Identify This Creating a system that stops identity theft and increases privacy Charles Baakel 5 13 2007 CS199r Final Paper Identify This C Baakel The growth of the Internet and computer technology has led to a growth of new opportunities both good and bad Identity theft in particular has become America s fastest growing crime 1 For example Sean Hoar the Assistant United States Attorney calls identity theft The crime of the new millennium 2 While the methods of identity theft have grown rapidly the methods of prevention and recovery have not Today once one s identity is stolen it is a very long and public path to recovery Every business and agency that one has had contact with has to be notified that one s identity has been stolen so that no new fraudulent actions are made This is a very humiliating and public process The question I plan to address in this paper is Why are the current identity theft recovery measures so slow and poor at maintaining one s privacy and what new systems could be developed where recovery is more rapid and private I contend that there is a solution that can fix the problem of identity theft recovery and privacy The Identity Theft Resource Center defines identity theft as a crime in which an imposter obtains key pieces of personal identifying information PII such as Social Security numbers and driver s license numbers and uses them for their own personal gain 3 The crime is very difficult to manage under our current system because one s PII can be obtained in a number of different ways and exploited for gain in more There are two main reasons why identity theft research data is difficult to obtain First many victims of identity theft are not aware of the problem until months after their information has been stolen and exploited Second during the process of recovery it is not clearly known whether or not one has completely recovered from identity theft until fraudulent accounts and charges have stopped Insurance agencies banks and other organizations have completed studies on identity theft but the data is not the most reliable and the sample groups are not always the most representative Nationwide Mutual Insurance Co conducted a survey on identity theft victims and found some rather disheartening results 28 of the victims could not reconstruct their identities within one year It took an average of 5 5 months for a victim to realize their identity has been compromised The average victim lost nearly 4 000 due to fraudulent charges and 16 were still forced to pay for them Meanwhile only 17 were notified by their financial institution or creditor that suspicious activity was occurring on their accounts 4 Currently the process of recovering requires a great deal of persistence by the victim The Nationwide study notes that victims spent an average of 81 hours attempting to recover though some never do The Federal Trade Commission recommends these steps when one is aware that his her identity has been stolen 1 Place a fraud alert on your credit reports and review your credit reports 2 Close the accounts that you know or believe have been tampered with or opened fraudulently 3 File a complaint with the Federal Trade Commission 4 File a report with your local police or the police in the community where the identity theft took place5 1 Identity Theft http www usps com postalinspectors idthft ncpw htm Accessed 5 10 2007 Hoar S Identity Theft The Crime of the New Millennium United States Attorneys USA Bulletin March 2001 Vol 49 No 2 3 Identity Theft Resource Center A Nonprofit Organization http www idtheftcenter org Accessed 5 9 2007 4 TechWeb Technology News One in Four Identity Theft Victims Never Fully Recover http www techweb com wire security 166402606 Created 7 26 2005 Accessed 5 1 2007 5 DEFEND Recover from Identity Theft http www ftc gov bcp edu microsites idtheft consumers defend html Accessed 4 25 2007 2 2 Identify This C Baakel Let s evaluate these measures more closely The four steps require the victim to contact at least 6 entities the 3 credit bureaus the account that has fraudulent activity the FTC and the police The list does not include ChoicePoint a private entity that is also used to obtain identity information about individuals Contacting the 3 credit bureaus includes placing an extended fraud alert on one s credit report which will be visible to anyone who checks your report It is debatable as to whether or not this is a good thing Maybe a person is careless if they had their identity stolen But very few if any other victims of crimes have a visible record of the offense on something like a credit report By contacting the FTC and the local police one obtains an FTC ID Theft Complaint and an Identity Theft Report respectively These documents allow a victim to place a seven year fraud alert on one s credit report This part of the process is not as easy as it may seem The Nationwide study finds that 40 percent of victims list the police their financial institution or their credit card issuer as the most difficult to work with when trying to solve the problem In addition a survey respondent is quoted as saying that The institution we do all of our banking with made us feel like we were the ones trying to pull something 6 In extreme cases the Social Security Administration will give a victim a new Social Security number but this is usually only after all options have been tried and fraudulent accounts have continued to be made for years It is clear that the process for recovering from identity theft is neither quick nor private but why is this so A simple diagram can explain the current system of identification Figure 1 If a credit card issuer an employer or any other entity wants to know if John Doe exists and who he is they can contact the three credit bureaus or ChoicePoint These agencies create a profile of Mr Doe based on his interactions with other agencies which then share this information In the end there is You a Social Security number and a date of birth Those two numbers are the most reliable because they are the only identifiers that do not change as name address and even gender can be modified Date of birth is not a reliable identifier since birthdays are celebrated and often publicized This leaves the Social Security number as the best identifier under our current system The Social Security number was first distributed in 1936 for the purpose of giving out government benefits Over time other federal and state governmental uses have