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                                                                    Stopping
                                                                           ID Theft
                                                                    by Lynne Sanders                             in Its Tracks
                                                                    I      dentity theft, the fastest growing
                                                                           crime of the 21st century, can be
                                                                           devastating to anyone touched
                                                                    by it. Victims can spend years trying to
                                                                    repair their damaged credit, and banks
                                                                                                                 a variety of ways. An ID thief can estab-
                                                                                                                 lish telephone or cellular service or
                                                                                                                 obtain a credit card, revolving credit
                                                                                                                 line, or other type of credit. With credit
                                                                                                                 established, a thief can run up exorbi-
                                                                                                                                                              security standards, strict privacy policies,
                                                                                                                                                              robust fraud detection practices, and
                                                                                                                                                              employee training.

                                                                                                                                                              Although victims of identity theft may
                                                                    often expend countless hours assisting       tant bills with no intention of repay-       not be burdened with the financial
                                                                    customers and noncustomers alike in          ment, in the process totally destroying      charges, the personal and emotional
                                                                    the repair of their accounts and financial   the victim’s credit history.                 pain is enormous. Victims face a frus-
                                                                    standing. Handled improperly or with-                                                     trating, emotionally draining process of
                                                                    out the right degree of sensitivity, banks   The Federal Trade Commission, the lead       regaining their financial health, a
                                                                    stand to lose their customer’s trust,        governmental agency addressing identi-       process that can take years. Consumers
                                                                    and the implication for reputation risk      ty theft, launched an ID Theft hotline and   can minimize their risk of becoming vic-
                                                                    is enormous.                                 data clearinghouse in 1999. For the year     tims of this crime by managing their
                                                                                                                 2000 the FTC processed more than             personal information wisely. There are
                                                                    ID theft occurs when someone co-opts a       40,000 reports from consumers and vic-       precautions one can take to guard
                                                                    consumer’s personal identifying infor-       tims of identity theft. Approximately 64     against identity theft and specific proce-
                                                                    mation, such as name, address, Social        percent, or 26,000, of these complaints      dures to follow should an identity theft
                                                                    Security number, or credit card num-         were incidents in which an identity theft    occur (see page 37). Educating cus-
                                                                    bers, and uses the data to represent         occurred. Of the identity theft com-         tomers is one of the most important
                                                                    himself or herself as that person for        plaints received, about 50 percent relat-    things a financial institution can do to
                                                                    fraudulent purposes. This crime has          ed to credit card fraud where a new card     help curb ID theft.
                                                                    grown to such epidemic proportions           was opened or existing cards were used
                                                                    due largely to the fact that in performing   for unauthorized charges.                    Banks, law enforcement, and the finan-
                                                                    such daily activities as writing checks or                                                cial services industry as a whole continue
                                                                    using a debit or credit card, consumers      Thanks to federal laws that have existed     to work toward minimizing the crime of
                                                                    reveal personal information that, in the     for many years, victims of credit and        identity theft. Advanced technology, such
                                                                    wrong hands, can be used for illegal pur-    banking fraud are generally liable for       as biometrics, adoption of stricter state
                                                                    poses. Factor in the escalating use of the   no more than the first $50 of a loss. It     laws, and sharing of victim information,
                                                                    Internet, and the amount of personal         is therefore in the best interests if the    are a few of the new tools in use today
                                       illustration by Ace Layton   data available for the taking increases      banking community to safeguard our           to combat this growing problem. While
                                                                    exponentially. Thieves with the right        customer’s information. While recent leg-    identity is not likely to be completely
                                                                    skill-set can hack into Web sites and        islation and media attention has raised      eviscerated, collectively the banking
                                                                    obtain enormous amounts of data, all         awareness of privacy issues, the idea        industry is striving to minimize the effect
                                                                    under anonymous cover.                       of safeguarding customer information is      of this crime on customers.
