Protect 2

JANUARY 2010

THIS MONTH IN PROTECT

Inside This Issue . . .

PROTECT is a monthly newsletter that helps you avoid becoming a victim of identity theft. Our goal is to inform and educate, not to frighten. But in preparing this edition, even our editors are shocked — and, in truth, a bit scared — by the epidemic of identity crimes sweeping across America. In this issue of PROTECT, youʼll read stories about credit card thefts at major stores and institutions, about risks to your privacy at work and at home, about threats to your financial and medical records, even dangers when you are relaxing at a restaurant, sharing music, visiting Facebook, or on a date. Ten million Americans have already been victims, and we are all vulnerable in our personal and professional lives.

HACKED TO THE MAXX

WE ARE ALL VULNERABLE AT HOME AND AT WORK

The purpose of PROTECT is to explain the latest crimes and scams and, most importantly, to tell you how to protect yourself and your loved ones. PROTECT is brought to you by the people who operate I.D. SHIELD 360, a leading service that helps shield you from the criminals determined to steal your identity. So continue to look for this newsletter every month.

Youʼll find useful and authoritative ideas and information to protect your most important possession — your identity.

ONLINE DATING DANGERS

THE ATM SKIM SCAM MUSIC SHARING IS OFF KEY

COMPUTER BACKUP BETTER SAFE THAN SORRY NEW AGE BONNIE AND CLYDE

HOW THEY CALCULATE

YOUR CREDIT SCORE

HACKED TO THE MAXX

Some identity thefts are small and that is bad enough. But sometimes they are big.

No make that . . . HUGE. That始s the story of TJ Maxx and Marshalls, where hackers stole data from 45.7 million credit and debit cards of shoppers in a case believed to be the largest such breach of consumer information.

The criminals were able to access the credit and debit card information for all retail store operations in the United States and Puerto Rico. In addition, nearly half a million more customers who returned merchandise without receipts had their data stolen, including driver始s license numbers. The TJX breach is the latest in a string of incidents that have exposed sensitive consumer information.

Retailers are often attacked; transaction data was recently stolen from 108 DSW shoe stores, a problem with point-of-sale software at Polo Ralph Lauren compromised the credit card data of as many as 180,000 people, and 40 million credit card numbers were hacked from CardServices company back in 2005.

TJX, as the parent company is known, says it notified the Department of Justice, Secret Service and even the Royal Canadian Mounted Police when it learned of the breach. It also hired General

Dynamics and IBM to monitor and evaluate the intrusion, identify the affected information and, they claim, to upgrade their computer systems and safeguards. Experts suspect that the TJX stores have the same security gaps that persist at many firms entrusted with consumer data: failure to promptly delete data on customer transactions, to keep secret the encryption method, or to keep access to a minimum.

Thus far, more than 60 banks around the world have reported that fraudulent charges have appeared as the result of information stolen from TJ Maxx and Marshalls. Many of the banks have reissued cards to customers as a precaution against further fraud beyond cases detected as far away as Sweden and Hong Kong. The only arrests tied to the case involve a spinoff scam in which 10 people bought data from the TJX hackers to purchase Wal-Mart gift cards, and then used those cards to buy $1 million worth of electronics and jewelry at Sam始s Club stores.

BAD ECONOMY WORSENS ID THEFT HOW DO YOU LIMIT THE DAMAGE IF YOU ARE, OR MAY BE, A VICTIM OF THIS KIND OF THEFT?

1. Pay attention to the charges on your credit card statements.

2. Verify them with receipts.

3. The moment you see something, say something, by contacting your credit card provider.

4. Send providers notice of the problem in writing and keep a copy.

5. Check your credit reports for any funny business, and place a statement on the credit report indicating what has happened, or ask your identity theft service to make sure the credit report companies are aware of your circumstances.

The experts have spoken. And what they are saying is that the difficult economy and a sky-high unemployment rate are motivating more and more identity theft, and shaping the trends we are likely to see in 2010. From among the forecasts by experts, such as the non-profit Identity Theft Resource Center, here are several select crimes expected to grow as a result of the economy.

1. As a general matter, since identity thieves always find a way to use difficult economic times to their advantage, the recession will lead to more identity theft scams.

2. High unemployment rates make people more susceptible to being tricked by fake job listings, work-athome scams, and the like.

3. Without a steady income, individuals with no criminal history will be motivated to explore the crime of identity theft for financial gain.

4. Since companies are not investing in information security, insider identity theft will increase as identity thieves gain access to personnel information contained in databases or paper files.

