Thieves Get Rich Quick By Stealing Your Identity

March 27, 1997, dawned as a normal day at the Stevens' home in Maryland. Midmorning, John T. Stevens, Jr., was at his desk, checkbook open, paying bills the way he always had: on the nail.

Then the phone rang, and the nightmare began.

An investigator for NationsBank was on the line, asking why Stevens, a retired Air Force colonel and university physicist, was "delinquent" on payments for a $27,000 Jeep Cherokee, bought new in Dallas the previous year.

"I don't have a Jeep Cherokee," Stevens protested. Nor had he set foot in Texas in three decades. But his name was on the contract, and so was his Social Security number.

During the months that followed, he and his wife, Mary Elizabeth, learned that someone had bought four more cars and 28 other items—worth $113,000 in all—in their name. Their good credit had been destroyed. "After a lifetime of integrity," says Stevens, "all of a sudden I was being essentially accused of embezzlement and treated like a deadbeat."

This is what it means to fall prey to a nonviolent but scary and fast-growing crime: identity theft.

It happens to at least 500,000 new victims each year, according to government figures.

And it happens very easily because every identifying number you possess—Social Security, credit card, driver's license, telephone—"is a key that unlocks some storage of money or goods," says Bob Kuykendall, a fraud program manager of the U.S. Postal Inspection Service. "So if you throw away your credit card receipt and I get it and use the number on it, I'm not becoming you, but to Visa I've become your account."

Even the most vigilant consumer can be suckered. Kuykendall's own wife, for example, paid a restaurant bill with her card. Twenty minutes later the waiter used its number to charge $20 calling a sex chat line.

One major problem, experts say, is that the Social Security number (SSN)—originally meant only for benefit and tax purposes—has become the universal identifier. It is used as ID by the military, many health insurance companies, colleges and as drivers' license numbers in many states as well as in billions of commercial transactions.

Yet a thief can hijack your SSN easily, not only by stealing your wallet, but also by taking mail from your box, going through your trash for discarded receipts and bills (known as "dumpster diving" in the trade) or asking for it over the phone on some pretext. A thief can get whole batches of SSNs from accomplices working in companies that have access to them. They can even be bought on the Internet at $20 each.

Cloaked in your SSN, the thief applies for a credit card in your name, asking that it be sent to a different address than yours, and uses it for multiple purchases. A couple of months later the credit card company, or its debt collection agency, presses you for payment.

You don't have to pay the debt, but you must clean up your tarnished credit record. That means trying to get a police report and copy of the fraudulent contract, then using them to clear the fraud from your credit report, which is held by a credit bureau. Each step can be an epic hassle.

In the Stevens' case, it took three years of paper work and $6,000 in legal fees. In the meantime, they were denied a loan to build a vacation home, forced to pay cash for a new heating and cooling system, harassed by debt collectors, and suffered the humiliation of having their home put under surveillance by investigators looking for the missing Jeep.

It could have been much worse. Other victims have been denied jobs, had their drivers' licenses suspended or even been jailed for offenses committed by their identity hijackers. One impostor even used her victim's name to have a baby—to avoid hospital costs or because her own name was on some police wanted list.

The shock felt by law-abiding folk caught up in this peculiarly personal crime intensifies if they find that no one seems interested in bringing the culprits to justice.

Police are often reluctant to investigate because they consider the banks or stores—whoever's out of pocket—to be the real victims. The creditors themselves usually write the debt off as a business loss, or claim it against insurance and take no further action.

Of course, thousands of impostors are caught and prosecuted, most often by the U.S. Postal Inspection Service (which investigates mail fraud) or the Secret Service's financial crimes division. But it was only last year that Congress made identity theft itself a federal felony. That act set up an identity theft unit at the Federal Trade Commission (FTC) to help victims regain their lost credit and to improve law enforcement by tracking cases on a national scale.

Consumer advocates say this may help retroactively but will not address the basic problems, which, they believe, are causing an identity-theft epidemic: industry's rush to attract more customers by issuing instant credit, inadequate checking of identity, and too few legal protections for consumers' personal information.

"Last year the credit industry mailed out 3.5 billion preapproved offers of credit to Americans," says Beth Givens, head of the Privacy Rights Clearinghouse in California, a nonprofit group that has helped victims since 1993. "And without properly verifying the identity of applicants, they're giving out an awful lot of credit cards to impostors."

When Stevens finally saw the Jeep application, he found that the only wholly accurate piece of information on it was his stolen SSN—a number issued 25 years before the birthdate given by the thief.

Several congressional bills have attempted to protect personal privacy and curtail fraud by limiting the use of SSNs in commerce. The most comprehensive, introduced by Rep. Jerry Kleczka (D-Wis.), would prohibit businesses from obtaining or distributing anyone's SSN without that person's written consent.

Also, the bill would stop credit bureaus from selling "credit headers"—the top portion of credit reports—without consent. Each lists a consumer's name, address and telephone number (including unlisted ones), mother's maiden name, date of birth and Social Security number. The credit bureaus have admitted that selling headers earns them tens of millions of dollars annually.

Kleczka faces fierce lobbying from the credit industry, which argues that removing the SSN as a universal identifier would break the main link of confidence between lender and consumer, complicate the process and slow transactions. "Unlike any other economy in the world, we demand credit, and we demand credit now," says Norm Magnuson of Associated Credit Bureaus, Inc.

The true magnitude of identity fraud is not known. Trans Union, one of the big three credit bureaus that log consumers' credit histories, reported an average 20,000 calls a day to its fraud victims help line in 1997, up from 135 a day in 1992. About a third were from consumers wanting to know how to avoid identity theft.

"Unless you never give out information for any reason, you can't prevent identity theft," says Beth Grossman, head of the FTC's new program. "But there are ways of minimizing the risk." Such as:

• Never carry your SSN in your wallet or diary or printed on checks.
  
  
• Guard your SSN closely, giving it out only to official authorities or businesses you trust. Some firms will accept another identifier if you ask.
  
  
• Be careful how you dispose of documents. Ideally, shred them.
  
  
• Exercise your right to stop your credit header being sold, which will also stop preapproved offers of credit. Call the credit bureaus' special toll-free line: (888) 567-8688.
  
  
• Don't post personal information on the Internet — for example, on genealogical or college reunion sites.
  
  
• Check your credit report at least once a year.
  
  
• Check bank and credit statements item by item.

Should you become a victim, see Where to Go for Help. Here also are some tips from experts, including John Stevens, who learned the hard way:

• Get a copy of the fraudulent contract or application. This is the key document that proves the person who signed it isn't you. Finding the company that issued it and the right person to talk to is not always easy. Try to get past the gatekeepers to someone in charge.
  
  
• Contact the credit bureaus that hold your credit report. Ask them to log the theft and remove the bad accounts from your report, giving as much proof as possible. You may meet difficulties, but by law the bureau must correct any wrong information.
  
  
• Have a " fraud alert " put on your credit report. This should (though it doesn't always) alert credit grantors to check a new application.
  
  
• Keep meticulous dated records of your attempts to clean the record — letters, phone calls, what was said. You'll need them. If multiple thefts were made, keep records in separate files for quick reference.
  
  
• Never agree to pay any portion of the debt just to get debt collectors off your back. The balance will stay on your record. Taken to extremes, says Stevens, this means " they could even come at you after your death, asking your executor to pay out. "
  
  

Finally: "I don't go along with the term 'victim,' " added Stevens, now 71, and an AARP member. "We just came out fighting mad. You can't allow these people to intimidate you. So 'warrior' would be a better word."