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CNN IN THE MONEY

What You Need To Know About Identity Theft; Advice From Experts On How To Deter, Defend, And Detect

Aired May 27, 2007 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICK SANCHEZ, CNN ANCHOR: We certainly hope that you can catch "Warrior One: On The Road" as it tours the country for the Fisher House Foundation.
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FREDRICKA WHITFIELD, CNN ANCHOR, CNN NEWSROOM: I'm Fredricka Whitfield, in Atlanta.

"Now in the News": The search for two missing American soldiers enters its third week. The search is taking place south of Baghdad in the area known as the triangle of death. Specialist Alex Jimenez and Private Byron Fouty are believed to have been captured in an ambush.

The U.S. death toll in Iraq climbs again. Two American troops were killed yesterday, one by a bomb south of Baghdad, the other by small-arms fire during an operation in Baghdad Province. A U.S. Marine was killed in a noncombat-related incident in Anbar Province.

Here in the U.S., West Point's newest graduates getting a pep talk from Vice President Dick Cheney. He was the speaker at the U.S. military academy's commencement today. Cheney told the grads they've trained for battlefield leadership and now, they'll be joining President Bush's war on terror.

I'm Fredricka Whitfield in Atlanta. We'll update your top stories in 30 minutes. Now, it's time for IN THE MONEY.

ALI VELSHI, CNN ANCHOR, IN THE MONEY: Welcome to IN THE MONEY. Protecting your identity.

I'm Ali Velshi.

CHRISTINE ROMANS, CNN ANCHOR, IN THE MONEY: I'm Christine Romans.

Today we're focusing on identity theft. You may not think you're a potential victim, but almost everyone is. Coming up, what you need to know about the big credit companies to keep your credit scores safe. VELSHI: Plus, discover what it feels like when someone does steal your identity.

ROMANS: And later, why your online passwords aren't as tough to break as you think they are, and what you can do about it. Hint: You've got to change them, you've got to change them more often than you think they do.

VELSHI: And you've got to not use your dog's first name.

ROMANS: Or the year you graduated college.

VELSHI: It's very hard because some places need multiple passwords. We think about identity theft something that somebody gets from information on a computer but you were telling me a story a few weeks ago about your grandfather, and how he was a victim of identity theft.

ROMANS: He went to put a starter in his car, in his 80s, right? And he went to the auto supply shop and the man behind the counter asked him for his credit card, his driver's license and his check. And that guy behind the counter was running a ring with somebody at the phone company, with somebody at the bank, and they proceeded to completely take over his identity, get car loans, almost get a mortgage. That's when my grandfather came on to it.

VELSHI: That's how he found out?

ROMANS: That's how he found out. A delivery person came and brought him the mortgage papers that had the forged signature of my late grandmother, and that's how he knew. It took hundreds of hours to undo it. And the beautiful part of that story was that the victim impact statement when they caught these guys with the help of my grandfather. The judge had my grandfather stand up and say, you thought you were picking on an old man. Well, this old man has just sent you to prison.

VELSHI: Has fought back.

ROMANS: But not everybody can do that. And that's why it's so tough.

VELSHI: And so many people don't find out about it in enough time. Our first guest has a strategy for protecting yourself against identity theft. And she sums it up in three simple words -- deter, detect and defend.

ROMANS: Betsy Broder is the assistant director of the Federal Trade Commission's Division of Identity and Theft Protection.

Thanks for joining us today.

Pleasure to be here.

ROMANS: You know, everybody knows somebody this has happened to. Everyone has a friend this has happened to. It is absolutely devastating. It takes hundreds of hours -- and that is no exaggeration -- to get control.

What's the first thing to do, from your perspective at the FTC, what's the first thing to do when you think that something's wrong?

BETSY BRODER, FEDERAL TRADE COMMISSION: Well, you need to take action, you need to take it quickly. The first thing you want to do is contact one of the three major credit reporting agencies. These are the companies that keep track of new accounts that are opened in your name, and bad debts.

You want to contact that company, tell them that you've been a victim of fraud, and have them put a fraud alert on your credit report, which will make it less likely that someone else can open up new accounts in your name. They will convey that information to the two other credit reporting agencies, so that there are fraud alerts on those three agencies. And you get a copy of your credit record to look at it.

