The Identity Thief: The Credit Card Fraud - Essay Example

The Identity Thief -The Credit Card Fraud As more and more people are willing to pay the expenses of their daily activities using credit cards and debit cards instead of cash and checks, a new millennium crime has spawned: Identity thief (Hoar). It could be accomplished anonymously, easily, through a variety of ways and the consequences are extremely devastating. What is Identity Theft? Basically, there are thieves who steal other people’s identity information such as name, date of birth, social security number or bank information and use them for their own benefit to defraud their victims. This paper will delve into discussing credit card fraud, how it is done and its effects on the society and economy. Today, it is not strange to hear that someone’s credit card got stolen and lost a huge sum of money. Actually, every mundane activities of a typical consumer may provide a nice chance for identity thieves. As long as your identity information is shared or seen by others, that is a golden opportunity for identity thieves. By just filling out a personal information form in social media, purchasing items in a market or getting gas from a gas station, one’s personal details can fall into the hands of identity thieves (Smith and Lias). Basing on the public record, identity theft has been the fastest growing financial crime in the U.S. in past decades. According to the Federal Trade Commission, there were more than forty-two percent of 204,000 complaints in the Federal Trade Commission database in 2000 (Hoar 142). A recent report by the Federal Trade commission revealed that the average rate of credit card fraud in the U. S increase by ten percent annually because of identity theft. This means that one out of ten people around us may have been the victims of the identity theft. As the identity theft is growing, the related crimes are also growing fast. This has a bad effect in the economy and the society. It is not just hurting the benefit of small groups, it is also hurting more and more people in our daily life. Therefore, in order to prevent these negative influences in the economy, then the government needs to set up strong regulation that aim at identifying these identity thieves. Consequently, these identity thieves can cause serious money laundering problems and influence teenagers negatively to adopt this bad behavior. How can an identity thief steal our information today? Basically, there are three ways they are using: stealing information online, stealing the information from the POS machine or ATM, and obtaining personal information disguised as officers from banks or security departments through phone calls. In recent times more and more people choose online shopping instead of going to the actual store. This has led to an upsurge in credit card fraud. This is ascribed to the fact it provide an avenue for identify thieves to have an opportunity to steal personal information of many people. The more times consumers fill out their financial information, the higher ratios of credit card fraud and identity theft happen. Just in the U.S. victims may spend on average 1500 dollars in out- of pocket expense and about an average of 175 hours in order to resolve the credit card fraud problems caused by identity thieves (Jr). In contrast, identity thieves do not use any penny. What they do is just hack the web or make some fake website which says they could send free gift card as long as people registered in their website (Smith and Lias, issue2). For relatively conservative people who do not like using online shopping, the actual store shopping may not also provide that security as before. The identity thieves can still steal the information they want from POS Machine or ATM. Last year, there was news that shocked almost all families in America. There were more than 40 million credit and debit card accounts belonging to customers of Target were reported to be affected by data breach after being targeted by identity thieves. This occurred during the Thanksgiving days. Target said that those 40 million customers affected were not only online costumers, but also actual store shoppers. These breaches still affect a lot of families and threaten their future purchasing in Target. Although Target would not like to talk about how the identity thieves stole their customers’ information, many evidence points out the identity thieves might have stolen the customer information from the POS machine (Koops and Leenes). Similar to the POS machine, identity thieves can also steal the information from the ATM. A lot of people are used to keep some cash in their pocket. When they run of cash in their people, such people instead of driving to the bank, going to the ATM seems to be more convenient. In spite of the many cameras around ATMs, they are still not that safe as we think. Identity thieves can steal our credit card information by faking ATM, shouldering surfing, skimming devices and faking key pad overly attack. First, faking ATM actually is a faked ATM that automatically share the user’s information and PIN with the thieves. It is similar to genuine machines and could be used as an ATM, but it can share one’s information (Gerard, Hillison, and Pacini). This kind of machines may not exist in the U.S., however; they have been found in many places in India. Secondly, shouldering surfing is using the digital technology by recording the users’ information. Sometimes by using skimming machines, attackers may record all bank information by forging a new card. Third, skimming devices has been a common threat all around the world. By stealing data from multiple cards when a user gives a payment, the identity thief can make a new card in three minutes after they get the data they need. The last one is faking the keypad overlay attack. The attacker places a keyboard overlay upon a real keypad. Once the user uses it to enter the PIN, it can record the PIN and credit card number automatically (Duvey, issue 1). One of the common ways that people’s information gets stolen is identity thieves disguising themselves as officers from banks or security departments through phone calls. It is common sense that people do not become suspicious when they receive a phone call from 800-xxx-xxxx. This is ascribed to the fact that most phone number starting with 800 are from reliable companies such as Geico, ATT, HP, and even some government agents. Many people would easily tell their actual security information when someone calls from those lines (Koops and Leenes). However, if you use Google, it is not hard to find a place to buy a phone number that that begins with 800 and it only cost a few dollars. After they get the security number and personal information, it is not hard for identity thieves to apply for new cards under the victims’ account or replace the old ones. What can