We all know what identity theft is and some of us know how it is committed, but how many people stop to think about what criminals use the stolen identities for? Here is my list of the top 5 worst crimes that are committed with stolen personal identifiable information (PII).

Hackers and fraudsters constantly seek new ways to steal identities. Specifically, they want to steal personally identifiable information (PII) that they can then use to fraudulently buy goods, services or property. Some of these crimes are nothing more than an inconvenience to the victims (like fraudulent purchases with stolen credit card info), but others can have devastating life-changing consequences (like deed fraud and wire transfer fraud). Read on for details about the top 5 worst crimes committed with stolen PII.

What is Identity Theft?

Wikipedia provides a thorough and easily understandable definition of identity theft:

Identity theft occurs when someone uses another person’s personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes….[T]he definition of identity theft has been statutorily defined throughout both the U.K. and the United States as the theft of personally identifiable information [PII]. Identity theft deliberately uses someone else’s identity as a method to gain financial advantages or obtain credit and other benefits,and perhaps to cause other person’s disadvantages or loss.…Personally identifiable information generally includes a person’s name, date of birth, social security number, driver’s license number, bank account or credit card numbers, PINs, electronic signatures, fingerprints, passwords, or any other information that can be used to access a person’s financial resources.

Now that we understand WHAT identity theft is, let’s discuss the 5 most damaging ways in which criminals use stolen identities.

#5 Fraudulent Purchases with Stolen Credit Card Information.

If you have a credit card, then chances are you have been a victim of identity theft…probably many times. You find out you have been a victim when you see charges account statement that you did not make. The most recent time it happened to me, the fraudsters used my credit card info to buy food through Uber Eats in the San Francisco area. I live 500 miles away. In this case, they obtained my credit card number and used my good name and credit to steal from Uber Eats and the restaurants that provided the food.

The consequence of this type of identity theft is minimal.As long as you notify your credit card company quickly, they will most likely waive the charges entirely. Under the federal Fair Credit Billing Act, they could make you responsible for up to $50, but they usually don’t. To them, it is simply the cost of doing business, and they are willing to write off the fraudulent charges as long as you keep using your credit card. To facilitate this, they will probably overnight a new card to you, so you can Keep On Chargin’.

# 4 Fraudulent Tax Returns with Stolen Social Security Numbers.

In August 2021, a man by the name of Windsor Nycklass of Florida admitted to filing fraudulent tax returns in the name of his identity theft victims. He stole their names, dates of birth and social security numbers, filed the returns, and then received tax refunds in their names in the amount of $50,801.

According to one report, the IRS stopped 443,000 confirmed fraudulent returns from being processed, which means that there were many more unreported cases of fraudulent tax returns. The good news for you if you are a victim of this crime is that the IRS will not hold you responsible once you prove to them that you did not submit the fraudulent return or receive the fraudulent refund. The IRS has a whole process set up to unwind these fake returns, and the most likely worst-case scenario is that it will delay the processing of your returns.

#3 Fraudulent Medical Billing with Stolen Medical Records.

If someone steals your medical information – name, date of birth, and social security number or Medicare number – they can set up fraudulent medical accounts in your name. They will submit bills to the insurers for medical services, prescriptions and equipment that they never actually provided for you. By setting up many healthcare accounts in the names of many victims, these fraudsters can submit bills and receive payments in the 100s of 1000s and millions of dollars.

According to the FBI, medical billing fraud causes tens of billions of dollars in losses to the healthcare system each year, and another report explained that at least 3% of the $2.6T (that’s a T for trillion!) that was spent on healthcare in 2018 was fraudulent. That’s $78B in fraudulent medical billing. This is big business, and organized crime is actively involved in it.

The good news is that you will not be held responsible for the losses attributed to your stolen identity. Law enforcement understands how these criminals work, and rarely are the victims involved in the conspiracy.

#2 Mortgage Fraud with Deed Fraud.