So, first contact the credit reporting agencies. Second, report it to the police. You're a victim of a crime. You need to report it and get a police report. Third, you want to contact the companies where the accounts have been opened, have them shut down the accounts and send you a letter confirming that they've shut it down.

And finally, you need to contact the FTC at ftc.gov/idtheft, file a complaint and get access to materials on the other steps that you need to take start restoring your identity.

VELSHI: Now, for those of us who haven't, I think, been victims of identity theft -- I don't know -- but I sort of feel like I'm -- I do feel a little invincible. I really don't think it's going to happen to me. I study this all the time, Betsy. I actually skipped over your first step, which is deter.

I'm all ears, give me some tips. What do I do so I don't even get to that point?

BRODER: Well, we say deter and we don't say protect because you can't always absolutely immunize yourself from identity theft, but there are some steps that you can take to make it less likely you will be a victim.

Be very careful about how you handle your own personal information. For example, you get one of those e-mails that appears to come from your bank or service provider saying they need you to provide your account number, Social Security number, it's a fraud. It's a scam. Do not respond to those e-mails or telephone calls asking you to provide the information.

If that's your bank, they know your information, and you should contact them. So be careful about how you do it electronically. Also, be careful about what you carry in your wallet. If your wallet is stolen, does that put you at risk of identity theft because you're carrying your Social Security or something else with your Social Security number on it? So, be careful there --

VELSHI: And your driver's license, which has your address on it, all sorts of things in your wallet.

BRODER: Well, you know, some people take all the contents of their wallet, put it on a photocopy machine so that if their wallet is stolen, they know exactly what's in there and they know what phone calls to make.

And finally, you know, we're all entitled to a copy of our credit report once a year for free. Get a copy of your report. Make sure that everything on it is correct and no mistakes or indications of fraud.

ROMANS: I want to go back to something -- phishing is what it's called. And a lot -- more and more people are getting online and their setting up with their banks and they might not really know this is happening. You get something, an e-mail that says, we've had a problem with your account. We think someone's trying to access it.

VELSHI: And it tells you to click on a link and you sign it.

ROMANS: Click on a link, sign it, give us your passwords, give us your Social -- don't ever, ever do that, right?

BRODER: You know, I'm going to say even more than that. I'm going to say, don't even open the e-mail. Delete it. If it appears to come from a bank or service provider, an online auction house, delete it because some of those e-mails also have viruses embedded in them, and once you open the e-mail, you have let loose some horrible thing on your computer.

So, trust that your bank knows how to get through to you in a paper way or they'll phone you, and that you can call them back at that number to assure yourself that they are who they say they are.

VELSHI: My mom gets these from time to time and she tells me, so and so contacted me. I've been told if you think there's some work you need to do online with your bank, go to your bank's website yourself, the way you normally do. One of the tricks in these e-mails are these links they tell to you click on and then you put your name and your password in, and now you've given somebody your information.

BRODER: You've been hijacked. That's right. So be very careful and the advice you give is good, you type in yourself the web address of your bank or other online business so that you know you're going where you want on to go.

ROMANS: Betsy Broder, FTC, deter, detect, defend. Those are the three tips. You can go to ftc.gov to get more information. Thank you.

VELSHI: It's a good read. It's really worth it.

BRODER: Thank you.

VELSHI: When we come back, tips from a former conman on keeping your identity safe. And find out why your online passwords need a security upgrade. We're back in a minute. (COMMERCIAL BREAK)

ROMANS: Frank Abagnale knows how identity thieves work because he used to be one himself. He past the himself off as other people, he cashed $2.5 million in fraudulent checks, and paid for it with a 12- year sentence.

VELSHI: But he finally got out of jail and he went straight. He found fame when his story became the basis of the movie, "Catch Me If You Can". I recently asked him, how much easier it is to steal someone's identity today than it was back when he was doing it.

(BEGIN VIDEOTAPE)

FRANK ABAGNALE, AUTHOR, "STEALING YOUR LIFE": Probably 4,000 times easier today than when I did it. Just printing checks required a Heidelberg printing press, color separations, negatives, plates, typesetting, today you open a laptop, you pick a company logo, you put it on a check, go down to the office supply store, by check paper and print the check out.

