Identity Theft
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The first time it happened, Paul Prairie says, he nearly lost his breath. "You can't realize how scary this is until it happens to you," says Prairie, beginning his tale.

It was in June 2002 that Prairie had a routine phone conversation with a credit card company representative. During that conversation, the 62-year-old Grand Isle resident agreed to have Discover reinstate a card that he had just canceled because he thought the interest rate was too high. The Discover representative lowered the rate to meet that offered to Prairie by another credit card company. And Discover agreed to send Prairie a new, reinstated card by mail.

Little could he have imagined that his seemingly insignificant decision would kick off a series of crimes that would cost Prairie endless worry and months of frustration.

Prairie never got that credit card in the mail. He doesn't know how, but somebody else got his hands on that card and used it to rack up more than $17,000 in charges in Prairie's name.

In a 10-day period in July of that year, $17,522 in fraudulent charges were applied to Prairie's card from the Huntington, N.Y., area, where Prairie had never visited and at that time couldn't even point out on a map. The expenses were initially in the form of small charges and then large cash withdrawals.

Discover called Prairie to ask about the unusual charges and then canceled the card on his behalf. Prairie in turn canceled all his remaining credit cards with other companies, except Sears.

If Prairie thought his troubles were over, however, he was wrong.
"That was just the start of it," says Prairie today.

More than a year later, in September and October 2003, Prairie received a host of correspondence from many of his former credit card companies thanking him for reopening the old accounts and for requesting $10,000 balance transfers and boosted lines of credit. Prairie believes his credit report detailing all past credit activity was accessed and past credit card information obtained.

In November 2003, the situation got even worse. Someone transferred a total of $13,800 from his Sears card to several bank accounts that were not Prairie's – bringing the amount of money stolen in Prairie's name to over $30,000. His credit report also showed still more credit cards opened in his name, including a BankOne card that had been sent to an Illinois address.

The credit report also had a fraudulent address listed for Prairie in Jamaica, N.Y. "I had never been there in my life and I have no clue where Jamaica, N.Y., is," says Prairie.

The credit card theft, fraudulent charges and even the fake address meant only one thing: Prairie's identity had been stolen.

Identity theft occurs when a piece of personal information is stolen and used to commit fraud or theft, according to the Federal Trade Commission. A common example is obtaining credit cards under someone else's name.

Considered the fastest-growing offense in the nation, according to the California-based nonprofit Identity Theft Resource Center, the crime affected more than 7 million people between July 2002 and July 2003. Last year, 159 Vermonters reported to the FTC that they had been victims of identity theft.

The crime, which became widespread in the 1990s, comes with its own jargon and nicknames; certain thieves, for example, might be classified as "shoulder surfers" or "Dumpster divers" or be given any of a variety of other monikers.

The nicknames reflect how identity thieves collect information for a crime that comes in many forms. Dumpster divers, for example, are those who search through trash, stealing credit card numbers off discarded statements. Shoulder surfers are those who use their eyes, and sometimes camera phones, to peek over shoulders and record information entered in automated teller machines.

Identity thieves steal wallets and purses containing identification and credit and bank cards; they steal mail, including bank and credit card statements, pre-approved credit offers and new checks; and they find and complete change-of-address forms to divert such mail to another location.They also fraudulently obtain credit reports — documents showing a person's credit history — by posing as a landlord, employer or someone else who may have a right to the information; obtain information from the Internet; scam victims through e-mail, often by posing as legitimate companies; and get information from victims' workplaces by stealing files, bribing employees to share the information or hacking into electronic files.

Identity theft isn't limited to stealing financial data, however. Identity thieves use other information, such as duplicate driver's licenses, to commit crimes – crimes for which identity theft victims are sometimes mistakenly arrested and thrown in jail for a weekend before getting the confusion cleared up.

As prevalent as identity theft is, however, the number of arrests doesn't nearly match the number of victims, because solving the crime can be extremely difficult and costly. The Identity Theft Resource Center says the average arrest rate is less than 5 percent of all reported cases. And, according to the center, a report by federal prosecutors says the average cost of prosecuting a white-collar crime is $11,443; the Secret Service estimates the average cost of investigating a financial crime is $15,000; and the FBI figures the average cost of its investigation of financial crimes is $20,000.

In Vermont, identity theft complaints often go to the attorney general's Consumer Assistance Program in Burlington, where Laura Dobos is a coordinator.

Dobos says the number of identity theft complaints has been rising. "It's growing by far," she says.

Part of the increase is actually due to greater public awareness of the crime.

In Vermont in the last year, says Dobos, a number of homeowners learned when they tried to refinance their mortgages that their identities had been stolen. Instead of qualifying for a lower house payment, homeowners discovered, for example, that their loan would be denied because of a fraudulent $60,000 credit card debt.

The victims phone the Consumer Assistance Program and "they're livid," says Dobos. "It's panic. It's rage. People are really outraged (someone) did this to them."

"'Fix it,'" Dobos says victims tell her, but she confesses, "I can't fix anything."

Instead, Dobos, who speaks around the state on the subject of identity theft, gives advice.