Deed fraud is a growing crime because 1) until 20 years ago, it was not easy to forge a deed, but now everybody has the technology on their home computer to create a believable fake document, and 2) according to my friends who are real estate fraud detectives, organized crime has discovered deed fraud as an easy source of a lot of money.

To commit deed fraud, a fraudster needs to see the title history to your home, and these documents are publicly available at your county government office, which makes stealing your identity as a homeowner pretty easy. Then they forge your signature, the signature of the notary, and the notary’s stamp on a new deed that transfers ownership to themselves or, if they are smart, to an entity that they control but that does not reveal their identity. Once they have control of the property, they can commit mortgage fraud and suck out all the equity in your home or sell your home to unsuspecting buyers.

The good news for you is that forged deeds are not worth the paper they are printed on. They are void and unenforceable. The bad news is that you have to file a lawsuit to undo the fraudulent deed, and to do so, you will usually have to hire a lawyer. This process can be expensive, can drag on for years, and is stressful enough to shave several years off your life.

If the bad guy sold your house to unsuspecting buyers, the buyers’ title insurance company will take the biggest financial loss because it has to pay off the buyer for the money they paid to the fake seller. In one recent case that was handled by a friend of mine, the title company ended up paying out almost $2.5M to resolve the lawsuit. That’s a lot of money!!

To avoid this fraud, all property owners should monitor their title history with a premier title protection company like TitleShield™.

#1 Wire Transfer Fraud with Stolen Email Identities.

Because of the size of the losses and because there is little or no recourse for the victims, wire transfer fraud is easily the worst and most damaging identity theft crime.

Consider this: If you were in the middle of buying a house and were receiving numerous emails from the title company, do you think you would notice the difference between these two email addresses?

  • Joan@AnyTitleCompany.com
  • Joann@AnyTitleCompany.com

There is a good chance you would not. The first one is the real title agent with whom you are working and the second is the fraudster who hacked into the Any Title Company (ATC) email system and sent you a fraudulent email. In that fraudulent email, which mimics a true email from Joan, the fraudster gives you the wiring instructions for your down payment.

You then wire the money, and you don’t think anything more about it. Two days later, Joan sends you the real wiring instructions, and you realize you have been conned by a faceless hacker, who stole Joan’s identity to defraud you.

Unfortunately for you, there is no easy way to recover your money. Before anybody discovers the fraud, it has been transferred multiple through multiple accounts (this is called money laundering) and cashed out in Nigeria or Romania or the Philippines. The money is gone.

Who is on the hook for this loss? Primarily you. There is no easy recourse against any other participant in this real estate transaction. Under some states’ laws, ATC might have some liability because its email system was used as part of the scheme, but there is no guaranty and you can be sure that ATC will not pay you without a fight. You will have to hire a trial lawyer.

This crime doesn’t only occur in real estate deals. It occurs in any business in which money is regularly wired to vendors or other participants in the transactions.

Several years ago, this type of wire transfer fraud happened to a client of mine, and before anybody had any idea that the recipient’s email had been hacked, my lost $250,000 to fraudsters in China. The internet is scattered with sad tale about losses between $300,000 and $500,000, but the largest such loss that I can find was almost $100M. In that case, the money was laundered through accounts in Cyprus, Latvia, Hungary, Estonia, Lithuania, Slovakia and Hong Kong, and the crime was probably orchestrated by a rogue nation rather than an individual.

Conclusion: Wire Transfer Fraud

The ways in which stolen identities can be uses are limited only by the imaginations of the fraudsters who steal them. Many identity theft crimes (like stolen credit card) have simply become the cost of doing business, and financial institutions eat those costs. This means that the victims suffer minimal damage; it’s mostly an inconvenience. However, at the other end of the spectrum is wire transfer fraud, in which oner person’s identity is stolen to trick another person into wiring money to the wrong account. In this case, the victim has little or no recourse and usually loses all of the money that the fraudsters stole. Wire transfer fraud is a devasting identity theft crime.

– David Fleck, CEO

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