Friday, February 03, 2006

2005 Identity Theft Statistics

February 3, 2006 – Well the statistics are in, and 2005 was a banner year for identity theft according to the FTC. There were more than 685,000 complaints of fraud and identity theft, and $680 million stolen. But among the statistics, there are some bright spots.

Of the complaints for fraud and identity theft received by the FTC, 37% were actually for identity theft and 63% were for fraud. Of the fraud cases, the internet was used nearly half of the time; accounting for 46% of all complaints and $335 million in losses. 73% of all scams used the internet as the initial way to contact potential victims. The top fraud scams break down as follows:

· Internet Auctions was the leading complaint category - (12% of overall claims)

· Foreign Money Offers (8%)

· Shop-at-Home/Catalog Sales (8%)

· Prizes/Sweepstakes and Lotteries (7%)

· Internet Services and Computer Complaints (5%)

· Business Opportunities and Work-at-Home Plans (2%)

· Advance-Fee Loans and Credit Protection (2%)

· Telephone Services (2%)

The cities with the highest number of fraud cases on a per-capita basis were:

· Washington, DC area

· Tampa-St. Petersburg-Clearwater, FL

· Seattle-Tacoma-Bellevue, WA.

In cases of identity theft, credit card fraud was the most common form; accounting for 26% of all cases. The other favorites of identity theft were:

· Phone or utilities fraud (18%)

· Bank fraud (17%)

· Employment fraud (12%)

· Government documents/benefits fraud (9%)

· Loan fraud (5%).

The cities with the highest number of identity thefts per capita include:

· Phoenix-Mesa-Scottsdale, AZ

· Las Vegas-Paradise, NV

· Riverside-San Bernardino-Ontario, CA.

Victims are 40% more likely to be between the ages of 18 and 29, than in any other age range.

The average victim lost $2,412 but there were 49 people who reported losses in excess of $1 million.

As bad as these numbers may seem, there were some bright notes among the data. Identity theft grew by only 3.5% in 2005. This compared favorably to a 15% growth rate in 2004 and a 33% growth rate in 2003. It is apparent that states with strong identity theft and privacy laws were responsible for much of this reduction. 22 states passed data breach notification laws in 2005, requiring companies to notify consumers when their data may have been exposed to identity thieves. And there are now 11 states with Credit Freeze laws, which make identity theft nearly impossible for consumers who actually exercise the right to freeze their credit files.

ACCESS would like to see more states pass credit freeze laws. These laws give consumers far greater control over their financial privacy.

And while we are pleased with the reduction in the growth rate of identity theft, we are also concerned that Congress may set a national standard for data breach notification laws that is significantly weaker than state standards. There are currently no fewer that 19 separate bills dealing with this issue in Congress, and most of these take away the state’s right to regulate companies that operate within their borders.

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Thursday, February 02, 2006

Computer Worm Set to Attack Tomorrow - An ACCESS Fraud Alert

February 2, 2006 – A computer worm that is believed to have infected about 300,000 computers is set to attack tomorrow. The worm will begin destroying a variety of files on the computers that it resides on, including Adobe PDF files, Microsoft Word documents, and other files created in Microsoft Office.

This worm is not new. It was originally release in 2004 using the name Nyxem.D and was designed to attack computers associated with the New York Mercantile Exchange. The current version is known by a variety of names, including Blackmal.E, MyWife.E, KamaSutra, Nyxem.D and Blackworm.

Computers are infected by the worm when it arrives as an e-mail attachment. Recipients are told that if they want to look at sexually oriented photos, to click on the attachment. Those that fall for the ploy will find that their computers are infected.

From that point on, unless a computer is cleaned using antivirus software, the worm will start operating on the third day of each new month.

The way that this worm operates is unlike most known internet threats. The vast majority of Trojans and worms are designed to allow a hacker to gain access to the computers that host them. This capability is then used either to steal information that resides on the computer or engage in some form of illegal activity such as spamming the internet.

The sole purpose of Nyxem.D is to destroy data residing on the computer’s hard drive. Anyone without backup copies of their data could find themselves and their businesses severely crippled.

