The Sydney Morning Herald recently reported one in 10 Australians who use the internet have lost money to online identity fraud over the past year, with those losses reported to total $1.286 billion. The story, titled ‘Online ID fraud losses explode to $1.3bn a year’ featured a survey of 2510 Australians conducted in June by Galaxy Research, for Authentification Service company VeriSign.

Identity crime is getting quite a lot of attention in Australia lately, with Channel 10’s 7pm Project running a story on identity theft this week. The Government also recently reported survey results on identity theft which reveal 1 in 6 Australians may be affected or know someone who has been affected by identity theft or misuse.

If the VeriSign Online Fraud Barometer figures are an accurate reflection of identity fraud numbers in Australia – the figures have massively jumped from figures reported by the Australian Bureau of Statistics in its Personal Fraud Survey conducted in 2007. This survey (conducted with over 16,000 Australians) found just over 800,000 people have been victims of personal fraud, with combined losses of $977 million. These figures were across the board for fraud, including but not exclusive to internet use.

The 2007 ABS figures represented 5% of the population. This new survey demonstrates a doubling in identity theft numbers for the internet alone to 10% of the population in just 4 years.

This escalation in identity fraud numbers would be a direct result of an increase in internet use.

Figures from 2008-9 from the ABS on the use of internet in Australian households showed 72% of households had access to a computer. It will be interesting to see what statistics on household internet use will arise from the 2011 Australian Census.

People are increasingly conducting their social lives, their finances and their business on the internet. So, the freeing of information leads to increased opportunity for criminals.

The government’s scamwatch website has extensive information on current scams that are plaguing the internet. There are so many forms of scams to be wary of out there, it is frightening.

Cyber security consultant Alastair MacGibbon, former head of the AFP’s High Tech Crimes unit, broke it down into four main ways people could have their credentials compromised online:

1. Entering details such as credit card and banking information into a website that is run by crooks.

2. Handing card details over to a legitimate site but they are then stolen from the site itself through a security flaw.

3. Man in the middle attacks, where a legitimate site is infected by malware and credit card details are stolen from users as the transaction is underway.

4. Having a virus planted on your own computer which sucks up credit card details and passwords and sends them to criminals.

What is not known from the recent figures is how many of those identity fraud victims have had the crime impact their credit rating.

Typically, when fraudsters take out credit in someone else’s name, the victim is not aware of the fraud immediately. Any kind of credit account (from mortgages and credit cards through to mobile phone accounts) which remains unpaid past 60 days can be listed as a default by creditors on the victim’s credit rating.

So the fraudster could abuse someone’s good name all over town and it is not until the victim applies for credit and is refused, that they learn about the identity theft and subsequent fraud.

Credit rating defaults remain on credit files in this country for 5 years. The effect of people having a black mark on their credit rating is generally an inability to obtain credit. Most of the major banks refuse credit to people who have defaults, or even too many credit enquiries, so it is really essential to keep a clean credit record.

It is actually quite difficult to go about removing defaults from credit files, regardless of the source. Most creditors will tell people listings are only marked as paid if they have been paid and remain there for the required 5 years. But by law in Australia, if a listing contains inconsistencies the credit file holder has the right to negotiate their amendment or removal.

To clear their good name, the identity theft victim needs to prove to creditors they did not initiate the credit – which can be difficult. Not only are victims generally required to produce police reports, but large amounts of documentary evidence to substantiate to creditors the case of identity theft.

So as they say,prevention is always better than the cure.

The Government’s Stay Smart Online website recommends Australians follow these 8 top tips for increasing their resistance to identity fraud, and avoiding the loss to their bank balance and potentially their good name:

1. Install and renew your security software and set it to scan regularly.

2. Turn on automatic updates on all your software, including your operating system and other applications.

3. Think carefully before you click on links or attachments, particularly in emails and on social networking sites.

4. Regularly adjust your privacy settings on social networking sites.

5. Report or talk to someone about anything online that makes you feel uncomfortable or threatened – download the government’s Cybersafety Help Button.

6. Stop and think before you post any photos or financial or personal information about yourself, your friends or family.

7. Use strong passwords and change them at least twice a year.

8. Talk within your family about good online safety.

For people who already suspect they have had their good credit rating compromised due to identity theft, MyCRA Credit Repairs can possibly assist in removing defaults from their credit file. Call us on this toll-free number 1300 667 218, or visit our website for more information www.mycra.com.au .

Image: photostock / FreeDigitalPhotos.net