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ISPI Clips 5.13: Identity Theft is Huge & Growing
News & Info from the Institute for the Study of Privacy Issues (ISPI)
Saturday October 3, 1998
ISPI4Privacy@ama-gi.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This From: American Bar Association's, ABA Journal, October 1998
http://www.abanet.org

IDENTITY THIEVES
http://www.abanet.org/journal/oct98/10FIDENT.html

        Stealing someone's identity to buy everything from cars to toys
        and leaving the real person's credit rating in ruins may be the
        perfect crime because there is little that can be done to prosecute
        it. Until now.


BY
MICHAEL HIGGINS, higginsm@staff.abanet.org

Sometime in the early 1990s, a con man named Scott Clinton Gilbert visited
a resum and printing shop in Las Vegas. His bill came to $185.30, and he
paid in his usual fashion: He lied.

Gilbert charged his purchase under the name "Robert Hartle." If anyone had
questioned Gilbert's true identity, the scam artist was more than ready. He
had obtained a "Robert Hartle" driver's license, Social Security card--even
a birth certificate.

Gilbert probably didn't think much of that small transaction. Before his
fraud spree was done, he would stick the real Robert Hartle with debts of
more than $110,000, including bills for three pickup trucks, two
motorcycles and a double-wide mobile home.

Gilbert, who later pleaded guilty to related charges, was one of thousands
of criminals who quietly discovered what in an increasingly cashless
society had become almost the perfect crime: identity theft. By posing as
someone else, thieves found, they could steal in a way that left victims
powerless and police uninterested.

"It was a very easy crime," says Ed Mierswinsky, a consumer advocate at
U.S. Public Interest Research Group in Washington, D.C. "Forget
restitution. Consumers couldn't even obtain peace of mind" from seeing the
criminals punished.

Today, identity theft is still a vibrant and growing criminal enterprise,
but its cover has been blown. Federal officials are holding summits and
seminars to alert law enforcement officers to the crime. State legislators
are pushing for tougher criminal penalties.

And this fall, Congress is likely to vote on a bill that would make
identity theft a federal felony, punishable by up to 15 years in prison.
Another bill would give consumers more control over who has access to
personal information, such as Social Security numbers.


A '90s Kind of Crime:

It's hard to say how widespread identity theft is because there is no
standard definition of the crime. But sometime around 1994, the number of
complaints to government, business and consumer groups began to explode.

Last year, identity theft cost consumers and financial institutions some
$745 million, according to the U.S. Secret Service, which has jurisdiction
over many financial crimes. In 1992, about 35,000 people called the credit
reporting agency Trans Union with questions or complaints about identity
theft, the company reports. Last year, calls numbered more than 523,000.

It is the victims themselves who've dragged the crime into the spotlight,
demanding that lawmakers take action.

Among them: an Arizona factory worker who helped initiate the new federal
felony bill. He's a man who first learned about identity theft in 1994,
when a collection agency called to ask why he hadn't paid his printing
bill. He's Robert Hartle.

Hartle, 46, was living with his wife, JoAnn, in Spirit Lake, Iowa, and
working as an inspector at a foundry when he was thrust into identity-theft
hell. The Hartles had been living frugally, with few bills, and made almost
all their purchases in cash.
But when Hartle got the strange call about the Las Vegas printing bill, he
ordered a copy of his credit report. It told a different story, Hartle
says. To the credit reporting agency and anyone who used its information,
Hartle was a free-spending deadbeat.

Luckier than most, Hartle had a lead on the culprit. He knew of a man going
by the name of Carl Lee Lunden who had befriended his mother in Phoenix. In
fact, "Lunden"--later found to be Gilbert--had persuaded the elderly woman,
some 30 years his senior, to marry him, giving him access to Hartle family
information. He had also made what Hartle had assumed was a joke about
working under Hartle's name.

Hartle traveled to Phoenix to present his case to police. That's where he
learned something he found hard to believe. Even if he was right about
"Lunden," the police didn't consider Hartle to be the victim of a crime.

The law enforcement logic was this: Hartle wasn't legally obligated to pay
any of the bills the impostor had run up. Therefore, Hartle wasn't out any
money. If anyone was a victim, it was the bank that issued the credit card.

Never mind that Gilbert had ruined Hartle's credit. Or that the creditors
wouldn't erase the debts without a showing of fraud. Hartle found the
police wouldn't even allow him to file a police report.

