Identity Theft

Identity Theft

 

 

 

Concept Paper

Research Description

This paper discusses the high incidences of identity theft and the various factors that have brought about the occurrence of this phenomenon. It is noted that the internet has played a significant role, if not the greatest, in the occurrence of identity theft. The paper will discuss the role of the internet in enabling this vice especially against unsuspecting individuals. The surveys and information provided by the Federal Trade commission will be effective in developing the content for the subsequent research paper on identity theft and its prevalence in the united states and more so around the world.

The paper will utilize the victimization surveys as well as the database of consumer complaints collected from the Federal Trade Commission (FTC). It is also critical to understand that identity theft is not a crime that is perpetuated alone, but rather is followed by other criminal activities such as financial crime against financial institutions, corporations, individuals, and government agencies. Furthermore, it is also critical to evaluate other factors associated with incidences of identity theft and the overall effect of such considerations on identity theft.

The discussions in the subsequent research paper will include the need for use of biometric identifiers in organizations and financial institutions. Additionally, the paper will provide a detailed discussion over the need for new measures to curb incidences of identity fraud as well as the subsequent costs to the government, taxpayers, and business community for new legislations approving the biometric measures. The discussions are also aimed at illustration of the growing risk of identity theft because of technological advancements. Furthermore, the paper will also discuss countering the increasingly sophisticated modern identity theft, which demands the need for proactive techniques to ensure technical safety from such frauds.

The proposed research will be used to illustrate the propensity of identity theft against organizations and individuals in both developed and developing markets. Furthermore, it will also be used to illustrate that identity theft is a phenomenon that occurs together with other crimes. Identity theft is usually propagated with an aim of facilitation of other criminal activities such as fraud and financial crimes against entities such as business, individuals, governmental agencies, and financial institutions with the primary aim of enriching an individual or group of individuals. Reports indicate that incidences of identity theft have increased dramatically for the past decade, which is attributed to advancements in technology. The discussion is founded on the data indicative that identity theft was termed as the sixth most prevalent form of suspicious activity after other crimes such as money laundering, check fraud, loan fraud, credit card fraud, and counterfeit checks in their respective order.

Statement of Research Question

What is identity theft and its prevalence in the United States and global economy?

The answers to this question will include the prevalence, occurrence, contribution factors, deterrents, protection, and cautionary measures.

Importance

The need to understand identity theft is due to the rates or prevalence of this vice especially against unsuspecting individuals, corporations, and governments. It is critical to understand identity theft and the precautionary measures, which an individual can undertake to ensure safety of one’s identity. Furthermore, the evaluation of the incidences of identity theft is critical in understanding the phenomenon and the strategies and measures one can take in ensuring safety of one’s identity.

Plan

The research paper will utilize 10 sources of information primarily in the form of reports and scholarly work and recent texts. This is founded on the need to collect adequate, reliable, and extensive information over the occurrence, prevalence, and mitigation strategies against incidences of identity theft and subsequent crimes associated with this vice. An in-depth literature review of appropriate resources will be utilized as the basis for this study due to a variety of limitations. In addition, the literature forms a critical part of this research paper given that all information utilized will be derived from the 10 selected sources.

The information provided in the resources is adequate and effective in enabling the audience to understand the occurrence or incidences of identity theft in modern society. Some of the ethical issues to consider in development of this paper include the incidences of plagiarism. It is critical to ensure that all information used is adequately referenced and cited to ensure that the paper is effective in addressing the incidences of identity in modern society. in addition this study will also take into consideration various

Statement of Limitations

Some of the limitations associated with this study include the reliance only on secondary sources of information mainly the form of literature such as government agencies’ reports, scholarly articles, and texts. The time and costs associated with conducting surveys are beyond the scope of this research. Furthermore, the study only uses information from other studies and does not use primary techniques in evaluation of identity theft. Further research should focus on providing detailed categorization of the primary forms of identity theft attacks. It should be made up of detailed recoding of the appropriate evidence associated with the respective crimes. Additionally, it should take into consideration the emergence of new technologies for identification, location, and extraction of such evidence to aid investigations and mitigation of risks associated with identity theft.