5. With more people applying for government assistance and benefits using their Social Security Numbers, there will be more victims of identity theft.

6. High medical costs combined with high unemployment will cause the uninsured to use the identities and coverage of friends, relatives, or strangers to steal medical care.

7. Criminal identity theft, when one individual uses another始s personal information to avoid showing a criminal record, will grow.

...

ONLINE DATING DANGEROUS LIAISONS

In todayʼs fast-pace and fully-wired era, it is no surprise that more

and more people are turning to the internet to meet prospective partners. Online dating can be a satisfying and rewarding experience.

Still, the growing popularity of the practice — and the fact that people can hide anonymously behind their computer profiles — is leading to a rising tide of identity thefts and related scams.

HERE ARE THE BASICS FOR PROTECTING YOURSELF FROM ONLINE DATING SCAMS:

Among the most common problems encountered in the online dating scene: the person on the other end is not who they claim to be, perhaps older or less genteel, heavier or poorer, married on the side, or even emotionally unstable; or the person is part of a scheme to get your email address for marketing or spamming; or your prospective date is really looking for a shakedown to get you to send money for a visit or an emergency or to help a sick friend or aid a Nigerian prince; or your online pal is really looking to obtain your phone number, credit card, bank information or passport to steal your identity.

AVOID FREE DATING SITES These sites donʼt make much of an effort to run background checks to identify or filter out fakers and scammers.

SET UP AN ANONYMOUS EMAIL ACCOUNT Use an email service and change the account information to not give out your full name. This protects your privacy.

USE A CELL PHONE NUMBER A person armed with your home number can more easily find your home address.

QUESTION PERFECTION Carefully scrutinize the dating profile to look for obvious signs of fraud such as the person being too perfect or the information too generic.

MEET IN A PUBLIC PLACE This includes driving yourself to the destination so that a stranger does not know where you live.

WATCH A TV SHOW ABOUT SAFE ONLINE DATING

DONʼT OFFER TOO MUCH INFORMATION Resist the urge to tell your life story, occupation, details, even your address, until you feel more confident about the other person.

DO EXTRA RESEARCH If you are interested in this person, run your own background check or at least use Google for the basics.

FEAR LOVE AT FIRST SIGHT While having someone fall instantly in love with you may be flattering, be wary.

They may try to gain your trust through flattery, only to abuse it later. Time is on the side of honest people, and against desperate scammers.

DONʼT SEND MONEY Be concerned when people ask for money. Keep it where it belongs, in your pocket.

TRUST YOUR GUT If someone or something makes you uncomfortable or sends up too many red flags, stop communicating with this person.

Like in all aspects of life, online dating requires listening to your instincts.

ONLINE MUSIC SHARING IS OFF KEY

Illegal music downloading and file sharing seem to have become a right of passage, a part of growing up in the 21st century, a way to get great deals and make online buddies while sticking it to anonymous companies. But, in addition to the fact that it is illegal, the practice opens music sharers to serious security breaches, computer viruses and other ugly side effects.

One danger is that it is difficult to verify whether the source of the files is trustworthy. Such files are often used by attackers to transmit malicious codes. This means spyware, viruses, Trojan horses or worms. When the music is downloaded, your computer becomes infected. All kinds of private information about you, such as logins and banking details, may be sent back to a central server owned by the spyware or malware creator. Also, your computerʼs performance is compromised: some experts estimated that as many as 50 percent of all problems that send computers to the shop relate to viruses planted, purposely or not, through such files.

Further, music file sharing often leads to identity theft issues because you often give other users access to personal information. Whether it's because certain directories are accessible or because you provide personal information voluntarily, unauthorized people may be able to access your financial or medical data, personal documents, sensitive corporate information, or other personal information.

Yet another concern is that, in the process of sharing and transmitting files, your computer may open certain ports in your firewall. This may give attackers access to your computer or enable them to attack your computer by taking advantage of vulnerabilities in your applications or system.

Finally, back to the obvious point: itʼs often illegal and it may have consequences. File shared applications may include pirated software, copyrighted material, or pornography. If you download these, even unknowingly, you may be faced with fines or other legal action. If your computer is on a company network and exposes customer information, both you and your company may be liable. And, as much as you may wish to deny or rationalize, the fact is that artists, musicians, writers, engineers and others in the music business suffer harm, which ultimately costs the consumer – you – as well.