                                                                                                                 not new to financial institutions. Banks
                                                                    When a thief obtains personal identify-      use a combination of safeguards to           Banks across the country are fighting
                                                                    ing data, that information can be used in    protect personal information, such as        ID theft in a number of ways. For a lucky

34 May/June 2001 ABA Bank Compliance                                                                                                                              ABA Bank Compliance May/June 2001 35
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Banks use a combination of safeguards to protect personal                                   For example, Anne Benney, an 18-year
                                                                                            veteran of Provident Bank who works as
      information, such as security standards, strict privacy policies,
                                                                                            a deposit collection manager, recently
                                                                                                                                         Precautionary Measures
robust fraud detection practices, and employee training.                                    added “Fraud Finder” to her title after
                                                                                                                                         The following list provides tips on how you — and your bank customers — can stop an ID theft before it happens. Proactive
                                                                                            she discovered a potential area for trou-
                                                                                                                                         measures provide the best protection for your assets and your good name.
few, the problem hasn’t risen to crisis      Weddle developed for use in community          ble. Benney noticed that the onset of
proportions, but it is a growing problem.    presentations. In addition, the bank has       Internet and phone/mail applications
                                                                                                                                          1. Do not give out financial information such as checking account and credit card numbers — and especially your social Security
                                             taken steps to enhance its security policy     for deposit accounts meant that in some
                                                                                                                                             number — on the phone unless you initiate the call and know the person or organization you’re dealing with.
Detective Lynn Weddle of the Topeka          to cover identity theft.                       cases the bank no longer “sees” the cus-
(Kansas) Police Department, indicates                                                       tomer and, therefore, could not check
                                                                                                                                          2. Do not pre-print your driver’s license, telephone, or Social Security numbers on your checks.
that what many bankers have thought          At Provident Bank in Baltimore, protecting     forms of identification. She decided to
of for years as “fraud” is actually a form   customers from becoming victims of iden-       take a closer look at some of the Internet
                                                                                                                                          3. Report lost or stolen checks immediately. Also, review new checks to make sure none has been stolen in transit.
of identity theft. In the first 12 months    tity theft is considered “standard operat-     and phone/mail accounts that had been
since identity theft was criminalized in     ing procedure.” Since November, 47 cases       opened up from other states. Through
                                                                                                                                          4. Store cancelled checks — and new checks — in a safe place.
2000, Topeka, a town of 119,000 people,      of identity theft were documented within       credit reports and other methods, Ben-
has had more than 100 reports of ID          Provident Bank thanks to proactive initia-     ney found several customers whose
                                                                                                                                          5. Guard your personal identification numbers (PINs) for your ATM and credit cards, and do not write on or keep your PINs
theft. Weddle estimated that more than       tives by employees.                            addresses did not match the account
                                                                                                                                             with your cards. You should also guard your ATM and credit card receipts. Thieves can use them to access your accounts.
twice that number of cases are discov-
ered by detectives and sent to the court,
                                               It Can Happen To You, Too                                                                  6. Be creative in selecting personal identification numbers for your ATM and credit cards, and passwords that enable you to
though not reported by the victims as
                                                                                                                                             access other accounts. Do not use birth dates, part of your Social Security number or driver’s license number, address, or
ID theft. “If a party signs my documents
                                               Identity theft is not a crime that simply happens to the                                      children’s or spouse’s names. Remember: If someone has stolen your identity, he or she probably has some or all of this
for economic gain,” she said, “that’s
                                               naive; it can happen to anyone, including a very savvy com-                                   information.
forgery, but if that party uses my infor-
mation on a check for economic gain —          pliance professional:
                                                                                                                                          7. If you receive financial solicitations that you’re not interested in, tear them up before throwing them away, so thieves can’t
regardless of whose account is involved
                                               “Imagine my surprise at receiving a call four months ago                                      use them to assume your identity. Shred or make unreadable any other financial documents, such as bank statements or
— that’s ID theft.”
                                               from the MBNA security department. The security depart-                                       invoices, before disposing of them.
At Topeka’s largest local bank, Com-           ment representative asked whether I had authorized a
                                               $1,185 purchase at a Burlington Coat Factory store. When I                                 8. Do not put outgoing mail in or on your mailbox. Drop it into a secure, official Postal Service collection box. Thieves may
merce Bank and Trust (CB&T), senior
                                               responded most emphatically that I had not, he asked whether I had authorized                 use your mail to steal your identity.
vice president Linda Woodland, and
vice president Betty Seimears, indicated       a $10,000 cash advance at an East Coast bank. Again, I was quite sure I had not.