That includes having victims call the three major credit reporting agencies, Equifax, Experian and TransUnion, to report the fraudulent activity; going over various credit reports once they are received to check for fraudulent activity; contacting local police and filling out a police report; and filling out an identity theft affidavit to send to the three credit agencies.

The forms for identity-theft affidavits, in which victims report information about themselves and the theft, are available through the Federal Trade Commission. The FTC also recommends closing accounts that have been tampered with and filing a complaint with the FTC, which can be done online or over the phone.

"It's possible to clear up, but it takes a lot of time," says Dobos.
Going forward, and for those who have not yet been victimized, Dobos recommends diligence, such as checking credit reports annually. Vermonters, under state law, can get a copy of their reports once a year at no cost.

Vermonters also should avoid carrying their Social Security cards in their wallets as well as health insurance cards – because the identification number is often one's Social Security number. Bill payments should be dropped in blue post office boxes, not mailed from home mailboxes, and people with credit cards should keep photocopies of both sides in case the real cards are lost or stolen, says Dobos.

It is also wise to shred financial information before throwing it out and to keep credit card limits as low as possible. "It minimizes the amount the bad guy can get away with," says Vermont State Police Detective Sgt. Mark Lauer of the latter.

Internet offers that sound too good to be true or e-mails that require one to supply personal information should also be avoided. "The Internet is a monster," says Dobos. "You really have to approach it like it's warfare."

According to Lauer, who works at Vermont State Police headquarters in Waterbury and teaches identity theft awareness and computer safety, certain "spyware" programs have been designed to search victims' computers for credit card numbers, bank statements and billing information. The "spyware" programs enter one's computer via an e-mail, hidden in, say, a photograph, and then are launched when the victim opens that photo. The program searches one's computer for financial data, which it then sends back to the identity thief through an e-mail or text message.

"It's crazy; it's like a full-time job keeping up with the different ways they're devising to get information," Dobos says.

Some of the latest scams are e-mails claiming to be from eBay or the online payment company PayPal. The fraudulent e-mails say personal information has expired and they ask the recipient to re-enter the information — a technique dubbed "phishing." "It really is a fishing expedition," says Lauer. "They're hoping someone takes the bait and sends information back."

Prairie got some help investigating his problem from Citi Identity Theft Solutions, available through Citi Cards. The company has raised its profile recently thanks to its clever television advertisements that feature, for example, a man on a lawn mower speaking in a woman's voice about all she was able to buy with his credit.

Citi Identity Theft Solutions helped Prairie obtain copies of his credit report, clear fraudulent information from that report, contact the FTC and get local police involved.

"Before that, I was just bumping my head against the wall," says Prairie. "I had no clue how to proceed. The local sheriff had no clue how to handle it. … I finally convinced them to take down a police report."

Vermont has a new law that is meant to smooth the process for victims, says Julie Brill, an assistant attorney general who lobbied to get identity theft legislation enacted here.

According to Brill, who is also chief of the attorney general's Antitrust Unit, the law makes identity theft a felony crime. Previously, identity theft-crimes were prosecuted under various statutes, such as those covering false pretense, false personification and larceny. The new law also requires law enforcement agencies to accept complaints, provide victims copies of police reports and forward complaints to other relevant jurisdictions.

The law also allows victims to put security freezes on their credit reports, which prohibit credit reporting agencies from releasing a consumer's reports or any information from them without the consumer's authorization. In Prairie's case, this portion of the law would have prevented his old credit card numbers from being accessed.

One popular hunting ground for identity thieves is the Department of Motor Vehicles.

"It starts here," says Drew Bloom, chief inspector for the DMV.
Under the name of someone living or dead, Bloom says, identity thieves to the tune of three or four a week approach the DMV trying to obtain driver's licenses, vehicle titles and registrations fraudulently.
"Generally, people are going to be doing this because they want to commit other crimes," he says. "The crooks we get, they're pretty seasoned."

A couple of years ago, the DMV arrested a man on a federal "Most Wanted" list, who had obtained three different identifications from the Vermont department.

Some thieves then try to commit credit card or bank fraud with the new identification; some might be criminals from other states trying to hide in Vermont or escape to Canada, Bloom says.

Those who use a new identity to commit crimes, however, really put victims in difficult circumstances. "Let the nightmare begin," says Bloom. "It could be a real mess. … We had one victim who had been arrested repeatedly for stuff he hadn't done."

The victim, from Pennsylvania, was arrested in his state on various outstanding warrants that were the result of crimes committed by the Vermont identity thief.

Bloom encourages those who have been victimized to call the DMV immediately. The DMV relies on such tips — and information from police and DMV customer service representatives who might become suspicious — to catch identity thieves.

"I arrested a guy on July 28 at the counter. He was a known identity thief. We had been looking for him in connection to identity theft," says Bloom, noting this man was "flagged" in the DMV's computer system after he obtained information in a dead person's name. He had also been arrested two times before by DMV investigators, including once by Bloom, for the same crime.

While agencies like the DMV try to improve procedures to prevent the crimes, few cases of identity theft are actually prosecuted, says Lauer. That's largely because identity theft often involves victims and perpetrators from several states.