MORE ON THE DANGERS OF MUSIC FILE SHARING FROM MICROSOFT MORE ON THE RISKS OF FILE SHARING FROM THE US DEPARTMENT OF HOMELAND SECURITY

COMPUTER BACKUP BETTER SAFE THAN SORRY

Backing up your computer is always on the “to do” list but never seems to get done. After all, youʼre not a banker or a government official or a medical researcher with trade secrets, millions of records, or proprietary information to protect. But it makes sense to act now.

Letʼs face facts: computers are a big part of our lives, replacing the mail, the stereo, the encyclopedia, the mall, the photo album, the file cabinet, the financial ledger, and so much more. Why take the chance that you will lose useful — or even vital — business or personal information because of your own error or because your computer malfunctions or because your files become corrupt?

Generally, there are three ways to back up documents, photos, music, and other data. The least expensive but most time-consuming is transferring your data to CDs or DVDs. This require a CD or DVD burner, patience, and the discipline to do it regularly. If you have a lot of data, using CDs could mean burning a lot of discs. Most DVDs, on the other hand, can hold up to 4.7 gigabytes of data.

A simpler solution may be to use an external hard drive to mirror existing information. External hard

drives can provide a convenient way to increase storage space, with the added benefit that the drive may be unplugged and connected to another computer.

They generally have tons of storage capacity and modest per-gigabyte costs. Other external storage options include USB flash drives, which are faster and the most portable, but have little capacity. High-capacity solid state drives — fast and relatively free from mechanical failure — cost too much per gigabyte to be affordable for most people, but prices are coming down in 2010.

Finally, there are sites that offer online backup. Most free and commercial backup software allows you to click and highlight the files and folders you want backed up. They also let you schedule when each day or week you'd like the action performed.

A few actually back up files continuously. In general, these services are inexpensive, and the best ones wonʼt noticeably slow down your computer. They also encrypt data before, during, and after it's been sent to industrial-strength servers. There's no media to mess with, either. The differences to shop for: ease of use in setup, choosing files and folders for backup; how you get files back if you lose them; and the degree of encryption and security built into their procedures.

Any of the three options — doit-yourself, external hard drives, and online sites and services — are relatively inexpensive and easy to use, and protect you from permanent loss of data.

SO WHAT ARE YOU WAITING FOR?

THE SKIM SCAM

When located in an area that is well lit and filled with people, the ATM seems like a great convenience and a safe bet. Don始t be fooled.

ATM skimming is the newest identity theft technology spreading nationwide. Indeed, the ATM Industry Association acknowledges that the scam is among the banking industry始s biggest frauds and the U.S. Secret Service estimates that annual losses from skimming now total about $1 billion a year.

Here始s the scoop. Skimmers are electronic devices cleverly disguised to blend in with an ATM始s appearance. Their purpose is to record the information stored on the magnetic strips of debit and credit cards. ATM skimmers can have two different hardware parts: a card reader and a camera. The card reader is a plastic covering that attaches over the slot. It may be bulky, but blends in because the color matches. The card reader steals a card number and, for some purposes, that is enough. But if the criminals also want cash after you leave, they need the camera to record your PIN number. Cameras tend to be hidden in discrete objects, with a small pinhole in it, and attached further up the ATM. The pinhole lets the camera view and record PIN numbers that are punched on the keypad below.

While the ATM is the most common locale for

skimmers, the system can be set up on any machine that accepts credit cards. Cases are beginning to show up at gas pumps, stores and restaurants as well. There are even handheld skimmers which are increasingly hard to detect.

How is the information actually stolen?

Essentially, there are two different types of wireless transmissions in play. The first uses Bluetooth technology. Once the hardware is attached to the ATM, someone in a nearby car downloads the information onto a laptop as people perform their transactions. Most commonly, the stolen data is uploaded to the internet and sold to scam artists. The other method is through a router. After attaching the hardware to the ATM, the individual places a laptop and router nearby, perhaps in a garbage can. The router transmits the data from each transaction to the laptop. Later, the criminals return to pick up the equipment. Often, in this case, the stolen information is uploaded onto blank gift cards and used for in-store purchase, or onto ATM cards where the stolen PIN numbers come in handy.

Financial institutions know that skimming is on the rise. They are trying to work together more closely as a group and with law enforcement officials.

Alerts are sent out whenever a skimming incident is detected and surveillance devices are being placed near ATMs to take pictures of potential skimmers in action.

The reality, though, is that individuals must take greater responsibility for their own protection. Use the same ATM whenever possible. Familiarize yourself with the machine and be able to spot anything out of the ordinary, such as suspicious attachments or an altered keypad. Look for hiding places for a tiny camera, such as oddly placed brochure holders or a mirror positioned over the keypad. Cover the screen with your hand when typing your PIN to obstruct the view of your fingers.

