By Linda Taaffe

Identity theft on the increase in Los Altos

n the booklet “ID Theft: When Bad Things Happen to Your Good Name,” the Federal Trade Commission recommends that fraud victims contact the following agencies to protect themselves.

The booklet is available in the lobby of the Los Altos Police Department at 1 N. San Antonio Road.

Better think twice before tossing away junk mail. A discarded credit card promotion cost local resident Kerri Gordon thousands of dollars after a criminal stole her personal information out of the garbage and charged merchandise under her name.

Gordon’s case is far from unusual. Stealing mail and other personal information to assume a person’s identity for profit has become the fastest-growing crime in the United States in recent years. The Federal Trade Commission (FTC) estimates that between 500,000 and 650,000 Americans annually are victims of what is called identity theft or identity fraud. More than half of those who report their experience to the FTC have discovered identity theft in multiple accounts, credit cards, cell phones, auto loans and leases, according to FTC data.

In Los Altos and Los Altos Hills, police say identity fraud is the number one growing problem. Los Altos police receive about one identity theft report a day, Sgt. John Hughmanick said. There have been 56 cases in Los Altos this year, almost double the number last year.

“We didn’t have that much (identity fraud) in Los Altos until the change in the economy,” said Los Altos Crime Prevention Officer Rod Sayre.

The Santa Clara County Sheriff’s Office redeemed about $100,000 in altered checks during a string of mailbox thefts over a four-month period in 2000. The problem is ongoing. One thief leaves, another moves in, a sheriff’s spokesman said.

He said the chances of identity theft are much higher in affluent cities such as Los Altos and Los Altos Hills because most residents have thousands of dollars in their checking accounts. In other places on the Peninsula, stolen checks run the risk of bouncing.

The rural character of Los Altos Hills also may make it the community of choice for such thefts because mailboxes are located far away from homes, usually masked by trees, bushes or a long driveway, which “allow plenty of cover for the criminals,” Sgt. John Hirokawa explained during a mail theft investigation in 2000.

Sayre said identity thieves typically steal mail with bank account information, insurance information and Social Security numbers for a variety of reasons: to obtain credit or credit cards from banks and retailers, steal money from the victim’s existing accounts, apply for loans, establish accounts with utility companies or file bankruptcy.

The impersonator often steals thousands of dollars in the victim’s name without the victim knowing about it for months or even years. Recently, criminals have been using the victim’s identity to commit crimes ranging from traffic infractions to felonies, he added.

A recent survey by Farmers Insurance Group showed that most consumers say they check their credit card and bank statements, tear up receipts that contain their account numbers and even check their credit reports on a regular basis.

Even so, Bruce Banick, director of fire product management at Farmers Insurance Group, said identity theft has increased 15-fold in the last 10 years.

For Gordon, destroying her credit card charge carbons wasn’t enough to protect her identity. A thief got hold of her personal information in 1999 and charged $3,000 on her credit card for purchases in China before a Wells Fargo fraud investigator red-flagged her account due to “unusual” activity. Although bank officials had discovered the theft almost immediately, Gordon spent six months trying to straighten out her account.

She had to file an Affidavit of Forgery with the bank and undergo an investigation to determine whether she was indeed a victim.

“The whole situation is perplexing because neither my husband’s nor my Visa cards ever left our possession, and my husband uses a different card for all Internet purchases,” she said after the crime. Gordon believes that someone may have stolen a piece of junk mail.

“Ours was a mild form of identity theft. We didn’t lose any money; no one stole our Social Security numbers. All in all, it was a nuisance but insignificant compared to all the people who lose thousands of dollars or have criminals walking around pretending to be them and ruining their credit ratings. We consider ourselves lucky,” she said.

How identity thieves get your personal information

Mail theft is the most common method in Los Altos that criminals use to obtain information needed to impersonate their victims, Sayre said.

Sayre said it’s easy for thieves to cash in on someone else’s identity. All they need is a person’s Social Security number, birth date and other identifying information, such as an address and phone number. With this information, and a false driver’s license with their own picture, they can begin the crime.

Most of the information they need to get started is in the victim’s mailbox, he said. Criminals go around to mailboxes and steal anything from phone bills, pre-approved credit cards and telephone calling cards to tax information.

Hirokawa said mortgage payments are the most popular mail to steal, because given the price of homes in Los Altos Hills, the monthly checks - written for thousands of dollars - can be cashed with the amount as is, leaving the victim’s checkbook perfectly balanced.

Once checks are stolen the ink is usually lifted, leaving the name of the recipient and the dollar amount whitewashed. This allows the thieves to use a laserjet printer to insert new names and amounts. These amounts are generally limited to $8,000 or $9,000, since anything over $10,000 raises a red flag at banks.

A stolen piece of mail containing an IRS check caused one Los Altos family several months of anxiety. Sandeep and Sandy Lal became suspicious when their tax refund - owed to Citibank, Sandeep’s employer - never arrived. They were living overseas at the time.

The Internal Revenue Service told them that the check had already been sent out and cashed, according to the agency’s records. Citibank advised Sandeep to file a complaint, which he did. And they thought that was the end of the ordeal.

A few months later, when Sandeep quit Citibank and the couple moved to Los Altos, problems resurfaced.

The local Citibank branch refused to open an account for the couple. Bank officials told Sandeep that Bank of America had submitted a negative report to credit agencies.

