Hi. I live in Arlington, VA which is across the Potomac River from Washington, DC - home to the Federal Trade Commission (FTC). Though the FTC has responsibility for addressing identity theft, the problem continues to skyrocket in the US and around the world!

41 Million Card Numbers Stolen

The New York Times reported recently that Federal prosecutors have charged 11 people with stealing more than 41million credit and debit card numbers, cracking what officials said on Tuesday appeared to be the largest hacking and identity theft ring ever exposed.

See Full Story Here

What was interesting is that the thieves focused on major national retail chains like OfficeMax, Barnes & Noble, BJ’s Wholesale Club, the Sports Authority and T. J. Maxx. You may remember that the discount clothes retailer first reported the data breach early last year, when it said its systems had been hacked.

If you are a customer of these retailers and used credit or debit cards for purchases, you should have received written notification of the breach and the follow up actions.

Thieves Hacked Wireless Networks

These identity thieves drove around and scanned the wireless networks of retailers to find security holes — known as “war driving,” according to prosecutors. Once the thieves identified technical weaknesses in the networks, they installed so-called sniffer programs, obtained from collaborators overseas.

Those programs tapped into the retailers’ networks for processing credit cards and intercepted customers’ PINs and debit and credit numbers that were stored there. The thieves then spirited that information away to computers in the United States, Latvia and Ukraine.

Officials say the conspirators sold credit card numbers online and imprinted other stolen numbers on the magnetic stripes of blank cards so that they could withdraw thousands of dollars from A.T.M.’s.

Financial Impacts

Federal officials did not have an overall tally for the amount of money stolen by the ring, but they offered some glimpses into its profitability. In the indictment against one defendant, federal officials asked that he be forced to forfeit more than $1.6 million, among other assets.

In public financial filings, TJ Maxx said it had spent around $130 million on matters related to the break-in, including legal settlements, and it expected to spend an additional $23 million in the 2009 fiscal year.

This story reminds us that identity theft - the fastest growing crime in the world - is still a huge problem.

Financial Identity Theft is Only the Tip of the Iceberg

As amazing as this recent story is, financial identity theft accounts for only about 28% of all identity theft according to the Federal Trade Commission (FTC). There are five main types of identity theft:

Financial - of the type as reported above.

Medical - where someone steals your medical information and either uses it for their own treatment, leaving you with the bill or your information is used to defraud insurance carriers. This form of identity theft is dangerous because someone posing as you could provide medical information about themselves that could be fatal to you if you were admitted to the hospital or emergency room.

Driver's License - where someone provides your information after being arrested (say for Driving While Intoxicated). They then fail to appear in court. And, when you inadvertantly commit a traffic violation, a routine check by the officer results in your arrest for failure to appear on the previous charges. This happened to a good friend of mine. The information was stolen by his roommate's "friend."

Social Security - where someone uses your social security number to apply for a job or credit. They receive income that is not taxed (1099 income) and you end up with the tax bill. Did You Know? You have no right to be notified if someone is using your social security number under another name. If someone opens an account with you SSN under a different name, a separate credit report is created under that name and you would not detect it.

Another popular scam involving social security numbers is someone filing an income tax return early in the year using your social security number. When you file your return, it is rejected as a duplicate return!

Criminal - where someone steals your information and is charged with a crime. Later, law enforcement officers come to your home with an arrest warrant. Or, as happened to a school teacher in Florida, being denied employment when a routine background check showed that "she had been arrested for prostitution."

Protection from Identity Theft

Identity theft continues to be the fastest growing crime in the world. The really frustrating news: Since 2005, there have been 226,970,321 personal records compromised in the United States alone. This data will continue to be used against consumers while new data breaches occur - due mostly to human error and security weaknesses.

In my next hub, I will offer a variety of ways to protect oneself against identity theft.