If you see a strange device on an ATM machine, call your local law enforcement agency or bank immediately. Finally, check up frequently on your accounts and monitor your credit reports to help limit any damage, as is true with identity theft of any kind. Awareness is the key.

SEE PHOTOS OF COMMON ATM SKIMMING DEVICES

HOW THEY CALCULATE CREDIT REPORT SERIES #2

YOUR CREDIT SCORE

Last month, PROTECT commenced a series on understanding your credit report. The reason is simple: knowing what is in these reports is vital to your economic health and safety. You need a clean report to apply for a mortgage on a house, to buy a car, or to finance any big ticket item. You need to know how the reports work so that you can work to improve your credit scores. You need to monitor it for errors and discrepancies, which happen often, and to make sure no one has stolen your identity is running up debts in your name.

Since credit reports are updated all the time, itʼs also good to check your credit report regularly with the three credit bureaus, Equifax, Trans Union and Experian; some say at least once a year while many experts recommend a quarterly review. Last month, we looked at the basics: what information is compiled in the report. This time around we explore your credit score, what it is and how it is calculated.

Your Credit Score is a mathematically calculated number based on the information in a credit report, essential your payment and debt records. It does not include outside information such as salary, age, gender or race. By comparing the information on your report to hundreds of thousands, credit reporting agencies come up with a number that can be used to identify your level of future credit risk. Credit scores are often called “FICO scores” because most scores are produced from software developed

by Fair Isaac Corporation or FICO.

SCORES RANGE FROM 300 TO 850 – THE HIGHER THE SCORE, THE LOWER THE RISK. HERE IS HOW THE CALCULATION IS MADE:

you have managed credit responsibly and this may be better for a score than having no balance at all.

LENGTH OF CREDIT HISTORY

PAYMENT HISTORY

This accounts for about 35 percent of the score. This includes on time payments on credit accounts, credit cards and retail stores, as well as mortgage payments and installment loans for cars and other large items. Late payments and delinquencies are also taken into account, such as how late they were and how many times you missed a due date. Payment History also includes public record and collection items such as bankruptcies, foreclosures, wage attachments, liens, judgements and even late payments on public utilities such as water or electricity.

AMOUNT OF CREDIT

This accounts for about 30 percent of the score. This looks at the total amount owed on each account and the overall amount at issue. It also looks at the number of accounts on which you owe money. Here, the larger amount of debt and the more accounts you have, the greater is the credit risk. Interestingly, having a small balance without missing a payment can show that

With 15 percent of the score, this factor looks at the age of your oldest account and the average age of all of your accounts.

It also considers how long it has been since you used certain accounts.

NEW CREDIT

This accounts for 10 percent of the score.

The credit report considers how many new accounts you have, how long it has been since you opened a new account, how recently a lender made a credit report inquiry, and whether you have repaired problems with your credit history.

TYPES OF CREDIT

The final 10 percent of the score looks at the types of credit accounts you have, and how many of each type. Revolving credit is basically credit cards, American Express, Visa, MasterCard, Discover, and store cards. Installment credit encompasses personal loans, car loans, student loans and mortgages.

COMING UP IN THE SERIES:

HOW MISTAKES ARE MADE AND HOW TO FIX THEM HOW TO IMPROVE YOUR FICO SCORE WHAT YOUR SCORE DOES NOT INCLUDE AND MORE . . .

TRUE STORIES JOBLESS AND HOMELESS For four long years, Bronti Kelly couldnʼt figure out why no would hire him. He showed department store managers a resume full of sales experience, but was rejected hundreds of times.

Along the way, Kelly filed for bankruptcy, lost his apartment, and became homeless. “For years as this went on, I blamed myself,” Kelly says.

Eventually, he found the source of his trouble: a man had given Kellyʼs identity to authorities when arrested for shoplifting and the tainted profile found its way into computer databases used in background checks by employers.

Kellyʼs nightmare had began with an old-fashioned wallet snatching, which contained his driverʼs license, Social Security card, and military ID for the Air Force base in southern California where he was a reservist. Seven months later, Kelly was fired from a sales job at a top department store, faced a flood of other rejections, and ended up sleeping his car. An indication of the turmoil identity theft can cause: even after he finally cleared his name, the arrest continues to show up in various records. Today, he is employed as a pool cleaner.

