Fighting back on ID theft

By Jeremy Scott-Joynt
BBC News business reporter

Frank Abagnale takes his credit card everywhere

Frank Abagnale spent his late teens and early 20s ripping off everyone he could.

But, following a five-year stretch in jails in France, Sweden and the US, he has spent the past three decades helping banks, companies, individuals and the FBI to crack down on fraud and identity theft.

His story was immortalised in 2003 in the Steven Spielberg film, Catch Me If You Can.

So, with more and more people finding their financial identities cloned and abused, what advice can a man with such a detailed knowledge from both sides of the fence give us?

Here, then, are Frank's rules.

CHEQUES

Don't use them - or use them as rarely as possible.

Frank doesn't.

Lenardo DiCaprio played Frank Abagnale in Spielberg's film

"There's your name, your bank's address, your account number, your signature," he says. "The front of a cheque alone gives someone enough information to steal your identity."

In the US, stores often write your driver's licence number and home address on the back too - just to make it easier for the fraudster. And the Internal Revenue Service prints your social security number on the back, too.

Frank gets his sent to him every month by his bank, to check them personally. That's rarely a service offered in the UK, and it can take weeks to get even a photocopy of a cheque if there's a dispute.

Still, the normal rules apply: check your account regularly, and if the amount taken out doesn't match a cheque stub, then find out why straight away.

DEBIT CARDS

Frank doesn't trust these either.

"I don't use them," he says. "I don't let my children use them either. If anything goes wrong, the money comes straight out of your account."

Foolproof systems fail to take into account the creativity of fools Frank Abagnale

And in the event that something goes wrong - and someone clones your card or steals the number - you could end up out of pocket while the bank takes its time investigating what may have happened.

CREDIT CARDS

In contrast, Frank loves his credit card.

"I use a credit card for everything - and I choose one of the ones which gives you money back. I travel all year long, so I run up a million dollars on my [credit] card a year. For every $100,000 spent, I get a $500 travellers' cheque - so [the card issuer is] paying me $5,000 to use their card."

Moreover, when you use a credit card, Frank argues, you're using someone else's money - and with much less of a paper trail.

"All month I spend, then I settle up with a single cheque at the end of the month. And my own money's staying in my account till then."

Most importantly, though, it comes down to a word Frank loves: liability.

If there's a mistake, or someone steals your card number, there's a good chance that the bank will carry the loss while the investigation continues - and you're not out of pocket in the meantime.

YOUR CREDIT RATING

Guard this with your life, Frank warns. It's the most valuable asset you have.

If you want to be safer, Frank advises people to avoid this...

Insurance, mortgages, loans - everything is based on it.

"Whether you're earning $7 an hour or $700,000 a year, it's very important to protect your credit rating," Frank says.

In fact, in the US it's so vital that people can even be at risk from their relatives.

Say, for instance, that a parent has declared himself bankrupt - not an uncommon thing these days.

Frank has come across cases where a father uses his daughter's credit rating to obtain credit cards and loans - and then manages, by negligence or recklessness, to ruin that in turn.

And even otherwise honest people - who happen to have had credit problems in the past - are stealing identities.

"There's 65-year-old Bob in the mail room at work," Frank says. "He's probably never used a credit card in his life, and has a clean credit record, so you think: I'll use his name to buy a car.

"So you make sure you make the payments every month, and once it's paid for, you sign it over to yourself for a dollar.

"And Bob may never know."

The irony is that if you do keep up the payments, cardless Bob's credit rating will probably improve thanks to your scam - and he won't be out of pocket as a result.

Assuming, of course, that you don't repeat your earlier mistakes - but this time at Bob's expense.

ID THEFT INSURANCE

There are any number of companies that promise to protect you from the pain of having someone clone your financial identity.

...And use these instead

But Frank won't touch any of them.

People who take it out are doing so frequently as a result of a mailshot from their bank - and don't really know what they're buying, he says.

"You ask people what they've got and they say, 'I'm protected against ID theft now,'" he says.

"But the company often doesn't explain that they're not reimbursing the money you lose - just the money it costs you to fix things."

CHIP-AND-PIN

Frank laughs when people start talking about foolproof security - particularly in the light of the recent revelations that Shell petrol stations have seen hundreds of cards copied and Pins stolen.

"I worked with a company in Australia 15 years ago to introduce chip-and-pin systems," he says. "And it wasn't three weeks before someone used copper wire to copy the details from the chip.

"There's no such thing as a foolproof system. That idea fails to take into account the creativity of fools."

In any case, as he points out, everything on the card apart from the Pin itself is still encoded on the magnetic stripe on the back - for use in cash machines and in places where chip-and-pin has yet to penetrate.

That, after all, is where the Shell fraudsters got their information.

Then there are the restaurants where the waiters bring a terminal to your table - so the card is never out of your sight.

The terminal's radio connection often has little or no encryption - which means, he says, that it would be possible for someone with a laptop and the right software to sniff the mag-stripe information straight out of the ether.

And how about ID cards - like the one the UK government is pushing to introduce as quickly as possible?

"I give it six months before someone replicates it perfectly," he says. "Everything you need to clone an identity is in one place."