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What is Identity Fraud?

What would you do if your credit cards were stolen? If goods that you did not purchase were charged to your credit accounts? If unauthorised credit accounts were opened in your name?

These actions are typical examples of identity fraud, where criminals steal victims' identities in order to take over their credit accounts or to open new accounts in their names.

Most of us have never experienced identity fraud and many of us may be unconcerned and believe we're not affected by it. But we are.

Identity Fraud Affects Everyone
Identity fraud is on the increase and is the fastest growing crime nationwide. According to statistics, identity fraud costs Americans millions of dollars every year and is one of the more difficult frauds to combat. The trouble with a successful fraud is that both consumers and lenders are fooled. Although lenders are employing ever-more sophisticated methods to spot fraudsters, people who are targeted by fraudsters often take up to 14 months to realize they are victims of identity fraud.

When criminals buy goods and services on credit using false information, we all pay through higher prices and more expensive credit terms, even if our own accounts are untouched. And when someone is victimized by a particularly successful scam, criminals are more likely to continue cheating others using similar fraudulent operations.

Some Typical Scams

The rise in Internet usage has meant an increase in the number of online scams. Here are some examples:

The Nigerian Scams
The fraudsters send emails to people telling them they can release a fortune that is tied up in an African bank by allowing them to transfer the money into the person’s account. In return, the person will be given a share of the profits.

Another variation on this is an email supposedly from the widow of a high-ranking Nigerian official pleading for the recipient to help her access her late husband’s money. Again, the recipient is asked for their bank details.

The catch with these scams is, of course, that rather than money going into the person’s bank account, the fraudsters clean out them out using the details sent to them.

This form of fraud uses various banks. While the fraudsters may not know if an intended victim has an account at a particular bank, they know that a percentage of the recipients will, and as a result, those that do may be fooled by their hoaks.

People are sent bulk emails saying that their bank is making technical changes. There is a link to go to a page where the person is prompted to enter their account detaild. Or a person may receive an "official-looking" email saying their account would be cancelled due to a new security measure, or something to that effect, unless they went to a partucular site and entered their accounts details. There are many variations to the scam.

The fraudsters set up "spoof" email addresses that look like they could credibly belong to the institution being targeted—and the website landing page victims are taken to is usually a replica of the chosen institution. Of course, it is a fake website and the account data provided by the victim ends up in the hands of the fraudsters.

Once they have received account details, the fraudsters can siphon money out to their own accounts abroad. These scams are believed to be run from Eastern Europe.

Lottery and Prize Draw Wins
Emails are sent out to millions of people telling them they’ve won a lottery or prize draw and they need to send a payment for "administrative" or some other purpose in order for them to claim their winnings. Of course, there is no prize...

Credit Watch is an online service offered by Equifax that monitors your credit report and alerts you if anything changes.

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Center For Debt Management

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