Consumer Fraud Prevention and Protection

Presentation By: Ms. Bayo Elizabeth Cary, A.A., B.A., M.L.I.S.April 4, 2015

Consumer Fraud Prevention and Protection

Consumer protections are in place to make certain that consumers are able to fairly purchase, safe products, from a market economy, with government backed :rules, laws, regulations, and, insurances, that

financial investments, and other monetary transactions, will be handled, in an honest, and reliable way, with all personal identification

information, including, but not limited to: social security number, driver’s license, bank routing and accounting numbers, tax

identification number, medical information-with the strictest of confidentiality, to prevent any, and all acts of fraud, against the

consumer.

2

Presentation Objectives:Part 1) The Impact of Consumer FraudPart 2) How To Protect Against Consumer Fraud

Part 1) The Impact of Consumer Fraud

Federal Trade Commission-Identity Theft Report, Examples: Quantitative Data Reports Identity Fraud

Definition: Identity Theft

The 5 main types of Identity Theft Explained

Part 2) How To Protect Against Consumer Fraud

Fraud Protection and Prevention: Red Flags

Ways In Which Identifying Private and Sensitive Information Is Stolen

Ways to Prevent and Remedy Identity Theft

3

Federal Trade Commission: Identity Theft Report

Quantitative Data Report 1: Incidence of Identity Theft

4.7% of American adults surveyed said that within the last 5 years they had discovered that they were the victim of an Identity Theft that involved the opening of new accounts or loans or committing theft, fraud, or other crimes using the victim’s personal information (“New Accounts & Other Frauds” ID Theft).(Approximately 65% of those who experienced “New Accounts & Other Frauds” ID Theft within the last five years also experienced the misuse of an existing credit card or other account –22% experienced the misuse of an existing credit card, 26% experienced the misuse of an existing non-credit card account, and 16% experienced both the misuse of existing credit cards and the misuse of existing non-credit card accounts. (p.11)

4

Part 1) The Impact of Consumer Fraud:

Federal Trade Commission: Identity Theft Report

Quantitative Data Report 2: Offenders Means of Access

35% of the 26% of victims who knew the identity (or, in other words, 9% of all victims) said a family member or relative was the person responsible for misusing their personal information. (p.28)

In those cases where the ID Theft involved the opening of new accounts or the committing of other types of fraud, 52% of those who knew the thief’s identity –18%of victims of this type of ID Theft --identified a family member or relative as the perpetrator. (p. 28-29 )

Where the misuse involved only existing credit cards, a family member or relative was cited as the person who misused the information by only 26% of victims who said they knew who the person was. (p. 29 )

5

Part 1) The Impact of Consumer Fraud:

Definition: Identity Theft

Identity Theft: Wikipedia Definition, Wikipedia.com:

Identity theft is a form of stealing someone's identity in which someone pretends to be someone else by assuming that person's identity, usually as a method to gain access to resources or obtain credit and other benefits in that person's name.[1][2] The victim of identity theft (here meaning the person whose identity has been assumed by the identity thief) can suffer adverse consequences if they are held responsible for the perpetrator's actions. Identity theft occurs when someone uses another's personally identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. (Para. 1)

6

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft:

7

According to Wikipedia, at Wikipedia.com: Identity Theft: Sources such as the non-profitIdentity Theft Resource Center[9] sub-divide identity theft into five categories:

1. Criminal identity theft (posing as another person when apprehended for a crime)

2. Financial identity theft (using another's identity to obtain credit, goods and services)

3. Identity cloning (using another's information to assume his or her identity in daily life)

4. Medical identity theft (using another's identity to obtain medical care or drugs)

5. Child identity theft.

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft Explained:1) Criminal Identity Theft:

When an individual engages in criminal identity theft, the person pretends to be, someone other than who they are, to avoid a criminal charge. When the suspect is apprehended, the suspect supplies the identifying information, of someone, other than themselves. Identification of a suspect, can be checked by police, and other authority figures, by verifying identifying documents, such as: a social security card/number, a driver’s license, a Passport, finger prints, etc. . Falsifying identifying personal information, when apprehended, and questioned by police, or other authority figures, is a chargeable offense, with serious consequences.

8

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft Explained:2) Financial Identity Theft:

9

When an individual uses someone else’s stolen identity, to obtain: goods, services, credit, etc. . When a stolen identity, is used to purchase goods, or services, or to obtain credit, the transactions, can all happen very quickly. If the financial identity theft, is caught right away, then the monetary damage done, and the damage done to credit, can be limited. However, if financial identity theft occurs, and the situation, of the stolen identity persists, for an extended period of time, large sums of money can be lost, and therefore owed, and an individuals credit, can suffer considerable damage, that takes years of hard work, in order to repair.