                                                                                                                                          9. If regular bills fail to reach you, call the company to find out why. Someone may have filed a false change-of-address notice
that ID theft has not yet been a major
                                               Just a few days before receiving that call, I had wondered why I hadn’t received              to divert your information to his or her address.
problem; however, the bank is paying
careful attention to the issue. Calls con-     a bill for the $225 in purchases on my new credit card. Given the events that
                                               followed, I have to assume that the bill was intercepted before it reached me.            10. If your bills include suspicious items, do not ignore them. Instead, investigate immediately to head off any possible fraud
cerning identity theft are directed to
                                                                                                                                             before it occurs.
one specific individual, who, working
with the bank’s security department,           Even with the card issuer’s cooperation, this fraud has taken me months to
                                               straighten out. Four months after the fact, finance and late charges attributable         11. Periodically contact the major credit reporting companies to review your file and make certain the information is correct.
assists customers on issues affecting
accounts at CB&T and then refers them          to the fraud remained on my bill. Through the years, I have endeavored to use
                                               my own bank’s products so I could look at things from the customer’s perspec-             For a small fee, you can obtain a copy of your credit report at any time. (Please note that in some states or municipalities, you
to local authorities to report the crime.
                                               tive. While being a fraud victim probably takes this philosophy too far, I think I’ll     may be legally entitled to these reports free of charge. Check with the credit bureau when ordering the report.) The three major
The bank works closely with law enforce-
                                               be more sympathetic next time a customer makes a fraud claim.”                            credit bureaus and their phone numbers follow:
ment on cases involving their customers.

                                                                                        Kathleen Quenneville, General Counsel,                 Equifax (800) 685-1111
CB&T is also taking steps to incorporate
                                                                                      The Mechanics Bank Richmond, California                  Experian (800) 682-7654
identity theft training into the bank’s
                                                                                                                                               TransUnion (800) 916-8800
regular training program, using as one of
their tools an adaptation of a brochure

36 May/June 2001 ABA Bank Compliance                                                                                                                                                                                                    ABA Bank Compliance May/June 2001 37
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addresses or phone numbers. The bank         identity takeover. “I know we have              tance with automated clearinghouse             had a focus for elderly and minority          about the author
attempted to contact the customers by        increased our costs for credit reports,         (ACH) issues, especially Social Security       members of the community. Mari Frank,
telephone or mail using the information      long distance calls, postage, etc., but         checks. In addition, ID theft victims are      a leading speaker on identity theft, along      Lynne Sanders, vice president for JP Morgan Chase & Co. has been in
shown on the credit reports and found        our proactive efforts will keep the bank        advised to contact all credit bureaus and      with representatives from various exter-        the banking profession for more than 15 years. She has worked in the retail
several identity takeovers. As a result,     from assuming nonrecoverable losses.            are given pertinent information, such as       nal organizations, including the FTC, U.S.      consumer division of the corporation her entire career, specializing in regu-
employees like Benney now run credit         At the same time, we’ll also help our           toll free numbers, for those agencies.         Postal Inspectors Office, America
                                                                                                                                                                                            latory activities. In her current position in compliance and operational risk
reports on customers who open up their       customers guard against and recover             These customers are advised to get             Online, Experian, the American Associ-
accounts without being seen by bank          from identity theft,” Benney said.              copies of their credit reports, to let the     ation of Retired Persons, and local law         management, Sanders focuses on privacy and identity theft. She has actively
personnel.                                                                                   bureaus know if they spot problems, to         enforcement participated. The seminars          worked to support legislative efforts in Washington on identity theft. Sanders
                                             “Banks play a significant role in preven-       contact other banks and other creditors,       promoted awareness and provided tips            has a bachelor’s of science degree in business management from CWPost,
Provident customers who have been            tion of ID theft with strict privacy policies   and to contact the local police.               on preventing the crime, as well as what        LI University and a master’s in finance from Pace University.
victims of identity theft are, understand-   and procedures,” noted Dennis Algiere,                                                         to do if identity theft is discovered.
