Cecily O'Connor
RedwoodAge.com

Identity fraud is declining in most parts of the US. But falling victim to a scam remains a legitimate concern for boomers - the favorite targets of con artists. 

The main problem is that scamsters continually find new ways to pillage consumers, with the phone now among their greatest tools for carrying out financial crimes. 

Americans lost $45 billion to identify fraud in 2007, down 12 percent from $51 billion the previous year, suggesting that awareness campaigns and greater education are making a difference, according to a report by Javelin Strategy & Research. 

The thinking is that businesses are getting better at managing personal information, while consumers are more inclined to update their spyware and anti-virus software. For example, many older adults have learned it's smart to move financial transactions to online bill payment services, rather than sending checks through the mail, which is one of the most common methods criminals use to obtain personal financial information. 

"The good news is the leadership role many businesses are taking in educating consumers about ID fraud risk factors is paying off," said James Van Dyke, president and founder of the research firm. "Still, fraudsters are getting creative and leveraging new techniques to commit fraud..."

One new scam is "vishing," in which criminals use the phone to obtain consumers' information. 

What happens is that consumers receive calls from people claiming to represent non-profit organizations, billing institutions or other financial companies. Some consumers are convinced to provide the callers with Social Security, bank account and credit card numbers, which are then used by criminals for fraudulent activity. As a result, access through mail and telephone transactions rose to 40 percent of thefts in 2007 from 3 percent the prior year. 

Meanwhile, wireless phone accounts are the most frequent types of new accounts opened fraudulently by criminals utilizing other persons' data. 

Heightened Alert
Regardless of the method used, however, identity theft hurts people of all age. For example, 33 percent of identify theft complaints received by the Federal Trade Commission in 2006 were made by adults aged 40 to 59. Another 10 percent were made by adults 60 and over. Among younger groups, 23 percent of complaints were logged by adults 30 to 39, and 29 percent were made by people aged 18 to 29. 

In addition to age, Javelin's research also found that geography is a factor, noting that California, Idaho, West Virginia, Delaware, and Illinois were among states whose residents are most at risk. Fraud was lowest in the Northeast.

Across the US, many consumers have been on heightened fraud ID alert since it was discovered last year that nearly 45.7 million credit and debit card numbers of TJX Cos. customers were stolen from the discount retailer's computer system over several years.

"For every headline-grabbing data breach there are many businesses setting good examples, but businesses must continue to fight the issue with more consumer education and best-practices to safeguard customer data," said Steve Cole, chief executive officer at the Council of Better Business Bureaus.

Vigilance is warranted because the total out-of-pocket expense ID fraud victims incur is rising. ID fraud cost consumers an average $691 in 2007, an increase of 25 percent over the $554 recorded in 2006.

Reducing Risks
As businesses and consumers work together to protect sensitive data by responsibly adopting online financial services, such as online banking and bill paying, Javelin expects the fraud reduction trend to continue, although at a slower pace than in the past.

In the meantime, Javelin outlined six tips for preventing ID fraud.

1. Monitor accounts regularly online at bank and credit card websites;
2. Review credit information at least once a year;
3. Never provide sensitive financial information over the phone or Internet, including Social Security numbers, passwords, PINs or account numbers, unless you placed the call directly to a verified and trusted location, such as the number on back of a credit card or statement;
4. Install and regularly update firewall, browser, anti-spyware, and anti-virus security software on your personal computer, and keep operating systems updated;
5. Move financial transactions online by turning off paper invoices, statements and checks, including paychecks, and replacing them with electronic versions where offered by employers, banks, utilities or merchants. Avoid mailing checks to pay bills or deposit funds in your banking account;
6. Reduce unnecessary access to personal information wherever possible. For example, don't carry Social Security cards, unused credit cards or checks, and don't leave sensitive documents out in the open.