Protecting your identity and security online

Guarding your credit card number and personal information is a high priority. Entire industries of identity protection and credit locks are built around protecting credit card information. While vigilantly guarding things like credit card and even social security numbers, most consumers have a vulnerability in their online activity left largely unsecured. Access to your primary email account is a significant exposure.

The potential damage due to an email account breach is greater than if somebody stole your credit card or possibly even your social security number. In fact some investigators and analysts call the email address “the new social security number.” If a criminal was able to log into your email account, they would be able to access many areas of your personal and financial life. Think back to all of the accounts, logins, and access codes which were established using your email. Your online banking, most credit cards, car loans, mortgages, even retirement accounts are all connected to your email. Try this; go to the website for some financial account you have, and click the “Forgot Password” link. In most cases the institution will simply send the new password or a reset link to your email account. (If you are lucky, some banks have a process to answer certain secret question, but even those can be reset by email)

What if a person was able to access your Facebook account? Could they get personal information from your contacts impersonating you? What about contacts on LinkedIn, your co-workers, or other associations? Remember that your associations with each of these is probably documented in a “Welcome” email in your archived emails. Make a list of all the account records you think you have, and then go through old emails to remember how many you really have. Could a criminal buy $1000 worth of items on Amazon using your stored credit card? How many shopping sites are you signed up for? All of these are accessible simply by getting into your email.

Now within your email messages there is likely a large volume of personal information. Your accountant may have sent your tax returns with social security numbers. You may have emailed credit applications to banks or mortgage companies containing all of your financial information. There are faxes, scanned documents, and copies of drivers licenses possibly attached to emails. Other documents such as Excel files or Word docs may contain sensitive information about your business or employer. More damaging might be “private” photos exchanged between yourself and relationship partners. Last, the message content of communications themselves contains details which you may not want in the wrong hands.

So considering all of this how hard to you protect your email password compared with your credit card number? If it is an easy to guess word or number such as your date of birth it is insecure. Some individuals have it written on a slip of paper near their computer. In some cases the computer stays logged in to the email account at all times. Even if you guard the password carefully, are there any others who know your password? If you use the same password for email that you do for Facebook or other sites, have you given that login to anyone else to upload photos or fix something?

Email account access is a serious risk to all types of breaches. The steps to reduce the exposure are simple. First change your password today, and try and remember to change it every month or so. I recommend writing down the new password each time and keeping the login in a safe with your birth certificate and other valuable documents. You may want to keep your banking logins on that same secured “hot sheet” as well. Be sure to log out from your email when you walk away from it. Be especially careful when checking email from a remote location such as on public WIFI or on a hotel computer. These may be vulnerable to detection. If you must check email from a less-than-private location be sure to change your password again when you get back home. Also be sure check the “Last Login” record every time you look at your email account. Most providers will have a small box on the screen showing the date and IP address that your email was last accessed. it should match your memory of when you last were online.

All of these measures are certainly inconvenient, but much less of a project than fixing the damage caused by a breach of your accounts. In another comparison to the exposure to losing your credit card, remember that if a criminal gets your card number, the bank has to eat the loss. You may have to wait a few days for a new credit card and change some of your automated billing, but at least the problem is fixable. A person rummaging around in your email account for a while can do damage which you may not be able to fix.

Fraudulent lien release

When recorded documents are searched by a title abstractor, the searcher generally will take the document at face value unless some evidence of fraud is glaringly apparent. Document recorders and clerks operate under the same presumption.

Consider the case of a financial fraud being investigated. In this case a person had been sued several years before and a judgment was entered for the plaintiff. The judgment was properly recorded in the land records in the county where the debtor owned property. At the time of the judgment the creditor had reason to believe that the debtor had not discoverable assets to garnish, and the property was encumbered by a mortgage in excess of its value. (There are additional details of the events intentionally left out of this description.)

During that time the debtor acquired funds from the sale of two ATV’s and a boat which were not disclosed to the creditor, and which the creditor did not look for. The debtor also accumulated funds from savings from their regular earnings. The debtor wanted to conceal the funds from several creditors so they were not placed in any bank accounts, nor were visible assets purchased. Instead, the property owner used the funds to pay down their mortgage which had the effect of raising their net worth.

Investigating this case several years later no assets or bank accounts were discovered. However it was revealed that not only was the mortgage showing the higher balance, it was actually paid off. This is where the serious fraud was discovered. In order to extract the asset value from the property the debtor wished to sell, but was aware that the judgment lien would be discovered and would need to be cleared prior to closing.

To avoid this issue, the homeowner created a lien release in the name of the company holding the judgment, and presented it for recording with the county clerk. As it was valid on its face, the instrument was recorded. The property was sold and the debtor received the funds. Upon inspection of the release there was nothing which would indicate to any abstractor or title agent that it did not clear the previously recorded lien. The company name was correct. The signator was different but this would be likely for a company to have multiple signors. The debtor denied having any participation or knowledge of the release being filed.

Fortunately the investigation was able to track the source of the document through the notary. The name and stamp of the notary was investigated and found to belong to a desk clerk at an insurance agency. The agency was the issuer of the auto policy for the debtor, and also had a record of the notarization along with the drivers license info for the person who did sign. Upon contacting that subject they revealed that the debtor had instructed them to sign the form.

Hypothetically, what if the debtor had spent the $5 to go to a notary who was not personally familiar to them, such as at a shipping store? What if the notary had not recorded the identification information for the signor, and the signor had a common name which was not specific enough to locate one particular person?

The lesson for creditors is to check the status of your judgment liens regularly at least, and at best to keep checking for a change in credit or asset status on the debtor. There are a number of ways for debtors to attempt at concealing assets, but most can be discovered in an investigation.

