Protect 7

JUNE 2010

THIS MONTH IN PROTECT

It does not take long for identity thieves to adapt to new situations and new technologies, to slink and slither and strike. In this edition of the PROTECT newsletter, we see how quickly these criminals are taking advantage of confusion over “Obamacare” to sell bogus insurance policies, how smoothly they are tapping into the technological marvels of bank texting and VoIP or voice-overthe-internet, and how stealthily they are preying on online renters. These criminals are so clever, opportunistic and motivated to get your money, that it is no wonder identity theft has now touched more than 11 million Americans. For the rest of us, the challenge is to be smart, alert, knowledgeable and proactive.

IT DOES NOT TAKE LONG

PROTECT can be part of the solution. It is brought to you by the people who operate I.D. SHIELD 360, a leading service that helps shields you from the criminals determined to steal your identity. Every month in our newsletter, youʼll find useful and authoritative ideas and information to protect your most important possession – your identity.

Inside This Issue . . .

THE OBAMACARE SCAMS

VISHING AND SMISHING JOIN PHISHING VETS UNDER SIEGE, AGAIN

SENATOR’S IDENTITY UP IN SMOKE REVERSE MORTGAGE FRAUDS

THE COPIER CRISIS SLAM THE DOOR ON

RENT RIP-OFFS

CONFUSION DRIVES OBAMACARE SCAMS

AMONG THE EARLY EMERGING PATTERN OF FRAUDS:

The national healthcare bill is now the law of the land but most of provisions do not take effect for years. That is not stopping a spate of “Obamacare scams” that are taking advantage of the confusion over the program and the fallout from the nasty national debate.

So far, it is early in the process, say experts, and the scams are relatively unsophisticated. Still, state insurance departments and the U.S. Health and Human Services Department are gearing up for a flood of new frauds. “Confusion is the scammerʼs best friend,” James Quiggle, of the Coalition Against Insurance Fraud, is quoted as stating. “It didnʼt take long for them to realize that the health care law was a new marketing opportunity.”

1. Selling insurance policies to the elderly that purport to protect them from the “death panels.”

2. Posing as government employees and taking downpayments to reserve your “Obamacare” coverage.

3. Telemarketing or emailing offers of “government healthcare reform insurance” that requires the victim to provide a bank account or credit card number.

4. Stating that the new law requires you to buy a specific policy or right now in order to be in compliance.

5. Offering people “one of the last spots” in the Obamacare plan from their state or locality.

6. Generally using the words “Obama” or “national healthcare” to promote or sell private insurance plans.

What can you do to avoid being a victim?

At this stage, the frauds tend to be simple so use your common sense. In particular:

1. Avoid insurers who use the term Obamacare; no such healthcare plan actually exists under that name.

2. Avoid insurers who say you must buy now to avoid fees, penalties or even prison.

3. Shun those who say they can expedite Medicaid or Medicare drug coverage rebates.

4. Before signing any agreement, verify that the insurer is government licensed.

5. Call your state insurance department or the Better Business Bureau if you have reason to be suspicious.

WATCH THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS WARNING ON OBAMACARE SCAMS

VISHING AND SMISHING

JOIN PHISHING

Vishing attacks are generally conducted using voice technology to trick people into revealing critical financial or personal information to unauthorized entities. Most take place on voice mail, VoIP (voice over the internet), or landline and cellular telephones.

Here is how it works: The potential victim receives a message, indicating that suspicious activity has taken place in a credit card account, bank account, mortgage account or other financial service in their name. The victim is told to call a specific telephone number and provide information to verify or update an account, confirm a purchase or provide other related information. Vishing is troublesome to trace. Like legitimate customer services, vishing scams are often outsourced to other countries and thus are hard to track down. Also, scammers are using a ploy known as “spoof caller ID,” so even if a victim has caller ID, the call appears to come from a reputable source such as a bank or a government agency.

Readers of PROTECT already know well about “phishing,” the use of email or instant messaging on the internet to fool people into disclosing sensitive information.

The same trick is now spreading fast via voice technology, or “vishing,” as well as through text messaging, or “smishing.”

