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Wake Up America
By Robert Allen Hamlett
AuthorHouseCopyright © 2012 Robert Allen Hamlett
All right reserved.
Chapter OneIdentity Theft – Consumer Fraud
Who pays the cost of Identity theft? The consumer pays the cost for identity theft just like the consumer pays in every other category. The crime should be called consumer theft. Businesses lose out, but they pass those loses back to the consumer. This is just the cost of doing business. Now let's look at the credit card companies or the banks that actually operate the credit cards.
Identity theft has doubled every year from 2001 until 2005. Most identify theft cases involve the use of stolen numbers-either a credit card number or a social security number. The unfortunate dilemma is that we use our social security numbers for everything we buy, sell, or register, for organizations that we join, on and on. When we purchase a VCR from a store or order one through the mail, we are forced to complete the warranty card and send this back to the manufacturer. The manufacturer then has the information that we willingly provide to their database for marketing. This information includes our name, social security number, date of birth, address, telephone number, etc. They already have our credit card number from the purchase. Now the company takes this information and uses it to identify the consumer as potential customers for something else, like a camcorder. The company will also sell their database of customer information to other companies to be used for the same purposes. These companies will sometimes trade their information or databases.
This policy creates the problem. If the FBI or police wants to tap into this database, the law requires a subpoena or court order to obtain that private and allegedly protected valuable private information. If Con Man Carl wants the information, he just creates a company, becomes a customer, and buys the database. Now Con Man Carl has access to all of your data, and this is the data that he needs to tap into your hard-earned money.
Unfortunately the FBI cannot review any of this data to protect you, because the liberals in this dear country want you to think that the FBI is spying on you. The liberals think the FBI wants to know who you are talking to on the phone, where you shop, or who you might be sleeping with. Take a personal note. The FBI doesn't care. Nor does the FBI have the time to care. FBI agents have families too, and they would rather be home with their spouses and children going to soccer games.
The FBI used a computer system known as "Carnivore" to extract potential terrorism information and to identify those who might be planning a terrorist attack. I ask you a question. Would not most Americans prefer that the FBI, CIA, Homeland Security, or one of the appropriate government agencies take every step possible to prevent another 911 attack on the United States? The ACLU and their followers would like for the average American to worry about the government spying on them. These liberals spread numerous reports that the FBI was reviewing all of the emails that Americans were sending. Do you know how many emails are sent per day? About ten zillion, if the number is even accountable. There are only twelve thousand FBI agents as of 2011. There is no way that the FBI and/or all the federal agencies together could handle this job. But beware, the liberals will promise that you must worry about what you email to your friends or relatives.
Sometimes victims of identity theft do not find out that they are victims for many months, even years. In 2002, the Justice Department estimated that over 700,000 people would become victims of identity theft. It costs the average consumer more than $1000.00 in expenses to cope with the damage to their credit history and their buying power. The cost and responsibility to recover from identity theft or credit card theft is solely the responsibility of the consumer. In 1997, a woman in California obtained a driver's license of a soon-to-be victim. The crook was able to drain $4000.00 from the victim's bank account and steal a rental car. When the victim went to rent a car, the victim was almost arrested. Have you ever tried to correct a problem at the Department of Motor Vehicles? It takes an Act of God or at least a Presidential pardon. Currently, the highest areas for identity theft are California, Arizona, and Washington DC.
The present and future arena for thieves exists on the internet. A victim in Kentucky received a call from an online retailer that the victim had never known. The caller asked the victim if he knew a man by the name of Boonchard and of course, the victim responded that he did not know the man. The caller then asked if the victim really wanted to charge $4000.00 worth of cell phones and other electronic equipment, then ship these items to Thailand. Thank goodness for the call. Most retailers would send the merchandise and only follow-up after a problem arises. Hacked from unsecured computers, swiped by crooked retailers, or located in trashcans, there are stolen account numbers flying across the internet faster than you can send an instant message. The victim from Kentucky had been a victim because his name, address, credit card number, etc., had been zapped across a chat room for all to see and all to use.
Scams on the internet are booming. The crooks try to use identical web sites and use pop-ups to advise the user of an impending virus or present a request for an update of the user's information in order to install various protective measures. A user in Virginia received an email message in his in box reflecting that America Online needed to verify his credit card information. Unfortunately, for the crook the user was a technician for the FBI. The domain name was a fake and was a scam known as "phishing." The resulting investigation resulted in the two crooks being convicted and sentenced to four years in jail.