ably, relieved that employees uncovered      senior vice president of The Washington         Chase Manhattan Bank has recognized
                                                                                                                                                                                            Special thanks to the following people who contributed bank and
the information. One customer in Laurel,     Trust Company. “The Identity Theft Tool         the urgency to educate its employees,          Expanded training programs, community
                                                                                                                                                                                            personal experiences for this article: Kathy Stetler, vice president, JP Morgan
Maryland, learned that someone who           Kit developed by the ABA is a good              customers, and consumers in general on         seminars, close working relationships
gave an address in Greenbelt had assumed     resource.”                                      identity theft. In 2000 Chase launched         with local law enforcement, victim’s            Chase & Co.; Thomas W. Bernoski, vice president and compliance officer,
his identity. He also found out that the                                                     an education and awareness campaign            kits, and focused employees are a few           Provident Bank; Vicki Cox, public relations and community relations man-
“thief” had used his identity to secure an   The Washington Trust Company has                on the crime that includes both proac-         of the techniques financial institutions        ager, Provident Bank; Kathleen Quenneville, senior vice president and gen-
account for a cellular phone service. He     instituted a training program on fraud          tive and reactive measures. Preventive         can use in the fight against this perva-        eral counsel, The Mechanics Bank; Barbara McGuire, vice president,
cancelled the account immediately and        prevention for employees that includes          tips were given to customers of the bank       sive crime. Whether you are in the big          compliance, Commerce Bank & Trust; and Dennis Algiere, senior vice presi-
thanked Provident for the alert.             what to do if a customer claims his             in regular statement mailings and cus-         city or our nation’s heartland, identity
                                                                                                                                                                                            dent, compliance, The Washington Trust Company.
                                                                                             tomer newsletters, and ATM messages            theft can strike indiscriminately. Many
Expanded training programs, community seminars, close working                                were displayed to communicate to an            financial institutions are just realizing
      relationships with local law enforcement, victim’s kits, and                           even broader audience. An Identity Theft       that what they have been investigating
                                                                                             Victim Kit was created to assist victims.      as fraud cases are in fact variations of
focused employees are a few of the techniques financial
                                                                                             The kit provides the names and contact         identity theft. The bottom line, educating
     institutions can use in the fight against this pervasive crime.                         information for key agencies, including        employees and customers to be aware
                                                                                             the major credit bureaus, information on       and act immediately if they discover the
A victim in Arnold, Maryland, was noti-      or her identity has been stolen. The            other important contacts, a checklist to       crime, will go a long way toward com-
fied by Provident that an account had        bank’s security department is involved          assist customers keep track of the con-        bating this rapidly growing problem of
been set up using that person’s name         in this training, and the course includes       tacts they have made, and samples of           the 21st century.
with a California address. The victim,       information on how to handle pretext            letters to use to begin the process of dis-
who is not a customer of the bank — at       calls to prevent customer information           puting charges. Along with information         For more information about identity theft,
least not yet— said, “If this is what you    from falling into the hands of would-be         on dealing with the aftermath of an iden-      visit the Federal Trade Commission’s
do for noncustomers, I can’t imagine         thieves.                                        tity theft, Chase’s kit also includes sec-     consumer Web site at www.consumer.gov/
how much you would do if I had been                                                          tions describing how identity theft may        idtheft, or call the FTC toll-free at (877)
a real customer.”                            If a customer claims identity theft, steps      occur and how to protect personal infor-       IDTHEFT (438-4338). ❖
                                             must be taken immediately. It is impor-         mation in the future. The kit is made
In all cases of known identity theft,        tant to spend a sufficient amount of            available to any Chase customer who            For more information
Provident provides the victim with a         time with customers in this situation as        calls to report a case of identity theft to    about ABA Bank Compliance or to subscribe,
copy of an ID theft brochure and verbal      many have never had this happen before          the bank, and Chase also provides infor-       call (800) BANKERS.
advice on the importance of securing         and may be confused about the correct           mation on its Web site.
information. Benney says it is truly a       procedures to follow.
cooperative effort because many depart-                                                      In addition, Chase sponsored events in
ments within the bank, such as Loss          Washington Trust closes old accounts            New York and Houston, two of the top
Prevention and Security, have con-           and opens new ones for identity theft           six cities registering identity theft cases.
tributed information that pointed to an      victims. The bank also provides assis-          The events were open to the public, but


38 May/June 2001 ABA Bank Compliance                                                                                                                                                                                                      ABA Bank Compliance May/June 2001 39

				
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