In Act 2 of Brett Neveu's play 4 Murders (currently at A Red Orchid Theatre), a woman sits alone on a bus-stop bench late at night. She is careful to pay attention to her surroundings. When she sees a strange man approach, she lifts her purse from the bench and clutches it in her lap.

Common sense behavior. None of us wants our purses snatched. We automatically protect our money and our bodies from physical attack. But increasingly, robbery is electronic rather than physical. The more enterprising class of criminals has figured out that debit/credit card fraud, and its more complex cousin identity theft, are more lucrative and less dangerous than street muggings.

Packing Plastic

Card fraud has been around since general-purpose charge cards were introduced by American Express and Bank of America in 1958. The basic requirement has not changed: the thief must first obtain a valid account number, name and expiration date. After that, he typically either a) finds a gullible merchant, where he charges lots of stuff that he then sells for cash, or b) uses a dishonest merchant to process a lot of phony charges and split the proceeds.

Recent news stories have emphasized hi-tech theft of credit card data by hackers who break into supposedly secure databases. These do happen, and they can be both scary and costly. But most thieves use low-tech methods. A hardware store clerk "forgets" to give you your card back. A waiter copies down the information before returning the card and check to your table. And they use dumpster diving.

Do you ever throw away a credit card statement? That is a powerful tool for a thief. Credit card expirations are rarely more than two years out, so he has a good chance of guessing that before the security systems kick in. How about those "convenience checks" they send you for cash advances? Nobody checks signatures on those.

You say you're more careful than that? Do you save your copies of all of the charge slips? Never just tossed one? Until recently, those slips would always have your name, credit card number and the expiration date. If you pay attention to such things, you may have noticed that fewer businesses now give you the credit card chit to sign with a carbon copy, and more give you two originals on that icky thermal paper. The full information is on the merchant's copy. Your copy, though. has all but the last four or five digits of the card number replaced with X's: enough that you know which card you used, but not enough for a thief.

"He that Filches from Me My Good Name... Makes Me Poor Indeed."

So far as I know, no identity theft victim has reached Othello's level of murderous rage, but it may be only for lack of opportunity. Identity thieves are hard to catch, and hard to make court cases against since there are no eyewitnesses and no physical evidence. Often, it is unclear where the crime took place and what court has jurisdiction.

Fixing the resulting problems is much harder than with card fraud. Federal law generally limits your liability to $50 for a lost card, and no more than that for other improper use. This protection is pretty routine, though your bank may bluster and badger you a bit.

Identity theft victims, in contrast, often report spending thousands of hours, and thousands of dollars, trying to fix the problems and providing documentation over and over to fraud victims.

Identity theft occurs when someone gets enough data to truly pretend to be you. Having all your credentials as a responsible member of society, the possibilities are endless. Opening charge accounts in your name is simple and obvious. How about diverting your existing credit accounts to themselves to run up? Or a fraudulent second mortgage on your home? Maybe open a bank account and write bad checks? And if he is arrested, the booking record will have your name on it.

To easily steal an identity, the thief needs a name and address, Social Security number, date of birth and driver's license number. Adding a credit card number or bank account number makes it easier still. Amazingly, people still hand this entire collection of data to strangers every single day. Until a few years ago, you were actively encouraged to include your Social Security number on your Illinois driver's license. Let a store clerk copy that when you write a check, and he has a complete identity theft kit on a single sheet of paper.

Protecting Yourself

You cannot completely prevent this sort of fraud, because you cannot control the flow of information. Databases can be hacked. Legitimate businesses can have dishonest employees, or sell computers without wiping the hard drives, or throw away papers that should be shredded. Wallets can be lost. Mail can be stolen from mailboxes. And so on.

But you can make it harder. Don't give out your Social Security number or date of birth unless the recipient has a legitimate need for it. Let clerks look at the photo identification, but not copy information down. Never give out financial information in a communication you did not originate. Even if an e-mail has the exact right logo and layout for eBay or Washington Mutual Bank, do not click reply, and verify phone numbers independently.

Buy a shredder and use it; specifically, get a cross-cut shredder, as strips can be pasted back together.

Most important, watch your credit reports. This will not prevent identity theft, but it certainly can help contain it. The three major credit bureaus (Experian, Equifax and Trans Union) will vacuum up most any information under your name and Social Security number. We may complain about the errors that sometimes occur, but that list of every business that says it has extended credit to you is a powerful tool.

A recent federal law requires each credit bureau to give you a free copy of their report once a year, which means you can look at activity every four months. The official Federal Trade Commission Web site for this is https://www.annualcreditreport.com/cra/order?mail. (Any other "free" report site is selling something.) Please, please use this. A few minutes spent on this can save untold hours later.

No matter what you do, you might still become a victim, just as the bus-stop lady in Neveu's play is eventually murdered. If you do find yourself a victim of identity theft, go to www.consumer.gov/idtheft. You won't find all the answers there, but it will give you a good answer to "What do I do next?"

Are there money or tax questions you would like to see discussed in this column? Let me know, at 2835 N. Sheffield, Suite 311, Chicago, IL 60657, or call 773/525-1778 (888/525-1778 toll-free outside the Chicago area) or e-mail greg@gregmermel.com.

Greg Mermel is a certified public accountant whose clients in the arts range from individual performers to major theatre companies and suppliers. He has also been known to produce theatre. 

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