• Credit
• Data Breach
• Fraud
• Identity Theft
• Other News
• Privacy
• Reviews
• Scams
• Tips
• Truston

« Previous Post | Blog Home | Next Post »

Who is Really Motivated to Pursue ID Thieves?

Posted on Mar 14, 2007 by Michelle Pastor

This article from the NY Times explains some of the reasons that ID Theft is as prevalent as it is.  There are plenty of victims—credit card companies, banks, the consumer and the merchant—but there’s not much of an incentive to find the criminals. 

Still, for those so inclined, identity theft remains an extraordinarily appealing crime. In his new book, “Stealing Your Life,” the reformed fraudster Frank Abagnale calls identity theft an “elementary” crime with “enormous” upside and a “minuscule” chance of being caught. Most police departments don’t have the staffing or know-how to even pursue the perpetrators; the F.B.I., http://en.wikipedia.org/wiki/Fbi meanwhile, usually won’t get involved unless the fraud reaches $100,000.

(Frank Abagnale’s life of writing counterfeit checks was portrayed in the movie “Catch Me If You Can”.)

If law enforcement aren’t investigating identity thieves, then who is?  The credit card companies and banks would be the next most likely to benefit, but they consider identity theft losses to be a cost of doing business.  They want customers to use credit cards with ease and don’t want to bog customers down with increased security measures, nor do they want to spend many resources investigating identity theft.

So, it seems that the victimized consumer would be the most concerned about ID theft, but if the thief used a victim’s credit card, the maximum liability for the consumer is $50.  There’s much more liability if a victim’s bank or investment account is drained, but that is not as likely to happen.

According to article, the merchant is the one with the most to lose in cases of credit card fraud.

That is what Peisner, a 44-year-old veteran of the credit-card business, has discovered. “Let’s say one of these hackers takes the information they find in a chat room,” he says. “He goes to the Sony Web site, buys a laptop computer for $1,000, and a month later the actual cardholder gets the billing statement. He calls up his bank and says, ‘I didn’t order a computer from Sony.’ At that point, the credit-card issuer, let’s say Citibank, sends a ‘chargeback’ through the interchange system to the acquiring bank, and that $1,000 is taken right out of Sony’s bank account, and they also get hit with a $25 chargeback fee.” So the merchant has lost the money from the sale (as well as the laptop) while paying the chargeback fee, other bank fees and processing and shipping costs. “If you’re a merchant,” Peisner says, “you have all the liability.”