Archive for January, 2014

3 arrested in Beaverton for ID theft ring

Thursday, January 30th, 2014

BEAVERTON, Ore. — Beaverton police arrested three people for shoplifting Sunday and seized more than $26,000 in property, gift cards and cash in an elaborate identity theft ring.

At 5 p.m. Sunday, a police sergeant pulled over a vehicle reportedly involved in shoplifting incidents at nearby Best Buy and Nordstrom stores, said Mike Rowe of the Beaverton Police Department.

Investigators searched the vehicle and the hotel room where the suspects were staying and turned up $20,000 in stolen property, $5,000 to $10,000 in gift cards, $1,500 cash and more than 100 counterfeit credit cards, Rowe said.

The three suspects spent the day moving north from California, using counterfeit credit cards at several stores in Springfield, Salem, Tualatin, Tigard and Beaverton before they were caught, Rowe said.

“The suspects were buying iPads, iPad minis, iPhones, gift cards, money orders, and high-end clothing,” Rowe said.

Montral Demond Matthews (pictured, center), 27, Melissa Vongphakdy (pictured, right), 22, and Linda Vongphakdy, 24, all from California, were each jailed on charges of aggravated identity theft, organized retail crime, aggravated theft and other crimes. d

Article source: http://www.kgw.com/news/3-arrested-in-Beaverton-for-ID-theft-ring-242625221.html

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Here’s What Identity Theft Will Look Like in 2014

Thursday, January 30th, 2014

At the end of every year, the Identity Theft Resource Center reviews the events in the identity theft world from the previous year and makes predictions on what the future holds for the issue. This year, we’ve changed the format of these predictions to make some bold assertions. 

While we don’t believe that all of these will come true right away, we want to challenge the status quo and get people thinking about what could and should be in 2014. 

Changing How Identity is Defined 

The definition of “identity” will evolve.

Historically, we think of our identity as our personal identifying information (PII) and other tokens that we use for authentication. Our Social Security number, date of birth, driver’s license number and other pieces of information have been the cornerstone of what we believe makes up our “identity.” However, we believe that in 2014 the definition of identity will be expanded. It must begin to encompass the other factors that are used to both identify AND authenticate an individual. 

“Identity” will become a three-legged stool with PII as only one of the legs. Behavior and biometrics will also become part of an individual’s total identity. Behavioral metrics have long been used for both fraud analytics and marketing purposes. We will finally realize that this also constitutes our identity. Biometrics will continue to slowly make it into the mainstream. With the release of their use on the iOS platform on iPhones, others will follow. Will consumers embrace them or shun them? We believe it will vary by generation — that Millennials will wholly embrace them as they become available, while Generations X and Y will slowly adopt the less-intrusive forms (such as airport screening because of the convenience) and the boomers will resoundingly state: ‘You can pry my biometrics from my cold dead fingers.” 

Your Medical Identity: At Risk 

Medical identity theft incidents will surpass all other types of identity theft except for existing credit card misuse. 

This is a bold prediction, but the reality is that the thieves take the path of least resistance. And in no other area are we less equipped to combat the issue. With no central mechanism in place for remediation of medical identity theft, the ease in which thieves can victimize the same person, over and over, is increased. 

Once medical identity theives find a useful identity, they can keep using it for medical treatment as there is no place for consumers to place a single “alert” on their information that will stop further use. Additionally, it is still a widely unknown issue within the general consumer population, and many will have their medical identity used fraudulently without knowing it has even occurred

Statistics Won’t Tell the Whole Story 

Crime rate statistics will continue to give a false sense of security. 

The ITRC pointed out earlier this year that the way we measure property crimes rates is antiquated and in need of revision. The wheels of change turn slowly in this area, and we fully believe that the crime rate statistics will again be released in the beginning of the year and they will indicate that property crime rates have either decreased or stayed relatively flat. The report that is typically referenced as the primary indicator excludes identity theft as a metric. In fact, it excludes all fraud activity, thus we will continue to believe that crime is on the decline, when the opposite is true. 