Because most corporations use antivirus software that is regularly updated, it is expected that the infection will have the greatest impact on home users. Microsoft is advising consumers to update their virus definitions and to run a virus scan on their systems today. Anyone without their own software can use Microsoft’s Safety Center to scan their systems for free over the internet.

Consumers may also want to consider downloading and installing the following programs. These are either free to use, or offer free trials:

Avast Antivirus: A free antivirus program for home users only. The company also offers a paid service for commercial use.

AVG: Also a free antivirus software package.

Neither one of these should be confused with the many paid antivirus software packages like those offered by Norton or MacAfee. The free programs have some significant shortcomings. These may include virus definitions may not be updated as often as with other services and, as in the case of AVG, they may not offer standard features such as "help". Even so, they provide a good alternative for consumers who can’t run out and purchase a paid service today.

Another program to consider is Online Armor by Global Fraud Solutions. This program scans incoming e-mail messages, and websites you visit to make sure that you don’t pick up malicious Trojans and worms in the first place. The program costs $39.95 but they also offer a 30 day free trial.

ACCESS highly recommends that consumers back up their data today and then run a virus scan of their systems. Parents who have children using the internet should not think that simply because they have not attempted to open the e-mail attachment described here themselves that their systems are clean. If you have children with e-mail access, we are advising that you scan your system as a precautionary measure.

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Wednesday, February 01, 2006

Can a Poor Credit Rating Keep You From Getting That Dream Job? You Bet!

Over the past three years, millions of Americans have found themselves standing in the unemployment line at one time or another. Many companies have outsourced jobs overseas. The common myth that most of these positions are manufacturing jobs is no longer true. Many of the positions that are now being outsourced are high paying, white collar positions. This in combination with a downturn in the US economy has made finding a new job difficult.

 

This set of circumstances has been combined with huge losses by companies that were previously thought of a bellwether stocks, sending their prices plummeting and leaving their shareholders with, in many cases, no savings to fall back on.  What better set of circumstances for consumers to get overextended financially?

 

Unfortunately being overextended and, perhaps, behind in paying your credit obligations could make it nearly impossible for you to find that next dream job. And for good reason.

 

For many years now, many large corporations have checked the credit records of people that they are considering for employment. Originally, companies conducted background checks inclusive of credit records for sensitive jobs – in many cases these were positions that dealt with the company’s finances. Over the years, these policies changed to include more and more employees until now, in much of corporate America, every single employee hired by a given company will have their credit checked.

 

Now, many small and mid sized companies have also jumped on the band wagon. The reasons are many but they boil down to a few very simple things.

 

First of all, just by announcing that it will conduct a background check, companies discourage people from applying for jobs that they are not qualified for. They also discourage those who have criminal records from applying (these account for nearly 10% of the people looking for positions). This saves both the company and the hiring manager time and, in the long run, money.

 

Secondly, people lie on their resumes and companies know this. In fact, as many as 30% of all resumes contain lies that are material to the job being applied for.

 

Just given these statistics, it is actually a wonder that not all companies conduct these checks.

 

Just because you haven’t lied on your resume, and you are not a criminal, doesn’t mean that you are out of the woods however. Many background checks include a credit check.

 

When employers look at your credit, they can get a lot of information about what kind of a person you are. About your character. Do you pay your bills on time? If the answer is “yes” then one can surmise that you take your obligations seriously. Have you had your wages garnished to pay taxes, child support, or for some other reason? If the answer to any of these is “yes” then your prospective employer may come to a very different conclusion about you.

 

The fact is that employers don’t want employees that have credit problems for a variety of good reasons. If you are focused on your financial problems at work, then you are probably not focused on the work your were hired to do. You may also be tempted to steal.

 

If you think that you are the only one worried about having your wages garnished, you are incorrect. Employers don’t like this either. It means that they have to establish special procedures to pay you, which takes time and costs money. And if the employer messes up a garnishment, then it is the employer who is liable. Legal issues are not something that employers want their employees to cause.

 

And if you are the subject of active collection issues, you may have a real problem finding a job. Employers hate having collection agencies call their offices. They find it even less attractive when process servers show up on their door to serve legal papers.

