High-Tech Holdup


Chicago police officer Charles Anderson is patrolling the neighborhood where he grew up. Eight years a cop, after eight in the military, Anderson knows exactly who he is.

Problem was, reports CBS News Correspondent Jim Axelrod, someone else did too -- as he discovered when he applied for a credit card.

"Four days later I received a call from a separate credit card company. They informed that someone in another state had actually used my name, social security number, date of birth — all of my pertinent information to apply for a credit card with them."

The identity thief applied at several other banks as well. One sent three different credit cards to the same address with three different names — none of them Anderson's.

"I don't think they were doing background checks to see how many cards were going to the same address," said Anderson.

Anderson's story is shared by half a million Americans a year. A government hotline logs more than 2,000 calls a week.

"We need to be just as harsh when it comes to identity theft as we were when crack hit these cities," said Terry Hillard of the Chicago Police Superintendent.

Which is what brought Rob Douglas, one of the nation's top identity theft experts, to Chicago.

"You don't need a gun to get money out of the bank, you can get more money with a telephone," said Douglas.

He's training a group of Anderson's colleagues.

"In identity theft and financial fraud it's rare that they'll be investigated. If investigated, it's rare that they'll be prosecuted and if prosecuted, the rarest of all is that they'll do a day much less than 5 years in jail for it," explained Douglas.

Identity Proection Tips
Identity thieves prey on your everyday transactions. Transactions that require you to share personal information: your bank and credit card account numbers; your income; your Social Security number; and your name, address and phone numbers. An identity thief takes some piece of your personal information and uses it without your knowledge to commit fraud or theft.

Click here to learn how to protect yourself against identity theft and steps to take if you fall victim.

Law enforcement is just one of the front lines in a two-front war and many banks have been slow to adopt security measures, like PINs or passwords on phone ransactions, that might protect customer accounts from identity thieves.

"I would say 50 percent of banks right now are using PINs or moving in that direction," said Douglas.

"In many cases, consumers would prefer not to be inconvenienced at all," argued Boris Melnikoff of the American Banking Association.

While Melnikoff says banks are afraid of annoying customers, he admits there's another reason.

"It could be extremely expensive also and you have to make a business decision at that point."

Many banks find it cheaper to simply cover their customer's financial losses — which may help explain what Officer Anderson said he was told about the thief who stole his identity.

"As long as he stayed under $10,000 with each individual credit card, there was really no interest for any particular agency to try to prosecute this guy," said Anderson.

But with identity theft now exploding, it may soon be the case that the cost and inconvenience of higher security is cheaper than reimbursing victims.

©MMI, CBS Worldwide Inc. All Rights Reserved