New form of Social Security ID theft

July 13, 2009 12:00:00 AM PDT
There's a frightening new form of identity theft out there, where thieves can steal your ID by accurately estimating your Social Security number.

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"I was shocked" said I.D. theft victim John V.

John V. of Napa is talking about how he felt when he found out his ID had been stolen.

"They ran up a bill of somewhere between $2,000 and $2,500 and it was all in my name," said John V.

John thinks his ID was stolen from the records at a doctor's office. But there's a new more impersonal way to steal someone's identification.

"If you know where someone was born and the month they were born, you can decode at least part of the Social Security number," said Prof. Chris Hoofnagle, director of Information Privacy Programs at the University of California Berkeley.

Hoofnagle says starting in the 1980s, Social Security numbers started following a pattern and identity thieves have discovered it; the first three digits indicate place of birth, the next two numbers are based on date of birth, the last four numbers can be estimated using advanced statistical technique. It's a process found by researchers at Carnegie Mellon University in Pittsburgh, where the first five numbers were correctly predicted up to 44 percent of the time. But even if the crooks estimate the last four numbers incorrectly, they can come out alright.

"Even if you guess incorrectly, you still may be able to steal identities through a new form of identity theft known as synthetic identity theft, and in this form of the crime you create a new person, you create a fictitious person, using a similar kind of guessing game of Social Security numbers," said Hoofnagle.

Synthetic identity thieves then give a name and post office box to this fictitious person and order dozens of credit cards.

Professor Hoofnagle says the Social Security number is an authentic one, or close enough to pass credit card fraud security checks. Either way, credit card companies eventually figure out they've been had. One way or the other, consumers pay for it.

"From the banks' perspective it's cheaper to issue lots of cards and just manage the fraud on the backend, rather than investigating on the frontend and preventing identity theft," said Hoofnagle.

Whether you're a victim of synthetic identity fraud or any kind of identity theft, everyone agrees you have to confront the situation head on.

"The first thing I did was call credit card agencies and put them on alert that someone had accessed my Social Security number," said John V.

"Identity theft is a product of the credit market; it's an externality of instant credit. And so we have to figure out how to get banks to internalize the costs that are spilling over and affecting consumer victims," said Hoofnagle.

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