The truth about internet fraud

Posted on 7 May 2009 at 14:53

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As media headlines scream about the threat of online theft, we reveal what really happens when criminals steal your identity - and explain how to prevent it.

Fraudsters have been trying to trick their victims since the dawn of time. While the earliest con artists most likely used promises of sabre-tooth tiger steaks and magic stones to lure their marks, today's criminals prefer to use the internet.

We have investigated the different ways that fraudsters use the internet to trick their victims. These victims may be banks, online stores or ordinary citizens. By making yourself aware of their methods, you can vastly reduce the chance of falling foul of a con and, if you do experience problems, we'll show you how to manage the problems that can arise.

Over the next few pages we'll reveal the truth about identity theft, rogue security software, fake lottery wins, Nigerian 419 scams and the problem of fraudulent websites designed to steal your login details.

What is identity theft?

Identity theft is big news. Some credit cards seem to offer special protection against it, the media reports that this type of crime has rocketed, and surveys scream that many Britons are worried about having their identity stolen.

Identity theft occurs when a criminal gains access to a victim's data and documents. They can then masquerade as that person to access bank accounts, apply for credit cards and loans and use any number of other financial services.

According to the Credit Industry Fraud Avoidance System (CIFAS), the fastest growing form of identity theft is from dead people, which accounts for around 30 per cent of this type of crime. As we'll see, though, even stealing the identities of the dead is not a victimless crime.

The result of a successful identity theft is that an innocent person ends up facing a large bill and possibly a large bailiff. Their credit rating could be damaged, affecting their ability to take out legitimate loans, transfer their mortgage or take out insurance. If the police get involved, victims could spend a lot of time helping with enquiries.

Being the victim of identity theft is likely to cause emotional distress rather than a large debt. It's important to remember that, ultimately, you aren't responsible for the behaviour of the criminal who is pretending to be you. However, you will still want to avoid becoming a victim, if only for an easy life. According to CIFAS, "identity fraud is still a comparatively rare type of crime, but it is a crime that can be very worrying for the victims". With a little effort, you can prevent your details falling into the hands of identity thieves and reduce your chances of becoming a victim.

How do they do it?

In order to protect yourself, you need to know how criminals steal your information. Here are the most common ways for fraudsters to gain information and assume alternative identities. Some of them use the internet, but many do not.

Robbing the dead

Spies, terrorists and other criminals have been stealing identities to use as cover for years. In his 1971 novel The Day of the Jackal, Frederick Forsyth described how simple it was to obtain a fake passport using the details of a dead person. The assassin in the book searched a graveyard for a headstone of a child with whom he shared a year of birth. He applied for a birth certificate in the child's name and used it to obtain a passport.

The loophole that allowed this has been open for a long time but, in October 2008, the situation finally changed. Now the General Register Office in England and Wales, as well as its counterparts in Scotland and Northern Ireland, sends weekly information about who has died over the previous seven days to organisations such as credit reference agencies.