 

 

Research Paper

Introduction

Research indicates that identity theft is a phenomenon that occurs together with other crimes. Identity theft is usually propagated with an aim of facilitation of other criminal activities such as fraud and financial crimes against entities such as business, individuals, governmental agencies, and financial institutions with the primary aim of enriching an individual or group of individuals. Reports indicate that incidences of identity theft have increased dramatically for the past decade, which is attributed to advancements in technology. Identity theft was termed as the sixth most prevalent form of suspicious activity after other crimes such as money laundering, check fraud, loan fraud, credit card fraud, and counterfeit checks in the respective order.

The Suspicious Activity Report (SAR) from the year 2009 notes that there was a 123% increase in the number of suspicious activities compared to the number recorded in the year 2004. The report also notes that 865 of the samples from the depository institution SAR described identity theft through either identify theft related to keywords or identity theft suspicious activities. The additional filings only provided partial descriptions of identity fraud coupled by insufficiency of information for confirmation of identity theft. Credit card fraud was termed as the most common form of suspicious activity that is characterized with identity theft. It was present in more than 45.5% of all the sample filings (Federal Trade Commission (FTC), 2010). In an estimated 30% of all the fillings indicated the successful takeover of a credit account whereas 17% indicated that there was success in unauthorized setting up of new credit accounts with a thief adding their names to an account as authorized users.

In addition, it is noted that there are various forms and stages associated with identity theft. The most common form of identity theft is credit card fraud, which takes a variety of forms. The three stages are identified as acquisition, use, and subsequent discovery by the cardholder or card issuer. Use of another’s identity is usually driven by financial gain, avoidance, arrest, or veiling one’s identity from law enforcement. Crimes in the use stage may also cover account takeover, usage of debit accounts, opening of new accounts, sale of identity information in black markets, and the acquisition of other identity documents such as passports, visas, health insurance, and driver’s license.

Discovery stages of identity may be discovered rapidly given that advanced cases may take long periods to identify. This is related to the differences in the level of reports by individuals of incidences of victimization. Research is indicative that the elderly, uneducated are usually at high risks given that they take relatively longer periods to report such crimes as compared to young and educated parties. Longer reporting periods are highly correlated to increased risks of loss and suffering by a victim (Federal Trade Commission (FTC), 2010). Furthermore, it is also critical to note that the poor are usually at a higher risk of loss and suffering given that they are also affected by various factors such as illiteracy and social disorientation.

Law enforcement agencies note that that identity theft and related crimes are a challenge to identify because of the difficulty in providing a definition of identity theft given its relation in other crimes. Some agencies lack adequate capacities to record identity related crimes because of lack of training and infrastructure deficiencies. Secondly, this is also attributed to cross-jurisdictional nature associated with identity theft making it a challenge to arrest the culprits. Thirdly, victims usually report such incidences to agencies such as banks and credit issuing entities as opposed to law enforcement agencies. This is indicative of the need to enhance the systems for reporting of identity theft crimes and enabling networks between entities, victims and law enforcement authorities.

Literature Review

Hedayati (2012) in An Analysis Of Identity Theft: Motives, Related Frauds, Techniques And Prevention provides an analysis of the major criminal activities that usually give rise to identity theft and fraud resulting in losses of property for individuals, business, corporations and state agencies. He notes that individuals and organizations should be vigilant towards protection of their respective identities to prevent fraud. From this paper, the author refers to the Federal Trade Commissions report that 9.9 million individuals in the United States were victims of identity theft in the year 2008, which is a 22% increase as compared to the year 2007. in addition the author notes that identity theft costs individuals an estimated $50 billion dollars annually based on statistics collected in the year 2010 (Federal Trade Commission (FTC), 2010).

