As far as Christmas presents go, it was one of the worst.
On Dec. 24, 2003, Jerry Shipman, president of the Better Business Bureau of New Mexico, wrote some checks and popped them in his mailbox. He raised the red flag and forgot about them.
By the middle of January, he discovered someone had stolen his checks and used one of them to buy a cell phone.
Because Shipman closely monitors his financial accounts online, he immediately caught the purchase, but it caused additional problems with other checks he put a hold on while clearing up the fraud.
In the ensuing two months, he closed his old checking account, opened a new one, fended off a collection agency and wrote letters to businesses telling them what really happened.
“The problems . . . were considerable,” he says. “I was lucky.”
For far less fortunate victims of fraud, a snatched check can mutate from a one-time loss into the ongoing nightmare of identity theft, a crime of stolen identification numbers, names and addresses striking more and more New Mexico consumers.
In 2003, New Mexico saw 1,317 reports – 563 in Albuquerque – of identity theft, up 60.2 percent from the 822 reported in 2002, according to the Federal Trade Commission. Compared with other states, New Mexico ranked 13th in 2003 and 19th in 2002 for the number of victims per 100,000 people.
Nationally, the FTC estimates nearly 10 million people were victims of identity theft in 2002, and the cost of the crime soared to roughly $52.6 billion for businesses and consumers the same year.
In some of the worst cases, victims find themselves with criminal records as the thieves of their identity commit other crimes and get arrested under the stolen names. In other cases, banks deny victims loans because an identity thief has taken out credit cards or loans in the victim’s name and racked up considerable debt.
The costs can become financially and psychologically devastating as victims struggle, sometimes for years, to restore a healthy credit rating and clear up the fraudulent purchases.
“Some compare it to a cancer that’s invaded their lives,” says Linda Foley, co-executive director of the Identity Theft Resource Center, a San Diego nonprofit organization helping victims of identity theft. “This crime never seems to end.”
One organization fighting the growing problem is the New Mexico Securities Division, which licenses and audits the state’s stockbrokers and investment advisers. Since 1989, the agency has been educating the public on the details of financial investment and dangers of financial fraud.
After sponsoring a PBS program about identity theft that originally aired on Albuquerque’s KNME-Channel 5 in early December 2004, the Securities Division began expanding its educational programs and seminars to address the increasingly occurring crime.
“If you get into that situation where someone truly takes your identity . . . that can be a nightmare to try to unwind,” says Bruce Kohl, director of the Securities Division. “We feel one of the most effective ways to combat it is preventative.”
Frank Mulholland, who presents one of the Securities Division’s seminars called the “Savvy Investor,” says attendees from all over the state have had more questions about identity theft in the last year than in the last two years combined. Often they, their friends or their family members have been victimized and they’re looking for advice on what to do next, he says.
“It’s not a hypothetical thing in many of these questions,” he says.
Tricks of the trade
The ways by which one can fall victim to identity theft are numerous and expanding as technology advances.
Some thieves steal wallets or purses and use the information found on the Social Security or health insurance cards inside.
Foley with the Identity Theft Resource Center points out that if people must carry a card with a Social Security number on it, they should carry a copy with the last four digits blocked out.
Other thieves go through trash cans and fish out documents containing names, addresses and account numbers. In response, many companies have shortened or removed customer account numbers from documents they produce. Shredding sensitive information – including credit card offers – can help protect against such theft even further.
Mailboxes also make a tempting target. Raising the red flag – Foley calls them “come-and-steal-me flags” – to inform mail carriers of outgoing mail is especially ill-advised. She suggests people install a locked mailbox.
Thieves also target e-mail inboxes with e-mails posing as official messages from banks, credit card companies or other businesses. Known as “phishing,” the false e-mails typically tell consumers they need to fix something with their account by visiting a specific Web site, which turns out to be illegitimate. The scam succeeds when consumers type in sensitive information – such as passwords – into fields on the fake Web site. Any such e-mail should be reported to the actual company being impersonated.
Skimming is when a thief takes a credit card and runs it through a skimmer – a legally obtainable credit card reader that has been modified and captures all the information on the card. Thieves commit the crime by getting jobs at busy retail stores that might give them the chance to temporarily move the credit card out of the victim’s sight. Keeping a careful eye on credit cards during transactions can help prevent skimming.
The New Mexico Retail Association is assembling a bill for the next legislative session to make skimming a felony.
“This is a crime that’s been happening throughout the country,” says Domonic Silva, vice president for government affairs with the New Mexico Retail Association. “We’re just trying to combat what’s evolving.”
Even though skimming is not regarded as a serious problem in New Mexico, Silva suggests people write “Check ID” on the back of their credit cards rather than sign their signature.
This solution might, however, cause problems with some businesses and organizations unwilling to accept unsigned cards. One solution is for consumers to write “Check ID” on the card’s back and sign it as well.
Both Kohl of the Securities Division and Sgt. Kevin Rowe of the Albuquerque Police Department’s White Collar Crime Unit would also like harsher penalties for identity theft. As of now, identity theft by itself is a misdemeanor.
