The History of Identity Theft: the UNESCO Mission and US Federal Efforts - Essay Example

Economic Impact of Online Identity Theft According to the United s Federal Trade Commission, over $10 million in consumer funds are lost annually to identity theft in the country, totaling over $50 billion of reported losses. Escalation of the problem is projected to exceed upwards of $5 billion annually if current rates of acceleration continue. Additional losses are presented upon consideration of the transmission of credit bureau, insurance and mortgage information. In 2007, in the United States, it was estimated that approximately 3.2 million consumers became victims of identity theft, with 6.6 million victims subjects of credit fraud upon un-consented to disclosure of account numbers, credit card or bank accounts. Indeed, apprehension of cyber-identity criminals, and especially multi-national organized crime rings, poses a serious challenge to law enforcement specialists deployed to tackle transnational jurisdictional measures. Cyber-theft knows no boundaries, and the tendency for such crimes to be commissioned through a network of communications is extensive. With exception of high wealth transfer operations, and those transactions connected to official terrorist organizations, cooperation between governments is far beyond normal extradition order. As a result, facilitation of consumer protections is allocated primarily to watch groups and the efforts of independent counsel hired to address client complaints. At the Sixteenth Session of the United Nations Economic and Social Council (UNESC) Commission on Crime Prevention and Criminal Justice in 2007, the Results of the study on fraud and the criminal misuse and falsification of identity in a Report of the UN Secretary General toward 'international cooperation in the prevention, investigation, prosecution and punishment of fraud, the criminal misuse and falsification of identity and related crimes' set the international platform toward legislative policies pertaining to cyber identity theft, and the economic impact of transnational fraud. Responsive to the intensifying multi-jurisdictional complications of global cyber fraud and its attendant economic impacts in the realm of cyber-terrorism, the Commission outlined priority targets within international legislation intended to stem the rapid expansion of predatory privacy invasion and usurpation of finance through identity theft toward support of organized criminal activity. Amidst the proliferation of personal data collected by internet service providers and commercial and government businesses online, the quantification of fraud has become a massive undertaking. The recent disclosure of previously undetected, large-scale securities based Ponzi schemes, informs us that significant losses of wealth can be lost over long periods of time when they involve a large portfolio of parties subject to varied national rules on securities trading. Counting the cost of identity theft is, then, one of scale. As the UNSEC Report indicates, "mass-fraud schemes tend to produce large numbers of cases if occurrences are based on counting numbers of victims or complaints but lower rates if numbers of offenders fraud schemes or prosecutions are counted." Statistical accountability of identity theft related fraud by UN member states is spotty, with underreporting of the prevalence of the different methods of commissioning those crimes has shifted rapidly as technologies induce related regulatory restrictions that push criminal activity into a vague area whereby "fraud imitates legitimate commerce, making variations of commercial practice likely to produce parallel variations in fraud over time, between countries or regions, and with respect to specific areas of commerce." Mitigating factors such as privatization of previously State-owned operations in contexts where the system of justice is weak due to parallel post-conflict or reconstruction efforts, leaves infrastructural oversight open to fraud in general. The Fair Credit Reporting Act (FCRA) was written into legislation in 1970 and has been amended almost yearly up to 2003. The Act provides foundational legislation to all foregoing policy and statutory regulation of identity theft in the United States. Commercial law has also contributed substantially, and continues to be perhaps the most critical activity within rule application toward stemming criminal activity by way of privacy protection measures. In 1996 the pivotal agreement between MasterCard and Visa corporations introduced the single Secure Electronic Transaction (SET) format for credit-card purchases on the internet; paving the way for e-commerce. More generally, the Uniform Commercial Code (UCC) offers provision to international agreements under the Statute of Frauds with Electronic Signatures in Global and National Commercial Act (E-sign) and the Uniform Electronic Transactions Act (UETA) stipulations intended to satisfy the writing requirement of rule. Preemption of the congressional enactment of E-sign by UETA in most states allows states to enforce the writing rules based solely upon electronic record. Substantially, economic fraud is a crime of commerce. Economic Impact of Online Identity Theft is an investigation into the current state of commercial, legal and public policy measures, and the cooperative cost of international protections. Statement of Purpose Identity theft is a transnational crime. The proposed study looks at the ways in which international cyber-theft and privacy invasion have contributed to GDP losses in the United