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The growing problem of identity theft

Europe catching up with USA

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According to the 2003 Computer Crime Survey conducted by the Computer Security Institute in conjunction with the FBI, nearly 13 per cent of respondents were the victim of identity theft in the past year in the US, writes Fran Howarth OF Bloor Research. In total, losses from identity theft in the US in the past year are estimated to have amounted to around $50 billion.

Identity theft is the appropriation of an individual's personal information - including such identifiers as social security numbers, driving license numbers, financial cards and account information. This information can be used to fraudulently obtain such things as loans, credit, employment, healthcare services, rentals and mortgages.

Traditionally, the most common way for thieves to obtain such information is carelessness on the part of individuals, including not taking sufficient care to safeguard personal information, especially when disposing of it. One of the richest treasure troves for thieves looking for personal information are family and company rubbish bins - in the US, it is estimated that as much as 70 per cent of all identity theft includes theft of disposed of information from bins.

However, as the use of the Internet has grown, so too have the incidences of online identity theft. But why should businesses care? For a start, theft of credit card and account information is one of the most common reasons for identity theft, but consumer liability is generally capped in the case of such fraud - leaving financial institutions to pick up the pieces.

According to MasterCard, identity theft accounts for seven per cent of all fraud committed and is a growing problem. Further, fraud committed during card-not-present transactions accounts for 60 per cent of fraud - not all of which is caused by identity theft, although this is a particularly fast growing area.

Until recently, identity theft has been less of a threat in Europe than in the US. One reason why it has been such a problem in the US is the traditional use of social security numbers as an identifier - a piece of information that, when linked to the name and address of the individual, makes it relatively easy for a thief to assume an individual's identity. However, the UK Home Office estimates that identity theft is growing at 165 per cent per year in the UK and is currently costing the country £1.3 billion annually. Furthermore, the areas in which identity theft is growing fastest are Eastern Europe and Southeast Asia - two of the new hotspots in the current spate of outsourcing.

Companies need to be aware that identity theft is a pressing problem for them - especially since the vast majority of fraud is carried out by insiders. There have been numerous reports recently of employees involved in theft of information, such as customer credit card numbers. And companies are increasingly finding themselves being held responsible.

Companies need to look long and hard at the internal and external processes to make sure that they have the business processes and infrastructure in place to prevent themselves falling victim. All data gathered on individuals must be held securely - and disposed of securely when no longer needed. Companies need to think about how data is distributed in their organisations and must train employees on privacy matters relating to customer data. Policies should be drawn up and enforced regarding which employees have access to what data in which circumstances and procedures need to be put in place to handle complaints arising from its misuse. To reduce the likelihood of the problem occurring, background checks should be made on all employees.

Much legislation has been passed that affects this area and there will be more to come. But, as a rule of thumb, companies that comply with the principles of the 1998 EU Data Privacy Act will be in a good position to ensure that they are less likely to be targets of identity theft attacks. And individuals - take more care. Losing your wallet these days could be extremely expensive.

© IT-Analysis.com

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