ID Analytics chart
The dots indicate concentrations of identity theft crime rings.
There are 10,000 active identity theft crime rings across the United States, with the greatest concentration in a "ring of fraud" that stretches across the Southeast from Virginia to Mississippi, according to a new report by fraud-fighting firm ID Analytics.
A majority of these rings are what the firm calls "Friends & Family" groups, not professional criminal organizations, the report concludes. The rings are most highly concentrated in Washington D.C.; Detroit; Tampa, Fla.; Greenville, Miss., Macon, Georgia; and Montgomery, Ala., the report found.
ID Analytics compiled the results by examining its massive database of credit applications and other identity “risk events,” which now includes 1.7 billion entries. The firm cross references credit applications from major banks, auto dealers, wireless firms and other credit grantors looking for evidence of systematic identity fraud. Previously, ID Analytics has used its data to help identify tens of thousands of registered sex offenders who are living digital double lives, and millions of U.S. residents who are "sharing" their Social Security number with someone else.
The crime ring project is a first, says head researcher Stephen Coggeshall.
"This is first time we raised it up a level and looked at how these people are connected," he said. "I am surprised at how many rings there are."
A "crime ring" was defined by ID Analytics as two or more individuals working in concert, repeatedly submitting fraudulent applications in an attempt to commit fraud. Collusion was determined by noting when multiple members of the rings used similar personal identifying information, such as Social Security numbers, in fraud attempts.
Not every fraudulent credit application is successful; many are detected and denied by lenders' fraud-fighting tools. Still, the attempts indicate an active fraudster at work.
Examples of fraud rings published in the report read like short mystery novels.
One four-person group in the Indianapolis-area -- made up of two members in their 70s and two 48-year-old women -- has submitted 345 fraudulent credit card applications. The individuals’ names were not provided by ID Analytics because they have not been charged with any crime.
Another six-member ring is run by a 52-year-old woman and her sister and operates out of an apartment complex in Washington, D.C., the report said.
"Together this team has used 10 SSNs and multiple first names, last names and birthdates to commit fraud," the report says. "In addition to identity manipulation, this group is also applying for accounts using stolen identities (identity theft). They have completed more than 69 credit card applications and defrauded four victims, including two deceased persons."
Near McCallum, Texas, two families appear to have teamed up and specialized, with one member targeting wireless providers and two others focusing on retail and bank credit cards, the report said. Together they have submitted 142 fraudulent applications.
"It appears that the children in the group are stealing their own parents’ identities," it added.
While traditional organized crime and drug crime rings also form ID fraud rings, Coggeshall said the most surprising result of his research was the prevalence of what he called "Friends and Family" fraud rings. More than half of the rings include multiple family members.
"This is a strong indication that more than half are not what we’d think of as professional groups," he said. "(It’s) a family or an innocuous neighbor committing fraud.”
"The family dynamics is a big surprise," he said. "Rather than seeing a lot of what I would say are unrelated people collaborating, we see a lot of families doing this, sharing information. Siblings and parents toggling SSNs systematically, sharing dates of birth and committing identity theft."
Coggeshall said he excluded those family groups who might be sharing identities to simply avoid bad credit histories -- a brother and sister living together, and the brother allowing the sister to use his Social Security number to obtain cell service, for example.
"Every one of the (10,000) is committing fraud with the intent to not pay," he said, and doing it at least 10 times or more.
Another surprise in the report: Numerous studies have shown that the rate of identity theft is higher in urban areas, but the number of crime rings is much higher in rural areas, Coggeshall said.
"The map is a surprise, the systematic collusion in the South," he said.
One potential explanation: Identity theft and methamphetamine crime rings often go hand in hand, with meth addicts trading stolen mail and credit card applications for drugs. Meth addiction rates are also higher in rural areas.
But that doesn't completely explain the ID fraud rings to Coggeshall.
"These rural areas must make it easier for people to collude, for some reason," he said.
ID Analytics, which was acquired last year by identity theft monitoring service LifeLock Inc., has indicated a willingness to share the crime ring data with law enforcement, but Coggeshall said he was unaware of any arrests that have resulted from the research.
That level of information sharing is in its early stages, he said.
"It's not our business to (encourage law enforcement to act). I would say law enforcement is very busy and has to pick priorities. ... We do this for our commercial clients. We are having conversations with law enforcement agencies, but they are not too far along. I would say law enforcement is cautiously interested."
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