Hackers Steal Credit Card Information

"In the largest consumer information theft to date, shoe retailer DSW reports that 1.4 million customer records were stolen from 108 stores.

DSW first reported an information breach in March, but estimates of the number of customers affected were far lower. Now they have revealed that 1.4 million customers were affected. In addition, transaction information involving 96,000 checks was taken. A DSW spokesperson said the customer information included credit card names and numbers, bank accounts and driver's license numbers. No customer addresses, PIN numbers or Social Security numbers were stolen.

The theft is larger than the 1.2 million federal employee records reported lost by Bank of America late last year.

The theft is only the latest in a series of database break-ins reported recently. ChoicePoint lost information on 200,000 current and former customers. At Boston College, a hacker made off with the addresses and Social Security numbers of 120,000 alumni. HSBC informed 180,000 of its credit card customers of a breach that could affect them. Last month, the London-based Reed Elsevier Group said criminals had breached its security and acquired 32,000 records. Only last week, Ameritrade warned 200,000 clients that a backup computer tape containing account information had been either lost or accidentally destroyed, even though a company spokesperson said the company did not believe foul play was involved.

In the largest successful prosecution of consumer information theft in the US to date, Philip Cummings, formerly a help desk employee at Teledata Communications, was sentenced to 14 years in prison. The company he worked for provides banks and other credit providers with online access to credit reports. Mr. Cummings downloaded over 30,000 of those credit reports and sold them for $60 each. Criminals used the information to apply for credit cards, take out loans and drain bank accounts. The FBI estimates the take was between $50 million and $100 million. One of the victims was an elderly woman with a $1,000 savings account. After the thieves stole her identity, she was left with $35,000 in debt and nothing in her account.

In Seattle, Gary Peter Williams, the ringleader of an identity-theft ring responsible for over $1 million in bank fraud, was sentenced to 136 months in prison plus five years of supervised release. He also was ordered to pay $856,878 in restitution. At sentencing, US District Judge Robert Lasnik said, "Identity theft is a scourge in this nation. Identity theft is like tossing a rock in a lake, the ripples go out causing problems for people far into the future."

The news is catching the attention of consumers. In a survey taken in March 2005, 57% responded that they were either "very worried" or "moderately worried" about identity theft.

The Senate Judiciary Committee is considering a bill that would require companies to notify consumers when personal-identity data has been compromised. The bill is based on California's Security Breach Information Act, which allows consumers to put a seven-year fraud alert on their credit reports.

And the firebrand New York Attorney General, Eliot Spitzer, is weighing in. "New York State must enact reforms to strengthen consumers' ability to control personal information and to facilitate the prosecution of identity theft crimes," he stated.

As Finextra.com reported: "In February, the Federal Identity Theft Data Clearinghouse reported that 38% of all fraud claims in 2004 related to identity theft, and New York State ranked seventh in the nation in per-capita identity theft reports."

Currently, Colorado and Vermont are the only two states that haven't made identity theft a felony. According to the FTC, Colorado had the fifth-highest number of identity theft complaints last year per 100,000 people."

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