Mobile Wallets Gone Global? Not So Fast Mobile wallets will be adopted by some, but it will be a long, long time before they become the norm and gain overwhelming popularity — if they ever do. We believe that while many folks don’t mind using their Starbucks app to pay for coffee, or storing a credit card on a specific app for payments, it will be a hard sell to get them to put ALL of their financial information in their mobile device. This is supported by studies and surveys that show a distinct lack of consumer enthusiasm for overall adoption. In a survey conducted by Consult Hyperion in September of last year, 64% of the respondents stated they would not use a mobile wallet system. Smaller percentages said they would use a mobile wallet payment system administered by their bank, or Google (20% and 10%, respectively.) Of course, if industry provides the proper incentives for consumers (i.e. gives them discounts and free stuff) it could reach a tipping point for younger consumers. There may be more traction in 2015, we’ll have to wait and see. 

Accessibility of Fee-Based Financial Tools 

Low- and moderate-income individuals will find themselves further disenfranchised as the financial system continues to grow in complexity.

As more fee-based products and services enter the market (and we believe there are useful and generally legitimate services to those who can afford them) to assist individuals in this very confusing credit/loan/financial services climate, there will be no impetus to simplify the overall process for the common consumer. Individuals who cannot afford to pay for these tools, and who cannot be monetized, will be of little consequence to many in the industry. While some of the “white hat” industry leaders will do what they can to not leave these consumers in the dust, they will be less visible.

It’s the Law (or Should Be) 

Federal Data Breach Notification Laws will finally be enacted. This may be more of us wishing on a star than a reality, but it is so vitally important that we take positive steps in this direction that we just have to believe significant efforts will be made, and it will finally come to pass.

Making Extra-Certain You’re You 

More industries will adopt dual (and multi-) factor authentication in an effort to combat identity theft. At first seen as an inconvenience, the financial services sector has now convinced (most) of its customers that this practice is GOOD for them — and they want it. Many other industries will continue to follow suit. 

Security vs. Convenience 

Privacy/security versus convenience will continue to be hotly debated, but privacy will make huge progress, thanks to the negative attention generated by recent data breach incidents and governmental access to personal information. Consumers will finally start engaging in the dialogue and may begin to wonder if all that convenience is really worth it. The Top Complaint Identity theft will be the No. 1 complaint collected by the FTC consumer Sentinel report for the 14th year in a row. Did we hit the bull’s-eye? Did we miss the mark completely? Only time will tell, but we welcome your thoughts in the comments below. This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

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Article source: http://www.foxbusiness.com/personal-finance/2014/01/29/here-what-identity-theft-will-look-like-in-2014/

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Ex’s ID Theft Thwarts New Couple’s Finances

Wednesday, January 29th, 2014

Dear To Her Credit,

My husband was married before. When he and his ex-wife were still married, she took his Social Security number and got a credit card (without him knowing about it). Then she stopped paying on it.

When they got divorced, the divorce papers said that it’s her debt, and she agreed to pay it off.

Because the card is under his name and Social Security number, it’s causing problems for us trying to buy a house. Is there any way that we can get it off of his credit history?  

– Kim

Dear Kim,

Opening a credit card in another person’s name without their knowledge and authorization is a crime — even when that other person is a spouse. It’s a form of identity theft. Your husband’s ex should have been prosecuted for her actions.

Your husband may have thought that getting her to admit the debt is hers, and putting that in the divorce papers, was enough to take care of the problem. Unfortunately, that’s not true. Creditors are not interested in the contents of divorce papers. They have nothing to do with it. A creditor has a contract with a borrower or borrowers, and nothing agreed to between spouses in divorce court can change that.

The best thing your husband can do, if he hasn’t done so already, is to report this identity theft to the police. This establishes that he did not open the account. Contact the attorney general and police department in your state. He needs a police report to prove he is not liable for this debt.

Your husband can send a copy of the police report, along with a letter of explanation, to the credit card company. He should tell them that he is not responsible for the account because it was opened fraudulently, without his knowledge or consent.