In the past, these types of crooks were typically loners and hackers. Now, organized crime and terrorist support groups are behind these crimes. The crooks usually operate from outside the United States, making the investigations difficult and sometimes impossible to prosecute. The crooks are more intelligent and use many new resources. The amount of money being made illegally is astonishing. The chances of getting caught are minimal. The chances of getting prosecuted are almost zero. An audit conducted in 2003 identified over 60 million emails that were various types of "phishing" sent in one month. Some of these emails from the past were easily spotted due to the broken English used by the crooks. That has changed in the last year or two. The crooks often use companies such as banks, AOL, eBay, and other company names that are well-known to the consumer. People feel they can trust these companies, and the crooks extort that trust. One crook can send a zillion emails in a matter of minutes. These emails may contain "trap doors" which allow the crooks access to company or private information.
Ghana and Nigeria have a history of hosting crooks who use the internet to obtain personal financial information from victims and use this data to make purchases. The purchases are then sent to Nigeria. The goods are already on flea market tables in Nigeria before the victim is aware of the problem. The Secret Service and the FBI have established contacts in Nigeria and Ghana. Now the crooks have moved to other countries including Spain, the Netherlands, Ukraine, and Latvia. The problem is that the internet allows the crooks to appear online as if they are in the United States or a neighboring country, when in reality they are physically located in another country. As more and more people get online, more and more users will become victims.
The retailers play a role in the use of stolen credit cards. The sales associates are so eager to make the sale and receive the commission that they don't recognize the flags or they don't care about the risk. A victim in London learned that his name and credit information had been posted in a chat room. An online store contacted the victim early one morning and asked the victim if he had ordered over 200 DVD movies to be shipped to Asia. There were obvious flags that the retailer determined was a possible problem. This saved both the consumer and the retailer. As consumers and retailers, we must be alert.
How are most credit cards stolen? The U. S. Secret Service, which investigates credit card fraud, advised that most thefts occur in the physical world. The cards are swiped through electronic "skimmers" at corrupt retail businesses. Any business such as a gas station or restaurant could provide access to the crook. The server takes your card to the back room to swipe for your dinner charges. The server has all day to swipe your card through a "skimmer," read the label on the back, and note all the appropriate numbers associated with the card. She will even have your signature to copy as needed.
These "skimmers" are about the size of a pager and can store hundreds of account numbers. The information from the "skimmer" can then be downloaded to a computer and sent anywhere in the world. You may have dinner in Detroit one night and before you get home, you have bought dinner for hundreds of friends you did not know in Russia. They may even present you with a toast as gratitude.
An example of a simple assault on the credit card database was identified in March, 2000. Two teenagers in a small Welsh community hacked into the computers of several online retailers and obtained over 25,000 credit card numbers. Credit card companies and banks play down the significance of these intrusions. To banks, this is considered overhead, just a cost of doing business. To the consumer, it becomes a nightmare.
In 2000, Visa USA, one of the largest credit card companies, released a statement that the rate of credit card theft had gone down. In 1999, Americans had charged more than $721 billion on their accounts. Just $433 million (about six cents from every $100 charged) was fraudulent. Again, to the banks, this is overhead or just the cost of doing business. Remember that all businesses suffering loses pass those loses on to their consumers. If they did not, they would not be in business for very long. So what the credit card companies and banks are saying is that the credit card problem is small and the consumers will pay for it. Will you pay? You bet you will, if you become a victim.
Could the banks slow down or prevent some of the fraud? You bet they could. A 65-year-old neighbor who had one Master Card his entire life contacted this author about a problem. Joe, who lives in Maryland, received a letter from a Visa credit card account requesting a payment of $10,000 for an overdue balance. It seems that a crook in Washington DC had opened an account using Joe as a co-applicant. The address used by the crook was a mall in Southern Maryland. After a year of attempts to contact the crook at the mall via mail, Visa now started contacts with Joe in Maryland. Where were the contacts when the account was opened? Visa did not care at that time. Remember the overhead cost of business. Visa expected Joe to take care of their mistake. It took Joe numerous calls, letters, and money to fix his credit. The banks do not want to slow down the fraud. The percent of fraud to the banks is too low. Will Congress step in and help the consumer? Do not waste any sleep thinking this will happen. Who do these banks support with their contributions? Big banks send thousands and thousands of dollars each year to both the Democrats and the Republicans. Who do you think pays for those trips, tickets to athletic games, etc? Who actually writes the congressional bills associated with the banking industry? The lobbyists that are hired by the banks underwrite any legislation that is submitted. There is no way the banks will lose business. So with this in mind you will keep receiving at least three or four credit card offers per week. This is true for those with good credit or bad credit. My son began receiving credit offers at age sixteen. No one under the age of eighteen can enter into a credit card contract.