The victim's information, as in Prairie's case, may also be used out-of-state, making it difficult for small, local police departments to pursue investigations.

Barre police Chief Trevor Whipple says his department receives about half a dozen identity theft cases a year. Whipple says the department will fill out police reports for victims, but often it can't do much more. "We've taken information. We've documented it. (But) I can't say we've been incredibly successful (at making arrests)."
Whipple recalls some cases, most involving someone getting a credit card in someone else's name. About 10 years ago, one neighbor intercepted another neighbor's pre-approved credit card offer, applied for the card and began using it locally, but was eventually caught on a store's camera.

A more recent case involved a credit card being used in the state of Georgia, however. Whipple says he's not sending a Barre City officer to Georgia to investigate. "It's not a crime that I would give folks high hopes of us solving," Whipple says of most identity theft cases.

Some identity theft victims are victims of strong-arm tactics. And their problems persist long after a particular incident.

Take Angela Johnson of Rutland, for instance. In November of 2000, when she was a student at George Washington University in Washington, D.C., she was mugged while leaving a subway station.
"I was coming from work to the city where I lived," Johnson recalls. As she left the station and used her metro card to pay, a man stood close behind her. "He was literally inches from my body."

Johnson's initial thought – besides discomfort – was that the man was trying to sneak out of the station without paying – like a car whizzing through a toll booth on the previous driver's dime. Before Johnson could return her card to her open purse, however, the man grabbed her wallet from her purse, pushed her to the ground and ran up the stairs and out of the metro station.

"A couple of people tried to stop him, but most people did nothing," says Johnson, now 25 and a law school graduate.

She was left with the task of trying to return to her dormitory room without the electronic card required to enter the building. Stuck outside, she used a pay phone to call police – in her case she had to contact three agencies: city police, metro police and the campus police.

She then canceled her two credit cards, froze her checking account and thought that would be enough, she says. "Identity theft was the furthest thing from my mind."

A year later, however, while a law student in New Hampshire, Johnson returned home to Rutland to an American Express bill for a credit account she had never opened, she says.

She retrieved a copy of her credit report (from Experian) and found not only the card but two fraudulent cellular phone accounts on the report. She canceled both plus the card and contacted the FTC to have her credit report frozen.

"My biggest concern was obviously the future of my finances," she says. "At the time I was only 22. My concern was: Will I ever be able to get more student money?"

But Johnson is one of the fortunate ones. Since, her credit report has been clean. She's received additional student loans and even a home loan. And the fraudulent debt, which Johnson estimates in the thousands, has been cleared at no expense to her.

"I'm a lucky one," says Johnson. "I know it costs credit card companies and consumer industries a fortune."

The FTC estimates that identity theft debt totals $50 billion annually, 90 percent of which businesses pay and 10 percent consumers pay, says Brill.

"Most lending institutions will forgive the debt because it's not really the debt of that consumer," Brill says.

Others charge consumers for the first $50, but not all victims escape without paying more, Brill emphasizes.

The Identity Theft Resource Center estimates that the average victim pays $1,400 in out-of-pocket expenses. Those include not debt payment, but copying, phone calls, certified mail costs and lost time from work. The center estimates the average victim spends more than 600 hours clearing his or her name.

Financial institutions often try to help.

"As a financial institution we have not seen any fraudulent loans, (but) we have assisted members who are the victims of identity theft," confirms John Dwyer, executive vice president of New England Federal Credit Union. "We know it can be very traumatic and very time-consuming."

Gary Avery, director of security for Chittenden Corp., says the bank gives victims packets containing identity theft information, has trained staff on hand to offer guidance, and encourages customers to check statements monthly and report discrepancies to the bank.

His general advice to customers: Use money orders or treasurer's checks to buy anything from a private party on the Internet – such through eBay – in order to best to protect your bank statements. He also suggests that consumers immediately report any possible fraud to the bank.

Regarding phone-related ID theft – such as stealing calling cards or opening accounts in someone else's name — Verizon spokeswoman Beth Fastiggi says that generally, "We absorb the debt. … We take on that debt. If they can show they didn't make those calls or open up that account, how can we charge them?"

She adds: "We do get a lot of fraud. We have a fraud department that investigates all different kinds of fraud. It's a big issue, and there's always some new angle."

For victims like Johnson and Prairie the greatest cost may not be financial.

Johnson spent four months trying to clear up her credit. "It was a giant headache," she says.

Prairie was left feeling violated and embarrassed to be a victim, he says.

"It's very scary to think that anybody can just steal whatever they want, unabated," says Prairie.

While he didn't have to pay back any of those credit charges, Prairie says, "I wasted hours and hours of time trying to straighten out this mess. These crooks can steal all this stuff in a hurry, but the victim has a nightmare trying to clean it up."

Johnson now carries very little identification and is wary of strangers standing too close, she says.

Prairie still monitors his credit reports, keeps track of accounts online and carefully reads his mail. It's a diligence he'll maintain for the rest of his life.

"It's not over," says Prairie. "This is going to go on as long as I'm breathing."

Robin Palmer is a Times Argus staff writer.