Hedayati (2012) notes that the attempts towards changes in policies and regulations to counter identity theft have been unsuccessful given that the incidences of this crime have increased significantly. He defines identity theft as, “the preliminary steps of collecting, possessing, and trafficking in identity information for the purpose of eventual use in existing crimes such as personation, fraud, or misuse of debit card or credit card data”, which is a definition that is provided by the United States department of justice. He adds that identity thieves usually focus on 12 distinct types of information namely,

1. Credit card numbers
2. CW2 numbers (the back of credit cards)

• Credit reports

1. Social Security (SIN) numbers
2. Drivers’ license numbers
3. ATM numbers

• Telephone calling cards
• Mortgage details

1. Date of birth
2. Passwords and PINs
3. Home addresses

• Phone numbers

It is also evident that identity theft is relative to incidences of fraud and results in significant losses by the victims who include individuals, businesses, corporations, and governmental agencies. Hedayati (2012) also provides data from incidences of fraud in other countries such as Canada and the United Kingdom. He notes that the Canadian businesses, consumers, financial institutions, creditors incur loss of more than USD$2billion annually because of identity theft. Additionally, the United Kingdom’s Fraud Prevention Service (CIFAS) provides that identity theft in the United Kingdom has grown significantly and brought about losses of more than £1.7 billion annually as per data in the year 2010.

It is also evident that identity theft is a major crime especially in developed economies given that it results in numerous losses. Furthermore, it is important to note that effective avenues for protecting corporations and individuals are critical given the costs and time associated with repair and recovery of losses and damages on reputation, careers, and credit rating. He analyses a variety of factors, which he terms as critical in understanding the incidence of identity theft (Hinde, 2004). The factors are outlined as political, economic, social, and technological, which he associates with the high prevalence of identity theft.

Political and economic factors are associated with identity theft whereby the economic stability witnessed in developing economics provides adequate opportunity for incidences of identity theft. He notes that political and economic issues such as poverty and political instability make developing economies easy targets for identity thieves. In addition, this breeds illegal immigration to developed countries such as the United States resulting in incidences of identity theft as immigrants struggle to survive in foreign countries. Social factors such as communication avenues such as social media and the internet make users immediate targets from identity theft.

Social knowledge possessed by individuals, companies, institutions over avenues for protection of confidential data play a critical role in incidences of identity theft. Furthermore, sharing information such as passwords, banking information with family members, friends, and colleagues may place individuals at risk of identity theft. Technology is a critical factor that has contributed towards the high incidences of identity theft around the world. Technological advancements have increased the risk of confidential information and more so privacy of individuals. The emergence of new technologies has also increased the risk of identity theft given the changes in management of confidential information. The internet has emerged as a frontier for accessing private information and more so a platform for sale of confidential information such as bank data and corporate secrets.

Hoofnagle (2009) provides a discussion over the prevalence of identity theft despite technological advancements, which have brought about sophisticated tools for detection of fraud. He notes that the lack of control of confidential personal information has been a critical factor in the increased incidences of identity theft. The author explores a number of identity theft incidences. He notes that the identity theft problem is not limited to the financial sector but extends to other sectors such as healthcare, which has become a critical target by fraudsters. Hoofnagle (2009) notes that theft is also inclusive of credit applications and associated materials with an aim of enabling fraudsters or identity thieves with avenues for understanding the authentication processes for credit or healthcare insurance applicants.

The author notes that business risk is a normal occurrence. However, the incentives associated with the credit industry as well as competition within the credit markets provides an appropriate for identity thieves and fraudsters to utilize for various criminal activities. A majority of the debate has been centered on the need for enhancement of technical security measures by individuals and businesses. For instance, there have been suggestions on the need to incorporate biometric measures for payment systems. He adds that the incidences of identity theft are associated with misalignment of incentives especially within the financial sectors. The risk of issuing credit to impostors is usually distributed between the merchants and victims. Victims usually pay both directly and indirectly in the form of funds and time used to remedy the losses from the fraud.

Whitely et al. (2007) in Reflections on the Academic Policy Analysis Process and the UK Identity Cards Scheme, the authors’ emphasize on the need for introduction of biometric identifiers in institutions in the United Kingdom. The article provides a detailed discussion over the need for new measures to curb incidences of identity fraud as well as the subsequent costs to the government, taxpayers, and business community for new legislations approving the biometric measures. The article is an effective source of information as it illustrates the growing risk of identity theft as a result of technological advancements. The need to reevaluate policies by engaging policymakers is critical in ensuring that issues related to identity theft are addressed adequately. Furthermore, the emergence of biometric measures would be effective in ensuring safety in institutions in the United Kingdom. This is indicative that addressing identity theft should start with analyses of existing policies and regulations and the ability of such to safeguard privacy and confidential information for individuals in the country.

