Archive for the ‘Identity Theft’ Category

Tuesday, November 8th, 2011

Social Networking, DNA may Affect Credit Soon

Living in the Information Age has a number of advantages: we can avoid holiday crowds to shop from the comfort of our living rooms, and even ditch the commute to work remotely from home. But new stirrings in the credit card industry about future plans for collecting and using customer information have raised warning cries from a number of consumer advocates.

A recent article in Time magazine discusses plans that credit card issuer Visa has to gather more information from consumers to better target ads and evaluate credit card applicants. Sources report that the company has plans to collect information from a number of sources, including:

  • Social networking websites, on which many consumers discuss their interests and post (even if indirectly) about their desires and spending habits.
  • Credit bureaus, which they already use. This is why filing for bankruptcy has an effect on a filer’s ability to get credit in the future: credit card issuers can see that the bankruptcy took place for seven to ten years after it’s filed.
  • Search engines, such as Google and Bing. This information could include not only shopping habits and interests but also information about everything a person researches, including words like “mortgage loan help” and “payday loans offers.”
  • Insurance claims, which might paint a picture of a person’s health, driving habits, and more.
  • DNA databanks. This last information source has caused the most uproar: information hardly gets more personal than a person’s genetic code, and the potential applications of such data are mind-boggling.

So how would credit card issuers use such a bevy of private data to their benefit? In a lot of ways, according to analysts. And many of them could seriously hurt consumers.

DNA or insurance claim data, for example, could reveal to credit card issuers a person’s health history or likelihood for developing a genetic condition. If that condition typically leads to significant medical expenses, the credit card issuer might deny the person credit—after all, many people end up discharging high medical bills in bankruptcy, and credit cards often get the same treatment in Chapter 7 cases.

Insufficient Legal Protections

What worries some analysts is that the U.S. currently has no laws in place to prevent such elaborate information gathering or denying credit on the basis of information like genetic code. As usual, the technology available has progressed far faster than the legislation designed to regulate that technology.

Another major concern? Identity theft and data breaches. It’s hardly uncommon to hear about data leaks and breaches in the news, but imagine the potential fallout if thieves had access to more than names and social security numbers.

At present, of course, neither Visa nor any other credit card issuer has such information on hand. But it could be a less distant future than we first imagine.

DigiNotar, a Dutch company that provided digital authentication certificates for Dutch government-owned Internet domains, has filed for bankruptcy after a serious hacking incident led to a significant security breach. reports that DigiNotar, which is owned by Vasco Data Security (an Illinois company) was hacked in June because of insufficient security.

The hacker, according to reports:

  • Obtained more than 500 fake digital certificates for major web sites (including Google, Skype and Mozilla); and
  • Could use those certificates to collect users’ sensitive information when they entered it onto what they thought were secure sites.

Shortly after the breach was announced, the Dutch government reportedly stopped using DigiNotar’s services. When Vasco Data Security announced DigiNotar’s bankruptcy, it apparently made explicit its plans to maintain its own high security levels and to cooperate with the bankruptcy trustee and judge as necessary.

Digital Privacy & Identity Theft

The world of online identity protection relies on a system of encryption and authentication that, if hacked, can allow unauthorized individuals or groups to access sensitive information. When a hacker obtains false security certificates (as happened with DigiNotar), that hacker could access users’ accounts and even read their communications.

One of the main reasons that this hacking incident led to DigiNotar’s bankruptcy is that the company had failed to take adequate steps to protect itself from potential hackers. Apparently:

  • The hack occurred in early June but the company was not aware of it until mid-July, when an independent company conducted an audit of its security features;
  • DigiNotar’s system did not include strong passwords, anti-virus protection or updated software patches;
  • DigiNotar did not admit to the breach until August, when Iranian Gmail users reported difficulty accessing their email. At that time, Google confirmed that a fraudulent certificate was available and possibly being used to offer a fake Gmail page.

After reports of the incident surfaced, an Iranian man in his early 20s reportedly identified himself as a hacker and noted that his actions were an act of political retaliation for events that occurred during the Bosnian war in 1995.

The hacker may have allowed Iranian government officials to access citizens’ Gmail accounts, thus possibly providing them with a means of spying on dissidents. In other contexts, similar hacking feats could translate to other types of identity theft.

Major Blow to Legitimacy

After the incident played out, Google, Mozilla and other major web sites announced that they would no longer accept authentication certificates issued by DigiNotar, as they no longer trusted the company to adequately protect itself from hackers.