States. It also examines the development of legislative policies both at the international and federal level, and investigates the application of preemptive laws to state prosecution and regulatory oversight of internet fraud. With the exception of UETA as a general rule for determining breach of contract in consideration of digital record as final written agreement, most statutory rules both in the commercial and criminal realm are subject to federal preemption, and with the increase of transnational crime in this area, legislative rules pertaining to apprehension of those parties. According to the Identity Theft and Assumption Act of 1998, identity theft (ID theft), occurs when someone is "knowingly transferring or using, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, in the unlawful activity that constitutes a violation of federal law" (Alt, 2007, p. 67). The potentialities of fraud for criminals in the cyber-age are exceptional. From bank fraud, phone & utilities fraud, job related misrepresentation, consumer fraud, insurance fraud, government documents and benefits fraud to finance of international terrorism, individual legal identities have become a core financial crime modality. Criminals tend to work with reach. The internet provides them with endless opportunities for utilization of a single identity. From a law enforcement perspective, accountability of a victim's stolen identity within one investigation can consume an exceptional amount of time and money during the course of one investigative complaint. The areas of overlap indicate multiple intrusions of identity theft. Furthermore, 58.9% of all victims experienced the misuse of an existing credit card. A total of 48.6% of victims experienced the misuse of existing accounts other than existing credit card accounts andv21.9% of victims had their personal information used to open a new account or commit some other kind of fraud. 38.1% of all victims the misuse of an existing credit card was the only form of ID theft suffered, and approximately one-third of victims who experienced the misuse of an existing credit card also experienced another type of ID theft (Federal Trade Commission, 2007:14). A related issue in identity theft is the problem is the timeline to discovery of the crime, and then subsequent investigation. In many cases the crimes may not be discovered until a great deal of damage has been done. Nearly 40% of all ID theft victims discovered the misuse of their information within one week of the start of the misuse. However, the discovery period was significantly different depending on the type of fraud experienced. Victims in the Existing Credit Cards Only (22%) and the Existing Non-Credit Card Accounts (21%) categories were about twice as likely as those in the New Accounts & Other Frauds (10%) category to find out about the misuse the day it started. Nearly one-quarter (24%) of New Accounts & Other Frauds victims did not find out about the misuse of their information until at least 6 months after it started - compared to just 3% of Existing Credit Cards Only and Existing Non-Credit Card Accounts victims. Where discovery of the misuse occurred more quickly, victims reported lower out-of-pocket losses and thieves obtained less. (Federal Trade Commission, 2007: 23-24). One of the largest issues facing both the prevention and detection of identity theft is the fact that for more than half of the victims of identity theft it is unknown how the information was at first obtained. The following pie chart in figure 4 represents this data. Here, interestingly enough, although 56% of the victims did not know how their information was found out, of the 44% that did know the largest percentage was from people they did know personally at 16%. A more recent entrant in the identity theft genre is phishing. Compromising 1% of the total category, "Phishing occurs when fraudulent e-mails are sent to online users by impersonating Internet service providers (ISPs), merchants, and banks, in an attempt to steal financial information" (Stafford, 2004, p. 201) The rise in Identity Theft is in direct correlation to the rise of the United States as a Credit Card nation in what retrospectively represents a paradigm shift in the way in which America decided to 'do business' in the twentieth century transition from industry to banking and financial products. Consumption of finance itself became a more e lucrative business than traditional goods-producing industries. Installment credit was the first to make the scene and initial critics of the system stated "that consumer credit (as a repudiation of Puritan thrift) not only tempted people to sin, it provided the means for sinning as well." (Manning, 2000, p. 3) But as time wore on the consumers' needs outweighed their original philosophy and another attitude became prevalent. With this change in consciousness now accomplished a myriad of new ways for consumers to spend money they did not yet have came into being. Identity theft emerged almost simultaneously to the dawning of the Credit Card Age. Not only was there a rise in fraud and ID theft, but a totally different consciousness regarding money and how it is spent (Manning 2000). Originally called charge plates, Credit Cards are one of the most vulnerable areas of ID theft. (History of Credit 2008) now, several levels of security are in place to help prevent the online use of stolen credit card numbers such as require special ID codes and answers to security questions. Services also evolved in response to merchants' efforts to minimize the damage stolen cards would cost their customers (Holmes, 2007). Electronic Fund Transfers (EFT's) posed another potential risk; and an entire set of regulatory rules governing those agreements became necessary for protections against risk of fraud and theft in the virtual banking environment. This is not to say that merchants did not also involve themselves in identity theft scams, particularly where there was no physical presence. Negligent Enablement implicated liability of merchants in direct exchange with thieves whom establish bogus accounts under the assumed name of the customer. Many businesses refuse to take any action on the victim's behalf. (Howard, 2005) Joint-liability for fraudulent transactions including multiple parties has the potential to result in high compensatory damages if tortfeasor grievances are substantiated. Numerous legal matters directed at corporate involvement, whether surreptitiously or without knowledge, have resulted in responsibility for the inaction toward ascertaining the true identity of their customers, as well as assisting victim of Identity theft with adequate resolutions and remedies. Similar complaints directed at government offices are not sustained, due to federal laws of immunity, but the threat to consumers is substantial, nonetheless, and does not negate obligation by state actors to testify on behalf of the plaintiff. There are several fronts that need to be addressed when attempting to prevent and/or prosecute Identity Theft. Efforts by businesses to update security have become an incumbent aspect of trade relations. Software and hardware manufacturers now often work in conjunction with business to help prevent these security breaches, and combat an ever increasingly intelligent cyber criminal community. Government involvement is essential in the coordination and assistance on combating international cyber-crime. Facilitation of standardized security protocols and unfair practices over the Internet, and to prosecute persons who commit the acts legislatures deem harmful enough to make criminal. (Yang & Hoffstadt, 2007, p. 213) At present, the U.S. federal government is making great strides in ratifying adequate laws to address ID Theft. Nevertheless, appropriate regulatory balance between civil protections to individual privacy and criminal disclosure continue to slow decision making on critical measures on technological factors such as cookies; which are not protected as an intellectual property right of the consumer who is the subject of the information. Literature Review Contribution of the study will go toward these three areas literature on cyber theft; 1) History of the monetization of personal identities; 2) Economics discussions on cyber-crime finance; 3) and policy studies on consumer and governmental responses in the realms of law enforcement, legislative policy, and statutory application. Instructions: insert paraphrase paragraph with bibliographic citations according to 3 bodies of literature. As the writer has not read all of the below texts within the request, the capacity to provide competent discussion in the limited time is prohibitive. This review will present a thematic description of these three components through the literature used in this research. Historical - The credit card has played a major role as both a regulatory and technological synergist in the transformation of not only banking industry but the entire economy of the world. In some sense credit cards have been a part of globalization efforts making it possible to use funds around the world with a single swipe of the card. Initially it caused a great deal of upheaval as one of the earliest and most successful challenges to many federal regulatory statutes such as interstate banking and so on. It also developed into the ideal product for financial institution in the development of automated consumer banking systems (ATMs). During the 1980's the banking industry was even able to circumvent the state usury laws, but not for too long. This coupled with a dramatic reduction in national inflation led to the enormous profitability of bank credit cards. This surplus of profit was strategically allocated to help with the dangerously low capital reserves of many major money center banks in the late 1980s and early 1990s (citation of all applicable scholarship). Economic - Law and Policy - Methodological Considerations Methodological consideration in the study is premised on cyber-fraud case studies. Implementation of the project is based on a tri-partite research design, and will be conducted in three Phases: Phase I: Field Investigation; Phase II: Data Analysis; and Phase III: Archival Research. The study focuses on the impact of internet based identity theft, and jurisdictional challenges within commerce, law enforcement and legislative policy. Phase I: Field Investigation: consists of data collection at law enforcement agencies dedicated to apprehension of identity theft. Discussions with the U.S. Federal Bureau of Investigation - Cyber Action Teams, Computer Crimes Task Force oversight in the division nearest (my location) will provide the foundation for the inquiry. At the international level, law enforcement data will be drawn from engagement with Interpol's Directive on Information Technology Crime (ITC), Paris, and through the agency's Regional Working Groups. Interviews with attorney specialists in both civil and criminal IT law will provide critical ethnographic insights into the legal process and restitution related aspects on matters pertaining to cyber commerce, identity theft, privacy invasion and resultant financial theft. Information from