Title searchers can keep an eye out for obvious fraud, but this is a rare event and sometimes not discoverable. The title agent could have caught the fraud if they did not rely on the release to clear the lien but instead contacted the creditor directly. It was after all still showing on the credit report for the debtor.


Business identity theft

Business owners should be aware that a trend of fraudsters stealing the identities of business is increasing. There are variations on the scheme, but typically the good name or credentials of a business are used to obtain credit, merchandise, or sales. One common vulnerability is where a business provides documentation through an association or trade group.

In one example, a trucking firm was a member of a computerized shipping cooperative network. The network provides a directory of cargo loads available to be picked up and shipped which truckers can select from. The trucking firm looks up loads in a location where they will be available and selects one based on weight, size, and type of cargo. The trucking firm contacts the shipper and arranges for the pickup based on the posted rate or negotiates a higher price if possible. As part of participating on the network, the trucking firm posts their company information along with their insurance certificate for verification by the shipper. The shipper views the information and verifies the insurance and schedules a time for the truck to take the shipment.

The criminals apparently used this system to take a shipment using the identity of a legitimate trucking company. They obtained all of the company information from the shipping network, and printed off a copy of the insurance form. The other key to this theft was using an online phone service provider to create a virtual phone line. There are several communications company which will issue a number in any area code and create a custom greeting in any company name. Incoming calls are forwarded to a number provided by the customer. Phone trees, voicemail, and a complicated extension system can be set up as well. In this case the criminals created a virtual phone line which answered in the name of the legitimate trucking company. “Thank you for calling _____ Trucking, press 1 for……”.

The calls were forwarded to a pre-paid cell. So the criminal calls the shipping firm and agrees to take the truckload for delivery. They fax over a legitimate looking letterhead with the new phone number and attached the insurance form. The shipper calls the number to verify and is given the go ahead to release the cargo to the truck driver.  A pickup time is scheduled and the criminal leaves with a six figure load of cargo, never to be seen again. The shipping warehouse did get a copy of the drivers CDL but it turned out to be a forgery.

In hindsight, the shipping company could have insisted on calling the numbers listed within the computer network for the company, but they simply went off of the faxed letterhead. The investigation now hinges on tracking down IP addresses used to visit the website for the virtual phone company, and possible logins to the shipping network website. These are thin leads at best.

The message for company owners is to watch out where your company information and credentials are posted. You may have license information and personal information listed on trade groups, industry associations, marketing forums, and sales organizations. An identity thief can gather a great deal of information about the company from combining this information. The same technique could be used to create phone accounts, obtain credit, or buy services from vendors.


Hiding assets after judgment, bankruptcy, or short sale

Creditors are often suspicious of whether their debtors have assets which are being concealed. Searching for hidden assets is a powerful tool which judgment holders can use to obtain higher returns on their judgment instruments. Debtors attempt to conceal assets in many ways by a debtor, but a thorough investigation can discover these.

Fraudulent transfer

Using this strategy, a debtor transfers or title assets in the name of a relative or associate, believing that the “paper” ownership in another name demonstrates that the asset does not accrue to them. In some cases a debtor will create a corporation or other entity to hold assets for their use or ownership. An investigation can discover these assets by following a flow of funds to determine where the money came from which purchased them. If the money came from the debtor to acquire an asset for a third party, that is one red flag to investigate further. In high profile cases, assets can be discovered through observation or surveillance. A debtor seen driving an expensive car or one not listed on a disclosure form can be deposed to determine the ownership and origin.

Lifestyle laundering

A debtor can use an affluent lifestyle to conceal assets or income. Instead of hiding assets in the form of a tangible object such as a car or boat, some debtors will liquidate hidden cash or off-the-books-income over time by spending lavishly on vacations or entertainment. This will not show up on a balance sheet or credit report, but can also be discovered through observation.

Trigger records

The records of a debtor should always be inspected, no matter how small. A $50 charge to a debit card may seem insignificant on its face. However, many of these charges indicate a relation to a larger expense. We have seen examples of small charges at a jewelery store which turned out to be a repair bill for a $50,000 Rolex. In another case, a $80 check was paid to a company with a generic name. It turned out to be a catering company which delivered lunch to a marina where the debtors undisclosed vessel was berthed. Small expenses can also indicate the location where a person traveled to, or how much gas is used during a particular time. Clever debtors will pay cash for large purchases to hide them, but often revert to credit cards or checks for smaller items, which can trace back to larger assets or lifestyle indicators.

Bank accounts

It is a common misconception that bank accounts appear on a credit report. Some debtors know that a casual search of credit records or even financial statements will reveal bank accounts. Actually, a more detailed investigation is needed to locate bank or brokerage accounts. Investigators with specific knowledge of these methods are necessary.

Real estate

Asset concealment and fraud almost always has a real property component. Real estate may be the origin of the fraud, or the means to divest the funds. Some debtors believe that real estate owned is not discoverable if some method to conceal ownership is take. Vesting title in another name is the most common. Some will use a quit claim deed to move ownership to another person. Debtors often overlook the fact that their prior ownership and the quit claim deed itself can be found in public records using the grantor/grantee name index. Using title forensics an investigator can even locate incidences where a debtor appears on title documents but not listed in the name index. References to the debtor as a signature witness to a transaction, holder of a remainder interest or life estate, or even having contributed to the closing funds on a HUD settlement statement can indicate that the property can be looked at as an asset.

Judgment creditors can look beyond the apparent means of a debtor to have assets to collect from. Many methods of investigation are used to discover all types of assets which a debtor may have. The bottom line is that everyone has some assets, including a debtor. A professional investigation is a powerful tool in obtaining a settlement or garnishment of assets.