Is Your Credit Union Doing Everything It Can To Protect Your Members From ID Theft ?

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NAFCU prides itself in staying ahead of the curve on issues important to the credit union community. One issue that has increasingly alarmed our members is identity theft.

In hearings before his House Financial Services subcommittee last year, U.S. Rep. Spencer Bachus aptly described ID theft as a "particularly heinous crime" that victimizes consumers and financial institutions alike.

The incidence of identity theft has risen significantly over the last few years. NAFCU is proactively attacking this upward trend by joining and supporting government efforts targeted at ID theft and providing educational resources and online information helpful to both credit unions and credit union members.

There is no doubt ID theft is more prevalent than ever before. I put "ID theft" into the Google News search engine to see what would come up for a four-day period from June 23 through 26.

The first story that came up, from The Oregonian, was about two former Vancouver residents being arrested for an identity-theft operation that claimed more than 400 victims.

A woman was arrested, according to The Desert Sun, for involvement in an identity theft and check-forging ring.

According to a local Durham, N.C., radio station, a Duke researcher admitted he used someone else's identity to try to steal about $4 million in home loans. In this same search, I found MasterCard announcing a "fundamental shift" and "more aggressive approach" to combating online identity theft through a partnership with a digital fraud detection company.

An FTC survey of households found that 10 million Americans were victims of some form of identity theft within a year from when the survey was taken in 2003.

Breaking It Down

For 2002, the breakdown in the types of ID theft were: complaints involving credit card fraud (42%), activation of a utility in the victim's name (22%), bank accounts opened in the victim's name (17%), employment fraud (9%), government documents or benefits fraud (8%), consumer loans or mortgages obtained in the victim's name (6%), and medical, bankruptcy, securities and other miscellaneous fraud (16%).

The estimated cost to businesses and financial institutions from ID theft for 2002, according to the FTC, was $47.6 billion; for individual consumers, it totaled $5 billion.

An important indication of a crime's impact on our society is a hike in the penalty for committing it. Well, that just occurred in June when Congress passed the Identity Theft Penalty Enhancement Act.

Identity theft, as we are all aware, involves acquiring key pieces of a person's personal identifying information-name, address, date of birth and social security number-in order to impersonate that person and illegally obtain goods or services.

An insidious aspect of ID theft is that months may go by until it comes to the attention of the victim. The cost of an incident of ID theft is, however, significantly smaller if it is discovered early.

In its 2003 survey report, the FTC noted that individuals who discovered misuse of their personal information within five months incurred no out-of-pocket expenses 67% of time; that percentage dropped to 40% when the misuse was discovered six months or later.

In testimony before Congress last year, a representative for the U.S. Postal Inspection Service said that more than half of victims report their cases being open an average of 44 months, and the average number of hours to clear their name totaled 175.

Cleaned Out In 10 Hours Or Less

The FTC says 76% of victims who discovered the misuse within a month of it occurring spent less than 10 hours clearing their name.

In May 2000, NAFCU first made available its statement stuffer, "Protecting Against Identity Theft," which lays out simple tips for prevention and an equally straightforward checklist to follow when someone is the victim of ID theft.

That statement stuffer has become a bestseller for NAFCU, with 2.7 million sold to date. We have developed additional statement stuffers-"ATM Safety Tips" and "Don't Get Phished"-that have also proved timely.

Whether it is using NAFCU's statement stuffers or a similar resource, all credit unions must make it a priority to reach their members on this issue.

Those credit unions that successfully raise the consciousness of members that fall victim to ID theft will very likely save those members not only money but also the aggravation of fixing their credit and gaining back their identity. We believe credit unions' efforts to educate themselves and their members is the very definition of member service.

For over a year, NAFCU has been offering seminars across the country on ID theft. They have been well-received; in fact, two prominent U.S. Treasury Department officials-Assistant Secretary Wayne Abernathy and Deputy Assistant Secretary Michael A. Dawson-have used our seminars to carry their anti-fraud message to these key audiences.

The Message Is Simple

Their message has been simple: encourage credit unions to work with Treasury to carry out the new anti-money laundering and anti-terrorist finance provisions of Title III of the US PATRIOT Act and enlist credit union support in the fight against ID theft.

NAFCU also presented a webcast on identity theft and cyber crime in April that featured representatives from the U.S. Postal Inspection Service, FBI, U.S. Attorney's office and a retired police commander of investigations now working for a member credit union.

We featured U.S. Postal Inspector Stephen Korinko, who is the team leader of the U.S. Postal Service's Major Crimes Unit, at last year's Congressional Caucus, and we have a break-out session planned at our Annual Conference in Vancouver.

NAFCU is also proud to be a private sector partner with the U.S. Postal Inspection Services on its major initiative, "Operation: Identity Crisis," that was launched last September with national spokesman Jerry Orbach, star of television's "Law and Order." We sent all NAFCU-member credit unions a poster suitable for display in their lobbies.

A new, menacing variation of ID theft is "phishing," which uses bogus e-mails and fraudulent websites to trick recipients into providing personal information.

According to the Anti-Phishing Working Group-an industry group dedicated to attacking ID theft perpetrated through phishing-5% of recipients respond to these attacks.

According to this group's trend reports for the month of May, there were 1,197 unique phishing attacks reported; the organization most targeted was Citibank (370), and the business sector most targeted was financial services.

Other popular hijacked names used by phishers were eBay, Paypal, U.S. Bank, Fleet, and AOL.

About 95% of phishing attacks use "spoofed" or fake e-mail addresses like AOLBilling aol.com, support citibank.com or suspend@ebay.com.

A Variety Of Resources

There are a variety of resources that credit unions can avail themselves of to help their members fight ID theft. NAFCU has a link on its homepage www.nafcu.org, while other useful sites include the FTC (http://www.consumer.gov/), the U.S. Postal Inspection Service (http://www.usps.com/postalinspectors/) and the Anti-Phishing Working Group (http://www.antiphishing.org).

NAFCU will remain proactive in attacking identity theft by providing credit unions with resources that will make a difference in their members' lives. It is credit union members who must be reached with useful information and tools that go beyond simply documenting the unfortunate consequences and rising incidence of this heinous crime.

Linda Dent is director of regulatory compliance for NAFCU.

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