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By L. Burke Files
There are state laws, local laws, and federal laws all dealing with ID theft, and yet it still persists. Isn’t the entire concept behind passing a law preventative? In other words, to make it illegal is to stop it, right? (That approach worked perfectly for speeding, didn’t it? Yes, siree. We really need a few more laws!)
So why does the crime of identity theft still persist? The answer is simple – it works. Identify theft is easy; identity theft is profitable; and the likelihood of getting caught is well under ten percent — so why not pirate a few names and have at it?
I mean, really; you’re a red-blooded person and you want more stuff, right? You can do anything you want, so why not aim at the loot? All you need is some derring do! Go ahead, manufacture a false ID, become a privateer, and show those idiots how dumb they are and how a clever person, like you, should operate. Target the stupid banks, dumb consumers, clueless — I mean utterly clueless — public and go for it. Skin them all! Borrow money, file for phony tax refunds, get cosmetic surgery on credit, buy large cars and home entertainment centers – aw heck – why not just buy whole homes under some one else’s good name? You surely wouldn’t be the first, and the chance of them, the stupid and clueless ones, figuring it out is next to nothing. Unless, of course, something huge happens and they have to sort it out after the fact.
If you said this to me, honestly, I would say you have made a good case. Why? Because everything said is correct. The crime of identity theft persists because it is profitable, wildly profitable, and the efforts to stop it are paltry in comparison. So is the chance of getting caught — and we won’t even mention laughable penalties.
As for investigators, we can and do hunt down the ID thieves, either publicly, such as law enforcement, or privately, such as White Hat good guys like you and me. We can hunt ’em down and make the Black Hat thief’s life miserable. For the most part, the false flags of ID thieves are at best a gossamer flag that (when the slightest breeze of effort is applied) one can see right though to the true colors. Yes, we can find the ID thief. But the ID thief knows this too, and he only steals enough from once place or person to define that fine line in the sand between “really annoying” and “gets away with it.” Law enforcement does not have enough people or time to tackle this problem. Private investigators only get involved when a wealthy person has lost a great deal and is looking to make a point of being made a mark. That’s about it.
Just like we have ‘hard’ fraud and ‘soft’ fraud, we have ‘hard’ identity theft and ‘soft’ identity theft. While there is a difference in the descriptions, there is no difference in the outcomes. Both equally rob the system. When we talk about a hard fraud, it is one that is intentional from the onset. A staged automobile accident, a work-with-a-partner-who-spills-water-on-the- floor-slip-and-fall, or a Monday morning workers’ comp incident to take care of a Sunday afternoon skiing wipe out. Hard frauds are premeditated. A soft fraud is more opportunist in nature. A low impact rear-ender that turns into four grand of chiro bills, diagnostics, or procedures for the sake of med building rather than necessary care; or a few extra lost items in an otherwise legitimate theft claim. How do we acquaint this with ID theft? I say that ‘soft’ is a threat that steals time and a sense of security from the victim, while ‘hard’ is an actual theft of time, a sense of security, and tangible or intangible value from the victim whose identity is compromised.
There is another form that affects the insurance and financial fraud industries in a far more deadly way because there exists no front line (the victims) of identification and notification. I’m talking about identity fabrication. Fake from the starting gate. Investigators have a fighting chance when a real identity has been taken over; but what about a person created from forged documents, one who never existed on anything but paper? Hackers do some amazing things. Graphics programs do some amazing things. An index search turns up nothing at all. Every bell in our system is avoided. No alarms go off.
An individual loss associated with ID theft may be small; but add them all up and the totals are massive. It’s a bit like the old Superman movies where Richard Pryor is stealing all of the rounding errors in bank account interest and making a fortune. Few will notice the 100 foot silo filled with beans; instead they’re busy counting the beans individually. For every one we think we catch — and count — a few hundred get away. It’s time to recognize the enormity of the problem and give it the time, attention, and resources it deserves.