The bankruptcy filing will likely allow Vasco Data Security to maintain its operations without significant interruption.

Dealing with debt collectors can be stressful enough when you know you actually owe them money. But with cases of identity theft and mistaken identity, some people have the unpleasant experience of debt collector harassment when they don’t owe anything at all.

Here’s a look at how debt collectors might get the wrong person and what you can do if you’re on the wrong end of the phone.

Identity Theft or Mistaken Identity?

Generally speaking, there are a few reasons a person would get collection calls intended for someone else. These include:

  • Identity theft: When someone uses another person’s identifying information (Social Security Number, credit card numbers, bank account numbers, etc.), that’s identity theft. Some thieves apply for jobs with stolen SSNs, some open new credit accounts and some simply use existing accounts. To check whether someone besides you has been using your information, log on to for a free check of your credit report. If debt collectors are calling because of identity theft, you might have a lot of work ahead of you straightening things out. The sooner you check your reports, the better.
  • Mistaken identity: In this situation, a debt collector simply mistakes you for someone with a similar (or identical) name. Those with common names are naturally more susceptible to this than those with unusual names, but it could happen to anyone. In some cases, third-party identity checkers will contact you before you receive debt collection calls to verify your name and phone number. If you get a call like this, insist on learning as much as you can.
  • A combination: It’s possible that a credit reporting company accidentally combined two credit reports (i.e. merged information from the reports of two people with similar or identical names). If this has happened to you, you need to take action to get your credit situation sorted out. It will require a little effort, but it’s essential to avoid future confusion and to maintain your individual credit.

Dealing with Debts that Aren’t Yours

So what can you do if debt collectors won’t leave you alone about someone else’s debt? Thanks to the Fair Debt Collection Practices Act, you can take action:

  • Review your credit report. Make sure your identity isn’t being used by anyone other than yourself.
  • Send the collectors a letter explaining why you are not responsible for these debts and asking them to stop contacting you.
  • Request written proof that you are the one who owes these debts. Because the debt collector is unlikely to be able to do this, you may never hear from them again.

If you are unable to convince collectors of your identity, you may want to consider enlisting legal help.

You’ve probably heard of the crime known as identity theft, in which a criminal uses someone’s sensitive information (like Social Security Number, credit card number, or bank account information) to make fraudulent financial transactions.

But have you heard about the newest version of this nefarious crime? It’s called taxpayer identity theft and, according to the Government Accountability Office (GAO), it’s become five times more common in the last two years. It works like this:

  • The identity theft uses someone else’s SSN to get a job: People may do this for a variety of reasons, including criminal records or illegal residential status. Regardless, it can wreak havoc on the victim’s life and finances.
  • The identity thief files his taxes early: Most legitimate taxpayers tend to wait until later in the season to file, so getting the paperwork in early increases a thief’s chances of going undetected.
  • The victim files his tax return: When the victim of taxpayer identity theft submits his forms to the IRS, he finds out his forms have “already” been submitted. That is, forms with his information have been submitted by someone else.
  • The victim has to sort everything out: According to sources, this can mean hours of phone calls to government agencies, credit card issuers and banks in an effort to clear up the confusion. In many cases, victims have to wait up to six months to get any tax returns owed them.
  • The IRS distributes an official form: To help the victim with future confusion the identity theft is likely to cause, the IRS offers victims an official document (the 14039 form, or the IRS Identity Theft Affidavit).

Protecting Yourself from Identity Theft

As identity theft victims know, sorting through the mess left by an identity thief is not for the faint of heart. Identity theft can cause:

  • Credit score damages: Identity thieves can open new credit accounts, max out existing cards, drain bank accounts and more, depending on what information they get. All these can hurt a credit score. (Note: credit reporting bureaus will remove such information, but it takes a lot of legwork on the victim’s part.)
  • Bankruptcy: Even though there are protections in place to prevent identity theft from leading to bankruptcy, many filers indicate that a stolen identity was one factor that led them to file.
  • Criminal troubles: Depending on what kinds of actions an identity thief engages in, a victim can be mistakenly apprehended by law enforcement agencies. Like most identity theft consequences, this can generally be cleared up, but not without effort on the victim’s part.

The bottom line? Identity thieves are constantly thinking of new ways to get their hands on sensitive information. Be careful with yours.

