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How Identity Theft Happens

(...and why it can easily happen to you)

In today's digital age there are seemingly countless ways identity thieves and cyber-criminals can get personal information about you, steal your money, and use your identity and your credit record to commit fraud in your name. The risks are real, affecting millions of people every year.

This quick overview of how identity theft and cyber-crime happens today will help you understand how easily it could happen to you, and why you need to protect yourself and your family.


Data Breach
Businesses, government agencies and organizations of all types and sizes gather, store and share all kinds of personal information about their customers and employees. This is a virtual gold mine for thieves!

A "data breach" is any incident where customer or employee information is accidentally lost or exposed by a careless employee, or stolen by a hacker or thief. Stolen laptops, lost USB flash drives, un-shredded paperwork, improperly discarded computers, and hacker break-ins are among the most common ways files are lost or stolen. Another growing problem is "insiders" – employees or contractors gaining access to data and selling it to criminals.

With so many businesses and organizations doing a poor job of protecting personal information, and with criminals targeting businesses and organizations, there is a good chance your information will be exposed or stolen in a data breach – if it hasn't already happened to you!

  • 47% of adults had their personal info exposed in data breaches in last 12 months (Javelin Strategy & Research)
  • In 2013, 1 in 4 Americans who received a data breach notice involving their personal information became victims of ID theft (Javelin Strategy & Research)

See lists of recently reported data breaches at the Privacy Rights Clearinghouse or the Open Security Foundation.

Friendly Fraud
A significant percent of identity theft cases involves friends, family or other acquaintances. Common among these crimes is child ID theft, senior ID theft and ID theft through messy divorces. Young adults, college students are easy targets because of their age and inexperience and carefree trust of people they've just met. Thieves will use social networking, music download and sharing sites, and other shared interests to gain access to the victim's personal information, passwords or account numbers.

Computer Hacking
Cyber-criminals are expert at breaking into or hi-jacking home computers and laptops. Hacker intrusion, including international organized crime rings have become commonplace – and they now target home and small business computers, looking for credit card numbers, online banking logins, and other personal or financial information. If a hacker gains access to your computer, they have access to everything you do, and you probably wouldn’t know they were there.

How big of a threat is computer hacking and cyber-crime? Look at these stats:

  • Cyber-criminals capture and sell over $114 billion worth of stolen data each year – compared to only $43 million stolen in bank robberies in 2010! (MSN Money / FBI)
  • At last count, almost 4 million computers are now infected with the Zeus Trojan spyware program that steals online banking login information.

Spyware/Keyloggers
Spyware, viruses, worms, Trojan horses, rootkits and keyloggers are all common tools of the trade for cyber-criminals and ID thieves. They are used to infect computers and capture specific information such as credit card numbers, online banking logins, passwords, Social Security numbers, and more. Captured information is automatically transmitted to the hacker and then later sold to identity thieves and underground brokers of stolen information.

Viruses are often carriers of these information capturing tools. Unfortunately, you will likely never know your computer is infected with some of the newer more dangerous hacker tools. Anti-virus/anti-malware software generally does a good job detecting the more common viruses and spyware, but they do not catch everything, and cannot remove certain malware designed to imbed itself right into your computer’s operating system.

It's best to frequently have a trained security professional do a full system diagnosis and manually find and remove specific hacker tools and infections that can result in identity theft or cyber-crime.

  • Watch this video to see how the Zeus Trojan was used by a crime-ring to steal over $70 million from individual and business bank accounts.

Email Phishing
A phishing email is an email from your bank, credit card company, utility, cell phone company etc. that appears to be completely legitimate, but is actually coming from a cyber-criminal with the intent of duping you into giving them your sensitive information. The word phishing is derived from "fishing," because the emails are like bait set up by the criminal.

The emails may look legitimate, but clicking on the links may immediately install spyware or keyloggers into your computer. The websites they send you to may look exactly like the sites you are familiar with, but actually belong to the thief. The phone numbers listed will go to bogus phone centers. Phishing attacks can be very sophisticated setups designed to do one thing – extract information from you.

Legitimate emails from businesses you have accounts with do not ask for sensitive information via email.

Phone Vishing
Vishing, or "voice phishing" is when you get a call on your phone from someone who says they are from a trusted source, like your bank or credit card company. They can also pose as your phone company, utility, etc. The person calling you is actually a thief, looking to trick you into giving up your account or other personal information.

They will tell you there is a problem with your account or your card, or service – or that your account needs to be updated. They'll ask you to verify your identity – but they're not verifying anything, they are simply stealing your account information so they can steal your money. They may even leave a message if you don't answer and direct you to call a bogus number where the fraudsters are waiting to get you to give them your information.

Text/Cell phone Phishing
Cell phones are increasingly being used in vishing scams – through SMS text messages. You may receive a random text message that appears to be from your bank, etc. – but again, it’s the thief looking for you to respond and give up your information. Your bank, credit card company or any other legitimate business will not ask you to update your account or give up personal information via a text message to your cell phone.

Vishing victims typically have large amounts of money or all their money withdrawn or wired out of their accounts within just 10 minutes of receiving a vishing phone call.

Card Skimming
Skimmers are small electronic devices that thieves place over the card slot of a gas station pump, ATM machine or a handheld credit card device, like those used by waiters. With card skimmers, everything appears normal to you, but the thief collects your card number and other information from the magnetic stripe when your card is swiped. Most often, they use the captured information to create counterfeit cards and purchase things in your name. This is a fast growing problem, costing consumers and businesses billions each year.

Change of Address
This is an old school tactic to change the address where you receive mail and divert your bills and other personal information into the hands of the criminal. The thief collects addresses either online, through the phone book, or driving by homes. Then they simply complete a Change of Address form with the U.S. Postal Service, which is easily available online or at the local post office. This form of identity fraud continues to be one of the most used schemes by thieves today.

Stolen Wallet
Of course, thieves will take the cash and credit cards you have in your wallet. But today's criminal is also looking for everything they can use to also steal your identity – like your driver’s license, membership cards, bank account numbers, insurance information, and more. With all the hi-tech crime happening, lost or stolen wallets are still a significant source of identity theft problems.

Dumpster Diving
This method of getting personal information has been around since long before the Internet age. The thief will go through dumpsters at office buildings, mortgage companies, medical clinics, schools, etc. looking for any form of identity information they can get their hands on. Criminals will also dig through your personal trash to find old bills and mail like pre-approved credit offers to re-create your identity. It's important that you shred all important documents or mail that you have prior to throwing it away.

Mail Theft
Stealing mail is of course a federal crime, but it's an easy way for criminals to steal your identity right from your mailbox, drop box, or mailbox panels. Though many mail thieves are typically looking for cash and valuables, identity thieves know your mail contains much more. Along with pre-approved credit offers, your bank statements, tax information, credit card, mortgage and loan statements are among the common things thieves can use to steal your identity.

Black Market Sales
When hackers and cyber-criminals get their hands large batches of stolen identities from a business or other organization through a data breach, they generally cash out on their crime by selling the stolen IDs on the underground online black market. These black markets for stolen IDs and credit cards are international, typically hosted on websites in countries outside the U.S., but frequented by hackers and thieves around the world who want to buy the stolen data and use it themselves, or to sell to other criminals locally.


ID theft and cyber-crime...
The new crime for a digital age

Cyber-crime: $114 billion
Cocaine market: $85 billion
Bank robberies: $43 million
(MSN Money / FBI)

Over 800 million personal information records have been reported lost or stolen since 2005 in the U.S.
(Privacy Rights Clearinghouse)

8.4 million credit cards are stolen annually in U.S.
(Ponemon Institute)
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