Newsweek Covers Growing Identity Theft Problem

Posted on June 29, 2005

The July 4 issue of Newsweek cover story looks at growing problem of identity theft. Senior Editor Steven Levy and Silicon Valley Correspondent Brad Stone investigate how identity theft has become a nationwide epidemic thanks to the electronic age. Criminals are grabbing our private information in huge cunks. Last week criminals gained access to as many as 40 million Discover, Visa, MasterCard and American Express numbers along with the secret code numbers printed on the actual cards. The credit card data was stolen from a company called CardSystems. Newsweek says CardSystems was lax in protecting the credit cards from the transactions it processed.

Rob Douglas of PrivacyToday, a security consulting firm, tells Newsweek, "Over the last nine years, criminals have gotten a better understanding of the power of information. Instead of selling drugs, so much can be made so quickly with identity theft, and the likelihood of getting caught is almost nil."

Federal Trade Commission Chairman Deborah Platt Majoras discovered last week that her credit card was one of over a million credit-card numbers that DSW Shoe Warehouse stored in database that did not have enough protection. Savvy computer users know never to respond to a request for personal information in an email. But there are problems when it comes to companies charged with safeguarding your data. Security is lagging behind the use of the technology. Most companies now have databases connected to the Internet but security is an after thought. Newsweek notes that companies leave important customer data unencrypted on computers, where malicious hackers can easily get hold of it. Company employees may also leave this data on laptops that get stolen. Companies are also not monitoring what insiders may do with customer information.

The Department of Justice is reorganizing to focus on the rise in cyber crime, but it's a huge challenge. Avivah Litan of research firm Gartner Group speculates that fewer than 1 in 700 identity crimes leads to a conviction. Chris Painter of the Department of Justice agrees that the criminal hackers are organizing. He says, "It's not the lone gunman of the past. There are highly structured criminal organizations operating."