"I offered to give [the detective] the evidence, and he refused to take
it," Hartle recalls. "I told him that I was not a lawyer or a police
officer, but I knew that crimes had been committed."

By mid-1994, Hartle was in desperate shape. Gilbert had left Hartle's
mother and fled Arizona, but hadn't stopped using his name. Hartle was
spending $400 a month on phone calls, trying to get creditors off his back
and law enforcement onto Gilbert.

"Our credit was ruined. We couldn't move ahead with our lives. Everything
was on hold," he says. "We couldn't continue to live like this."

In Hartle's case, the con man he was chasing was crafty. Gilbert had moved
to Phoenix from Florida, where he had a criminal record. But identity
thieves don't need to be so devious. All that wouldbe thieves require is a
credit card application and some basic personal information about their
target.

The key piece of information--the victim's Social Security number--is
surprisingly easy to get. It's widely available on credit reports. And it's
often the account number on documents that thieves can steal from their
victims' mail or dig out from their garbage.


Lawyers Can Be Victims, Too:

Mari Frank, a lawyer in Laguna Niguel, Calif., found out firsthand how
easily a scam artist can steal someone's name.

In August 1996, Frank got a call from a bank in Delaware, asking why she
hadn't paid an $11,000 balance on a Toys "R" Us credit card. When Frank
asked where the bank had been sending the billing statements, she got an
address in Ventura, Calif., about 80 miles north of her.

It was Frank's first clue that an identity thief had run up bills of about
$50,000 in her name. "She had gotten a red convertible Mustang that she was
driving around --with my credit," says Frank, now an advocate for tougher
identity theft laws. "She got a driver's license with my name."

The thief in Frank's case was anything but sophisticated. She got Frank's
credit report by saying she was a private investigator. To get the Toys "R"
Us card, Frank says, the woman had simply crossed out her own name on the
application and written in "Mari Frank."

Another victim-turned-advocate is Jessica Grant, who also was shocked to
find out how unprotected she was. Grant, a pension manager in Sun Prairie,
Wis., had always used credit sparingly. But when she and her husband tried
to refinance their home in December 1997, they found that an impostor had
run up about $60,000 worth of debt in Grant's name.

The thief, who lived in Texas, had opened 19 separate accounts. In some
cases, the impostor got credit in Grant's name despite submitting
applications with a residence and employer that didn't match Grant's.

"That's the part of it that just infuriates me," Grant says. "There was
just so much information that could have been--and should have
been--questioned. But it never was."


Dilemma of Enforcement:

Like Hartle, both Frank and Grant found that local police did not consider
them to be victims of crime. Both took their cases to federal law
enforcement--the fbi and U.S. Secret Service--where they found good news
and bad.

Federal law does prohibit the fraudulent misuse of identification, bank
cards and Social Security numbers. 18 U.S.C. 1028, 10 U.S.C. 1028, 42
U.S.C. 408.
But, Frank and Grant both say, federal investigators told them they deal
only with multistate fraud rings and cases worth upward of $200,000. Their
cases didn't qualify.

For the feds, it's a predicament, says James Bauer, a deputy assistant
director in the Secret Service and a proponent of tougher identity theft
laws. For example, Bauer's office is shutting down a fraud ring in which
the thieves used stolen identities to buy cars, then cleverly leveraged
their bounty. The thieves would take the car out of state, sell it, use the
money to make a down payment on a house, then take out second mortgages on
the house.

"Multiply that times the 36 cars that we know about so far, and it amounts
to literally millions of dollars," Bauer says.

But while the feds have struggled to crack those sorts of operations,
relatively small fish like Scott Gilbert have wriggled free.

In theory, the banks that issue the credit cards--the real victims, in the
eyes of local police--could push harder for prosecution.

But according to U.S. Sen. Jon Kyle, R-Ariz., sponsor of the new federal
identity theft bill, banks often have insurance to cover their losses. And
they know their chances of getting any restitution may be slim.

Even if police do investigate, identity theft cases can be expensive to
prosecute, says Donald Grant, a Ventura County, Calif., deputy district
attorney whose office handled Frank's case.

Prosecutors have a strong incentive to work a plea deal because trying the
case means paying to bring in bank employees as witnesses, as well as bank
records from across the country, he says.

They also know judges aren't likely to give jail time to nonviolent
criminals, especially if the dollar amount is relatively small or the
defendant is a first-time offender.