identity thieves do after they get those financial information and personal information? They might use this personal information to earn some profit directly, earn profit by selling those identities to black-market or they may use those identities for other personal purposes. First, identity thieves use the stolen information to pay for their daily life expenses and make profit. Last year, there was a movie known as ‘Identity Thief. In that movie, there are living images showing how identity thieves pays for their daily life by the stolen credit card in a comedy way. The main character made tens of ID and credit cards herself so that she could live a high standard life by using those accounts. Whenever she needs more money, she would steal more credits cards. Compared to the main character in ‘Identity Thief’, there are always more greedy people. More and more identity thieves are not satisfied with paying their daily life by others’ credit cards. They want to be rich, so they started a new criminal line for trading the goods they got from the stolen credit card. In last November, three Californians, Xiaoling Cao, MengzhaoTu and Khailee Soong, faced criminal charges after allegedly raking up as much as $150,000 in flatulent credit card purchasing (Gerard, Hillison, and Pacini). They used the credit cards they stole to purchase thousands gift cards and resale those gift cards or buying goods to resale to earn profits. Last December in New York City, there are more than ten people who got arrested because they purchased tons of baby formula by using other people’s credit cards and tried to ship those formulas to China in order to resell them. This is a lucrative business, identity thieves do not need to invest any money since they get goods for free. No matter how much they set the price for resale of their items, they are earning money and make the dirty money clean. Some identity thieves are selling the identities to the black market. Compared to stealing the financial information, it is easier to steal someone’s driver license information. It only cost about one hundred dollars for one to get a new identity (LoPucki). These false ID may not be useful to many people, but there is a very high demand for them in black-markets by underage drinkers, like high school students or underage college students. Similar to the credit card theft, it is also a lucrative business, but with a lower risk. Lastly, some people use them for criminal purposes. It is believed that many criminals use false identity to get access to the secure location and obtain employments for living. These criminals may have many different identities, and this make their arrest extremely hard. How do identity thieves affect their victims? They might affect the victims in terms of financial, credit history, and may send their victims to jail. Basing on the data from Federal Trade Commission, many victims spend more than 1500 dollars in the pocket expense, which apparently is not a small number to most people. Also, as the most “popular” financial crime, it resulted to an estimated loss of 221 billion dollar worldwide in 2003 (Gerard). Credit card fraud also leaves a credit history problem to victims. Due to the federal law, the identity thief has to play gutty in the court and give the detail of how much money he stole and who he stole from in order clear the victims’ bad history record caused by identity thieves. It sounds pretty easy. It only needs the criminal to tell a few words. However, the problem is that most identity thieves do not remember who they stole from since they stole the information from strangers. If the victims have no capability to pay for the credit the identity thieves spent, the bad credit record may follow them their whole life. Then the victims may also be sent to the jail. In the Identity Theft and Assumption Deterrence Act of 1998, it said that any theft of personal information with the intent to commit an unlawful act in the U.S. has penalties of up to fifteen years and a maximum fine of 250,000 dollars (Gerard, Hillison, and Pacini). Also, the people who buy stolen goods may be considered to be companions or partners to the crimes. It would be hard to explain that one did not know the goods he or she bought from criminals are legal since the goods come with a surprising low price. How can identity thief use 40-million customer information without getting attention? 40-million is not a small number even if the thief steals one dollar from those victims, it is still a big number. They got help. Due to the MSN financial report, more and more criminals are hiring the college students to use these false cards to make purchase (“Stolen Credit Cards”). Basing on Santa Monica Daily News Paper, there are more than one percent college students working for identity thieves. These students can get as much as one hundred dollars as commission for buying a single luxury item for the identity thief. Once they get arrested, they are treated as accomplices of those thieves even though they probably thought they are working as fashion buyers. Also, there is another potential victim, the retail store. Even though the identity thieves buy the goods from retail stores, but they would not sell those luxuries directly. It is more like the gangs, the top level ask the lower level to sell the luxury (“Stolen Credit Cards”). There is always a consumer surplus because lower prices than the retail store and the substitution affect the market. To make more profit, those people may sell something fake to satisfy the high demand. This could cause bad effects to the retail store since some bad quality goods are unacceptable to the retail quality. All in all, the advantage of the information age has created new challenges to protect privacy and security of financial information. One of those challenges is the identity theft. How to detect these frauds early and how to protect the customer’s privacy would be the top concern. As the scheme is changing, a new regulation system need be made. Works Cited Gerard, Gregory J., William Hillison, and Carl Pacini. Identity Theft: The US Legal Environment and Organisations’ Related Responsibilities. New York: Springer Books, 1993. Print. Hoar, Sean B. “Identity Theft: The Crime of the New Millennium.” n. pag. Web. Jr, Everton Bailey. “Trio Accused in $150,000 Oregon, California Fake Credit Card Purchases, Police Say.” Oregonlive Online. N.p., 2013. Web. 9 Dec. 2014. Koops, Bert-Jaap, and Ronald Leenes. “Identity Theft, Identity Fraud And/or Identity-Related Crime.” N.p., 2006. Web. 9 Dec. 2014. LoPucki, Lynn M. Human Identification Theory and the Identity Theft Problem. New York: Springer Books, 2001. Print. Smith, Alan D., and Allen R. Lias. “Identity Theft and E-Fraud as Critical CRM Concerns. 2005.” N.p., 2005. Web. 9 Dec. 2014. “Stolen Credit Cards.” MSN Online. N.p., 2011. Web. 9 Dec. 2014.  Read More