IS SOME IDENTITY THEFT WORSE THAN OTHERS?

There are basically two reasons to commit identity theft: to commit fraud (consumer theft) or to impersonate you, generally to commit (criminal theft). Of the two types, consumer theft is the lesser a crime of two evils and accounts for the vast majority of all identity theft cases. Probably because it affects so many people, there are a handfull of laws that protect us from the bad outcomes.

In the world of consumer fraud, credit card fraud is the most kind of identity theft and the one that you have the most protection from. It generally involves either an account takeover -- someone makes bad charges on your account -- or account creation. In the latter case, the criminal sets up a new account with a fake address. They ignore all of the bills that go to that address, and you generally find out about what is going on when the bill collectors get involved.

Assuming that you report any loss of your credit card-say your wallet is stolen-within a timely fashion, federal law limits your liability for any resulting fraudulent activity to fifty dollars. Most banks won't even charge you that. If an identity thief steals your card number but not your physical card, you have no liability whatsoever. This makes sense when you think about it. Because you have no way of knowing that your number has been stolen until a problem occurs, there is no reasonable way you could have prevented the fraud. More information on liability limits can be found on the Federal Trade Commission Web site (www.ftc.gov).

By far the worst type of identity theft is criminal theft. The consequences you, like getting arrested, are potentially more serious than in consumer ID theft, and your ability to clean up the problem on your own is much more difficult. Because every criminal has some sort of excuse, law enforcement agencies are naturally suspicious when you say that someone else must be posing as you. Even when you convince the police that they`ve got the wrong person, law enforcement needs to keep track of the fact that the crook might use your name again. Your name is inextricably attached to the actual criminals wrongdoings. You are now an "alias."

The good news is that this kind of worst case scenario is fairly uncommon, accounting for only 4 percent of the reported cases of identity theft. And despite being somewhat torturous, there are 1egal actions that you can take to clear your name. More advice on this very thorny issue can be found at Privacy Rights clearinghouse (www.privacyrights.org).

WHY IS MY SOCIAL SECURITY NUMBER SPECIAL?

It all began with the depression. In 1935, Franklin Delano Roosevelt signed the social security Act, creating a state-sponsored pension program for all workers. Beginning with the first day of 1937, workers were given a unique identifying number to track earnings for participation in the Social Security retirement program.

Since that time the number has been used to track federal tax returns (starting in 1961) state and local tax returns, Medicare, Medicaid, welfare programs, and driver's license and motor vehicle registration (since 1976). It is now also used by the government for military ID cards and immigration papers, and as a way to hunt down deadbeat dads. Most health insurance is linked to this number. Colleges and companies put it on ID badges. In other words, as the need for a unique identifying number came up, our social security numbers provided a convenient system to co-opt.

The result is that this one number is the key to a fairly complete digital history on you. with knowledge of that number a thief has no difficulty taking over your identity to add new pieces to the puzzle. Does he want a loan? He simply puts your social security umber on an application and uses your very good credit history to convince the bank to give him as much as he needs.

Government is slowly beginning to catch on to the fact that it may have created a monster. several initiatives at the state and federal levels are under way to restrict or forbid the use of the social Security number as a means of identifying us. The federal Privacy Act of 1974 was an important early step in this process, and it still has force today this law requires all government agencies (federal, state, and local) to tell you if you are required to provide your Social Security number, and what the number will be used for.

With a few exceptions, such as being involved in a transaction that requires notification of the IRS, no private entity can legally require a Social Security number. However, no company is required to give your service if you refuse to provide your number, either. The unfortunate reality is that it's difficult to get companies to change their policies of using a Social Security number as a customer identification number, and sometimes the service we seek is one we cannot do without! Faced with the choice of making your Social Security number public information and not getting health coverage, for example, the vast majority of us have opted for the coverage.

IS IDENTITY THEFT AGAINST THE LAW?

Back in October 1998, Congress passed the Identity Theft and Assumption Deterrence Act (Identity Theft Act). This law basically made it a federal crime to knowingly use identifying information about a person to commit, aid, or abet any action that is already illegal.

In other words, you cannot be convicted of identity theft unless you are involved in some other crime. The law doesn't make pretending to be someone else at a party a crime. However, if you then go on to use another person's ID to swindle money from someone you met at that party, this act allows the FTC, the Secret Service, the FBI, and the U.S. Postal Inspection Service to get involved. The law further requires the FTC to coordinate identity theft information and to track the latest trends and issues relating to identity theft.

The law also addresses another problem. For years, the person whose identity was stolen often didn't get recognized as the victim and had no rights. This meant that only the credit card company who lost money was given information about an identity theft case. The person whose credit was ruined, who was getting turned down for jobs, and who was fielding calls from bill collectors was left in the dark. The Identity Theft Act gives the individual who is impersonated some power, but there are still reports of police departments who won't take identity theft complaints or companies who won't share information with the victims. Another more recent law, the Fair and Accurate Credit Transactions Act (FACTA) takes on this last problem directly. We'll talk more about FACTA in chapter 3.

In the past few years, individual states have also been creating legislation to address identity theft. A list of specific laws broken down by state can be found on the FTC Web site (httpr//www.consumer.gov/idtheh/federallaws.html#criminalstate) or you can contact your state's Attorney General.

CHECKUP

Now that you're an expert on what identity theft is, it's time to see just how vulnerable you are to it. The following checkups help you to evaluate your own situation to see where you stand.

Can You Pass the Wallet Test? There is one point of vulnerability to identity theft that you have absolute control over'. your wallet. Are you prepared for what happens when your wallet gets stolen? Here's the test. Don't take out your wallet. Just close your eyes and try to remember everything you have in it. You probably have at least one credit card. And a driver's license. There's also probably something with your address.

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