A fraud victim's false victory and the high tech industry that supports identity theft

SFGate, a San Francisco news site, puts on optimistic spin on the chance capture of a woman who did very well as an identify thief. Alas, the reality is not at all encouraging (emphases mine)...

How victim snared ID thief / She chased down woman who had given her 6 months of hell

... Nelson took off again. In front of West Coast Growers, she dropped a wallet into an abandoned shopping cart. Lodrick, still after her, picked up the wallet -- also Prada -- and found an entire set of identification, including credit cards, a Social Security card and a debit card all in the name of Karen Lodrick. Later, when she returned to the bank that had been her original destination that morning and took possession of the lost driver's license, it was a perfect forgery -- with a hologram and a California seal -- and it had Lodrick's name but Nelson's photo and physical characteristics.

"You can buy the technology (to add marks and holograms) on your computer from companies that have legitimate government contracts and then make a lot of money selling the technology to people they must know are not legitimate," Fairbairn said. "Millions and millions of dollars." The black market, he said, is "a growth industry."

... In November 2006, her postal carrier told Lodrick that master keys to the neighborhood's mailboxes had been stolen. Soon afterward, Wells Fargo informed her that there was suspicious activity in her accounts.

Using the stolen keys, Lodrick believes, Nelson made off with an unsolicited mailing from the bank. Lodrick said it contained two debit/credit cards she had not requested and, worse, a statement for a certificate of deposit that included her Social Security number. Personal identification numbers for the cards were in a separate envelope.

It took only three days for Nelson to raid the accounts for about $9,000 through withdrawals and purchases, bank records show....

Dealing with the consequences of somebody pretending to be her and ringing up purchases of computers, jewelry, clothing, groceries, cigarettes and liquor took a day or two of Lodrick's time every week. There were the credit card companies to hassle with and credit agencies and banks, especially her own bank.

Lodrick calculates that as a self-employed consultant, she lost $30,000 in unearned income between November and Nelson's apprehension in late April. Wells Fargo eventually restored to her accounts all the money Nelson had withdrawn.

... "the bank was horrible. I felt they thought I was comical. I kept dealing with different people. Three different times they told me I'd have to come in and ID the (security camera) photo, that I hadn't done it."

... Lodrick changed bank accounts and identification numbers, only to find that Nelson had again broken into her mail and stolen the new information and was still after her accounts.

...What Lodrick didn't know is that they were neighbors, living only three blocks apart.

In the end, that photo of Nelson in her distinctive coat was her undoing. On June 6, she pleaded guilty to one felony count of using another person's identification fraudulently. She was sentenced by Superior Court Judge Harold Kahn to the 44 days she had already served in county jail and three years' probation...

Lodrick, who made a statement at sentencing, was dissatisfied. "I can't believe it," she said. "I went through six months of hell, and she's going to get probation? She was on probation when she victimized me. Obviously, probation's not helping."

Nor did Nelson, 31, appear to be remorseful. When she entered the courtroom in her orange jail jumpsuit and saw Lodrick, she smirked and waved at her. Judge Kahn chastised her for her attitude...

To summarize the obvious:

• The banks (Wells Fargo in this case) don't care all that much. They'd care a lot more if they were liable for a victim's pain, suffering, and lost income.
• The justice system isn't set up to deal with this kind of crime. Identity thief a pretty good profession for someone who doesn't mind having a criminal record. It's the same story for stealing checks btw, offenders are usually put on probation - again and again. What's new is that income opportunities are now much greater.
• The thief was not particularly bright or inventive, but she was able to plug into a "franchise model"
• Above all, high technology vendors are, at a minimum, closing their eyes to the crooked intermediaries who buy their products. In the case of InfoUSA, they went so far as to develop products that were primarily designed for crooks. Arms dealers in general, and gun manufacturers in particular, of course, have made an art form of this over the centuries.

It's part of this meme.

So what do we do?

1. Make the banks liable for more than the money lost. Maybe ten times more. That would incent them to change their behavior.
2. Go after the legitimate suppliers. That means going after companies like InfoUSA and whoever supplied the id manufacturing equipment that was used in this case. These are companies with deep pockets and a business to protect. This may require changes to laws. The arms dealer industry may provide some good lessons.