He should also send letters of explanation to the credit bureaus.

Going forward, your husband should make sure his ex doesn’t open more accounts in his name. Identity thieves often strike more than once. He should check his credit reports on a regular basis. He might even want to put a freeze on his credit and alert one of the major credit bureaus (Equifax, Experian or TransUnion), so they put a fraud alert on his name. He only needs to alert one agency — it will alert the other two.

Just one debt like this can mess up your husband’s credit sufficiently to keep you both from moving forward with your financial goals. If the amount of the debt is significant, and you cannot resolve the issue yourself, seek qualified legal advice in your state.

See related: Divorce doesn’t dissolve credit card contracts, 7 big post-divorce money mistakes

Article source: http://www.foxbusiness.com/personal-finance/2014/01/24/ex-id-theft-thwarts-new-couple-finances/

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Alexandra Friedman | Political identity theft

Wednesday, January 29th, 2014

Alexandra Friedman
Friedom of Speech

Growing up in Marietta, Georgia, I was a proud liberal. Like my parents, a blue dog Democrat. At a young age, I didn’t necessarily know what being a liberal meant, but I rubbed it in the faces of my classmates, who, like their parents, identified as conservatives. We enjoyed engaging in debates, as if any of us really knew President Bush’s motivation to invade Iraq or whether or not Al Gore had really won the election. Being a liberal, nonetheless, made me unique. I wore it proudly like a scarlet “L” emblazoned on my being.

In high school, even before I could vote, I felt proud watching President Obama’s inauguration. While my conservative classmates made snide comments about the apparent apocalypse on the horizon, I lauded myself and people like myself for being open-minded, for being liberal. Upon my arrival at Penn in 2011, one of the first things I did was register to vote. My mom used to joke that I would register in Pennsylvania and not my home state of Georgia, so that “my vote would actually count.” Finally, I would be in a place surrounded by other, liberal-minded people like myself.

Being a liberal on a college campus like Penn, however, is not as simple as it was in my conservative hometown. Being liberal used to mean expressing my left-leaning views while also respecting others’ right to express theirs, despite the fact that theirs may differ from mine. The “liberal” I have encountered on this college campus, however, disdains any political ideology that does not align exactly with his or her own.

This is the great paradox of liberalism: Its very name suggests freedom of speech, while in practice, this is not the case. As a liberal, I agree that the murder of Trayvon Martin and the consequent trial was an absolute injustice. However, as a liberal, I also agree with your right to disagree with me.

Being liberal used to mean being willing to engage in debate — it meant that I had a stance, yes, and I held strongly to it. It did not mean, however, that if you agreed with the ruling in the George Zimmerman trial, then you were a racist. I was the one who was supposed to be open-minded, to be liberal — not a name-caller.

The issue, then, is who has come to own the term “liberal.” Much like the term “conservative,” which has been hijacked by the far-right Tea Party movement, the term “liberal” now seems to be owned by the ultra far-left. As liberals, we have become intolerant of intolerance, and a movement that was once multidimensional has become monolithic.

Whereas in the 1960s and 1970s being a liberal meant opposing the Vietnam War and supporting civil rights, a liberal ideology today supports the “Boycott, Divestment and Sanctions against Israel” movement, backing international alienation of America’s strongest ally in the Middle East.

Moreover, the current state of bipartisan politics in the United States reflects the increasing importance of adhering to extremist interpretations of “liberal” or “conservative” in order to retain political support. A moderate political candidate simply would not succeed in this day and age; candidates must espouse extremist political ideologies to even have a chance at winning. The Tea Party movement itself attributed Mitt Romney’s loss in the 2012 Presidential election to his being “too moderate.”

I like to think that I am a liberal in the more classical sense of the word. Moving forward, however, I have chosen to identify as a “moderate liberal,” and I am looking to engage in political discussions with those “moderate conservatives” who similarly see the inherent difficulty in identifying simply as “conservative.”

