South Carolina Lawyer
SC Lawyer, March 2008, #3.
Identity Theft: A Primer
South Carolina LawyerMarch 2008Identity Theft: A PrimerBy Debra Sherman TedeschiThe Federal Trade Commission estimates that nine million Americans have their identities stolen every year. According to the President's Identity Theft Task Force's recent report, the annual direct and indirect financial losses of identity theft run into the billions of dollars. See FTC, About Identity Theft, www.ftc.gov/bcp/edu/microsites/idtheft/consumers/about-identity-theft.html
; PRESIDENT'S IDENTITY THEFT TASK FORCE, COMBATING IDENTITY THEFT: A STRATEGIC PLAN, 11 (Apr. 2007), available at www.idtheft.gov/reports/StrategicPlan.pdf
at p.11. Given these numbers, there is an unfortunate likelihood that identity theft will affect you and your clients, if it has not already.
But what exactly is identity theft? Put simply, identity theft occurs when someone uses personal identification data to perpetrate a type of fraud. First, the criminal harvests the personal information in some manner. This can be accomplished in low-tech ways, such as going through someone's garbage (known as "dumpster diving"), by a caretaker in the home stealing a checkbook or even by a friend or family member misappropriating personal information. Indeed, these traditional methods are the most common ways identity thieves gather identifying information.
Identity thieves also use more sophisticated methods, such as sending e-mails that dupe recipients into entering their personal information on bogus Web sites that look amazingly authentic-a technique known as "phishing."
Once the information has been collected, it may be used to complete the defrauding scheme or even sold to a third party for a swindle to be accomplished at a later time. For example, an identity thief may open new credit card or checking account in the victim's name, and then use the cards or checks to incur debts under the victim's name. An identity thief may even give the victim's identifying information to the police when arrested. If the thief fails to show up for court, an arrest warrant would be issued in the victim's name. See FTC, Facts for Consumers: Take Charge: Fighting Back Against Identity Theft, www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt04.shtm
Effects on victim Despite the fact that the victim of identity theft generally is not liable for the debts incurred by the criminal, the cascading effects of identity theft are quite significant. The crime exacts emotional tolls on the victim. For example, it is the victim who initially is viewed as the wrongdoer and therefore "bears the burden of proving that she did not do what she is alleged to have done." Holly K. Towle, Identity Theft: Myths, Methods, And New Law, 30 RUTGERS COMPUTER & TECH. L.J. 237, 241-42 (2004).
Moreover, as one commentator has described, victims experience "angst, a diminished sense of privacy and security, and difficulty obtaining loans, mortgages, security clearances, promotions and even gaining employment." Lilia Rode, Comment, Database Security Breach Notification Statutes: Does Placing The Responsibility On The True Victim Increase Data Security?, 43 HOUS. L. REV. 1597, 1601 (2007) (footnote and internal quotes omitted).
Although the victim may discover the crime and take some immediate steps to rectify matters, the myriad resultant problems often are difficult for the victim to fully resolve because "the harm caused by a stolen identity is ongoing. Even after the affected individual has cleared her name and credit history, the risk of further harm will linger as long as the thief remains at large and in possession of the victim's personal identification data." Id. (footnotes omitted).
South Carolina statutes In 2000, the S.C. Legislature passed the Personal Financial Security Act, which statutorily defined the crime of identity theft as "financial identity fraud." S.C. CODE ANN. § 16-13-510 et seq. (2003 & Supp. 2006). A person commits financial identity fraud when, without the permission of another person and with the intent of unlawfully appropriating the financial resources of that person, he:
(1) obtains or records identifying information that would assist in accessing the financial records of the other person; or (2) accesses or attempts to access the financial resources of the other person through the use of identifying information[.] § 16-13-510(B). Given both subsections of Section 16-13-510(B), the crime may be committed either at the information gathering stage or when the information is actually utilized, provided there is...