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft Explained:3) Identity Cloning

10

When an individual, assumes the name, and identifying information, of a stolen identity, and stolen personal information. The individual may re-route the mail, from the original owners home, to a P. O. Box. The individual, may try to hack, and take over email accounts, from the original owner. The individual, may attempt to obtain possessions, which once belonged to the original owner. The individual, may also legally change their name, so that they have the same name, as the original owner. The individual, may stalk the original identity owner, or engage in other sociopathic, and dangerous behaviors, towards the original owner, of the identification.

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft Explained:4) Medical Identity Theft

11

When an individual steals someone else medical history, and or medical coverage information, in order to receive, medical services, in someone else’s name. Personal information, pertaining to medical records in the United States, is supposed to be classified as: private, and confidential information. H.I.P.A.A. laws, in the U.S., are supposed to protect the confidentiality, of an individuals, medical records, including any personally identifying information, which allows for: medical examination, procedures, and other medical treatments. If an individuals identifying medical information is stolen, that can be damaging to the original owner, because, there are limits placed, on how much medical care, in any given area of medicine, an individual can receive, under any given insurance plan. If someone has stolen, an individuals medical information, and used their insurance for treatment, then, there may be no money left, to allocate for medical services, if, and when the original owner, of the medical insurance plan, becomes ill.

Part 1) The Impact of Consumer Fraud:

The 5 Main Types of Identity Theft Explained:5) Child Identity Theft

12

When an individual, steals the identifying information, of a child, to use the information to: purchase good and services, to establish new lines of credit, to sell to others for the creation of false documents, etc. According to Patricia Harmon (2015),there are certain signs to look for, for when a child’s identifying information, might possibly have been stolen, for fraudulent purposes:

Calls from collection agencies

Bills from credit card companies or medical providers

Credit card offers for the child

Bank checks in the child’s name

Requests from the IRS or Social Security Administration confirming that the child is employed

A denial of government benefits because they are being paid to someone else with the same social security number

A notice from the IRS saying the child failed to pay any taxes even though he or she is not employed

Being notified by the IRS that the child’s name and social security number have been used on another tax return. (p.2)

Part 1) The Impact of Consumer Fraud:

Internal Revenue Service Filing: Tax ID Fraud

According to: Chambers, Zeidan (2013): Definition of Tax Fraud

Tax return identity theft occurs when someone uses a taxpayer's personal information, such as name and Social Security number (SSN), without permission to commit fraud on tax returns to claim refunds or other credits to which a taxpayer is not entitled, or for other crimes. (Para. 1)

Thieves normally file early in the tax-filing season, often before the IRS has received Forms W-2 or 1099, to thwart information matching and avoid receiving duplicate return notices from the IRS. (Para. 2 )

Taxpayers sometimes discover they are victims of identity theft when they receive a notice from the IRS stating that "more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past" (FS-2012-7 (January 2012)). (Para. 2)

13

Part 1) The Impact of Consumer Fraud:

Fraud Protection and Prevention: Red Flags

According to: Mulig, Smith,& Stambaugh (2014), the following are the Red Flags Rules:

Identify relevant patterns, practices, and specific forms of activity-the red flags that signal possible identity theft;

Incorporate business practices to detect red flags;

Detail appropriate responses to any red flags detected to prevent and mitigate identity theft; and

Be updated periodically to reflect changes in risks from identity theft. (p.3)

14

Part 2) How To Protect Against Consumer Fraud:

Ways In Which Identifying Private and Sensitive Information Is StolenAccording to: Mulig, Smith,& Stambaugh (2014): Stealing Data the Old Way:

Physically breaking into a business or home to steal data;

Pickpocketing or purse snatching to steal money, credit or debit cards, or information on driver’s licenses;

Bribing employees or other trusted parties who have access to targeted information;

Rummaging through the dumpsters or trash cans for data (dumpster diving)

Observing a victim enter a password or passcode, write a check, or complete a document (this is called shoulder surfing) and using the information to penetrate a computer system and steal data;

Obtaining credit reports fraudulently;

Abusing authorized access to information as an employee or other trusted person; and

Stealing credit or debit card numbers directly when the victim presents the card to pay for purchase.

Reference supplementary materials and resources. (p.3)

15

Part 2) How To Protect Against Consumer Fraud:

Ways In Which Identifying Private and Sensitive Information Is Stolen Continued

According to: Mulig, Smith,& Stambaugh (2014): Stealing With Technology

Phishing-bulk email messages that entice recipients to reveal personal information.