Perhaps we will both walk away, our minds unchanged, but more knowledgeable. Perhaps we will walk away more passionate about the beliefs we already held. Perhaps together we can make more progress and identify solutions to the most pressing issues we face today, something our colleagues and elected representatives seem to have forgotten about.

Alexandra Friedman is a College junior from Marietta, Ga. studying diplomatic history. Her email address is alfrie@sas.upenn.edu.

Article source: http://www.thedp.com/article/2014/01/political-identity-theft

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Pair arrested in Burbank on suspicion of ID theft, other offenses

Wednesday, January 29th, 2014

A man and woman in a stolen truck were arrested Saturday morning after police discovered burglary tools, drugs, birth certificates and Social Security cards in the car, police said.

Police spoke with Pamela Toftee, 28, and Kevin Aide, 21, both of Victorville, in the 100 block of South Lamer Street, where they had parked the truck, said Burbank Police Sgt. Darin Ryburn.

Police ran a search on the vehicle and discovered it was reported stolen.

When police searched the truck, they found tools, suspected methamphetamine and the identifying information for five victims, including Social Security cards and credit card bills.

Police on Monday were reaching out to the identity-theft victims.

The pair were arrested on suspicion of identity theft, along with possession of methamphetamine and burglary tools.

Follow Alene Tchekmedyian on Google+ and on Twitter: @atchek.

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Article source: http://www.burbankleader.com/the818now/tn-blr-pair-arrested-in-burbank-on-suspicion-of-id-theft-other-offenses-20140128,0,744429.story

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St. Paul woman convicted in ID theft ring gets 6 years

Wednesday, January 29th, 2014

A woman who worked with three co-defendants in an identity theft scheme was sentenced Tuesday to more than six years in prison.

Kristin Renee Warren, 40, of St. Paul had been living as a mother and military veteran with a good job at the University of Minnesota, her attorney, Nicole Kubista told the court.

That world fell apart when she started to use methamphetamine, Kubista said.

Warren pleaded guilty Oct. 8 to one count of identity theft.

“I’m sorry for my actions,” she told Ramsey County District Judge George Stephenson. “If I could change it, I would.”

“You can’t,” replied Stephenson, who sentenced her to six years and three months in prison.

At her plea hearing, Warren admitted she had more than 350 victims’ identities in her possession in the summer of 2012. She gave the names to co-defendant Shauntell Burg; Burg, 32, would “order stuff online,” and they would both pick up the merchandise, Warren said.

Burg also pleaded guilty; her sentencing is scheduled for Thursday.

Co-defendant Roxanne DeFlorin, 50, was convicted by a jury Jan. 22. She obtained some identities through her former job at the state Department of Labor and Industry. Her sentencing is scheduled for March 14.

Andrea Leigh Gunderson, 30, also purchased and picked up items bought with stolen identities, then pawned many of the items. She was sentenced in December to 6-1/2 years in prison.

Emily Gurnon can be reached at 651-228-5522. Follow her at twitter.com/emilygurnon.

Article source: http://www.twincities.com/crime/ci_25012273/st-paul-woman-convicted-id-theft-ring-gets

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‘Real Housewives of Atlanta’ Husband Charged With Fraud, Identity Theft

Wednesday, January 29th, 2014

By ABC News

 

ABC News’ Sandra Lee reports:

The “Real Housewives of Atlanta” is known for the over-the-top lifestyles and personalities of its leading ladies. But lately, it’s the real drama off-camera that has everyone talking.

The most recent scandal involves potential jail for the husband of one of the stars.

Phaedra Parks’ husband, Apollo Nida, was arrested and charged with bank fraud and identity theft.

According to federal court documents, Nida is accused of depositing millions in “stolen and fraudulently obtained checks,” “auto loan proceeds” and “US treasury checks” issued as tax refunds into some 40 bank accounts that had been opened allegedly using “stolen identities.”

“This is a really big deal for Apollo,” certified family law specialist, Steven Mindel, who is not connected to the case, told ABC News. “Any time that the federal government files criminal charges against you, you can expect they’re looking for jail time.”

The feds seized Nida’s laptop containing what court documents say are more than a thousand pieces of evidence potentially linking him to the alleged crimes.