Wednesday, June 8th, 2011

How to Avoid Money-Guzzling Scams

One of the most troubling aspects of financial scams is that they prey on people’s best intentions. Nearly every time a natural disaster occurs, the Federal Trade Commission issues a report warning against scammers posing as charity fundraisers offering their funds to the latest victims.

And being victimized by a scam can cost a lot of money, cause serious damage to your credit score and take hours and hours of your time to recover from. Here’s a look at some steps you can take to make sure you and your finances are protected from scam artists.

Protect Your Money

  • Do some research. If you’re offered a questionable deal over the phone or in person, don’t agree right away. Instead, consult with a trusted friend or family member. That way, you’ll have a chance to cool down and get a second opinion.
  • Check your credit. Anyone who has filed for bankruptcy understands the importance of monitoring her credit report, and in addition to giving you a general picture of your financial health, it can show you whether or not anyone besides you has been using your accounts or identifying information. You can see your credit report for free at to make sure you’re the only one spending your money.
  • Keep your information private. Most people know now not to write their Social Security Number on checks, but it’s also a good idea to take greater measures to protect yourself. Check out the FTC’s resources for keeping your phone number, email address and other contact information private.
  • Know debit and credit card risks. While most credit card issuers offer excellent protections for scam victims, debit card protections are often scant. If you have the option between debit and credit (and you can trust yourself to pay your bill in full each month), choose credit when making large purchases or ordering products online.
  • Know the risks of email and phone calls. These days, scammers can call themselves whatever they want to trick caller ID into making you think you’re talking with someone trustworthy. And email scammers are getting better and better at sending phony links that look legitimate. Generally speaking, don’t offer personal information unless you’ve typed a URL or dialed a phone number yourself; otherwise, you risk sharing your sensitive facts with the wrong sort of people.
  • Pay attention to your medical information. When you receive mail from your health care provider about services or insurance issues, read through it carefully to make sure nobody but you has been using your information to receive medical treatment. Medical identity theft is a serious concern that can damage you financially and lead to inappropriate medical treatment.

In the wake of tax season, the Internal Revenue Service has issued a statement warning Americans about how to spot and rectify identity theft that may affect their taxes. Identity theft can be a difficult crime to deal with, and can cost victims hours of time and even money to repair.

Here’s a look at what you need to know about identity theft and your taxes.

  • The IRS does not initiate contact by email. If you receive an email from someone claiming to be the IRS, report it as spam and do not click on any links or provide any of your personal information.
  • Pay attention to any snail mail contact. If the IRS contacts you by postal mail and indicates that multiple tax forms were filed in your name or that records show you received wages from an employer you don’t know, you should suspect possible identity theft.
  • Contact the IRS. If and when you receive a notice from the IRS by mail that indicates unusual or suspicious activity, you should contact the IRS by responding to the address or number provided on the form you received.
  • Check your credit report. If you’re interested in knowing more about whether your identity might be at risk, visit to check your credit report for any suspicious activity. You are entitled to view a credit report from each of the three major reporting bureaus for free once per year.

It’s best to act quickly if you suspect identity theft related to your taxes, because if someone else filed a tax return in your name (or using your Social Security Number), that person could be eligible for a return – and you might not get one.

Online Resources to Protect Yourself

One of the best ways to combat identity theft is to prevent it. And, seeing as identity theft can cost serious money (and even triggers bankruptcy filings for some victims), it’s never too soon to start protecting yourself, your sensitive information and your money.

The Federal Trade Commission, the IRS and a number of other government organizations have teamed up to create the web site, which offers information, tools and tips for staying safe in the digital world.

The site’s online resources include:

  • Detailed instructions for dealing with identity theft (tax-related or otherwise);
  • Pointers for keeping your information, accounts and passwords safe at WiFi hotspots;
  • A number of games designed to educate users about various digital risks and how to protect against them;
  • Informative videos that include expert interviews and how-tos designed to help people stay on top of digital and cyber safety; and
  • Tools to use to protect yourself in your everyday life.

Monday, April 11th, 2011

Celebrate Financial Literacy Month

The Federal Trade Commission has announced that April is National Financial Literacy Month and, as such, a great opportunity for Americans of all ages to brush up their financial smarts to make the most of their money, credit and financial future.

So what kinds of things can you do to celebrate financial literacy month? The FTC recommends checking out these services.

