'Catch Me' thief: Too much information is available
By Laura Bruce • Bankrate.com

The latest government numbers show that more than 27 million Americans have been victims of identity theft in the last five years, including 10 million people in 2002. The Federal Trade Commission says that last year alone the crime cost businesses and financial institutions $48 billion. Consumers spent an estimated $5 billion in out-of-pocket expenses trying to refute fraudulent claims and restore their financial reputations.

Bankrate.com recently spoke with Frank Abagnale, a reformed thief and now an authority on identity theft and other forms of fraud. His book, Catch Me If You Can, details his criminal past and was recently made into a Hollywood movie.

Bankrate: The last time we talked (January 2003), the FTC was saying they expected 700,000 people to be victimized annually by identity theft by 2005. These latest numbers blow away those estimates.

Abagnale: This is a much more accurate number and the dollar amounts are much more accurate. You can't stand in a room with three or four people and someone hasn't been the victim of identity theft. I tend to see people blaming the credit bureaus and creditors, but that's putting the blame in the wrong place. There's too much information about individuals available in the public marketplace. Criminals realize this is a simple crime; they can become anybody they want to be.

Bankrate: We most often hear of identity theft in terms of someone using a victim's personal information to obtain a credit card in the victim's name. But millions of victims are finding the perpetrator has used their identity to take out a mortgage or even to get medical care. It seems that as the crime escalates, the financial damage could be much greater.

Abagnale: Every crime continues to evolve. First they get a credit card, then take out cash advances. Then they throw away the card and you're stuck with the bill. They figure if they can get a credit card, they can get a cell phone or cell phone service. They figure if they can get a loan in a victim's name, they can get a mortgage, too. It's unlimited. It's just a matter of one's imagination.

Bankrate: Is corporate America doing its share to thwart identity theft?

Abagnale: I recently spoke at the Electronic Transfer Association's annual meeting in Boca Raton, Fla., and I told the attendees, here's the problem: Visa and MasterCard have losses amounting to $1.3 billion a year from stolen, forged, altered cards or those applied for under false pretenses. But Visa and MasterCard are nonprofit franchises, so in the end it's their member banks that actually lose money. Since 50 percent of their losses can be written off, the other $600 million will be lost by the banks that have been victimized. Visa and Mastercard's actual annual sales are in excess of $900 billion. The actual loss is less than .01 percent of their total revenues. In the end they will probably raise fees and service charges to recoup these losses.

I get frustrated when I see on the news that people are arguing over spending $87 billion for Iraq and they don't care that we're losing $600 billion to white collar crime annually. That $600 billion in fraud losses increases prices for goods, fees for services and interest rates. The consumer pays for these crimes out of their pocket. The $87 billion is a debit against our national debt.

Banks and corporations have found it is easier to write off a loss than it is to prosecute it. Most district attorneys have a benchmark set and do not prosecute forged checks under $5,000. Most U.S. attorneys have a benchmark of $250,000 before prosecuting white collar crimes, and the FBI is under a directive not to investigate crimes under $100,000. The problem for the government agencies and municipalities is the lack of manpower and resources to prosecute these crimes.

Bankrate: What can we, as individuals, do when we're so often required to provide personal information?

Abagnale: You'd love to say we have to start controlling the Social Security number, but that's not going to happen. We have to stop putting information into the public marketplace, but that's not going to happen either.

I have to know instantly when someone is checking my credit. I have to tell the credit bureaus I don't want you granting credit unless you contact me first. If a bank checks my credit, I want a credit monitoring service that is going to e-mail or page me right away to say, 'Are you aware a bank is looking at your credit?' I don't want a service that is going to send me a letter that may not get to me for two or three weeks.

It is very popular now for insurance companies and other groups to sell you identity theft insurance. The way they sell it makes the average consumer believe that if someone gets their debit card and drains their account of $2500, they'll get their money back. That's not the case. They'll get reimbursed for their out-of-pocket expenses -- what it costs to take time off from work to make phone calls, write letters -- whatever it costs to get the problem fixed. None of those policies cover the actual loss from identity theft.

I also recommend that everyone purchase a shredder. However, straight shredders are worthless. Criminals will dump the bag on the floor, pull out all the strings -- they tend to clump together -- and line them up. Get a crisscross shredder. This way the documents end up like confetti.

Balance your bank statement. A study in 1999 showed that 51 percent of Americans don't reconcile their bank statements. They don't even open the envelope. I believe this has come about from truncation -- when the bank no longer sends the original checks back to the customer with their bank statement. I always demand that the bank return my checks, even if I have to pay a fee for the service. This way I can verify who the check was made out to and if it was cashed by the intended party. If a check is altered, I'll see that.

I find it amazing that when I speak to trade associations, merchant groups, law enforcement officials and bankers, they look at me with their mouths open. These are people in the business. If these people don't know the risks, then what does the person on the street know?

No one wants to come forward and say it comes down to the cost of doing business. But the truth is, it does. The problem with this premise is that if you are not doing anything about the crime, you are encouraging it. You have to be a smarter consumer. You cannot rely on the police, the government, your bank or big business to protect you. You have to protect yourself. Be smart and think before you act.

Frank W. Abagnale is one of the world's most respected authorities on the subjects of forgery, embezzlement and secure documents. For more than 25 years he has lectured to and consulted with hundreds of financial institutions, corporations and government agencies around the world.

Mr. Abagnale has been associated with the Federal Bureau of Investigation for more than 25 years. He lectures extensively at the FBI Academy and for the FBI's field offices. More than 14,000 financial institutions, corporations and law enforcement agencies use his fraud-prevention programs. In 1998, he was selected as a distinguished member of "Pinnacle 400" by CNN Financial News.

Mr. Abagnale believes that punishment for fraud and recovery of stolen funds is so rare, prevention is the only viable course of action.