It can ruin your credit. And that's just the beginning
When Jessica Grant and her husband went to the bank in December to refinance their home, they thought it would be routine. After all, the couple, who live in Sun Prairie, Wis., were refinancing with their existing mortgage lender, and they prided themselves on their credit history. So it was quite a shock when the bank officer turned them down, pointing to their credit report, which listed numerous accounts in arrears.
It turns out that a woman in Texas had applied for credit 19 times using Grant's name and Social Security number. In all, she had made purchases totaling $60,000, leaving a trail of unpaid debt that Grant is desperately trying to prove is not hers: a $25,000 loan for a mobile home, two car loans, credit card bills, and charges for a cellular phone and other services. "She torched my credit to the point where even she was denied," says Grant.
Grant is a victim of a crime of the '90s: identity theft. It happens when one individual uses another's personal identification--name, address, Social Security number, date of birth, mother's maiden name--to take over or open new credit card and bank accounts, apply for car and house loans, lease cars and apartments, even take out insurance. The perpetrators don't make the payments, and the victim is left to deal with the damage--calls from collection agencies and creditors, the endless paperwork that results from trying to expunge fraudulent accounts from a credit record, the agony of waiting to see if more phony accounts pop up. Meanwhile, the proliferation of black marks on a credit report can be devastating. Victims of identity theft are often unable to get loans; some run into trouble applying for a job. A few have even been arrested after the thief committed a crime in the victim's name.
Many identity thieves use stolen personal information to obtain driver's licenses, birth certificates, and professional licenses, making it easier to get credit. Most victims don't even know how the criminals pulled it off; data have been stolen from desk drawers in the workplace, mailboxes, job application forms, and the Internet. False identification cloaks a thief in anonymity, and the impostor can often use the alias for a prolonged period of time; thieves typically have the bills sent to an address that is not the victim's, concealing the scheme for months, even years. Most victims aren't aware that their credit has taken a nose-dive until, like Grant, they apply for credit themselves or receive a call from a bill collector.
Proof positive. In the '80s, criminals who wanted free plastic simply made up counterfeit credit cards with the correct number of digits. To thwart them, the industry instituted sophisticated security measures involving holograms and algorithms. Now criminals are taking advantage of what some see as the weakest link in the credit system: personal identity. "There is nothing in the system that demands proof that I am the person I say I am," says James Bauer, deputy assistant director of the U.S. Secret Service's Office of Investigations, which has jurisdiction over credit fraud and false documents. "Our personal identifiers are now, more than ever, a valuable commodity to criminals."