WATCH A VIDEO REPORT ON VISHING SCAMS

A similar twist deals with SMS or banking text alerts. Dubbed “smishing,” this identity theft scam comes in looking like a common text message from your bank, warning you that your account has been invaded or locked. You are invited to call the number and provide some information about your account, and warned that if you do not respond you could lose every cent you have deposited. This approach is rising fast as banking text alerts are becoming enormously popular.

No matter what the medium, the best defense to these attacks is to be suspicious of any unsolicited message that suggests they are targets of illegal activity or that their money is at risk.

Rather than calling a number provided in an unsolicited message, a consumer should directly call the institution or bank named, to a number known to be valid, in order to verify all recent activity and to ensure that the account information has not been tampered with. The Better Business Bureau should also be alerted and, say the experts, always know what is in your credit report to be sure you have not been an innocent victim of “vishing” or “smishing.”

DONʼT PAY FOR

REVERSE MORTGAGE SCAMS

There are four major reverse mortgage scams: FEES FOR INFORMATION

The most common fraud is the

fake estate planner or consultant who offers nothing more than information on how to get a

reverse mortgage — and then

The FBI and the U.S. Department of Housing and Urban Development are urging consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages have increased more than 1,500 percent in the past decade because the concept is simple and appealing: homeowners allow a lien to be placed on their property in return for annuity-like payments on a regular basis — without the dislocation of selling the family home. Executed properly, the reverse mortgage is of great benefit to those at or near retirement age. But, as the FBI states, the popularity of these loans is “creating significant opportunities for fraud perpetrators.”

charges for the information. If a person says they will help you

find a reverse mortgage lender for a fee, be skeptical. The

federal government, through

HUD, provides the same facts

and services at no charge. There is abundant free information on the internet, too, and several

reputable books on the subject.

FORGERIES AND BLANKS

This frequent scam takes place when the loan paperwork

contains erroneous information or blanks, sometimes even in the loan amount itself. If the

lender pressures you to sign

documents that have blanks or incorrect information, cancel

the deal immediately. Unfinished documents create the chance for forgery, fraud, misdirected checks and other disasters.

BUNDLING

A common tactic of scam artists is to bundle reverse mortgage financing with something

else such as home improvements, annuities,

risky investments, additional properties, living trusts or other estate planning products. If

the company offering you a reverse mortgage also wants to sell you other products such as insurance or annuities, be suspicious.

Especially if they want you to assign your

reverse mortgage payments directly to sign UNOFFICIAL OFFICIALS

The most popular reverse mortgage is the

Home Equity Conversion Mortgage (HECM), an official program of HUD. Neither HECMʼs program nor any other reverse mortgage

programs is marketed directly to homeowners by government employees. Unscrupulous mortgage salesmen have been known to

represent themselves as government repre-

sentatives or volunteers for non-profit organizations. The solution: do not be timid about

asking for verification from salespeople such as

their home office location and phone number.

TO FILE A COMPLAINT WITH THE GOVERNMENT, THE HUD HOTLINE IS 1.800.347.3735

for the services. It is likely that you're being scammed into a larger loan with higher

fees, and the products and services you are buying are also costly.

The FBIʼs advice in this area is simple and succinct. Do not respond to unsolicited advertisements for reverse mortgages.

Do not sign anything that you do not fully

understand or which is incomplete. Do not

accept payment from individuals for a home you did not purchase or buy additional

services related directly to the loan. Seek out your own reverse mortgage information.

CLICK HERE TO READ THE FTC’S FACTBOOK ON REVERSE MORTAGES

VETERANS UNDER SEIGE, AGAIN First, several hundred veterans were put at risk when a thief broke into a car and stole an unencrypted notebook from Heritage Health Solutions, a VA contractor. The laptop computer contained Social Security numbers for 616 vets.

A few days later, a medical lab in Texas was robbed of a logbook that included the personal information on 3,265 former soldiers.

As the nation celebrates Memorial Day and pays tribute to its soldiers, it is sad to note that the Veterans Affairs Department has suffered yet another round of personal information theft.

This spring, sensitive data for several thousand veterans was compromised in two recent separate incidents.

Both data thefts were disclosed during a recent House Veterans' Affairs subcommittee hearing.