He was released on $25,000 bond and is due in court next month.

This isn’t Nida’s first run-in with the law. He served time for racketeering charges before being released in 2009, something his wife has publicly addressed.

“Of course my husband did have a past,” Parks said on HLN last June. “Like I say on my show, ‘Every sinner has a past, every saint has a future.’”

But Parks, an attorney by trade who’s represented celebrities like Bobby Brown, has yet to speak out on her husband’s latest legal drama. The Bravo network isn’t commenting either.

The couple, married for four years with two small children, has been plagued by rumors of Nida’s marital infidelity as documented on the show, something he denies.

Just days ago on Bravo’s “Watch What Happens Live,” Nida defended his marriage.

“I love my wife and she’s been so supportive and I really love her and appreciate her for everything she’s done,” he said.

ABC News reached out to Nida but hasn’t heard back. We also reached out to Parks, but she has no comment at this time.

A preliminary hearing for Nida is set for Feb. 12. Incidentally, Parks and Nida joined the reality show six months after he was released from prison for those racketeering charges.

Article source: http://abcnews.go.com/blogs/business/2014/01/real-housewives-of-atlanta-husband-charged-with-fraud-identity-theft/

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Tis The Season For Tax Identity Theft

Wednesday, January 29th, 2014

“Identity Thief” is a 2013 movie starring Jason Bateman and Melissa McCarthy about a woman who steals the identity of a man named “Sandy.”  After the McCarthy character steals the Bateman character’s identity, all types of high-jinx ensue.

In real life, identity fraud is a very serious matter that frequently ruins the credit of the victim and takes a great deal of time and effort to resolve.  With the 2013 tax filing season starting on January 31, 2014, the season for tax identity fraud is also upon us.

Stolen identity refund fraud (SIRF) is a subset of identity theft that involves the criminal stealing the tax “identity” of an individual.  Similar to any identity fraud, a criminal committing tax identity fraud obtains key information about the victim.  In the tax context, the key is obtaining the individual’s name matched with his or her social security number.  Once that is obtained, the SIRF thief submits a false tax return in the name of the victim claiming a tax refund.  Unfortunately, in many instances the refunds are issued.

The fraud may be discovered when the unsuspecting victim files his or her own return and discovers that the IRS will not issue a refund because a return has already been filed under their social security number.  It can be very difficult for the individual to get this straightened out with the IRS once the tax identity theft has been committed.  Like other identity theft, tax identity theft frequently causes the victim a number of problems including damaging credit ratings, and reducing state or federal benefits.

The victims of tax identity fraud are frequently the elderly, or individuals collecting subsistence payments who are not required to file federal income tax returns.  For the elderly and those who are not required to file tax returns, it may take much longer for such individuals to discover that they were victims of tax identity fraud.  Nevertheless, the fraud may impact those individuals by reducing state or federal benefits.

In September 2013, Treasury Inspector General for Tax Administration (TIGTA) issued a report on the IRS’s efforts to combat tax identity theft.  While TIGTA found that the IRS has taken a number of positive steps to combat SIRF and that the IRS’s expanded efforts in identifying tax identify theft cases have been working, TIGTA also noted that the IRS still issues billions of dollars in fraudulent refunds to tax identity thieves.

The IRS and Justice Department have clearly made combating tax identity fraud a high priority.  On September 27, 2013 Kathy Keneally, Assistant U.S. Attorney for Taxes stated that the Justice Department along with the IRS has made a commitment to crack down on stolen identity refund fraud, and to prosecute the perpetrators of tax identity fraud to the full extent of the law.[1]

There have been a number of tax identity theft prosecutions in 2013, and the convictions have been highly publicized.  The Justice Department hopes that the prosecution and imprisonment of tax identity thieves will create a significant deterrent to others contemplating tax identity theft.[2]

The IRS has also been active in fighting identity fraud.   The IRS has a section on its website www.irs.gov devoted to preventing identity fraud.  The IRS also has 3,000 fulltime employees working on identity fraud cases in 2013, nearly double the number that it employed in prior years.  In addition, the IRS has trained more than 35,000 of its employees to help taxpayers deal with identity fraud.

