Identity Theft - A Growing
Problem in the Workplace; an Opportunity for Employers
Threat Is Real
2004, 9.3 million Americans – or one in every 23 adults – were
victims of identity theft. The dollar cost impact is gargantuan.
Identity theft crimes tallied $52.6 billion in costs in 2004. This
amounts to almost $200 for every man, woman, and child in the U.S.
In five years, federal officials say people will be more likely to
be a victim of this crime than not.
theft wreaks significant damage on its victims. Out of pocket
expenses related to identity theft have risen to $1,495, up from
$808 in 2002, plus $16,000 in average lost wages. The average
recovery time has spiked to 607 hours, up from 175 hours in 2002.
While personal liability is low in the majority of cases, 16
percent of victims were forced to pay an average of $6,440 to
cover thieves’ purchases. And victims remain vulnerable for the
rest of their lives. Identity thieves are likely to use stolen
data months or years later.
shoppers and banking customers are reducing their cyber activity
because of privacy fears. A June survey found 40% of shoppers and
28% of online banking users are cutting back, Gartner said
e-commerce revenue growth will slow by 1-3% by 2011 unless
customer fears are alleviated. Nearly 40% of the banks
participating in the American Banking Association's 2002 survey on
fraud ranked identity theft as the No. 1 threat to the banking
industry. Over 1 million consumers have been tricked into
divulging their personal information to email fraud alone, with
financial losses totaling nearly $1 billion. Al-Qaida cells even
use identity theft to raise money. Imam Samudra, mastermind of the
2002 Bali bombings that killed over 200 people, wrote a jailhouse
manifesto about funding terrorism through identity theft and
years of media coverage and frequent dire warnings by consumer
protection groups, identity theft is the fastest-growing crime in
the United States. Identity theft has been the #1 complaint to the
FTC for the last 3 years in a row – by far. Last year, identity
theft represented 43% of all the complaints placed with the FTC.
There have been at least 104 serious "data incidents" in
the US so far in 2005, compromising the records of more than 56.2
million individuals. And a worldwide criminal identity marketplace
has now matured. Credit card numbers, SSNs, and other personal
data are commonly traded and sold in huge numbers.
Have A Major Stake
#1 underlying source of identity fraud is theft of employer
records. 51% of all identity thefts occur in the workplace;
usually perpetrated by people hired to perform low-level tasks,
such as data entry. About 90% of business record thefts involve
payroll or employment records; only about 10% are customer lists.
Most businesses think of client records as the most valuable, but
payroll records are more often what's stolen, with increasing
June 1, 2005, a new provision of the Fair Access to Credit
Transactions Act (FACTA) goes into effect. It says that any
employer whose action or inaction results in the loss of employee
information can be fined by federal and state government, and sued
in civil court. An employee is entitled to recover actual damages
sustained if their identity is stolen due to your inaction, or
statutory damages up to $1,000 per employee. Employees may also
bring class-action suits against employers for actual and punitive
damages. In addition, federal fines of up to $2500 per employee,
and state fines of up to $1000 per employee may also be levied.
recent case in Michigan highlights another source of corporate
liability. In the 2005 case of Audrey Bell et al vs. AFSME AFL-CIO
Local 1023, the Michigan Appeals Court affirmed a jury award of
$275,000 to AFSME members who had sued the union for failing to
safeguard its members' SSNs. It recognized a “special
relationship” between the union and its employees, including a
duty to protect them from identity theft by providing safeguards
to ensure the security of their "most essential confidential
identifying information, information which could be easily used to
appropriate a person's identity.
Bell case has national implications for employers. Arizona,
California, Illinois, Texas, and other states have statutes that
require an employer to restrict the use and disclosure of SSNs.
While not as broad as Michigan's, they support the view that a
"special relationship" exists between an employer and an
employee whose data is stolen from the employer to commit identity
theft. Even in jurisdictions with no statutes restricting
employers’ use or disclosure of empoyee SSNs, the tide of
legislation on identity theft may be sufficient to support a
finding of the necessary “special relationship”. The Wall
Street Journal recently predicted that there will be a flood of
lawsuits by both consumers and businesses because of identity
also suffer other significant costs when their employees
experience identity theft. Conservative calculations based on
recent reports indicate that an employer with 1000 employees, who
make an average of $40,000 salary per year, can expect to incur
costs of well over $600,000 per year. Identity theft also
threatens enterprise security, enabling corporate espionage and
fraud, and theft of hard assets and intellectual property. Large
scale or frequent identity thefts also results in significant
negative publicity, impacting sales, partnerships, and employee
recruiting and retention.
As An Employee Benefit
only solution that provides an affirmative defense against
potential fines, fees, and lawsuits is to offer some sort of
Identity Theft protection as an employee benefit. An employer can
choose whether or not to pay for this benefit. The key is to make
the protection available, and have a mandatory employee meeting on
Identity Theft and the protection you are making available,
similar to what you probably do for health insurance. They may
either elect or decline to have identity theft coverage.
the employee has coverage, but becomes a victim, the employer
gains: the employee will spend less time and money, and experience
less frustration in restoring their identity. If the employee
declines the coverage, and later claims their identity was stolen
as a result of you or your company’s actions, the employer has
signed proof that they attended the presentation and declined the
theft protection employee benefits are a trend because employers
are looking for ways to lower their costs. It's unique, it's hot
in the marketplace, and it's inexpensive. A growing number of
companies are offering identity theft coverage as an employee
benefit, in part to reduce lost time when a worker becomes a
victim. Greg Roderick, CEO of Frontier Management, says that his
employees “feel like the company's valuing them more, and it's
very personal.” Matt Oros, CEO of Benelogic, adds “I think
it's a tremendous value to protect someone's name. It is like a
soft pillow at night that you can lay your head on and know that
you're going to have an advocate.” And Donald Harris, head of
IHRIM’s Special Interest Group on Privacy & Security points
out: “Privacy is like diversity in this regard: Done the right
way, each involves respecting and empowering individuals, and
reaping the business benefits that this can bring, rather than
acting primarily to avoid risks and legal problems.”
– there is a significant difference between the programs that
are available. Many new programs are now appearing on the market,
to take advantage of the fear and confusion around identity theft.
Many of them are very overpriced, and many do not provide the kind
of protection necessary to really reduce risk, or to cover losses
and speed recovery in the event of an identity theft incident.
Peter has been a leader in HRIT and
“workforce effectiveness” for almost two decades. Prior to his
current role as CEO of The Identity Guardian, he was Director of
workforce solutions practices at KPMG Consulting and Siebel
Systems, the co-founder and CTO of Cipient Networks, and a
long-term strategic advisor to major HR outsourcers, enterprise
application vendors, and other Fortune 500 firms. He also managed
HRIS teams at Disney and FHP, and was Manager in KPMG’s
Peoplesoft practice. Peter is an acknowledged expert on enterprise
systems, identity theft, and workforce services, and brings this
unique combination of expertise to this critical and timely topic.
Identity Guardian provides in-depth corporate training and program
development services, as well as a comprehensive and low-cost
identity theft benefit program. For more information, visit our
website at http://www.theidentityguardian.com,
call us at (888) 7-ID GUARD, or email us at firstname.lastname@example.org.
Article Source: http://EzineArticles.com/?expert=Peter_Marshall
Identity theft affects nearly 10 million Americans every year.
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