part II

Medine notes that once the perpetrators identify their victims, they often need only that person’s social security number to facilitate identity fraud. The social security number “opens the door to an individual’s financial life -- providing access to checking accounts, savings accounts, brokerage accounts, etc...Social Security numbers and other unique identifiers can be gleaned from a wide variety of sources, including public records (like certain department of motor vehicles records), student transcripts, medical insurance records, survey response forms, and even warranty cards.”

The accessibility of this information has been made even easier by the growth of the Internet, which obviously creates greater opportunities for criminal activity, including identity fraud. Federal law enforcement officials have no specific trend data regarding the link between the Internet and identity fraud, but they recognize that numerous instances of identity fraud have been perpetrated online. At a Congressional hearing in 1997 an FBI official testified that “Technological advances have also facilitated…the availability and misuse of electronic account and personal information. Identity theft poses significant risks to financial institutions and individuals alike.”

Computerized database services -- frequently referred to as “individual reference services” or “look up services” are used widely by the public and private sector to locate or verify the identity of individuals. These services are there to collect and disseminate identity information. They can also easily be used by the public or private sector as a database of names for those wishing to commit identity fraud. The Federal Trade Commission has tried to work with industry representatives to encourage self-regulation. And while the reference services have agreed not to distribute non-public information such as social security numbers and dates of birth on request, they continue to sell this information.

Keeping your personal financial data private in the face of increasingly sophisticated technology is so difficult due to a phenomenon known as pretexting. Pretexting is the obtaining of personal financial information under false pretenses. For example, an investigator can obtain a bank account balance by posing as the account holder.

As a result of pretexting, financial privacy is rapidly becoming an endangered species. In his July 28, 1999 remarks to the Congressional Committee on Banking and Finance, Mozelle W. Thompson, Commissioner of the Federal Trade Commission, warned that pretexting “...appears to be gaining in popularity -- especially in the burgeoning Internet marketplace -- because of the booming market for comprehensive personal information.

Now, increasing numbers of high-tech private eyes, also known as ‘information brokers,’ are touting their ability to obtain surprisingly sensitive information without the subject ever knowing. Pretexting is a troubling, and apparently growing, problem facing consumers.”

In fact, it’s such a growing problem that consumers are beginning to revolt and demand that the financial services industry take steps to protect their privacy. Recently, Minnesota’s attorney general filed suit against U.S. Bankcorp over its information-sharing practices, and Congress is currently considering limiting the ability of banks to sell customer data to telemarketing firms. Additionally, President Clinton in May, 1999 proposed legislation that would put limits on information-sharing.

Although the Washington politicians seem intent on passing some legislation to limit information-sharing, don’t be surprised if the millennium is a distant memory before anything is on the books. So, while you’re sitting around waiting for Washington to act, you might want to take some concrete steps of your onw to protect your financial privacy, and that’s where this book comes in handy.

It shows you how to avoid turning over your private financial data to pretexters as well as to the legitimate information brokers like your local, neighborhood bank. By the time you’re done reading this book, you’ll have a better understanding of how simple, everyday activities can result in an unwilling disclosure of your most private financial information. For example, the next time you fill out a warranty card for a new toaster, stop and consider the amount of information that you’re being asked to disclose about yourself. More importantly, the next time you fill out an application for a mortgage loan, take a close look at the incredibly detailed personal information you’re being asked to divulge, and consider who might have access to that information.

As you’re probably aware, few things are more intrusive or intimate than a mortgage application. They generally require information such as how much you’ve made in the past few years, where you work, how frequently you’ve changed jobs, how much tax you’ve paid, your credit card and banking account numbers and balances, and in some cases, details about your major assets including stocks, real estate and partnerships. While we might understand why the broker needs this information to access your loan request, what is more difficult to understand is why the broker is allowed to store this information and sell it to anyone who wants it. In fact, there are currently no federal statutes that prevent mortgage brokers or independent mortgage companies from storing this information electronically and then selling it. So, if you’re intent on keeping such personal data as, say, your medical records from falling into the hands of your mortgage broker, you’d better start learning how to keep your personal financial information out of the hands of telemarketers and database compilers.