Collins (2003) in Business Identity Theft: The Latest Twist, the author notes that identity theft has grown to become a significant threat to modern day businesses. The article provides a detailed discussion of the trends regarding identity theft in the business world. He notes that identity theft is a two-part form of crime. It involves acquisition and use of information with the primary aim of impersonation of the victim for fraudulent purposes. Modern business and consumers are prime targets for identity thieves given that it assumed that their private financial information is critical for fraudulent activities. In addition, business executives are also at risk of identity theft given their immediate associations with businesses. The article is indicative that consumers and business are critical targets for identity theft. Furthermore, this demands the need for organizations and more so consumers to adopt new measures to counter the threats posed by fraudsters.

Angelopoulou et al (2007) in Online ID theft techniques, investigation, and response provides a detailed description of the incidences of online identity theft. The authors note that online identity theft has grown to a critical platform for fraud. Limitations in end-user awareness, retention of personal data and more so processing large amounts of confidential information by businesses without adherence to strict security and regulatory standards provides fraudsters with numerous opportunities for identity theft. Identity thefts in its three forms identity cloning, criminal, and financial theft have become prevalent as a result of the emergence of new technologies around the world.

Angelopoulou et al (2007) highlights a variety of techniques utilized in the propagation of identity theft. Such techniques include social engineering, burglary, household searches, and identification of deceased individuals. It is also evident that identity theft has become sophisticated with the use of computers to obtain and alter private information. The primary forms of internet related identity theft include phishing, web-spoofing, malicious software, biometric circumvention and identity cloning. This is indicative that the identity theft problem has grown because of the advancements in technology brining about the emergence of new techniques.

Analysis

From the literature review, it is evident that identity theft is an issue for concern for all individuals, businesses, corporations, and governmental agencies. This is because the prevalence of identity theft is a risk to investments, businesses and more so the stability of markets. Fraudsters usually focus on vulnerabilities that may be manifested in organizational databases, social networks, as well as personal interactions. In addition, online theft is a new form fraud, which renders forensic investigations on identity theft unable to counter this threat. The challenge is that computers only provide logical locations of fraudsters as opposed to providing physical or geographic locations of such parties.

Identity theft can also be propagated through phone calls as in the case of the United Kingdom. This is indicative that modern avenues of communication such as telephones, social medical, and electronic mail are risky for individual, business, and organizations. Organizations and individuals should focus on the primary and hidden avenues that fraudsters may use to obtain critical information for identity theft and associated crimes. The Federal Trade Commission provides that individuals should demand copies of credit reports from credit card bureaus with an aim of verification of the information held. Additionally, personal information in domestic settings should be retained in secure areas. Furthermore, in workplaces, there is need to ensure that parties provide only basic information , as well as ensuring restricted access to critical business and personal information of the employees.

It is important to note that the threat to confidential information and risk of identity theft is usually from within an organization. Organizations are usually unable to counter identity theft given that they are usually orchestrated by employees with critical understanding of the security measures and standards established by an entity to safeguard critical business and personal information. A majority of organizations are usually unable to cope with internal threats even in incidences when an employee unintentionally or unknowingly gives out confidential information to unauthorized parties. Thus, the protection of client information for modern organizations is beyond compliance and extends to protection of the interests of an entity.

Adoption of detection controls such as authorization, whistleblower hotlines and internal auditing that provide employees with information over the potential risk, or occurrence of fraud is critical for modern organizations given the emergence of numerous risks to organizational information (Gerard, Hillison, & Pacini, 2004). Additionally, the technological advancements demand that organizations adopt automated detection systems that are capable of processing large volumes of data and identifying suspicious activities based possible patterns. Such systems are capable of internal and external evaluations to ensure that corporate information is protected from possible threats. Furthermore, protection should also be inclusive of appropriate authorization for access and disposal of critical client information to ensure optimized safety for the customers and more so the organization.