It turned out that the tax refund check had been intercepted. Someone with a fake Florida driver’s license had used the stolen check to open an account at an Atlanta branch of Bank of America, from which he’d written bad checks.

Citibank eventually opened an account for the couple, but the problems continued. During a shopping spree at Macy’s, Sandy tried to open a store account but was denied based on the credit agencies’ report.

“It was like we kept running up against a wall, even though we’d provided the IRS and Bank of America with all the documents,” she said.

“Every time we called Bank of America to clear up the matter we were given the runaround, as if we were the bad guys,” Sandeep said. “You feel you’re shut out of the whole system.”

Fortunately for the couple, since the identity theft involved an IRS check, a Secret Service agent was assigned to investigate the couple to determine whether they were victims or part of a scam to defraud the IRS.

It was the Secret Service agent who finally had Bank of America expunge the negative remarks from the rating agencies’ databases.

Two years later, Sandy said they’re still not sure whether the ordeal is behind them.

“The check had our Social Security numbers on it, so I don’t know whether we’ve seen the end of it,” she said. She added that they now tear up mail that they once would have tossed in the recycling bin.

Sayre said criminals may also get their hands on someone else’s identity during a residential burglary. They may steal a check from the middle of the victim’s checkbook and get account information needed to assume that person’s identity. Most victims don’t notice that the check is missing.

Sayre said thieves in Los Altos often target wallets and purses containing identification and credit and bank cards that are left in unlocked cars. Others, called “Dumpster divers,” rummage through the trash for personal information.

How identity thieves use your personal information

After an identity thief has enough personal information from a victim, he may begin changing identities. Thieves apply in person for instant credit, or through the mail by posing as their victim. They often complete a change of address form to divert their victim’s mail to a P.O. box. Once the impostor opens the first account, he can quickly add to his credibility.

When the thief runs up charges on someone else’s account, often it takes months before the victim is aware, because the bills are being sent to the new address. Any delinquent account is reported on the victim’s credit report.

Thieves have also used false identities to establish phone or wireless service, to file bankruptcy to avoid paying debts they’ve incurred and to open a bank account to write bad checks. Some counterfeit checks or debit cards and drain a person’s bank account. Others take out auto loans to buy cars.

Sayre said Los Altos victims have lost as little as nothing to as much as $200,000 when an impostor closed a local account and had the bank transfer the money back East.

He said most local banks know their customers and call to confirm such transactions before taking action.

Legal protection

Until recently, victims had a difficult time proving to police that they were victims of an identity crime. Previously, only the credit grantors who suffered monetary losses were considered victims.

Lawmakers passed the Theft and Assumption Deference Act in 1998 to better crack down on identity theft. Under the law, identity theft is a federal crime with penalties of up to 15 years imprisonment and a maximum fine of $250,000.

The law establishes that a person whose identity was stolen is a victim.

This legislation enables the Secret Service, the Federal Bureau of Investigation and other law enforcement agencies to combat this crime. It allows the identity theft victim to seek restitution if there is a conviction. It also establishes the FTC as the central agency to act as a clearinghouse for complaints against credit reporting agencies and credit grantors and provides assistance for victims of identity theft.

Schemes to commit identity theft or fraud also may involve violations of other statutes, such as credit card fraud, computer fraud, mail fraud, wire fraud, financial institution fraud or Social Security fraud. Each of these federal offenses is a felony and carries substantial penalties - in some cases, as high as 30 years in prison, fines and criminal forfeiture, according to a fact sheet from the FTC.

Many insurance groups have developed a policy to assist in the cost of rectifying the credit errors caused by these crimes. Fraud insurance can usually be added to a customer’s homeowners’ insurance. It typically covers anywhere from $18,000 to $25,000, with a deductible to cover expenses incurred as a result of identity theft. Most policies include money for notarizing expenses, certified mail, lost wages, long-distance telephone calls, loan applications and attorney fees.

What victims can do

Take action immediately, Sayre said. Cancel existing credit card and bank accounts.

Contact the fraud departments of each of the three major credit rating bureaus to prevent the thief from opening accounts under your name.

Order copies of your credit reports from the credit bureaus.

Contact creditors for any accounts that have been tampered with.

File a report with the police in case the bank, credit card company or others need proof of the crime. Even if the police can’t catch the identity thief, having a copy of the police report can help when dealing with creditors.

Sayre said it takes about six months for most victims to get their credit back in order.

“It’s very difficult, extremely tough to catch (such a thief),” Sayre said.

Police got a break earlier this year when a Los Altos resident helped them catch a thief taking mail from her box. The man was charged with identity theft.

Fraud prevention

Awareness is the best way to prevent identity theft, Sayre said. Be aware that people do dig in other people’s trash and criminals do look for raised flags on mailboxes.

Sayre said buying a paper shredder is the best investment residents can make. Home shredders start at $45, he said.

“If you don’t need it, get rid of it,” Sayre said about old billing statements and credit card and bank promotions.

He suggested mailing bills at the post office rather than a personal streetside mailbox.

Have checks electronically deposited.

Buy a mailbox with a lock. The post office can help recommend one, he said.

Don’t sign the back of your credit cards. Write “See ID” on the back instead, he said.

The police department plans to launch an inkless thumbprint program in Los Altos by the end of this year that will enable merchants to place customers’ thumbprints on their checks as part of a new security measure.

“Identity fraud is everywhere,” Sayre said. “Not just here.”