Risk of identity theft on rise

By Rick Daysog
Advertiser Staff Writer

Charles Harrington said he should have suspected something was wrong last month when he couldn't use his Visa card to pay for lunch at a local restaurant or to purchase supplies at Office Depot.

Harrington, the publisher of Hawaii Parent magazine, said his wife recently alerted American Savings Bank, which had issued him the card, and a bank employee told them that up to 40 people had reported similar problems recently.

"I hate to be responsible for $8,000 without having anything to do with it," said Harrington, who has never visited Spain. "I could have had fun with that $8,000."

American Savings said it will investigate Harrington's case.

Under federal law, Harrington will only be liable for the first $50 once he can demonstrate he is a victim of fraud.

Harrington is one of hundreds of local victims of one of the fastest-growing forms of fraud in the nation: identity theft.

With increased popularity of online commerce and easy access to personal financial data, identity theft has become a "runaway crime," said Anne Deschene, president of the Better Business Bureau of Hawaii.

She believes that the state's law-enforcement community, Hawai'i's financial institutions and local consumer advocates are struggling to keep up with the problem.

That point is underscored by the brazen heist last month of more than 40 million credit-card records from an Arizona-based credit-card processor, Card Systems Solutions.

The theft placed nearly 12,000 credit and debit cards issued by Hawai'i banks at risk of having customers' names, card numbers and security codes stolen.

While no fraudulent transactions have been detected as a result of last month's heist, several Hawai'i banks have replaced hundreds of credit and debit cards that have a high risk of having their credit-card information compromised.

The local impact could be far greater since up to 90 percent of all credit cards in Hawai'i are issued by out-of-town financial institutions, local consumer advocates said.

Stephen Levins, executive director of the state Office of Consumer Protection, believes that identity theft is rising because there are so many ways to access a consumer's personal information.

Identity thieves do it by stealing a person's wallet, taking other people's mail, hacking into their computers or swiping information from credit-card transactions, Levins said.

In a more sophisticated type of online fraud known as "phishing," bogus e-mails or fake Web sites set up to look like those of legitimate companies are used to urge consumers to send Social Security numbers or credit-card information.

"Identity theft is on the rise because there are many ways that bad guys are trying to get consumers' information," Levins said.

To be sure, the banks have had some success battling identity fraud.

Last December, First Hawaiian Bank thwarted a Mesa, Ariz., thief after he used a counterfeit Visa card to purchase gasoline on the Mainland. The real cardholder had just used his card at an 'Aiea supermarket when the bank — relying on a report generated by its anti-fraud software program — alerted him that his card was being used on the Mainland.

The account was immediately blocked, prompting a Mesa department store to reject a $208 purchase by the Arizona thief.

In another case, the bank detected fraudulent use of a Makiki woman's First Hawaiian Bank MasterCard, when it was used to make multiple, early morning gasoline purchases in Wai'anae. The bank, alerted by anti-fraud programs, contacted the woman, who said she did not buy gas that morning but admitted that she kept her credit card in her car.

When she looked out of her window, the woman discovered that thieves not only had taken her card but also had stolen her car.

Harrington said he rarely uses his card for purchases, doesn't shop online and has never used his card for cash advances.

He said that the thieves somehow captured his card numbers to make several purchases between May 31 and June 1 at two different locations in Spain totaling $8,041.

Harrington said he has since replaced his cards with one that carries his photo.

"This scares the heck out of us," Harrington said.

Ken Newman, vice president of security at American Savings Bank, said he was not aware of any significant increase in identity fraud cases at his bank and could not verify whether 40 bank customers were recently victimized by such schemes.

But Newman said that Harrington's experience indicates that Visa's credit-card processors may have detected signs of fraud.

Typically, a processing company will issue a hold on an account if it detects unusual activity such as the use of the same credit card in two different countries on the same day, he said.

The bank, which replaced Harrington's credit card, is investigating his case. The Honolulu Police Department also has opened a probe.

For consumers, the experience of having your identity stolen "can be brutal," said the Better Business Bureau's Deschene.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com or 525-8064.