Identity theft a $100-billion industry
Source: smh.com.au
By Garry Barker
Date: July 07, 2003
He who steals trash can get your name ... and thence into your savings accounts.
What's in a good name? A fortune, for those who play your cards wrong.
If, in the days before plastic, online banking and the internet, you saw someone rummaging through a garbage bin, you knew they were a mostly harmless vagrant.
Today, the person burrowing through the dumpster full of discarded documents could be a millionaire criminal looking for more identities to steal.
Identity theft is big business. In Australia alone the proceeds of identity frauds, including dud cheques, still one of the largest sources of fraud, is estimated to be nearly $6 billion a year.
Worldwide, it may be as high as $100 billion.
In the US in 2002, an estimated 700,000 people were victims of identity theft, were stripped of their savings and their credit ratings, thrown into dispute with banks, loan companies, stockbrokers and even governments because their identities had been stolen and put to criminal use.
One of the most celebrated of recent ID thieves, Abraham Abdallah, a 32-year-old former dishwasher, pleaded guilty in a New York court last October to masterminding what investigators said was the largest identity theft so far attempted, a scam aimed at scoring more than $US80 million ($117.5 million).
Abdallah had fraudulently obtained loans from finance companies using the stolen identities of numerous celebrities including Microsoft co-founder Paul Allen and film maker Steven Spielberg. He used computers in public libraries and phone calls to get the credit records of stockbroker and bank accounts belonging to billionaire investor Warren Buffett, George Lucas, Oprah Winfrey, Ross Perot and the mayor of New York, Michael Bloomberg.
The most sobering point is that so many of the organisations hit by the fraud attempt appeared to take Abdallah's approaches at face value and as genuine.
At the time of his arrest, Abdallah also had 800 fake credit cards and 20,000 credit card blanks in his possession. He told police he used a list of the 400 wealthiest Americans, published by Forbes to select his targets and, using information obtained online and through phone calls to credit companies, opened accounts at Merrill Lynch and a big US loan company.
US reports of the crime do not say how Abdallah extracted the details but identity thieves commonly use a conversational technique to gain the trust of call centre operators and trick them into giving closely guarded information.
Abdallah's scheme was uncovered as he attempted to transfer $US80 million from legitimate accounts into his own using fraudulent wire transfers and counterfeit cheques.
Abdallah overreached and was caught, but thousands of other ID thieves get away with fortunes, almost every day.
In Melbourne last year, a Taiwanese man was arrested and charged with defrauding Victorian merchants of more than $500,000. He was carrying 103 forged credit cards, all with genuine numbers, most probably obtained from documents stolen from letter boxes or in "dumpster raids" in Australia and elsewhere.
CityLink's computers were hacked into about a year ago and several hundred credit card numbers were posted on a website, although none, apparently, was used fraudulently. Some American banks have been similarly attacked with, in cases, greater profit to criminals.
Computer-based financial crimes are now at a level in Australia and the rest of the world that, according to a report on fraud published in March by the Australian Institute of Criminology and PricewaterhouseCoopers, "has the capacity to retard legitimate business development . . . and security risks have slowed the implementation of online business models".
The rapid growth in the use of the internet and computers has made the misuse of identity much more common and easier to perpetrate.
Credit card "skimmers", small battery-operated card readers worn on the belt, may be bought openly in many Asian cities. If, through subterfuge, the skimmer can also get a customer's PIN number, it is easy to counterfeit what appears to be a genuine credit or debit card.
Even the holograms that distinguish cards such as driver's licences and Visa credit cards are now relatively easy for criminal gangs to copy and produce quickly in vast numbers.
"The use of computers has made theft of identity much easier for criminals," says Dr Russell Smith of the Australian Institute of Criminology. "Most of our systems for identifying people in government and business are based on people submitting documents and computers make it easy to alter or counterfeit documents.
"Even the more secure documents such as passports and driver's licences can be counterfeited or altered by enterprising criminals."
Millions of dollars are regularly skimmed out of government welfare systems through false identities, some of them produced by highly organised gangs operating nationally and internationally. About 40 per cent of such crimes in Australia are committed by locals. Of the rest, by far the largest group (about 10 per cent of the total) originate in South-East Asia, the institute's figures show.
Australian laws on identity theft vary from state to state, Dr Smith says, "but they tend not to be used in prosecutions which are more often based on the consequences of the deception, such as obtaining money, or opening a bank account in a false name, rather than on the theft of the identity".
In the UK, for example, it is not illegal to take someone else's identity, or even manufacture a bogus credit card, but it is illegal to profit from either activity.
"In the US, theft of identity is regarded as a crime but that has not been investigated in Australia," he said. "I think we probably have enough laws to cover these cases but often they are very difficult to prosecute."
Identity theft, such as is the central theme in the movie Catch Me If You Can, about the exploits of Frank Abagnale, a notorious fraudster who now works with the FBI and international banks in fighting fraud, is generally done by individuals.
Counterfeiting of credit cards or "skimming" their PIN numbers at automatic teller machines or in shops and restaurants is generally the work of organised gangs.
St George Bank's automatic tellers were hit last year by criminals who inserted electronic skimmers into the card slots of the machines to read card numbers. They then used a video camera with a telephoto lens to record the PIN number being punched in on the machine's keypad. From that information it was easy for them to produce usable cards.
Australia now has a central high-tech crime centre operating out of the Australian Federal Police complex in Canberra but staffed by specialist detectives and technicians from every state and territory police force. It will target a broad range of cyber crime, ranging from child pornography to card fraud.
"High-tech crime is no longer the province of science fiction movies," says Mal Hyde, chief commissioner of the South Australian police, who is chairman of the new centre.
The centre has its own investigators and acts as a clearing house for information on online crimes and identity theft in Australia and internationally, co-operating with security agencies in the US and the UK.
Original article: http://www.smh.com.au/articles/2003/07/06/1057430077059.html
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