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Financial Literacy - Protecting your identity Click Here
The price we pay
Sleazy con artists cause a great deal of inconvenience -- not to mention $45 billion in costs.
Protecting your identity

The costs of ID theft

"They're always looking for the weakest point, to manipulate a system or individual."

As such, there's really no bias toward high-tech or low-tech identity theft. In fact, identity thieves are more likely to be insiders than sophisticated hackers. In a recent study, more than 30 percent of the cases evaluated by CIMIP began with an employee stealing information from their employer.

"There are really a lot of different ways that identity thieves can work," says Gartner's Litan. "They can be high-tech crimes, directly against consumers, through phishing or malware attacks. We've seen a big increase in those."

"Or they can be attacks against systems that house the data, like retailers or processors, where external hackers take the data -- we saw that with TJX and CardSystems."

Trash cans make up almost no crime at all.”

It can also be a partial insider job. "Some cases are collusions or insiders at banks or other businesses that deal with sensitive information that take it and sell it to the black market," Litan says. "Others involve contractors that get in through privileged accounts, whether it's at retail systems or bank systems. There's a big increase in that. We call it 'partial insider.'"

As part of their study, every year Javelin asks victims of identity theft how thieves got their information.

"There are data breaches which make up just a few percentage points of the fraud in our study," Van Dyke says. "And then there are the people that are on the Internet. If you combine all the sources, from online shopping to banking to someone hacking into your PC, it makes up about 10 (percent) to 12 percent."

Despite the reputation for being repositories of oodles of info, Dumpster diving happens less often than you may think.

"Trash cans make up almost no crime at all," says Van Dyke. "We no longer even ask people if their data was taken from the trash because only 1 percent of people said that's how their information was taken."

Then again, how would someone pinpoint a Dumpster in the alley as the scene of the crime?

Consumers should resist blithely tossing out credit card statements and scraps of paper emblazoned with Social Security numbers. Javelin recommends that consumers invest in a shredder or take some care with sensitive documents that get thrown out. It's just not at the top of their list, says Van Dyke.

One receptacle to worry about more than the trash: the mailbox.

"The mail always makes up about 6 (percent) to 9 percent," Van Dyke says.

But consumers shouldn't confine their concerns to the criminals lurking outside the post office or behind a computer. In some instances, victims are the architects of their own undoing.

The Javelin study found that most often, consumers lose a wallet or a checkbook which leads to fraud of some kind.

"That's the largest category -- in the 30 percent range," says Van Dyke.

Other common sources of data theft are friends and family. "People that are close to the victim make up a significant portion of crime, mostly among lower-income (individuals) because they tend to live in areas of higher crime and don't have the financial education to minimize their losses," says Van Dyke.

-- Posted: April 21, 2008
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