Experts in industry and at the U.S. Government Accountability Office say that the VA has been attempting to increase security, but the contract with Heritage Health Solutions, for example, didn't include mandatory encryption of data. Indeed, nearly one-third of contracts between the VA and third party contractors do not address the issue of, much less provide a mandate for, the encryption of data.

As bad as these latest breaches are, they pale in comparison to the theft in 2006 of 26 million personal files from the VA, which included Social Security numbers and birth dates. The information was sitting on a laptop taken by an employee who wanted to work at home that day. Since that moment, Congress has been working toward new rules to hold the VA accountable for identity theft and encouraging the VA to implement new security practices.

THE COPIER CRISIS

Not enough to worry about? Now thereʼs another piece of office equipment that can put your identity at risk. You may have cleansed your computer and shredded your documents, but the next threat is the copy machine. Not all copiers, mind you, but the new ones that contain hard drives that retain the images of every document they have ever copied. These hard drives can be accessible to an ambitious thief and, often, they are not wiped clean when a copier is re-sold or recycled.

In a recent report on CBS News, correspondent Armen Keteyian demonstrated how easy it is for these images, which often include sensitive information like Social Security numbers and medical records, to fall into the wrong hands. For the study, CBS and a software company cooperating in the story, purchased four old copiers from a warehouse in New Jersey and found tons sensitive data stored in the copiers.

The CBS investigate report has spread ripples through the professional security industry which had not previously taken the problem seriously. Now experts and public officials are beginning to weigh in.

Though copier-related identity theft is still in its infancy, here is what experts say you can do to protect yourself: • Find out if your company has one of the potentially offending copiers; with small and personal copiers you are probably safe but the big, new expensive ones are trouble.

• Find out if your company has a policy in place for deleting or scrubbing information off the hard drive on a regular basis; if not, lobby for such a policy or ask your employer to purchase security or encryption packages available for an extra charge.

• Ask these same questions at your local copy shop or franchise, which are likely to own such machines as well.

• Find somewhere else to copy sensitive information, perhaps investing in a personal copier or multi-functional business unit in your home.

WATCH THE ORIGINAL CBS REPORT

TRUE STORIES SENATORʼS IDENTITY UP IN SMOKE Virginia Majority Leader Dick Saslaw had his credit card stolen, and it was then used in Sacramento CA to buy, among other things, medical marijuana. Senator Saslaw said he was alerted to a problem with his American Express credit card in March and quickly reported it to Virginia State Police. Authorities reported it to the California State Highway Patrol, which is searching for two suspects in the Sacramento area in connection with an identity theft ring. The suspects reached out to multiple banks and credit card companies to get new cards in his name. Saslaw theorizes that his number was skimmed while he ate at a restaurant.

As for the $225 in medical marijuana charged to the 70-year old senator's card? “That's California for you,” he said. “You can buy pot on a credit card.”

BACK TO SCHOOL A Poughkeepsie NY man sued a co-workerʼs identity to get $35,000 in student loans from local banks. State police said Rodney Wheatley, 53, was charged Friday with felony identity theft, criminal possession of a forged instrument and grand larceny.

Authorities said Wheatley, in November 2008, used the name, date of birth and social security number of a co-worker to apply for three educational loans at two financial institutions. The loans were approved by the banksʼ loan officers and Wheatley deposited the money in his own bank account. Conveniently for the police and prosecutors, he is already serving time there on an unrelated conviction for driving while intoxicated.

I’M GOING TO DISNEY WORLD

A federal grand jury has indicted Bonnie Sweeten, a Bucks County PA mom, for stealing more than $700,000 while working as a paralegal. Among the charges: she stole from her employer masquerading as the boss to take out a six-figure loan in the bossʼ name; she stole from a sick grandfatherʼs retirement account; and she stole the settlements given two teenage sex-abuse victims by forging a New Jersey judges signature. Not crazy enough: Sweeten was also arrested for falsely reporting that she and her 9-year-old daughter had been kidnapped; she was found the next day at Disney World, where she had flown with the child using a coworkerʼs stolen identity. The indictment says she stole money by forging signatures, diverting bank funds, and fabricating documents ranging from a U.S. passport, a power of attorney, from a driver's license to a court order.