Spear phishing-professionals looking for: financial gain, trade secrets, or military information.

Pharming-bogus website for personal information and data collection.

Stealth hacking programs delivered by email: IP/DNS redirection-key logger, key stroke copier.

Wardriving-location of unsecured Wi-Fi to attack and infiltrate Wi-Fi to steal personal information. (p. 4)

16

Part 2) How To Protect Against Consumer Fraud:

Conclusion:Ways to Prevent and Remedy Identity Theft

According to: Smith (2014): Protect Your I.D.

ID theft has moved well beyond compromised credit cards. Javelin found that fraudsters are piggybacking on victim’ utilities accounts, running up unauthorized charges on mobile-phone accounts and infiltrating other Internet accounts, such as eBay, Amazon, and PayPal. (p.3)

But Javelin’s most recent data finds that one in three people who are notified of a data breach become the victim of identity fraud. (p.3)

When notified of a security and privacy breach of personal information take proactive steps, to limit monetary and credit damage by: canceling vulnerable credit cards, closing compromised bank accounts, notifying credit bureaus of fraud risk, contacting the driver’s license office to place a fraud alert on your account, reporting stolen identification information to the: Federal Trade Commission, the Social Security Office, and the Internal Revenue Service. In some cases, the social security office will issue a new social security number, and in some cases, the I.R.S., will issue a special identification number, for safer filing of future tax returns, through the I.R.S. .

17

Part 2) How To Protect Against Consumer Fraud:

Conclusion: Ways to Prevent and Remedy Identity Theft: Continued

According to: Smith (2014): Financial Data Theft

Be wary of free Wi-Fi hot spots in public places, and never use an unsecured Wi-Fi network t make financial transactions. (p.3)

And don’t overlook low-tech precautions, such as shredding paper bills, receipts, insurance forms, credit offers, and similar documents. (p.3)

. . .watch for phishing scams, which occur when criminals try to fool you into divulging personal information. (p.3)

18

Part 2) How To Protect Against Consumer Fraud:

Conclusion: Ways to Prevent and Remedy Identity Theft: Continued

Medical Theft ID and Tax Fraud:

Change passwords frequently and do not share.

Update personal contact information on accounts, such as: email, phone, and home address.

Verify services that are billed through your insurance provider and medical prescriptions.

According to: Smith (2014):Tax ID Fraud:

The best defense against tax related ID fraud is to file your return early. (p.4)

19

Part 2) How To Protect Against Consumer Fraud:

Works Cited

Albrecht, W. Steve, Albrecht, Chad O., Albrecht, Conan C., & Zimbelman, Mark F. (2012). Fraud Examination, Fourth Edition. Ohio: South-Western.

Chambers, Valrie, Zeidan, Rabih. (Feb2013). Stopping Tax Identity Theft: Practical Advice for CPAs and Clients. Journal of Accountancy, 215 (2). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/detail/detail?vid=11&sid=43a0922b-f656-4e02-a2ad-e5c9b75a6a06%40sessionmgr110&hid=103&bdata=JnNpdGU9ZWRzLWxpdmU%3d#db=bth&AN=89471383

Harman, Patricia L. (Mar2015). 5 Challenges of Child Identity Theft. Claims, 63 (3). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=5&sid=43a0922b-f656-4e02-a2ad-e5c9b75a6a06%40sessionmgr110&hid=103

20

Mulig, Elizabeth, Smith, L. Murphy,& Stambaugh, Clyde T. (Dec2014). Identity Hack! Is Your Company Next? Strategic Finance, 96 (12). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=2&sid=ea087bab-8d08-4dbd-8187-4f817bae04fc%40sessionmgr112&hid=104

Smith, Anne Kates. (May2014). They Are Watching You. Kiplinger’s Personal Finance, 106 (5). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=9&sid=43a0922b-f656-4e02-a2ad-e5c9b75a6a06%40sessionmgr110&hid=103

Unknown Author. (Jan2015). Protect Yourself from Identity and Credit Fraud. Consumer Reports Money Advisor, 12(1). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=3&sid=d37b4439-764a-45ce-a13d-f9b93c886732%40sessionmgr111&hid=121

Unknown Author.(Sep2003).Federal Trade Commission-Identity Theft Survey Report. Retrieved from https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-identity-theft-program/synovatereport.pdf

21

Wikipedia/Consumer Protection. (n.d.). Retrieved April 3, 2015 from the Wikipedia Wiki: http://en.wikipedia.org/wiki/Consumer_protection

Wikipedia/Identity Theft. (n.d.) Retrieved April 3, 2015 from the Wikipedia Wiki: http://en.wikipedia.org/wiki/Identity_theft

22