ID theft and ID production persists because credit grantors, insurance and banking personnel, and everybody else in the food chain are erring on the side of convenience and expected profit. They are over-tasked and forced to rely on what a given computer screen says when it comes to granting credit, title, or coverage. The cost of this shortcut approach gets passed on to the consumer and is based on the concept of “whatever the market will bear.” Everything has a ceiling, a breaking point, and the current state of the overall economy is chaotic enough that all the king’s horses and all the king’s men might be getting dangerously close to that point.
How absurd has this become? If a bank is robbed at gunpoint, the money loss is from the bank, not from an account holder. However, if the bank is robbed by deception, it is not the bank’s fault, it is the fault of the customer. I have actually seen a check on an account get cashed by a teller where the check was made out to a fake person with a fake ID and the top of the check read, “Do Not Cash This Check. This Is a Fake Check.” Since the check was against the customer’s account, it was the customer’s account that got robbed, not the bank. The same holds true with your Debit Card; if it is compromised it is your fault not the fault of the bank or ATM makers. The same also holds true if an insurer is robbed via fraud or a retailer is robbed through shoplifting. It’s not the business that is financially impacted — it’s the consumer. The Great Unwashed!
The banks, ATM makers, merchants, police and the consumer all know ID theft is a problem. But the policies of those in control shift the responsibility back to the consumer through inadequate education, lack of new resources, poorly designed existing equipment, and data and storage technology that gets hacked ad nauseam each and every day.
The consumer is ill equipped to navigate the myriad of policies, procedures, benchmarks, etc. that are constructed to ensure “the buck” never stops anywhere but in the public’s lap! The ID thieves know this and count on this disconnect to continue to ply their trade. What’s the disconnect? It’s the fact that we are so busy following the manual, we don’t have the time to consider that those who perpetrate fraud by relying on ID theft/production have our manuals within days of our producing them!
The last time I spoke to Johnny, who within the fraud world strikes me in much the same way as the invisible Charlie of Charlie’s Angels, he repeated the same thing he said during our first face-to-face discussion. “The answer, son, lies in two words; communication and education. And insurers, banks, retailers, all of them, are doing a p*ss poor job of both.” The old guy is ornery and sometimes outspoken, but he’s right. The entire matter of fraud, including all of its elements (ID theft/production is only one of them), will only be curbed when we put our heads together and quantify the enormity of the problem, communicate that number to the legislators, educate the public that elects those legislators, and take well-measured steps to get a grip on the second costliest threat to our US economy. The first is still tax evasion; but if the true cost of fraud were ever qualified/quantified, it would run neck-and-neck or even surpass tax evasion in terms of costs.
For the present, let’s start with “it is what it is.” Identity theft IS a persistent crime. That’s a given. Law enforcement is busy chasing murderers, rapists, drug traffickers, and worse. Manpower and resources are in short supply; so bad guys are pretty much left to their own devices. If ID theft (as it affects the insurance industry) is to be policed, that effort needs to be spearheaded by insurers. Education can go a long way. Adding one more red flag to our list is, at this point in time, both necessary and long overdue. Just like we pay additional investigative attention to a claimant, a lawyer, a VIN, a medical provider, etc. that seems to pop up multiples times and places, it’s time to devote a similar degree of scrutiny to those that are devoid of history and have thus far been operating well below the radar.
There is no valid estimate of the number of fake IDs in circulation (the closest I could find was “tens of millions”), but it is safe to say that the holders of these documents are not using them for honorable purposes. Document quality is high; internal education is low. It’s time to change that more to our advantage.
Communication. Education. IMPLEMENTATION!
You heard it here first.
Find Burke at email@example.com Burke Files is a private investigator, the president of Financial Examinations Evaluations, Inc, a specialist in financial investigations throughout the world. He is also the author of many financial fraud books. Find Burke at firstname.lastname@example.org