NGO working groups in collaboration with the Organization for Economic Co-operation and Development (OECD), and United Nations Economic and Social Council (UNESC), Commission on Crime Prevention and Criminal Justice will further contribution to knowledge on multi-jurisdictional response within the study. U.S. Federal Trade Commission and the U.S. Securities and Exchange Commission provisional information will supplement the project's record. The field investigation will also include several online 'focus group' Skype based chat sessions with ex-offenders and consumer fraud victims. Advertisement for participation on the study will be solicited in local online resource sites (i.e. craigslist.org), and may include promissory of a nominal compensatory offer in exchange for audio authorization of anonymous participation in the research. In Phase II: Data Analysis: significant attention will be given to comparative legal analysis based on empirical data collection of legal matters pertaining to litigation over cyber identity theft. Information from the legal matters will be examined in relation to FTC regulations and related mandates by international UN bodies. Interview data and econometric information accumulated from the various institutional sources will be put into comparative study. Phase III: Archival Research: will be conducted at the ----- Library and will situate the study in the areas of contributory scholarship and support preparation of the manuscript. Implications of the Study In interest of the History of Identity Theft, the proposed study on cyber-fraud follows the UNESC mission and related U.S. federal efforts to contribute to the mitigation of economic victimization of private persons in a new sphere of global governance. I chose the study [for the following reasons] as the topic for the dissertation research on innovative legislation and technology based policies set forth for combating crime. Support from the [Foundation - Fellowship Title] will enable empirical data collection on the project, and furtherance of scholarship with honorable mention. Copies of articles from the chapters of the dissertation and all other publications from the project will be provided to the [Foundation]. Bibliography Alt, B. L., & Wells, S. K. (2007). Fleecing Grandma and Grandpa: Protecting against Scams, Cons, and Frauds. Westport, CT: Praeger. Bielski, L. (2001). Identity Theft. ABA Banking Journal, 93(1), 27. "Cost of Identity Theft." (2008) United States Department of Justice. National Institute of Justice. The Research, Development, and Evaluation Agency of the U.S. Department of Justice. Retrieved on October 20, 2008 from 'Deter, Detect, Defend. Avoid ID Theft,' video. (2010). Fighting Back Against Identity Theft, Campaign. U.S. Federal Trade Commission. Retrieved from: http://www.ftc.gov/bcp/edu/microsites/idtheft/video/avoid-identity-theft-video.html Dutta, S. (2007, October). IDENTITY THEFT : A Crime of Modern Times. World and I, 18, 290. Federal Trade Commission 2006 Identity Theft Survey. (2007). Federal Trade Commission FTC.gov Retrieved on October 18, 2008 from http://www.ftc.gov/os/2007/11/SynovateFinalReportIDTheft2006.pdf Guttmann, R. (2003). Cybercash: The Coming Era of Electronic Money. New York: Palgrave Macmillan. A History of Credit Cards. (2008). CreditCard.com. Retrieved on Oct0ber21, 2008 from http://www.creditcards.com/history-of-credit-cards.php Holmes, T. E. (2007, September). Is Your Credit Card Number Safe Online New Technology Offers Consumers Added Protection. Black Enterprise, 37, 163. Howard, H. M. (2005). The Negligent Enablement of Imposter Fraud: A Common-Sense Common Law Claim. Duke Law Journal, 54(5), 1263-1279 Jacobson, H., & Green, R. (2002). Computer Crimes. American Criminal Law Review.39(2) 273-278. Linnhoff, S., & Langenderfer, J. (2004). Identity Theft Legislation: The Fair and Accurate Credit Transactions Act of 2003 and the Road Not Taken. Journal of Consumer Affairs, 38(2), 204- 211. Manning, R. D. (2000). Credit Card Nation: The Consequences of America's Addiction to Credit. New York: Basic Books. Online Identity Theft. (2010). Organization for Economic Cooperation and Development (OECD). Paris. Retrieved from: http://www.oecd.org/document/44/0,3343,en_2649_34223_42420716_1_1_1_1,00.html Paul, S.R.(2006). Identity Theft: Outline of Federal Statutes. LLRX.com. Retrieved from: http://www.llrx.com/node/646/print Report of the Secretary General on Results of the study on fraud and the criminal misuse and falsification of identity (2007). International cooperation in the prevention, investigation, prosecution and punishment of fraud, the criminal misuse and falsification of identity and related crimes. Commission on Crime Prevention and Criminal Justice.Sixteenth session, Vienna, 2007. Geneva: United Nations Economic and Social Council. Retrieved from: http://www.unodc.org/pdf/crime/15_commission/study-on-fraud-and-the-criminal-misuse-and-falsification-of-identity-first-draft.pdf Sovern, J. (2004). Stopping Identity Theft. Journal of Consumer Affairs, 38(2), 233+. Stafford, M. R. (2004). Identity Theft: Laws, Crimes, and Victims. Journal of Consumer Affairs, 38(2), 201+. 'Combating Identity Theft: A Strategic Plan' (2008).The President's Identity Theft Task Force Report. Retrieved from: http://www.idtheft.gov/reports/IDTReport2008.pdf Thierer, A. & Crews, C. W. (Eds.). (2003). Who Rules the Net Internet Governance and Jurisdiction. Washington, DC: Cato Institute. Yang, D. W., & Hoffstadt, B. M. (2007). Countering the Cyber-Crime Threat. American Criminal Law Review, 43(2), 201-213. Read More