Identity Theft, the IRS, and You

Question: What happens when someone steals your identity and gains employment under your identity (but conveniently doesn't pay income tax)?

Answer: The IRS sends you a bill for the taxes the identity thief didn't pay.

Surprise!
That's what happened to an Chicago area 41-yr old woman. Surprise! You owe the government $22,024.40 in back taxes (to say nothing of penalties and interest). Oh, and Happy Thanksgiving!

What a (un)pleasant bit of news that must have been to receive. With the economy in a tailspin, the banking and housing sectors in complete meltdown, and inflation in food and energy up significantly; one might have been tempted to ask what else could go wrong. For the victim of identity theft, we now know the answer.

An Old Theft
According to the news report, the identity theft had actually occurred years earlier (on or before mid-2006). The accused identity thief (Rosa Flores-Velasco of nearby Elgin, IL) had purchased the identity (Name, Social Security Number, and Date of Birth) for $500 and assumed the identity for purposes of, at least, employment and obtaining a telephone account.

Flores-Velasco had additionally obtained, an additional fraud, a resident alien card with her own picture but the victim's name and information. The telephone account was also a trouble spot as it had referred to collections for non-payment.

The Anticipated Future of the Thief
Flores-Velasco has been arrested and charged with Identity Theft. Her bail has been set at $5,000 and she has been inducted into the Kane County jail. Her hearing is set for December 3rd. Her immigration status and other potential frauds relating to the identity theft are likely to be discussed then. For Rosa Flores-Velasco, her journey through the criminal justice system is just beginning.

The Anticipated Future of the Victim
Since the full details of the frauds committed by the identity thief are not yet known, it is clear that the journey of discovery, repair, and remediation has only just begun. Dealing with the consequences of identity theft can take hundreds of hours. In this case (long-term theft), the damages are likely to be both broad and deep.

Recovering your good name, dissolving fraudulent debt, restoring a valid credit worthiness score are all challenging. Dealing with government agencies like the Immigrations and Customs Service as well as the Internal Revenue Service generally do not rate very high on the list of "fun things to do".

How Merchants Helps
Merchants Information Solutions, Inc. has developed a service offering that helps folks recover from the consequences of identity theft. We have trained Recovery Advocates (RA's) that can assume much of the burden of clearing your name. The RA's can, upon execution of a limited power of attorney, act on your behalf contacting banks, credit card companies, utility providers, and other creditors where there is fraudulent debt. They can also contact government agencies (like ICE and IRS) and get things straightened out. We call this procedure our "Managed Recovery".

Of no less importance than our system of Managed Recovery, is our prevention service. Merchants' SmartIdentity program actively monitors your credit and other factors and sends you email alerts when potential trouble is spotted. We believe that prevention truly is better than cure. So when yet one more story of how identity theft has made the life of someone else very unpleasant, do more than just think about protecting yourself and your family.

Source:
- http://www.dailyherald.com/story/?id=250846

When the Going Gets Tough, the Identity Thieves Get Going

Things are already difficult and show no signs of improving in the near term. As if that were not sufficiently bad news, identity theft shows no sign of abating either.

Just yesterday at a Wal-Mart in the Phoenix metro area, a woman was arrested for reportedly stealing the identity of another Phoenix area resident and using the stolen credit card number (and an apparent forged driver's license) to purchase goods online from a local Wal-Mart.

Chandler police arrested Crystal Wright when she attempted to pick up the goods purchased with the stolen credit card (kudos to the Wal-Mart folks who spotted the fraud). However, when Ms. Wright was arrested, she did not reveal her true identity and instead used the stolen identity of Margaret Farnsworth. After Ms. Wright's arrest, she was released.

A local newspaper reported the arrest. An alert friend of the real Ms. Farnsworth read the report of the arrest in the newspaper and informed the real Ms. Farnsworth. The real Ms. Farnsworth, upon learning that someone claiming to be her had been arrested, contacted the Maricopa County Attorney's Office (kudos to both Ms. Farnsworth for promptly reporting and to the alert friend).

Margaret Farnsworth	Crystal Wright

Tempe police then went back and discovered Ms. Wright's true identity and have begun to clear Ms. Farnsworth's good name.

Ms. Wright has subsequently plead guilty to the charge of Aggravated Identity Theft (Class 3 felony) and may be spending some quality time in Sherriff Arpaio's (Maricopa County) famous Tent City jail.

Among the interesting things about this particular incident was that it highlights that the danger of identity theft goes well beyond just money. Imagine how unpleasant it might have been for Ms. Farnsworth (the real one) when Ms. Wright didn't show up for an arraignment hearing. The Sherriff's deputies could be on her doorstep to arrest, to charge, and to induct her into Tent City.

Sources:
- http://www.azcentral.com/news/articles/2008/11/11/20081111cr-idtheft1112.html
- http://www.eastvalleytribune.com/story/113191

More Vishing Attacks Seen

We continue to see more and more "Vishing" attacks mounted against unwary consumers. Attackers typically like to target large consumer bases so they focus efforts on impersonating large organizations (federal, state, or local government entities, banks, utilities, employees of large companies, etc.).

I recently read of just another such attack. In this particular attack, the attackers targeted a large utility company (DTE Energy). Metro Detroit residents were contacted by telephone by the attackers posing as representatives of DTE. In the recorded message, the attackers threatened the residents by stating that the resident's account was overdue and that services would be cut. The residents were then instructed to call a toll-free number for resolution.

The provided toll-free number was one operated by the attackers. When the residents called the number, they were instructed to supply their name, address, and social security number. Once the identity information had been harvested by the attackers, the residents were told that they had been contacted in error and the issue had been successfully resolved (no further action required on their part).

The attack was well executed. The recording was believable and convincing. The attack appeared legitimate as DTE does use an automated phone system to contact customers for billing issues but does not collect sensitive information.

It is very easy to become a victim. Identity theft wouldn't be the popular crime that it is if it didn't pay well for the attacker and was reasonably easy to execute successfully. It only requires that the target drop their guard for a moment.

If you receive phone calls like this, be suspicious and verify the source. You can visit the website of the utility company to get their phone number or use the telephone directory. Don't assume that the call is legitimate. You can confirm the veracity of the call by calling back using the phone number you obtained by using your telephone directory or visiting the company's website. A healthy dose of skepticism will go a long way.

Here at Merchants, we see a number of folks who have concluded that their personal information was at risk and didn't feel comfortable not having a safety net were they to discover that their identity had been stolen. For these good folks we offer broad spectrum consumer oriented identity theft services which include: education, prevention, detection, and remediation.

In some cases, forward-thinking companies use our business-to-business oriented services to safeguard their employees (offering them as an employee benefit) or to their customers (a customer benefit for valuable customers). In other cases, companies or other large entities approach us when they fear that information they possess relating to their customers and/or employees might have been compromised (lost, stolen, or made public).

However our customers come to us, we provide the security and peace of mind they seek. It's a risky world out there with bad actors ready to steal not only your money, but also your good name and reputation. You don't have to go it alone, Merchants can help.