A security breach affecting 360,000 credit card accounts at Citigroup last month made the financial giant one of the most recent companies to fall victim to cybercrime.
Identity theft is a serious and growing problem in the United States, according to federal regulators. The Federal Trade Commission estimates that as many as 9 million Americans have their identities stolen each year. The IRS, alone, reported 245,000 cases of identity theft involving 2010 tax returns.
“Identity theft is serious,” said the FTC in a press release. “While some identity theft victims can resolve their problems quickly, others spend hundreds of dollars and many days repairing damage to their good name and credit records.”
Blemished credit reports can cost victims job opportunities and loans for school, cars and housing, the FTC said. In rare cases, victims may be arrested for crimes they didn’t commit.
Fear of identity theft makes investors wary of using their smart phone to pay for transactions. More than half of affluent investors surveyed in June said they feel uncomfortable or very uncomfortable using the mobile technology as a means of payment. Our research also found that women (57 percent) were much more concerned about cyber security issues than men (46 percent).
Identity thieves work by rummaging through garbage for papers containing personal information and by skimming card numbers during financial transactions, the FTC said. Phishing scams take place online when cybercriminals posing as financial institutions or companies try to trick consumers into revealing personal information.
Some thieves complete a change of address form in the victim’s name and divert billing statements, and some do it the old-fashioned way by stealing wallets, purses and mail containing financial statements, pre-approved credit offers, new checks and tax information, the FTC said. Personnel records can also fall into the hands of criminals, who may bribe employees with access to the information.
The stolen identities are used to open new credit card, bank, phone or internet accounts in the victim’s name. Some close ATM cards and drain their victims’ bank accounts. Others take out loans in a victim’s name.
Thieves may use stolen identities to obtain government documents, such as a driver’s license or ID card, or to obtain government benefits. Others may use a stolen Social Security number to get a job, or may file a fraudulent tax return. A victim’s name may be used to rent a house or get medical treatment. If arrested, they may give the police a victim’s name and address. If they fail to show for a court date, a warrant for arrest will be issued for their victim.
Awareness is the best defense against cybercrime, but if consumers feel they have fallen victim to identity theft the FTC urges them to act immediately by filing a police report, notifying creditors and disputing any unauthorized transactions that have taken place.