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Crime and Fraud
Thursday, May 1, 2008
Personal insult

The United States Federal Trade Commission estimates that up to nine million Americans have their identities stolen each year. Similarly, the US Justice Department estimates that up to 3.6 million households are affected by identity theft annually.

“The South African Fraud Prevention Services reports that business here lost R276 million to identity theft-related fraud in the first three months of 2008 alone, a substantial increase on the 2007 figures”, says Gari Dombo, Managing Director, Alexander Forbes Insurance.
In South Africa credit cards make up the bulk of crimes classified as identity theft - as opposed to the more serious crime of having your identity stolen. “So, while actually having your identity stolen is less likely than having your credit card nicked, the one tends to lead to the other.”
The fraud chain usually begins with the theft of documents like your credit card, driver’s license, passport or ID book. In time victims fail to receive letters that they are expecting from their banks. Or, when applying for state benefits, they are told they have already claimed them. Similarly, they often find their loan or credit card applications turned down despite having a good credit history.
“And, certainly, the results of criminals opening accounts in your name, or getting false identities for themselves or other criminals using your personal details can be devastating,” he observes.
Once criminals have your information, they can register new credit or bank cards and run up debt in your name. They can take out loans or apply for new passports or identity documents, using your identity for criminal activity. They can rent an apartment and open a telephone account using your details. Fraudsters could even give your name to the police if they are arrested. If released on bail, any future arrest warrants would also be in your name.
Usually, says Dombo, “By the time you discover you have become a victim of identity theft the situation could be much worse than it first seemed.”
If you ever suspect that your identity has been stolen, it is critical you contact your bank immediately. Financial institutions should be able to help you alert credit bureaus and direct you to the appropriate resources. This, though, says Dombo, “is only the beginning of an often long and expensive process of reclaiming your identity, clearing your name and restoring you credit worthiness.”
The costs of restoring your identity include:
• Lost wages due to the months and sometimes years it takes to clear your name and regain your fraud-free legal status;
• Administrative expenses such as phone bills, certified mailing and notary costs etc;
• Legal fees to defend actions against creditor or collection agencies for debts incurred without your permission;
• Liability cover, allowing you to pay creditors where liability is incurred without your permission;

Dombo says “There is no sure way of preventing identity fraud, but there are steps you can take to minimise the chances of it happening to you.” These include:
• Not carrying extra credit cards;
• Cancelling any accounts you don’t use;
• Regularly checking credit reports for unauthorised activity;
• Check your credit card and bank statements every month;
• Shred or destroy papers containing sensitive financial information or identifiers. Don’t simply throw them into the bin;
• Guard your identity and account numbers. Only provide information necessary to facilitate a transaction you initiate or when you apply for credit.

While these precautions and immediate responses are important, Dombo adds that, “Since we part with details of our identity on an almost daily basis it is impossible to ensure you never become a victim of identity fraud.
Problem compounded by indecision
ID theft and fraud is unnecessary
Meanwhile, it gets worse: ID fraud trends have moved away from opportunistic criminals to professional fraudsters who are ‘e-enabled’. Technology and methods conducive to fraud have increased exponentially over the past decade. Sophisticated duplicating facilities such as colour copiers, high definition scanners and colour printers are more accessible and generally available world-wide, making it easier for criminals to commit identity theft or falsify electronic information and documents.
However, during this time the implementation of methods to counter this type of fraud have remained mainly unchanged. This provides a breeding ground for fraud and fraudsters, says Jans Wessels, Managing Director of the Dex Group of companies.
But the problem can now be solved by the implementation of encoded data with a document, confirming its legible part. This will make the forging of identity documents, passports, vehicle licences, degrees and certificates, admission tickets, as well as electronic information and documents, almost impossible and enable the man in the street to verify information accurately.
Large companies are fairly well-equipped to combat various types of fraud. But the time must come when the technology becomes accessible to individuals too. New technology utilises encoding techniques which allow anyone to decode and read the information, while the document can only be set up by its author who knows the required code. The so-called public and private key or PKI technique ensures that the origin of the document can be determined.
It is virtually impossible to enter a place such as the Koeberg nuclear power plant or a platinum mine unauthorised, because one’s identity is verified and tested in a variety of ways. On the other hand, it is possible to enter almost any ordinary office by wearing a false Telkom ID, because nobody knows how to verify its legitimacy.
To safeguard a paper document, encoded information has to be part of that document and must be easily decoded by available equipment in order to verify the validity of the document.
For example: Documents are provided with an encoded two-dimensional symbol. This symbol contains all the data which is on the document in an encoded format. It can then be read by means of ordinary communication equipment such as a fax machine, e-mail or even a cellphone. The information on the barcode is decoded and compared with the information on the document, to establish whether the contents have been tampered with, and to verify the author of the document.
A Unisa degree, for instance, can now be verified in this way, without any need to link up with the university’s data base or any other central information store. So, when someone presents his/her degree or certificate for whatever purpose, the document with the symbol can immediately be verified via cellphone, fax or internet to determine the true name, ID number, qualification, name of the university and a myriad of other information pertaining to the lawful owner. All that is now required, is that institutions and organisations start utilising the technology.
According to Alexander Forbes in South Africa, identity fraud and theft is becoming increasingly sophisticated with hackers accessing personal details of their victims over the internet.
Reuters says the rise of organised cyber-crime has led to a near 70% surge in the number of people falling victim to identity fraud.  Credit reference agency Experian warns of the “industrialisation” of identity fraud – the escalating involvement of organised criminal gangs. ID fraud trends have moved away from opportunistic criminals to professional fraudsters who are “e-enabled, IT savvy and anti-social networked.”

Copyright © Insurance Times and Investments® Vol:21.4 1st May, 2008
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