HE GAVE AT THE OFFICE Actor Ricky Gervais of “The Office” fame, and this yearʼs Golden Globes television host, had $575,000 transferred illegally from his bank account to buy gold bullion before his bank realized the scam. Gervais himself released the story on a podcast to help warn others. The criminals had managed to infiltrate the star's bank account when bank insiders provided the thieves with account details and ordered the precious metals in his name. The bad guys were only caught when they produced a shoddily done fake passport that included a photo of Gervais playing his character, David Brent, on the set of the television show.

DON’T BANK ON PRIVACY

A Marion OH man has been arrested for taking another manʼs Social Security number, stealing from his bank account, and getting a Verizon phone in his name. Kenneth Alan Batton, 37, is charged with two counts of financial identity fraud and one count of financial transaction card fraud. One of the alleged victims, James Backus, said the theft almost ruined his life and his nearperfect credit score. Backus said his personal financial meltdown began after credit card companies began calling and asking him to verify the opening several accounts.

After reviewing his credit report, Backus discovered the suspect had replaced all of his contact information. Backus corrected the information, but the suspect immediately changed it back and locked Backus out of his account. Things continued to spiral out of control when Wachovia released all of Backusʼ banking information to Batton.

NEW FACE(BOOK) OLD SCAM Bryan Rutberg sent out a message on his Facebook page: “Bryan Is In Urgent Need Of Help!!!"

But it wasnʼt Rutberg at all. His Facebook account had been hacked, and within minutes many of his friends were calling, emailing, and sending money in response to a fake notice that he had been robbed at gunpoint while traveling in the UK, and needed money to get home. The Seattle resident and Microsoft employee then spent the next 24 hours in a frantic search for a way to contact Facebook and stop the hackers. But he was locked out of his own account. He tried to use his wife's account to put a message on his “wall,” but the scammer had “de-friended” her. Three days later Rutberg got the message lifted but, by then, friends had filled up his cell phone with text messages of concern, sent emails, and called Microsoft to warn the firm that an employee was in trouble. Rutberg was the victim of a new, targeted version of a very old scam — the “Nigerian” ploy — combined with the personalization of social media. Facebook has confirmed the story.

CRIME ON THE MENU The owner of a restaurant in San Antonio TX received a police escort after evading authorities for months. Andrew Paparella, 36, was booked on 20 counts associated with identity theft. Police accuse him of obtaining credit card numbers from customers of his now defunct French bistro and using them to buy electronics and sports equipment

and then re-selling them on eBay. Paparella fled knowing police were investigating him for "thousands and thousands" of dollars of fraudulent purchases made with stolen credit card numbers.

CREDIT CARD FLIP FLOPS Suzanne Finch obtained a Sears store credit card, which was eventually flipped by Sears to Citibank and turned into a Sears Citibank MasterCard credit card. Though the practice of flipping is legal, experts say it often leads to breaches in security.

In this case, several years after the flip, Finch, an administrator at San Diego State University, noticed that her card had been used to purchase jewelry at an online store in Los Angeles. Her personal information had also been used to open up another credit account in her name with a billing address in Indianapolis. Finch says she contacted the store and discovered “it was they who contacted Sears Citibank MasterCard ... they had noticed an unusually large amount of activity coming from Sears Citibank MasterCards.” When police visited the fake Indianapolis address, they found it was a freight forwarder shipping goods to Russia. The police told Finch they suspected a data breach inside Citibank. Finch also discovered that the bank often uses contractors to store PIN numbers for flipped cards without sufficient security, enabling hackers to steal the numbers and create clones. She estimates having spent 600 hours fixing the problem.

NEW AGE BONNIE AND CLYDE

Jocelyn Kirsh and Edward Anderton, a new age Bonnie and Clyde, have been arrested for identity theft. The two burglarized their neighborsʼ condos and opened fictitious lines of credit under fake IDs they created using high-tech equipment in their own apartment. Kirsch, 22, and Anderton, 25, were both residents of the exclusive Belgravia Condos in Philadelphia. The couple was arrested at a UPS store as they tried to pick up a lingerie package ordered using a credit card in a neighborʼs name.

Cops said the team trotted the globe, furnished their apartment, stuffed closets with designer clothes, and bought the latest in electronics with their newfound credit. Police found three safe lock boxes in their apartment and confiscated cash, a Rolex watch, driverʼs licenses, credit cards in the names of neighbors, stolen billing statements and passports, and an article on “How to Spot Fake IDs.” Investigators seized four computers, two copiers, a scanner, and an industrial-size machine that manufactures driverʼs licenses. They also found spyware which monitors computer use.