  • Money Matters: This web site has information in both English and Spanish about essential financial literacy topics including debt collection, credit repair scams, vehicle repossession, job hunting, job offer scams, foreclosure rescue scams, budgeting for mortgage payments and more. Whether you prefer quick tips or more in-depth videos, this site has information to help you.
  • Free Annual Credit Reports: Here, the FTC explains how and why Americans are entitled to a free credit report from each of the three major reporting bureaus once each year. This site also provides information about why it’s important to check your credit report regularly and where you can get your no-strings attached, truly free credit report (
  • You Are Here: This site is geared toward children and provides them interactive online games that teach them about advertising, competition and steps they can take to protect their privacy and prevent identity theft.

Why Does Financial Literacy Matter?

So why does our country need a financial literacy month in the first place? In recent years, tests administered to high school students yielded almost no passing scores and, as we are still collectively learning, ignorance about financial matters (such as how mortgages work) on a grand scale can lead to devastating financial fallout for the entire economy.

In addition to those resources provided by the FTC, consider visiting these sites as part of your financial literacy month celebration:

  • Fair Debt Collection Practices Act: This page explains who is protected by the FDCPA and what the law prohibits from debt collectors. Understanding your consumer rights is one powerful way to make sure you aren’t victimized by scammers or dishonest debt collectors.
  • The Bankruptcy Glossary: Thinking of filing for bankruptcy protection? You may want to start here as you consider what bankruptcy might mean for you. This page offers plain-English definitions for many terms commonly used in bankruptcy cases.
  • Consumer Financial Protection Bureau: The government’s new consumer protection body is still growing, but already offers a number of interactive options for people interested in staying up-to-date about consumer protection rules, laws and debates.

Remember: the only one responsible for your money, retirement fund, loan payments and other financial obligations is you. If you aren’t sure how your money is working (or not working) for you, it’s a good idea to take the time to educate yourself about basic financial literacy matters – the resources are out there and they’re free.

Monday, March 21st, 2011

Protect Your Money: Avoid Charity Scams

The recent earthquake and tsunami in Japan have left many people in the United States eager to offer financial aid to the country and its citizens. But, as the Federal Trade Commission warns, it’s easy to get duped by unscrupulous scammers posing as charitable organizations.

Here’s a look at some of the FTC’s tips for making sure your money actually goes to people in need.

What to Look for in a Charity

According to the FTC, it’s important to take these steps before donating to any charity online, in person, over the phone or via postal mail:

  • Ask for the name of the charity, particularly if the solicitor does not immediately provide it. Check online to see whether the charity has a legitimate web site, Better Business Bureau accreditation and/or any consumer complaints posted on discussion forums.
  • Ask what percentage of your money will go towards charitable causes. If the solicitor cannot answer the question or is cagey, this is a warning sign. You have a right to know where your money is going, and if you think too little is slated for the actual cause, simply refuse a donation and find another charity with better donation policies (web sites like the BBB’s Wise Giving page and Charity Navigator can offer you alternatives).
  • Check with the charity that the solicitor is legitimate. In some cases, scam artists might pose as charity workers with a legitimate organization. If you’re uncomfortable giving money or a check to a person you don’t know, call the charity to verify any information you’ve been given. You can also choose to donate directly to the charity online or through the mail.
  • Don’t part with your sensitive information. Nobody should pressure you into revealing your credit card or bank account information. Wait until you’ve made a decision in your own time and only provide such information on secure web sites. This can help you avoid raising your risk of identity theft.
  • Ask for a receipt. Any time you make a donation to a legitimate charity, you should get a receipt indicating that the donation is tax-deductible.
  • Be wary of pushiness. Any person or group that urges you to donate immediately should be viewed with suspicion. Legitimate organizations will still be around tomorrow, after you’ve had time to consider your finances and determine how much money you can afford to donate.
  • Don’t use cash. For a number of reasons, cash donations tend to be the riskiest in the case of charity groups. Instead, write a check to the charitable organization (not to the person collecting donations).

Remember: nobody should use guilt or threats to convince you to donate money. If you don’t like the way a solicitor is making you feel, simply cut off communication with that person and (if necessary) file a complaint with the FTC. You can then donate as much or as little money as you choose to the charity of your choice.

Monday, March 14th, 2011

Top Consumer Complaints of 2010

The Federal Trade Commission has released a report on the consumer complaints it received from Americans in 2010, and the list illuminates many of the financial and privacy concerns important to the American people.

Here’s a look at the top ten issues that sparked the most consumer outrage, as well as some tips for dealing with a problem new this year.

