Identify Theft

Running head: IDENTITY THEFT IN THE WORKPLACE

Identity Theft in the Workplace

Accounting Fraud Examination Concepts

ACG 6686

November 11, 2006

Abstract

Identity theft occurs when someone uses the identifying information of another person to engage in unlawful activities. Identity theft occurs in the workplace in various ways. The fraudster may be an employee who gathers the information from personnel records or directly from the employee. Once the information has been retrieved, a lengthy process is involved to clear the name of the victim. Businesses are exposed to the liabilities of fraud and should do everything in their power to avoid becoming a victim themselves. Businesses can incorporate many safeguards into their structure to lessen and even eliminate the occurrences of fraud. The importance of precautions cannot be overlooked to make the workplace a safe environment free of identity theft.

Table of Contents

Identity Theft in the Workplace 4

Applying the Fraud Triangle 5

Pressure 5

Opportunity 5

Rationalization 6

Stealing a Victim's Identity 6

Business Exposure Checklist 8

Recommendations for Organizations 10

Ten Tips 12

Identity Theft in the Workplace

Recent headlines have shed light on a growing problem in which the personal information of business clients is being retrieved and sold with criminal intentions. (May, 2006)

So how does this happen? Everything can be done right, from shredding documents containing sensitive personal information to monitoring credit reports, but the reality is that personal information is only as safe as the organization protecting it. This paper shows various ways to safeguard and protect the sensitive information in the business environment.

Identity theft occurs when someone uses the identifying information of another person, such as name or social security number to commit fraud or engage in unlawful activities. While numerous variations of the crime exist, the identity thief can fraudulently use personal identifying information to:

1. Open new credit card accounts

2. Take over existing credit card accounts

3. Apply for loans

4. Rent apartments

5. Establish services with utility companies

6. Write fraudulent checks

7. Steal and transfer money from existing bank accounts

8. File bankruptcy

9. Obtain employment using the victim's name (May, 2006)

Identity theft rings have been known to recruit individuals who work within an organization. They also seek employment themselves in positions where they have access to personnel records, credit reports or other sources of personal information. Identity theft rings pay individuals between $20-$60 an identity (May, 2006).

A major problem exists when identity theft occurs in an organization. The company may try to avoid potential embarrassment and negative publicity by not informing their employees or their customers that their personal information may have been compromised. More clues are found when whole groups of people are victimized.

APPLYING THE FRAUD TRIANGLE

There are three key elements common to all frauds. These three elements make up the Fraud Triangle. Thes same three elements of the fraud triangle are present in Identity Theft. They are:

* Pressure

* Opportunity

* Rationalization

Pressure

The pressure is always present to someone who needs cash and finds identity theft as a quick way to gain cash. All the same pressures are pushing people to make the decision to commit some type of fraud. These pressures may include:

1. Financial Pressures - high debt, poor credit, living beyond one's means, greed,

unexpected expenses

2. Vice Pressures - drugs, gambling, drinking, extramarital affairs

3. Work-Related Pressures - little recognition, job dissatisfaction, fear of losing job, overlooked for a promotion, feeling underpaid

4. Other Pressures - challenge to beat the system, improved lifestyle, becoming more successful

Opportunity

Identity theft is a crime of opportunity. Vigilance and awareness is essential to combat the fast growing non-discriminatory crime (May, 2006).

Opportunity often involves the # 1 way thieves acquire identities, open-access. Employees should ask their employers what policies the company has in place to protect their personal information. According to the State PIRG website for consumer protection, privacy policies should:

* Prohibit the use of Social Security Numbers (SSN) as an identifier

* Restrict access to employees' and customer's personal information

* Detail basic security precautions, such as locking storage areas where sensitive information is kept, using passwords to access personal information, and training employees who handle sensitive information

* Guard against identity theft by employees of third party vendors, like temporary or contract workers

* Require destruction of personal information once it is no longer needed (State PIRG, 2006).

Rationalization

Rationalization can be viewed in different ways for various people. Some thieves try to rationalize their behavior when they steal an identity. They feel that it is owed to them or is out of necessity.

According to a 2002 report by