Economic crime is a serious business issue that potentially affects the financial performance of all commercial organisations. This article is one of a series on economic crime that is presented to assist local businesses, consumers and enforcement to prevent and detect fraud.
Picture this - you check your credit card statement and find a transaction that you don't recall having entered into. You call the bank to let them know that someone posted the wrong transaction to your account. But that isn't the problem. The authorisation of the transaction is documented, and you have become the latest victim of the fastest growing fraud in North America - identity theft.
I know what you are saying. This is not a problem in Cayman. There have been no reports of identity theft here. But you would be wrong (as you will see later). Although this activity may not be called 'identity theft' in the Cayman Islands, that is what it is. Identity theft is using one's personal information without their permission to commit a fraud or other crime.
Because the Cayman Islands have not yet enacted legislation that criminalises identity theft, it is normally prosecuted as theft, deception or forgery, but call it what you may, somebody is unlawfully using personal information to commit a fraud or criminal act - and that is identity theft.
Experience in the United States and elsewhere has shown that minimizing the risk of being a victim is best attained through consumer awareness and education. In this article, we discuss some of the more common ways identity thieves obtain personal information from their victims:
Dumpster diving: - This involves rooting through your trash for information, found on bank statements, credit card applications, receipts, literally anything that has information about you upon it, that innocuous piece of personal literature we have all thrown out with last night's supper. That is what the professional identity thief is banking on, literally.
A janitor employed on a U.S. military base was recently convicted of stealing the identity of 150 soldiers stationed at the base where he was employed. Did he have to break into anywhere; chances are he found this information in any number of garbage bags he collected during the course of his working day. A simple paper shredder used to destroy the personal information would have substantially minimized the risk of becoming such a victim.
Pick Pocket: - The old favourite is still a method employed to obtain personal information. Once the thief has your driver's license or credit card, he will either use it himself or sell it to another who specialises in this type of criminal activity. There are various methods that can be used to safeguard against this type of crime, but as a quick fix the simple remedy is to carry only the documentation that you require, and try to put it in a safe place not easily accessible to a third party.
Internet Scams: - This is becoming more common and uses the internet to gather the required information simply by requesting it in bogus emails or by false hyperlinks to a website. Similar to the "Nigerian Letter" this method makes promises of wealth for those that assist or threatens hardship to the unresponsive. In July 2005 the RCIP issued a warning to the Cayman public that related to fraud scams involving computers and specifically e-mails, informing recipients that they had won the lottery, or a share of a US$12.5 Million Trust Fund. The e-mails required personal and banking information in order to verify identity and validate a claim, all of which was bogus. The Police were not the only ones who recently issued warnings about this kind of behaviour. An international bank resident in the Cayman Islands also put a warning on their website that informed customers that they were not the ones phoning and requesting personal information.
Purchase Information: - Believe it or not personal information can also be gathered on a large scale by simply purchasing it. In relation to the liquidation of a Cayman bank, it was learned that one of their clients purchased a credit card database, and in turn charged monthly fees of US$19.95 to approximately 900,000 credit cards. A handful of alert customers questioned the charges and an investigation was launched. By the time the authorities got involved the fraudster had accumulated almost US$45,000,000 ($45 Million). Many customers ignored the charges because of the hassle to query the small amount involved.
Hidden Camera: - Another of the most up-to-date methods of obtaining information is by camera phone. The alert thief is always looking for an opportunity and the cash register or point of sale of any retail business is as good a place as any. Taking photographs of documentation or identification that may tendered as payment, used as verification, or simply left on display in an open purse or wallet may be the opportunity that these people have been waiting for.
Computer hacker: - Personal information is not only carried in wallets or handbags, but also stored on computers. The computer savvy no longer steals it from you or waits for you to casually discard it. They simply let themselves into your computer and take it straight from the hard drive. Businesses such as America Online and Visa use their anti-identity theft software as a sales pitch to would-be customers in television advertising, demonstrating just how big a problem this form of fraud has become, and why this type of software or firewalls assist to secure your personal or business systems.
Financial Transactions: - The final and one of the most prevalent ways that personal information is obtained is by any kind of daily transaction legitimately entered using a credit or banking facility. In March 2005 a Cayman supermarket cashier was jailed for six months after pleading guilty to various charges of theft. This defendant would retain information from credit card transactions that she had taken and then recreate a second receipt that she would sign herself. The defendant would simply take the cash from her register and replace it with the forged credit card transaction to complete this crime. The scam was only discovered when a vigilant victim noticed two separate transactions from this store on the same date on her account statement and questioned its validity.
So what can you do to protect yourself? As a consumer you have a basic right to protection and security from those that request and use this information. In order to further minimize your risk of becoming a victim serious consideration should be given to the following five strategies:
Protect your personal information. Secure it and keep hidden in public. Limit or restrict any release of personal information, unless required, especially if the contact was not initiated by you. Be skeptical if asked to provide personal information.
Stay current with your bills and account statements. Make sure that all charges are correct and question where you are not sure. Only deal with those institutions you trust. Avoid fly by night operators.
When using a debit card or a credit card, take all receipts with you and destroy or shred them.
Ensure that you know and understand the document retention policies of your financial service provider.
Stay current with new methods and trends adopted by these criminals.
One thing is true, you cannot entirely eliminate the possibility of identity theft. Clearly, by having an identity, one is susceptible. The key for businesses and consumers is awareness and education.
For this article, we used information obtained from websites directed to assisting in the prevention and detection of identity theft and specifically: www.consumer.gov/idtheft/ and www.ftc.gov.
In an effort to quantify losses arising from economic crime in the Cayman Islands, the Cayman Islands Chamber of Commerce, in association with the Royal Cayman Islands Police, and with the support of the Cayman Islands Compliance Association, has commissioned the Chamber of Commerce Economic Crime Survey 2005-2006. RSM Cayman Islands, a local audit and business advisory firm, has been appointed to conduct the research and prepare a report. Local businesses and are invited to review the results of the survey which are scheduled to be released on June 27, 2006, and will be used to inform local businesses, government and the general public of the financial impact that crime has on the Cayman Islands. Please visit The Chamber of Commerce's website at www.caymanchamber.ky for further details.
Ian Beresford is a member of RSM Cayman Islands' team providing corporate recovery and forensic accounting services. Prior to joining RSM he was a police officer, working in the Financial Investigation Unit. RSM Cayman Islands is a part of RSM Robson Rhodes, a member firm of RSM International, the world's sixth largest international network of accountants and business advisors, employing over 20,000 staff in over 70 countries.
