The Internet is fast becoming the primary tool used by perpetrators of identity and bank fraud - and by individuals who would rather not have their names connected to past misdeeds - to commit crimes using another person's good name and credit, law enforcement officials said Friday.
At a hearing of the Senate Permanent Subcommittee on Investigations, K. Lee Blalack, chief counsel and staff director for the committee, detailed how he and staff members identified several Internet sites that sold thousands of do-it-yourself software kits in a given month, kits that produce bogus documents and ID cards that are virtually identical to the real thing.
"The Internet has greatly facilitated the manufacture and sale of counterfeit identification documents by allowing sellers to mass market high quality fake ID cards with virtual anonymity," Blalack, said. "This has, in turn, presented significant obstacles to effective law enforcement."
Special Agent David C. Myers, identification fraud coordinator for the Florida Department of Business and Professional Regulation, said criminals are using the Internet to manufacture driver's licenses, birth certificates, and other vital documents that are so exact that even his own staff often cannot differentiate between an original and a fake.
Myers said computer-savvy criminals are using the Internet to duplicate special security measures placed on identification cards, such as holograms, microprinting and bar codes.
Myers said many of the false ID Web sites his unit examined received more than 10,000 inquiries on a single day, and that the annual income of an Internet ID sales site operator can exceed $1 million per year.
Myers added that the Internet is invaluable to do-it-yourselfers who simply use it to garner the information they need to create their own identity.
One such individual who actually testified at today's hearing, Thomas W. Seitz, is currently awaiting sentencing for forgery, deception, and bank fraud.
Seitz said he found names, social security numbers and addresses of people by accessing files maintained as public record on the Securities and Exchange Commission's (SEC) Web site.
"Although at first I did not have the intent to defraud anyone, I started searching the Internet again and determined there were a large number of sites that offered the means to make fake identification and the opportunity just presented itself," Seitz told Senate lawmakers.
Seitz said he also downloaded a New Jersey birth certificate and obtained a blank W-2 form from the IRS Web site. After filling in both forms with a simple software tool, Seitz took the fake documents to the New Jersey Department of Motor Vehicles and obtained an official New Jersey identification card.
Seitz then used the documents to obtain a car loan to buy "the most expensive car on the dealer's lot." Soon after, however, the state police caught up with him and his purloined sports car.
"Anyone with some computer skills can download the available templates for fake identification from the Web and produce some high quality fake documents," Seitz said. "I feel that if Web sites, especially US government sites, were prohibited from providing specific personal identifiers on the Web, it would make activities such as mine a bit more difficult."
Subcommittee Chair Sen. Susan Collins, R-Maine, insisted that most fraud could be nipped in the bud if law enforcement officials made a greater effort to crack down on purveyors of fraudulent documents on the Web.
But Brian L. Stafford, director of the US Secret Service - the branch of the Treasury Department charged with investigating producers of counterfeit money and fraudulent documents - said the agency simply did not have the manpower to police the estimated 10,000 new Web sites that are launched on the Internet each day.
"The problem is that there's so much of this going on, that I don't know if policing the Web is the answer," Stafford said. "We have a prosecuting problem for many of these crimes, in that the sentencing guidelines are often very low, and these criminals are back on the Internet in another state in just a few months."
Stafford said most Internet service providers, however, have been receptive to establishing connections with the Secret Service to keep fraud off of their systems, and that discussions were already underway between the government and ISPs to create a system whereby ISPs can discuss their concerns about particular sites with law enforcement.
The Treasury Department and the Secret Service recently held the National Summit on Identity Theft, which highlighted the incidence of identity theft and fraud, at which officials discussed ways of increasing cooperation among law enforcement officers from other countries.
A hotline recently installed by the Federal Trade Commission to report identity fraud is now logging more than 400 calls per week. The FTC estimates that call volume will eventually grow to 200,000 each year. A similar hotline established by The Social Security Administration received reports of almost 39,000 incidents of Social Security number misuse in 1999.
But the prosecution of those fraud cases is lagging far behind. According to statistics from the Department of Justice, the DOJ opened just 1,147 identity theft case during 1999.
Written By Brian Krebs - Newsbytes