 

The bottom line of this is that if you have poor credit and are looking for a new job, you could be in real trouble.  In certain jobs, getting into financial trouble can even be the cause of you joining the unemployment rolls. For instance, the armed forces will discharge people who can’t pay their bills. Likewise, getting or keeping a security clearance for either civilian or military work, is next to impossible if you have credit problems.

 

If you are in this position, there are things that you can and should start doing.

 

First of all, don’t ignore your payment obligations or collectors.

 

Secondly, get on a budget and stick to it. This means you may have to give up that next vacation or that new TV. In the long run, you will be much better off.  When you prepare your budget, list out all of your expenses and then eliminate the ones you really don’t need. For instance, you have to pay your rent. On the other hand, having 200 channels of cable TV is probably something that you can do without.

 

And if you think that little reductions in cost don’t matter, think again. If you are able to save just $3 per day, over a 35 year period at 5% interest, you can save over $100,000. That’s the cost of a pack of cigarettes.

 

Initially, take the money you save and pay your bills. Then start socking that money away. Eventually, you’ll be able to take that vacation, purchase that TV and not have to worry about paying your bills. You’ll also make yourself a lot more attractive to potential employers.

 

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Tuesday, January 31, 2006

The Best and the Worst of Credit Freeze Laws

January 31, 2006 – In the new year, a variety of state legislatures continue to debate credit freeze laws. Among these are two states on opposite sides of the country that are working on unique credit freeze solutions. One of them is probably the best credit freeze law proposed in any state. The other is dumbest credit freeze proposal that we have ever seen.

In Utah, there is low moan that can be heard. It is the plaintive wail of lobbyists for the credit reporting agencies (CRAs). They are upset because a State Senate committee approved SB71, which is probably the best credit freeze legislation to come out of any state.

If the bill eventually becomes law, Utah will give its consumers more flexibility than any other state with regard to credit freezes. The bill contains two provisions that the CRAs absolutely hate.


First, any consumer who places a freeze on his or her credit file will be able to remove the freeze within 15 minutes using a PIN number. This means that consumers with frozen credit files would still be able to have access to instant credit. Granted, they may have to go get a cup of coffee and come back, but they could still get credit on the fly. Because of this provision, a wide variety of major trade groups in Utah, including car dealers, realtors, and retailers selling big-ticket items have lined up in support of it. These same industry associations have opposed other credit freeze laws.

Second, consumers who find out a CRA has violated the law will have the right to sue that agency.

Complain as the CRAs might, there is a good chance that SB71 will become law. It has some key supporters within the State Senate. Sen. Sheldon Killpack said, "My wife had her purse stolen out of her vehicle. What a treat that was. It was like a month-long root canal."

With sentiments like that, how could the bill fail?

On the opposite side of the Country, Virginia may be set to take a somewhat different approach to dealing with credit freezes and identity theft. SB218 has the distinction of being some of the dumbest legislation that we have ever seen. It is also a shining example of why corporations should be barred from lobbying politicians.

Sponsored by Virginia State Sen. Frederick M. Quayle, the proposed law might actually do more harm than good for those between the ages of 18 and 65. But Quayle thinks he’s hit on something good here. He wants to allow parents to freeze the credit files of their minor children. He also wants to let anyone who is 65 or older, and living in an elder care facility to freeze their credit file. So far, so good.

But under Quayle’s proposal, everyone else is just out of luck. His excuse for this proposal is that too many lobbyists are opposed to stronger measures. To the Senator we say, "That’s why you make the big money!"

It shouldn’t be any great surprise that the senator’s bill hasn’t gotten the opposition that other credit freeze proposals have. Do you really have to wonder why? Nobody in business, including the CRAs, wants to allow identity thieves to steal the identities of minors. Why? Well for starters, they can’t be held accountable for the debts under any circumstances. And do you really have to ask why anyone wouldn’t support a bill that would help prevent fraud against frail elderly people living in nursing homes? Those pictures don’t play well on the nightly news.

The irony of this legislation is that it would protect two groups of people that get a lot of public sympathy, but it would do nothing for the vast majority of Virginian’s who become the targets of identity theft. If the bill passes, it will likely make more comprehensive credit freeze proposals less likely to pass. It would eliminate much of the bad press associated with identity theft.