The Service has also instituted a special taxpayer identification number, the Identity Protection Personal Identification Number or IP PIN, that is assigned to an individual to show that they are the person entitled to file a federal tax return.

The IRS Criminal Investigation Division investigates reported identity thefts, and the IRS is working closely with the Justice Department to expedite the investigation and prosecution of identity fraud.

Individuals who suspect that they have been victimized by tax identity fraud can file an “IRS Identity Theft Affidavit”, Form 14039, to report the suspected identity theft.  The IRS will institute an investigation of the alleged identity fraud and will work with the taxpayer to resolve the matter and straighten out the individual’s federal income tax accounts.   The IRS website estimates that it may take up to 180 days to resolve a tax identity fraud case, but taxpayers experiencing the process tell of delays exceeding a year.  The IRS is working to reduce that time.

A criminal who obtains an individual’s name and social security number may attempt to commit other financial crimes in addition to tax refund fraud so the problem may go beyond the issue with the IRS.  For example. the criminal may attempt to use the information to obtain credit cards or loans using the victim’s identity.  This additional identity fraud can destroy a victim’s credit preventing the victim from obtain mortgages or any type of consumer credit.

The following are some helpful hints to help minimize the risk of being victimized by identity fraud (some of which were taken from the IRS website): (1) shred any documents with your social security number or other sensitive information, including copies of bills, older bank statements, and older tax return information such as copies of old tax returns and Forms W-2, (2) avoid giving out personal identification information over the phone and via the internet when possible; only give out such information when it is absolutely necessary, and only on secure websites, (3) don’t carry social security cards on your person, for example in a wallet or purse, as those items might be stolen, (4) secure social security cards, tax records, and other personal information in locked file cabinets within your home, (5) protect your computers against hacking and unauthorized access by using firewalls, and security software, and change your passwords for internet accounts periodically, and (6) monitor your credit reports for any unusual activity and contact the credit reporting agencies if you see any suspicious activity.[3]

By taking these precautionary measures, individuals may reduce the risk they will be victimized by tax or other identity theft.  It is better to invest some time to be vigilant in preventing identity theft than to have to deal with the significant issues that result from being the victim of identity theft.  However, if you are the victim of tax identity theft, contact the IRS and fill out the IRS Form 14039 as soon as possible to expedite the process of clearing your tax accounts.

Here’s wishing you a successful tax filing season without any mischief in your tax filings or any other form of identity theft.


 

[1]  Ms. Keneally was speaking at the Villanova Law Review — Norman J. Shachoy Symposium at Villanova Law School.

IRSlogo

Article source: http://www.forbes.com/sites/irswatch/2014/01/28/tis-the-season-for-tax-identity-theft/

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Four Jailed in Puerto Rico for Identity Theft

Tuesday, January 28th, 2014

Four men were recently sentenced to prison for their involvement in trafficking the identities of Puerto Rican U.S. citizens.

According to court documents, members of the conspiracy located in Puerto Rico obtained Puerto Rican identities and corresponding identity documents, after which other conspirators in cities throughout the U.S. sold Social Security cards and birth certificates, which they ordered from document suppliers in Puerto Rico, for $700 to $2,500 per set. Some of the documents were used to commit financial fraud.

The four conspirators recently sentenced were operating as identity brokers in Columbus, Ohio; Seymour, Ind.; Lilburn, Ga.; and Albertville, Ala.

Domingo Pablo Gutierrez, 52, was sentenced to 30 months in prison to be followed by three years of supervised release, and ordered to forfeit $40,000 in proceeds. Gutierrez pled guilty on August 22, 2013 to one count of conspiracy to commit identification fraud and one count of conspiracy to commit human smuggling for financial gain.

Moises Lara-Ceballos, 38, was sentenced to 54 months in prison to be followed by three years of supervised release, and ordered to forfeit $422,793 in proceeds. Lara-Ceballos pled guilty on September 20, 2013 to one count of conspiracy to commit identification fraud, one count of aggravated identity theft, and one count of illegal reentry after deportation.