It is critical to note that identity theft has grown because of technological advancements. Technological advancements have resulted in storage of confidential information in databases, which makes them easily accessible by fraudsters in remote locations or even within organizations (Gerard, Hillison, & Pacini, 2004). This demands that forensic investigators and auditors should adopt new tools to counter and cope with increased risks associated with technological advancements. It is also important to note that identity theft for purposes of propagating medical, resume, tax, and mortgage are increasingly becoming common crimes that arise from identity theft.

Conclusions

It is evident that identity theft has evolved over the years, primarily due to emergence of new technologies. The evolution of identity theft presents a challenge for individuals, businesses, corporations, governmental agencies, forensic investigators, auditors, and policymakers. It is noted that identity fraud affects nearly 10million Americans annually. The failures by policmakers to address such concerns are indicative of the irony of regulations in the country to counter identity theft. The irony arises from failure by the policymakers to curb the use of private data through protection under consumer privacy legislations. Furthermore, proposals for identifying and mitigation of identity theft are relatively narrow (Gerard, Hillison, & Pacini, 2004). The incentives in existence are ineffective and inadequate to counter any incidences of identity theft. The incentives include tolerance by corporations given their focus on profits, which can be maximized if fraud is allowed as opposed to strict screening processes. This is prevalent especially for the credit markets, whose failure has been associated with the 2007/2008 financial crisis. It is clear that financial markets reward laxity in authentication process given that the players may risk the loss of new clients to competitions if they delay the access to funds by adherence to measures to prevent fraud.

Consumers lack the capacity and ability to control their positions as victims of such externalities given that they lack control over credit authentication processes. Addressing the incentives that drive identity theft in the credit market, in modern organizations and more so against corporations is critical to ensure that safety is achieved.

Recommendations

Countering the increasingly sophisticated modern identity theft demands the need for proactive techniques to ensure technical safety from such frauds. Ensuring safety of confidential information can be achieved through a variety of strategies namely

1. Desisting from disclosure of personal information to suspicious parties especially over the internet, telephone and other communication media such as faxes
2. Personal documents should be stored in secure areas and carried when need arises

• Demand periodical evaluations of credit from financial institutions, regulators and creditors

1. Personal identification numbers should be kept secret
2. Identity billing cycles to identify any suspicious activities and discrepancies
3. Shredding of personal documents is critical

• Postal addresses should be communicated to financial institutions immediately
• Ensure the presence of adequate security measures such as passwords on computers holding personal information.

Further research should focus on providing detailed categorization of the primary forms of identity theft attacks. It should be made up of detailed recoding of the appropriate evidence associated with the respective crimes. Additionally, it should take into consideration the emergence of new technologies for identification, location, and extraction of such evidence to aid investigations and mitigation of risks associated with identity theft.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Applegate, S. (2009). Social Engineering: Hacking the Wetware. Information Security Journal: A Global Perspective, 18(1): 40-46.

Angelopoulou, O., Thomas, P., Xynos, K. & Tryfonas, T. (2007).Online ID theft techniques, investigation and response. International Journal of Electronic Security and Digital Forensics, Vol. 1, No. 1,

Casey, E. (2003). Determining intent – opportunistic vs targeted attacks. Computer Fraud and Security, 2003(4): pp.8–11.

Collins, J.M. (2003). Business Identity Theft: The Latest Twist. Journal of Forensic Accounting, 4: 303-306.

Federal Trade Commission (FTC). (2010). Fighting Fraud With The Red Flags. Washington: The Federal Trade Commission (FTC).

Gerard, G.J., Hillison, W. & Pacini, and C. (2004b) .What your firm should know about identity theft. Journal of Corporate Accounting and Finance, 15(4):pp.3–11.

Hedayati, A. (2012). An analysis of identity theft: Motives, related frauds, techniques and prevention. Journal of Law and Conflict Resolution, 4(1): 1-12.

Hinde, S. (2004). Identity theft: the fight. Computer Fraud and Security, 2004(9):pp.6–7.

Hoofnagle, C. J. (2009). Internalizing Identity Theft. UCLA Journal of Law &Technology, 13(2): 1-34

Whitley, E.A, Hosein, I.R., Angell, I.O., & Davies, S. (2007). Reflections on the Academic Policy Analysis Process and the UK Identity Cards Scheme. Information Society, 23(1): 51-58.