While the bill may be well intentioned, it is definitely not well thought out. ACCESS urges the Virginia legislature to kill SB281 and to adopt some of the more comprehensive credit freeze legislation that is before it, even if the lobbyists don’t like it.

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Beware of ATM Card Skimmers

ATM card skimming has been around for years. Recently, police in Fort Worth, TX issued a warning to consumers to be on the lookout for card skimming equipment. Because card skimming is not limited to Texas, ACCESS believes that consumers nationwide need to be aware of what card skimming is, how it works, and how to prevent it.

Thieves engaged in card skimming install sophisticated equipment to capture data from ATM cards. The equipment is physically attached to ATM machines but disguised to look like a part of the machine. Once installed, the card skimming equipment captures all of the data stored on ATM cards that are inserted in the affected machine, along with the passwords that consumers enter when making a deposit or withdrawal.

Experienced thieves can install card skimmers in virtually no time. Once installed, they will leave the equipment alone for a period of time, and then return to the ATM to remove it. Once removed, they can use information that they have captured to make counterfeit ATM cards. These cards are then used, in conjunction with the captured user password information, to make withdrawals.

Card skimming is highly profitable for thieves and very problematic for consumers and law enforcement. The reason for this is it normally takes several days for consumers to discover that their bank accounts are being drained. Thieves use this time to make daily withdrawals from impacted accounts.

When using ATMs, consumers should look for any equipment that looks like it was installed on the ATM’s face plate. Most card skimmers look like a box, or an extension, placed over the slot that ATM cards are inserted through.

Consumers who suspect that an ATM machine has been tampered with should not use it, but they should report it to their bank immediately.

Anyone who has been victimized by card skimming should file a police report, and report the incident to their bank promptly.

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Monday, January 30, 2006

New Approach to Medical Bills Does Little to Help Most Needy

January 30, 2006 – In his State of the Union Speech tomorrow night, President Bush will propose a new approach to dealing with soaring costs associated with health insurance. But the proposal he will make does little to make insurance more affordable at the consumer level, and does nothing to address the underlying causes for the steep rise in insurance prices. Those who don’t have insurance for affordability reasons, or who can’t get it because for some reason they have been declared uninsurable will find virtually no light at the end of the President’s tunnel.

Soaring costs for medical insurance are one of the primary reasons that many employers have stopped offering it. It’s also the reason that even large companies have moved away from traditional health plans and forced their employees into more restrictive plans that also force the employees to share a part of the cost.

Under the current IRS rules, consumers can only write off medical expenses if they exceed 7.5% of their adjusted gross income. The President’s proposal will ask that this number be reduced. He will also propose that anyone leaving a job to start a new business, or to join another company, be allowed to take their insurance plan with them at no additional cost. Unlike current COBRA coverage, which expires in 18 months, the President’s plan would not cap the amount of time that a person could keep their policy.

In addition to these items, the President will also suggest that use of Healthcare Savings Accounts be expanded. These accounts allow anyone who purchases a bare-bones insurance policy to set aside a portion of their income in a tax free account. This account can be used to pay uninsured medical expenses.

But the plan falls short in a number of areas. The overall goal of the plan is to make medical coverage available to more people. That’s a good thing. But it does this by shifting even more of the cost burden away from employers and onto consumers, without addressing any of the underlying causes for cost increases in healthcare. In short, it’s an attempt to place a Band Aid on a hemorrhaging artery.

Businesses may very well like what the President has to say. In the short run, the plan will allow them to do more to contain the costs associated with offering insurance to their employees. But without some serious attention, within five years it is quite likely that business’s insurance costs will begin rising again.

Some consumers will also like portions of the plan. The expansion of tax deductions and Healthcare Savings Accounts will benefit those who are forced to pay for their own insurance policies. But the plan does absolutely nothing for people who can’t afford insurance in the first place.

Moreover, those who have been deemed uninsurable will still find it almost impossible to get health insurance even if they can afford it. And insurance companies are declaring people uninsurable at record rates, regardless of age. Even children can find themselves in this class.

ACCESS is particularly concerned with both the cost and availability of health insurance. Unexpected medical bills and job loss are the two most common reasons for personal bankruptcy in the United States. While the President’s plan may help some people, it will do little to impact those who are most in need.

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