“We need, on the judicial side, to have some teeth in the laws,” Rowe says.
Kohl points out that because of limits on victims’ liability, financial institutions and other credit-extending businesses have paid most of the financial cost of fraud including identity theft. Consumers’ payment comes more in the form of tolls on their emotions, mental well-being and time, he says.
In 2002, identity theft cost the nation’s businesses, including financial institutions, about $47.6 billion of the $52.6 billion total, the FTC says. Consumers bore the remaining $5 billion.
“Over the last five years, we’ve seen it increase,” says Steve Wells, former president of the New Mexico Bankers Association and president of Los Alamos National Bank.
Although the bank does not specifically factor the cost of fraud into the pricing of its goods and service, it does recognize it as another cost of doing business, Wells says.
“It’s an unfortunate cost, but (it) is the reality when you’re dealing with people and valuables,” he says. “It’s why they put locks on vaults.”
However, the bank’s growth is outpacing the growth of fraud, Wells says.
“The honest people are winning,” he says.
Shipman, with the Better Business Bureau, says businesses get hit hard by identity theft. They might never receive payment for fraudulent purchases, they lose customers paralyzed by fraud-tangled finances, and they must defend against the rare worker who commits fraud from the inside, he says.
“There’s a double whammy on businesses,” he says.
Despite the increasing incidences of identity theft, Albuquerque small-business leaders say the crime has not yet surfaced as a serious problem for them.
“I know security is an issue with small businesses . . . but so far identity theft and credit cards haven’t been,” says Anthony McMahon, district director of the New Mexico District Office of the U.S. Small Business Administration. “It’s not something that directly impacts the business owner as much as it does the victim who is the retail user.”
Foley says businesses can help put a damper on identity theft by limiting the information they collect from customers. They shouldn’t request a Social Security number unless totally necessary, she says, and consumers should question businesses that ask for it.
She says consumers should also take advantage of a new federal law that allows them to obtain one free credit report per year from each of the three major credit reporting agencies: Equifax, Experian and TransUnion, which show you any transactions on your credit file that you might be unaware of.
The law took effect for residents of New Mexico and other Western states Dec. 1; the rest of the country will have access to the free reports on a rolling basis. As each report closely resembles the other, it’s best to spread the three throughout the year.
“With identity theft, there are pattern changes we are all going to have to get used to,” Foley says. “We need a national wake-up call now.”
ON THE RISE Number of identity theft cases reported in New Mexico:
Number of identity theft cases nationwide in 2002: 9.9 million
Number of identity theft cases nationwide in the past five years: 27.3 million
Source: Federal Trade Commission
Here are a few tips from experts on how to avoid identity theft:
Don’t keep documents displaying sensitive personal information – such as Social Security or health insurance cards – inside your wallet. If need be, carry copies with the last four digits of the Social Security number blacked out.
Shred financial statements and other documents that might contain sensitive information before throwing them out.
Send mail from secured mailboxes accessible only to you or post office employees.
Be wary of unsolicited, fraudulent e-mails designed to appear as if sent by a legitimate company.
Keep a close eye on your credit card when handing it over during a transaction to ensure the person behind the counter is not secretly taking information from your card.
IF IT HAPPENS
There are a number of signs an identity thief might have struck: Bills stop arriving at your house, unauthorized charges show up on your accounts, creditors deny you credit for no reason, or debt collectors are calling about debts that don’t belong to you.
Rectifying the damage can be a long, painful process that can cost time, money, energy and peace of mind. The Federal Trade Commission – at www.consumer.gov/idtheft – suggests the following steps to get your life and finances back in order:
1. Contact the fraud department of one of the three major credit report agencies and place a fraud alert on your file with them. Whomever you contact will share the fraud alert with the other two agencies, and you will receive free credit reports from all three.
Equifax: (800) 525-6285 or www.equifax.com
Experian: (888) 397-3742 or www.experian.com
TransUnion: (800) 680-7289 or www.transunion.com
2. Contact your creditors and close the corrupted and fraudulent accounts. Use an affidavit on the FTC’s Web site to contest new accounts opened in your name without authorization.
3. File a police report and get a copy of it. Creditors and credit reporting agencies often require one in order to clear up fraud, and it’s an official record of the crime. Before calling, prepare as much documentation of the theft as possible to demonstrate what happened. The Albuquerque Police can be reached at 242-2677. Visit www.cabq.gov/police for more information.
4. File your complaint with the FTC – (877) 438-4338 – to help it and law enforcement agencies track identity theft. You can find a link to the form on the FTC’s Web site.
Be sure to keep records of all the steps you take. If problems persist, or you need more information, many other local and national organizations can help:
The New Mexico Attorney General’s Office: (800) 678-1508 or www.ago.state.nm.us
The Identity Theft Resource Center (San Diego): (858) 693-7935 or www.idtheftcenter.org
The New Mexico Securities Division: (800) 704-5533 or www.rld.state.nm.us/Securities/
Call for Action (Bethesda, Md.): (866) 4-346-8546 or www.callforaction.org