NO SECURITY IN PRISON Two Tampa FL men face numerous charges of identity theft in a scam that used jail inmate information to apply for food stamp cards and other public assistance. A police report said Sebastian Leonard, 24, and Bobby L. Wilson Jr., 21, searched for the names and information of inmates on websites for local jails and used the information to apply for the electronic eligibility cards. They then re-sold them for half their value. Leonard was already being held in jail on unrelated charges. He faces new charges of 130 counts of fraudulent use of personal information and 31 counts of obtaining credit cards by fraudulent means.

Wilson was arrested during a traffic stop and was charged with 130 counts of fraudulent use of personal information, 40 counts of obtaining credit cards by fraudulent means, and possession of marijuana.

FAKING IT A New Bedford MA man was sentenced to 14 years and one day in state prison for identity theft after changing his plea to guilty on

charges of identity fraud (16 counts); fraudulent use of credit cards to obtain goods (5 counts); falsification of operator始s license (7 counts); as well as trafficking in drugs and robbery. Rosario was producing fake Massachusetts始 driver's licenses with stolen personal information, then obtaining credit cards in the names of the victims. With those credit cards, he successfully purchased thousands of dollars worth of goods and electronics.

RESORTING TO FRAUD A 50-year-old Montana woman who pleaded guilty to credit card fraud and aggravated identity theft has been sentenced to almost three years in prison followed by three years probation. Erin Lee Stewart was sentenced in federal court in Missoula MT. Prosecutors say Stewart stole the identities of at least five people who worked for her at a restaurant at Big Sky Resort, where she was manager in 2007 and 2008. She is accused of using their personal information to obtain credit cards that she then used to buy more than $6,800 in merchandise, including a laptop computer.

COOKING UP A SCHEME

Police have arrested a Eugene OR woman for stealing customers' credit card information to make online purchases.

Lakhana Ingram, 31, is linked to several identity theft cases related to her employment at a kitchen cabinet and counters store. She obtained customer credit card information from victims who made purchases from the store and then used the information to make multiple purchases online. Investigators have tied Ingram to at least eight victims. The store is called Granite and Cabinets Direct. Ingram is being held on 25 counts of identity theft, computer and credit card fraud.

SLAM THE DOOR ON RENTAL FRAUDS

check. But itʼs for an amount “mistakenly” too high. You give him a cash refund for the difference and, by the time the check bounces, the thief is away with the cash. Similarly, the scammer give you a check for the rental, then says he has changed his mind, and you give him a cash refund only to find out later that his original check was bad.

There are several ways to avoid being a victim of these rental scams, most of which boil down to doing your homework.

As people increasingly list and search for rental properties online, there has been a surge in real estate rental frauds. These scams fall into two obvious categories: you are a renter or you are an owner.

In the first scenario, you are looking for a rental in the online classifieds perhaps on Craigʼs List or another popular source. When you respond to an ad that attracts you, the “property owner” turns out to be a scammer only pretending to have a property for rent. This phony landlord shows up at the property, shows you around, takes a deposit and flees. Alternatively, a fake landlord makes up some excuse for why he or she is out of town and cannot see you face-to-face, and asks you to mail a deposit or rent check to an out-of-town address or even a foreign country. You do so and, when you go to pick up the keys, you find out the scammer never owned the property and your money is gone.

In the second scenario, you have place to rent. Someone responds to your online listing. A scammy tenant takes the space and then re-rents it — sometimes multiple times — to other unsuspecting targets. Then they skip town with the deposit and perhaps the first monthʼs rent. Or, if the transaction is handled remotely, you agree on the rent and the scammer sends you a

If you are a renter: Ask to see the landlordʼs identification or ownership papers. Search local government websites for the rental propertyʼs address and make sure the name listed matches that of the landlord. If a property management company is managing the condo, home or community, call them and ask whether the person you're dealing with actually owns the property.

In a gated community or a condominium, a rental application is usually required; be suspicious if there is none. Use search engines to look up and cross-reference the propertyʼs address, landlord name and phone number. Consider employing a real estate agent.

If you're an owner: Keep an eye on your property and do not leave it vacant for long periods of time. Change the locks frequently. Ask potential tenants for references and check them. Verify a potential tenantʼs employment and run a credit check on potential tenants. Do not give tenants cash refunds until their own check has cleared. Search the internet for a potential tenantʼs name, phone number, and prior address. Do not rule our checking police records as well.