possible fraud, or other problem with the account. Sometimes the emails claim that your credit card has been charged for pornography and they need you to verify the information by clicking on a link and entering account information on the linked Website. The link takes you to a fake Website that gathers information that could be used to drain your bank accounts and charge up your credit cards.