"To prosecute these cases is a godawful pain in the neck," Grant says. If
there's a trial, "We generate a lot of expense to taxpayers, and it's not a
prison case. It's sort of a no-win situation for the victims," he concedes.

And it's identity theft victims who are left trying to explain all this to
creditors and collection agencies, who often suspect the victim of being
the impostor. "I was getting outright, flat-out abusive treatment," says
victim Grant. "I was in a position where I had to prove who I was, when
they never bothered to ask [the thief] to prove who she was."

By the time Hartle and his wife had moved to Phoenix to plead their case
with law enforcement officials, Gilbert had fled. In November 1994, state
police in New Hampshire picked him up on charges of trying to get a fake
driver's license, Hartle says. Out on bail, Gilbert called Hartle and tried
to get him to stop his pursuit. When Hartle refused, Gilbert taunted him.

"He told me ... he wasn't going to quit using my identity until he felt
like stopping," Hartle recalls. When Hartle threatened to track down
Gilbert himself, "He laughed at me, said, 'Go ahead and try it because
nobody's going to convict me.' "

At the time, Hartle recalls, "It was beginning to look like he was right."

But in early 1995, Hartle finally got a break. He had contacted U.S. Sen.
Thomas Harkin, D-Iowa, and asked him to press federal prosecutors to help.
In February 1995, they indicted Gilbert for buying guns under a false name
and misusing a credit card. Gilbert pleaded guilty and was sentenced to 17
months in prison.

But Hartle decided that wasn't enough. He turned to a state representative
in Arizona, who pushed state prosecutors to reconsider Hartle's complaints.
In October 1995, Gilbert pleaded guilty to perjury in state court and was
sentenced to four years in prison.

In total, Gilbert served a little more than three years. Not bad, Hartle
says, "when you consider that when I started this, no one was interested."


Hard to Pin Down:

Despite what their victims go through, it's unusual for an identity thief
to get a sentence as severe as Gilbert's.

Take Mari Frank's case. She was fortunate to find a police supervisor in
Ventura, himself a victim of identity theft, who ordered an investigation.
Police arrested her identity thief in October 1996, Frank says.

But the woman missed her sentencing hearing that December and remained free
until police picked her up on other charges in January 1997.

"She finally did a two-month work furlough program ... staying at a halfway
house," Frank says. The thief drove to the program in the red Mustang she
had bought with Frank's credit.

"Violent crime does take precedence," Frank says. "I understand that. But
the criminals know this is not really taken seriously. There [have] to be
some identity thieves going to jail and doing some real time."

Jessica Grant says she grew frustrated trying to get the Texas state police
to take action. She eventually got help from the Houston police and an
investigator with the Social Security Administration. As of July, the
investigator had confronted a suspect and was preparing to file charges,
Grant says.

But identity theft itself isn't a crime in Texas. "The law that they're
charging her with is the misuse of a Social Security number," Grant says.
"She will probably not get jail time."

All three victims paid a stiff price to clean up their credit records.
Hartle estimates that he spent about $15,000 out of his own pocket during
the ordeal. Grant says she has logged 158 hours, so far, trying to
straighten out creditors. Frank, the lawyer, says she cleaned her credit
record in eight months. But it took 90 letters, 500 hours and more than
$10,000 in out-of-pocket expenses, she says.


Beyond Bad Credit:

For some victims, it gets even worse. Impostors have been known to commit
crimes, then give their fake identity to police when they're arrested.

"We're hearing more and more cases these days where the identity theft
victim is saddled with a criminal record," says Beth Givens, project
director at the Privacy Rights Clearinghouse, a San Diego-based group that
aids identity theft victims. "That's what I call the worst-case scenario."

Some victims may never learn of all the damage that was done, notes Jodie
Bernstein, director of the Bureau of Consumer Protection of the Federal
Trade Commission.

"If your credit history is destroyed, you may not even know if it went to
some potential employer and you didn't get a job," she says. "The victims
we talk to eventually get it sorted out, but at great cost."

Bauer of the Secret Service relates another story: "I know a [thief] out
West who actually died using the victim's name," he says. The victim "had
to get a death certificate undone."

Hartle, Frank and Grant have pushed for reforms that are starting to change
how the nation deals with identity theft.

In Arizona, Hartle contacted his state legislator about making identity
theft a serious crime that local police couldn't ignore. In July 1996, the
state made it a felony--the first law of its kind in the nation.

In California, Frank joined victims testifying last year on behalf of a
bill that made identity theft a misdemeanor. As of July, she had testified
eight more times in support of other identity theft measures, including one
bill that would make it a felony in some circumstances.