Juan Quero-Mendez, 28, was sentenced to 36 months in prison to be followed by three years of supervised released, and ordered to forfeit $17,180 in proceeds. Quero-Mendez pled guilty on September 20, 2013 to one count of conspiracy to commit identification fraud and one count of conspiracy to commit human smuggling for financial gain.

Adonis Ramirez-Segura, 54, was sentenced to 22 months in prison to be followed by three years of supervised release. Ramirez-Segura pled guilty on September 20, 2013 to one count of conspiracy to commit identification fraud and one count of Social Security fraud.

Gutierrez, a Guatemalan national, and Lara-Ceballos and Quero-Mendez, both Mexican nationals, will also be deported from the U.S. following the completion of their sentences.

Photo courtesy of Shutterstock.

Article source: http://www.esecurityplanet.com/network-security/four-jailed-in-puerto-rico-for-identity-theft.html

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Cost has US banks stalling on ID theft deterrent

Tuesday, January 28th, 2014

The fraud occurred in mid-November, so it was apparently unrelated to the digital break-in at Target, which began after Thanksgiving and resulted in the card numbers and personal information of up to 110 million customers being accessed by hackers.

And it was apparently unrelated to the hack attack on Neiman Marcus, which began last summer and resulted in at least 1.1 million customers’ card numbers being jeopardized.

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But that’s little comfort to Padow, 36, of the San Fernando Valley.

“You feel like you’ve been invaded,” she told me. “You feel threatened. You immediately have to drop everything and spend many hours trying to stop this from happening.”

Businesses clearly need to be doing more to safeguard customers’ personal information. I recently proposed that all corporate databases be encrypted and other security measures be put in place. I also called on lawmakers to impose hefty fines on any company that fails to protect people’s info.

But that’s only half the battle. What’s also needed is an overhaul of credit and debit cards to make them less vulnerable to fraud.

And we’re not talking rocket science here.

All we need to do is follow the example of about 130 other countries that have abandoned magnetic stripes, or mag stripes, on credit cards and equipped their plastic with harder-to-hack security chips. They also require that all card transactions include a personal identification number.

Everyone seems to agree that the United States needs to join the chip-and-PIN party. Frustratingly, though, various business interests are squabbling over who should foot the bill, rather than focusing on the best way to protect American consumers.

Chip-and-PIN cards became widely used in Britain a decade ago. Since then, fraud losses from counterfeit cards fell more than 63%, according to a 2012 study by the Federal Reserve Bank of Atlanta.

During the same period, the study found, the fraud rate involving mag stripe bank cards in the United States increased 70%.

“With a clear pattern of fraudsters targeting non-chip transactions, the United States faces a significant risk of continued escalating fraud as long as the payments industry relies on mag stripe technology,” the Fed bank study concluded.

The National Retail Federation supports a switch to chip-and-PIN cards. The industry group sent a letter to congressional leaders last week calling for an end to America’s use of “easy-to-hack 1960s technology.”

“For years, banks have continued to issue fraud-prone magnetic stripe cards to U.S. customers, putting sensitive financial information at risk,” said Matthew Shay, president of the federation.

Adding insult to injury, he said, U.S. banks don’t hesitate to tout the security benefits of chip-and-PIN cards for their customers in Europe and elsewhere.

The banking industry recognizes a need for change. It just doesn’t want to be saddled with the full cost of implementing a new credit card system nationwide.

Banks want retailers to help pay the tab, which could run as much as $8 billion to issue new cards and upgrade card readers in stores.

“Much has recently been made about the ongoing disagreements between the retail community and the banking industry over who is responsible for protecting the payments system,” Frank Keating, head of the American Bankers Assn., said in a letter to Congress after the Target hack was revealed.

“In our view, it is a shared responsibility of all parties involved,” he said.

Article source: http://www.latimes.com/business/la-fi-lazarus-20140128,0,2146390.column

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