How do we protect ourselves from identity theft and/or credit theft? There are three major agencies that conduct credit reporting. Some insurance agencies offer protection plans.
Travelers Insurance of Hartford, Connecticut offers such a plan. Their insurance plan covers expenses for copies, mail, calls, time lost from work, and even attorney fees up to a set amount. If you become a victim, you will learn the hard way. The recovery process will take time and lots of telephone calls and letters. Unlike the Constitution, you are guilty until proven innocent. You will be forced to convince the credit card company or business that you are not the crook. If you are in the process of trying to obtain employment or make a major purchase during your recovery period as a victim, you may not get the job or qualify for the loan
A major step needed to protect the consumer falls in the lap of Congress. Consumers need to demand that their elected officials are aware of the extent of the problem, and they are enacting legislation that will protect the consumer. The spams and pop-ups are similar to telemarketing calls. All of us can attest to the pains that telemarketers cause by interrupting our daily lives. The Constitution protects us from any illegal entry into our homes. This was designed to protect citizens from the government making illegal entries and/or searches. When a telemarketer, internet marketer, or hacker enters your home or business via the telephone or the computer, they are encroaching on your constitutional rights. The consumer has the right to determine who he or she calls on the telephone or contacts via the computer. The consumer uses caller ID to protect themselves from unwanted calls. The same protection needs to be afforded online. The telemarketer on the telephone or on the internet should not be able the hide their identity when they make an unsolicited contact with the consumer. The consumer needs to be able to block those contacts at a cost to the telemarketer. The problem lies with the influence that big business has with Congress. The financial and telemarketing industry provides large monetary contributions to members of Congress, which will prevent any real consumer protection bills from ever being enacted. As all Americans know, not one Congressman has ever been influenced by a financial contribution.
Purchase an item from Radio Shack, and the clerk will ask you for your telephone number and zip code. This is how the retailers of the world track their sales. When you provide this info, the cashier will then say, Mr. Smith we are happy to serve you. You are in their data base and so is all your background data. One trick that I use is to provide my home telephone number while changing the last two digits. As long as you are consistent, they will never know. However, during one purchase my nine-year-old was standing next to me and listening while I provided the cashier with the wrong telephone number. You guessed it. My son stated, "Dad, that's not our number." I looked at the clerk and said something like, "Kids ... what are you going to do with them?" You are not required to give your home telephone number when you make a purchase. Order some flowers over the telephone or via the internet and the vendor will attempt to obtain as much information as you are willing to provide. This includes date of birth, social security number, credit card number, address, mother's maiden name, telephone number, a good time to call you at home, a work number, and anything else. That's data they can use for their marketing strategies.
The problem arises when the retailer sells their database to other vendors or criminals.
The information in the database world includes our financial history, medical history, and our family history. Are there any penalties for companies selling this information? The penalties are very minimal, and unless someone at the retailer is a whistle blower, no one will ever know. In 1996, Congress created the Health Insurance Portability and Accountability Act to protect the confidentiality of medical records for patients. The penalties were prison terms of up to ten years for unauthorized release of patient data. Of course, like many white-collar crimes, no one will ever receive a ten-year sentence. When you visit a doctor, one of the forms that you are required to sign is a release form. Try to question that form, and you may be looking for another doctor and another appointment. The Bush administration proposed a law allowing HMOs to release a patient's medical records unless the patient notifies them in writing that they do not want their information released. Current penalties carry a $100 fine per day for violators. This is a drop in the bucket for an HMO. As I have stated before, Congress does not write most bills. They only review them to some degree, and then vote on the bills.
Excerpted from Wake Up America by Robert Allen Hamlett Copyright © 2012 by Robert Allen Hamlett. Excerpted by permission of AuthorHouse. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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