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What is Identity Fraud?
Answer by Michelle Thiel, CAMS, Director of Data and Compliance, ChoicePoint®


Question:  What is identity fraud?

Answer:  Identity fraud includes "all types of crime in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain."1 Identity theft is one type of identity fraud and is probably the most recognized form. Although identity theft is defined in many different ways, fundamentally, it is the misuse of another individual's personal information to commit fraud.2 Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission" to commit a crime.3 As explained by U.S. Attorney General Alberto Gonzalez, identity theft "is a personal invasion, done in secret, that can rob innocent men and women of their good names."4

Identity fraud can take many forms, ranging from the use of someone's good credit to obtain a loan to a complete takeover of another person's identity. Aite Group suggests "using the all-encompassing term identity fraud that includes synthetic identity fraud (fictive person), identity misuse (misappropriation of another person's information or payment instrument), and identity theft (wholesale takeover of another person's identity)."5

Common practices of identity thieves are to complete transactions under false identities. Identity thieves often use false identities to do the following:
  • Open new accounts.
  • Borrow funds.
  • 'Take over' an account (including a credit card) and withdraw funds.
Proactive Identity Risk Management

An efficient Identity Risk Management (IRM) program can significantly help financial institutions curb identity fraud. What is identity risk? It is the danger that organizations face when they do not truly know their customers, employees and vendors. Managing identity risk to mitigate fraud is critical to the bottom line. A comprehensive IRM solution encompasses all of the systems, tools, processes and policies that are designed to help you mitigate fraud due to inaccurate or incomplete information about an individual or business entity. It should be both efficient and reliable: an efficient IRM program will allow employees to vet individuals and companies quickly through screening processes. Your IRM tools should offer good analytics, low false positive rates, and increased automation where appropriate. A reliable Identity Risk Management program can help you prevent risk instead of responding or reacting to it. IRM solutions can help strengthen your identity verification, regulatory compliance and enhanced due diligence programs, bringing additional layers of protection to your company's overall fraud prevention efforts.

Your institution should be able to spend fewer resources on compliance tasks and incident response while spending more on the lucrative areas of the business. A successful IRM program should be able to not only mitigate identity fraud, but also assist you with growing your business, increasing your brand value, and contributing to the bottom line.

Get a FREE USA PATRIOT Act white paper, which addresses regulatory compliance, identity verification, identity fraud and more.

About ChoicePoint
ChoicePoint (NYSE: CPS) provides businesses, government agencies and non-profit organizations with technology, software, information and marketing services to help manage economic and physical risks as well as identify business opportunities. Consumers have free access to the reports we create at www.ChoiceTrust.com. Learn what we do to protect consumer privacy by visiting www.PrivacyatChoicePoint.com and, for more information on our company, go to www.ChoicePoint.com.

This document is not intended to constitute legal advice and should not be relied upon as such. The opinions herein are the opinions of the author and do not necessarily represent the opinions of ChoicePoint or any other entity referenced herein.


1 U.S. Department of Justice, Identity Theft and Identity Fraud Web page, (4 April 2007).
2 The President's Identity Theft Task Force, Combating Identity Theft - A Strategic Plan, April 2007, p. 2, (4 April 2008)
3U.S. Federal Trade Commission, About Identity Theft Web site, (4 April 2008)
4U.S. Federal Trade Commission, Press release: The President's Identity Theft Task Force Releases Comprehensive Strategic Plan to Combat Identity Theft, 4 April 2008).
5AiteGroup, ID Verification: In Quest of a New Paradigm, A New Report from Aite Group, April 4, 2005, (April 3, 2008).


First published on BankersOnline.com 5/12/08










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