Frank, who works primarily as a mediator, also has written a book, From
Victim to Victor: A Step-By-Step Guide for Ending the Nightmare of Identity
Theft. And she has assembled a self-help kit and created a Web site,
http://www.identitytheft.org , to assist victims.

Frank says that because identity theft is so new, some lawyers misadvise
clients. She has heard of lawyers counseling victims to change their Social
Security number or declare bankruptcy, two strategies she says are
counterproductive because they ultimately burden the victim with even more
legal difficulties.

Grant, lobbying in Wisconsin, got the quickest legislative action. In
February, two months after she discovered she was a victim, Grant was the
subject of a front-page article in the Wisconsin State Journal.

State Rep. Marlin Schneider, an outspoken privacy hawk, introduced a bill
in her name making identity theft a felony there. Grant visited the
Wisconsin Capitol and talked to legislators, including one trip in March
with a local TV-news camera crew in tow.

The bill passed in April. When Gov. Tommy Thompson signed it into law,
Grant got to keep the pen.

And Hartle--four years after his first, confusing phone call about a
$185.30 printing bill--hopes that this fall he will become one of the few
victim-advocates to push through the same law at both the state and federal
levels.

With prodding from Hartle, Kyle, a member of the Senate Judiciary
Committee, introduced the Identity Theft and Assumption Deterrence Act last
year. The act makes identity theft that crosses state lines a federal
felony, punishable by up to 15 years in prison. It also allows restitution
to victims.

The larger war over who has control over personal information is one that
will be fought well into the next century.

Many issues are just now being identified. The financial and credit
industries certainly have their share of political muscle. But don't count
out those mistreated by the system--the Hartles, Franks and Grants.

"They have lived through the Orwellian nightmare," consumer advocate
Mierswinsky says. "The victims of identity theft are a force to be reckoned
with."


VICTIMS WORK TO KEEP PERSONAL DATA PRIVATE

Although they've been the driving force behind identity theft laws in
several states, the victims of this scam say what they've accomplished
isn't nearly enough. Along with consumer groups, they're pushing for
tougher restrictions on how businesses use personal information.

High on their wish list: a bill introduced by U.S. Sen. Dianne Feinstein,
D-Calif., that would force businesses to get a person's consent before
selling Social Security numbers and other personal data commonly found on
credit reports.

Consumer advocates blame banks and credit card companies for issuing
preapproved credit applications and then not screening carefully enough for
impostor applicants. They say merchants add to the problem by hawking
"instant credit" cards at the checkout counter.

"The lack of verification at that level is astounding," says Ed
Mierswinsky, a consumer advocate at U.S. Public Interest Research Group in
Washington, D.C.

The credit reporting industry says it, too, is concerned about identity
theft. Staffing has been increased on fraud hotlines, and sophisticated
software is being put to use to detect spending patterns that may indicate
fraud.

Visa suffered $470 million in fraud losses in the United States last year,
but only 4 percent was due to identity theft, says Dennis Brosan, Visa's
vice president of fraud control in McLean, Va. That's down 12 percent from
just a few years ago.

But the credit reporting industry opposes restrictions on selling personal
information. Officials say the information actually helps prevent identity
theft because it makes it easier for banks and merchants to confirm whether
people applying for credit are who they say they are. The data also
accounts for tens of millions of dollars in annual sales for credit
reporting agencies, the U.S. General Accounting Office reported in March.

For lenders, there's a tension between serving customers who want tight
security and those who bristle at being asked for three pieces of
identification for every transaction.

"All we can do is hope that the companies that have this ability to
minimize the threat are doing everything they can," says Robert McKew,
general counsel for American Financial Services Association, a trade group
in Washington, D.C., whose members include many lenders. "I believe that
they are."

U.S. Sen. Jon Kyle, R-Ariz., sponsor of a new federal identity theft bill,
says he is reluctant to blame lenders.

"They're dealing with a lot of deadbeats, frankly, and everybody has a
story," Kyle says. "It's very, very hard in today's world. In order to get
credit you've got to give information. And once that information is in the
commercial stream, it's very difficult to protect it."


Michael Higgins, a lawyer, is a reporter for the aba Journal. His e-mail
address is higginsm@staff.abanet.org.

Copyright American Bar Association.

American Bar Association 750 N. Lake Shore Dr., Chicago, IL 60611
312/988-5000 info@abanet.org

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