Identity theft threatens Fredonia Credit Union

Online fraud facilitated through Web sites, email

PETER VIGLIETTA
News Editor

Source: AlabamaConsumerLaw.com

When asked how often people try to steal from members of the Fredonia Credit Union using identity theft, Ray Lindquist, manager of the credit union, said it happens all too often.

On Monday, Oct. 29 members of the Fredonia Credit Union received a fraudulent email from an unknown source posing as the Credit Union National Association (CUNA) informing members that there was something wrong with their credit union Visa check card and that they had to disclose card information in order to fix it.

The e-mail advised credit union members to call a toll free number to "reactivate" their card. It said, "We will review the activity on your account with you and upon verification we will remove any restrictions placed on your account. Please disregard this notice if you have already accessed the Web site or spoken with one of our representatives."

Lindquist said that when he called the number there was a recorded voice asking him to punch in his 16-digit card number, his social security number then the expiration date on his card.

"It asked me for each of these things three times and I didn't put anything in," Lindquist said. "Then it said 'to confirm this information, press one.' I hadn't put any of this information in and when I pressed one and it said 'thank you, your card has been reactivated.'"

Nancy Narraway, assistant manager of the credit union said the credit union does not have members' check card numbers. The perpetrators of identity theft often gather account information and either use it to duplicate the card or sell the information on the black market, she said. They go to great lengths to seem official, sending e-mails and creating bogus Web sites complete with logos downloaded off the actual sites of legitimate banks and lending institutions.

"We had one young man who was studying in Russia. Someone stole his information, duplicated his card and used it to make two $500 transactions," Narraway said. "It's extremely difficult to track these people since it's through the Internet. Once you've reported them they've shut the site down and moved somewhere else."

The Fredonia credit union is one of many federal credit unions under the umbrella of the Credit Union National Association or CUNA Mutual. It is essentially a bank formed by state employees, Fredonia alumni and other Fredonia affiliates. Among many other services they give loans and provide insurance.

The issue of identity theft has also arisen in Congress, as some have pushed for more government regulation of private banks, lenders and credit card companies in order to protect consumers. According to a March 21 article in The New York Times, Chris Jay Hoofnagle, a lawyer and senior fellow at the Berkeley Center for Law and Technology at the University of California, submitted a proposal to the Senate Judiciary Committee recommending that all banks, lenders and credit card companies be required to publicly report instances of identity theft.

Hoofnagle detailed his solutions for identity theft in his article, "Identity Theft: Making the Known Unknowns Known," published in the Harvard Journal of Law and Technology, Vol. 21, Fall 2007. Hoofnagle argues that public surveys on identity theft are often tainted by the private interests of the companies that report them.

"Methodologically, these survey polls of the public suffer from being both under and over-inclusive in measuring the problem," Hoofnagle wrote in the abstract of the article. "As a result, low estimates attribute tens of billions of dollars in costs to the economy and consumers, the highest estimates place losses in the hundreds of billions."

A Nov. 8 article from the Associated Press reported a grand jury indictment of 17 people and a corporation on 173 counts of identity theft, worldwide trafficking in stolen credit card numbers and other Internet crimes.

According to the article the defendants trafficked more than 95,000 stolen credit card numbers and caused more than $4 million in credit card fraud. The defendants ran Internet promotions overtly advertising their stolen information- one of their promotional Web sites was called "The International Association for the Advancement of Criminal Activity."

Narraway said the credit union has a protection system called Falcon which traces where the transaction is coming from, rates the transaction as high or low risk and denies the transaction if the risk is high enough. The only reason the Credit Union would ever ask one of its members for their account information would be if they initiated the call.

Lindquist said on another recent occasion, a Fredonia professor who was a member of the credit union came to him with a letter he had received from a fake company saying he had won a cash lottery and was going to receive a prize of $250,000. The letter instructed the "winner" to deposit the check and then wire the company $400 that would supposedly free up the rest of the $250,000. Lindquist said the professor brought it to him because he had immediately suspected that it was illegitimate.

"Most people see that it's bogus and know not to follow through with it, but unfortunately some people do [follow through]." Lindquist said. "One thing you can count on is if it seems suspicious or appears too good to be true, it probably is."