  • Identity theft: For the 11th year in a row, identity theft earned the top spot for number of consumer complaints, with 19 percent of all complaints filed (a whopping 250,854).
  • Debt collection: If you’ve ever dealt with abusive debt collectors, it may not surprise you to learn that issues with this group caused the second greatest number of complaints among consumers (144,159, or 11 percent of all complaints).
  • Internet services: Whether for fraudulent offers or subpar service, Internet providers landed third for most consumer complaints, five percent of all complaints (65,565).
  • Prizes, sweepstakes and lotteries: In fourth place came this type of scam, which often offers phony rewards after the victim pays a bogus entry fee. A total of 64,085 complaints were filed about this type of issue, or about five percent of all complaints.
  • Shop-at-home and catalog sales: Whether for defective goods, unwieldy return policies or some other act of non-consumer-friendliness, this type of transaction accounted for about four percent of consumer complaints last year (60,205).
  • Imposter scams: A new category this year, this type of scam jumped to sixth place, prompting the FTC to issue warnings about how to spot imposter scams to avoid sending money to strangers (details below).
  • Internet auctions: Perhaps because of the Internet’s vast scope and inability to fit neatly into regulatory areas, online auctions prompted 56,107 people to file complaints with the FTC.
  • Foreign money/counterfeit check scams: Getting blasted when you intended to invest or travel can be especially traumatizing, so it’s no wonder 43,866complaints concerning this category were filed last year.
  • Telephone and mobile services: Varying definitions of service options and quality of service provided prompted 37,388 people to file complaints about their communication tools.
  • Credit cards: This old classic is still causing us plenty of trouble. Despite the new protections instituted by the Credit CARD Act, 33,258 complaints were still filed about credit cards.

Avoiding Imposter Scams

The FTC’s consumer complaints about imposter scams (that is, scams in which someone pretends to be a government agency or loved one in order to convince a victim to part with money or sensitive information) prompted the release of a report on how to spot and avoid such scams.

In general, avoid wiring money to anyone you don’t know, be wary if someone pushes you to act quickly to make a transaction, don’t transmit sensitive information by text message and always confirm a person’s identity before making a major financial move.

A new report from Javelin Strategy & Research uncovers some potentially troubling numbers about the changing face of identity theft. Here’s a look at the report’s findings and some reminders about what you can do to protect yourself, your identity, and your credit.

  • In total, fewer people were victimized by identity theft in 2010: The number of identity theft cases dropped by a reported 28 percent from 2009 to last year - reports in 2010 dipped to the 2007 level. Additionally, it seems the average dollar amount of fraud committed by identity thieves dropped slightly (from $4,991 in 2009 to $4,607 last year). The group speculates that a decrease in corporate data breaches can be credited with the per-case drop-off.
  • More expensive fraud for individuals: While the total number of identity theft cases decreased last year, the cost of such incidents for victims rose. In fact, Javelin reports that the jump was large – 63 percent – up to $631 from $387 in 2009. This suggests that the types of identity theft being favored now are those that cost victims more (in the form of covering fraudulent debts, paying legal fees, etc.).
  • New account fraud most popular: The report shows that new account fraud, one of the most difficult types of identity theft to detect, accounted for a whopping $17 billion last year, the largest amount in any category. New account fraud occurs when the thief opens a new bank or credit account with the victim’s identifying information; the other type of fraud, existing account fraud, dropped in popularity last year, to $13 billion dollars’ worth, from $23 billion a year before.
  • There’s a better chance you know the thief: It seems that in 2010, there was a seven percent increase in fraud perpetrated by thieves who knew their victims (including family members, friends and roommates). The report notes that those ages 25 to 34 are most likely to be victimized by this type of fraud.
  • Sign of the times: The Javelin report suggests that, because identity theft crimes have changed in direct opposition to changing retail sales, the increase in identity theft could well be an indicator of economic hardship.

How Bad Can Identity Theft Be?

If you aren’t convinced by these numbers that identity theft can be a pain in the neck (and in the wallet). A story from ABC News detailed the saga of a man who battled for 17 years against an identity thief living across the country.

The victim found himself responsible for debts he never took on and even ended up in jail for a crime he didn’t commit. If that’s not reason enough to take steps to protect your sensitive information, consider this: despite federal protections, some bankruptcy filers still cite identity theft as one of the factors that pushes them to the bankruptcy court in the first place.