The risk, I went to prison on a 12-year sentence. Today, I'd probably end up with community service or restitution or nothing. So, the risk is very minimal compared to what it was back when I did these things.

VELSHI: The impression I have is the chance of being a victim of identity theft or, having your credit card number stolen, is a whole lot less to do with you and how you maintain your life, and a whole lot more to do with your employer, a retailer, the government losing your information. We hear of laptops being stolen with thousands of people's identities and information on it. Where does the danger really lie?

ABAGNALE: On both sides. I mean, one, we give away too much information. I mean, if we go to a store and write a check and leave the check there at the store, on the check is your name, address, phone number, the bank's name, address, your account number, your routing number, your signature and if the store check wrote your license number across the front of the check -- in nine states it's your Social Security number -- next to it they wrote your date of birth, you don't get the check back because of truncation.

So, you don't know what happened to the check, but anyone who saw the check has enough information to access your bank account and become you.

VELSHI: Interestingly, it's not a particularly sophisticated crime while the technology enables anyone to do it, you can actually, with very little information, get everything you need to steal my identity.

ABAGNALE: Absolutely. For example, say that you wrote down a phone number at a pay phone because you were calling a friend. You called information, got the number, left the number by the phone and left. If I pick up that phone number with the area code. I can reverse that on my laptop, get the actual physical address of your friend, then go to the land title records for that county, find out where they have their mortgage, which means where they probably bank, get their bank account number, get their Social Security number, get their date of birth and in less than 30 minutes, I know enough of your friend to become your friend. That's as simple as it is. It's like counting one, two, three.

VELSHI: How do you deal with this when it happens to you? Where is your first phone call? According to your book, the police are not all that likely to help you.

ABAGNALE: No, you do want to file a police report and you want to go ahead and notify the credit bureau to either put a freeze on your account or tell them you've been victimized, that someone has stolen your identity and your credit, so they'll freeze your account for 90 days.

The things that you really need to do is you need to buy yourself a good shredder. I prefer shredders that turns paper into micro little chips papers, called a microcut shredder. Most shredders ribbon shredders, straight shredders, crisscross shredders can be put back together and read. Micro-cut shredders cannot. They're all the same price, so if you're going to buy one, you might as well buy one that works.

Use a monitoring service, there's lots of them, but if you buy one, they're about $10 a month. But you have to ask the two important questions. Do you monitor all three credit bureaus, Equifax, Experian, TransUnion. And do you notify me in real time? If they only monitor one credit bureau, are they notifying 24 hours later, they send you a letter and you get a four days letter. They notify you quarterly. That's worthless.

I need to know that somebody is in Macy's this afternoon buying a big screen TV with my credit and I need to know it while they're in the store. So I want a monitoring service that alerts me in real- time, immediately, someone's attempting to get credit in my name.

VELSHI: But even if it's 24 hours, four days, or three months, according to your book, that's a lot faster than most people realize they have been victims.

ABAGNALE: Most people never realize they have been victims because they really don't check their credit. And ironically, there are a lot of people who work with people, who maybe that individual can't get credit, they have a bankruptcy, they a judgment, a tax lien, so they know, that Bob they work with has great credit so they become Bob to buy a car. Bob has no idea they're using their credit to buy the car.

VELSHI: They don't actually steal anything from Bob. Their not using his credit card.

ABAGNALE: They're taking Bob's information, applying for the car in Bob's name. Bob never knows it. And, ironically, Bob probably never checks his credit, but let's say he does. Then Bob says to a friend, I went down, checked my credit said Ford Motor Company, paid as agreed $428, but I don't have a car. What did you tell the credit bureau? Well, nothing, because it kind of looked good on my credit. It upped my scores. I thought it was a mistake, it erred in my favor. No, somebody's using your credit, to go out to buy that car.

VELSHI: Want to ask you one question about credit cards versus debit cards. To a lot of people, they're kind of the same thing. They're a plastic card that means you don't have to pay cash, but there is a difference.

ABAGNALE: Big difference because when you use a debit card your using your money everyday. You're exposing your money. So, ask yourself this simple question. If you got your statement your debit card and there was an $800 charge you didn't make, you would have to go back to your bank and convince them to put the $800 back in your account. That could take 30 days, 60 days, 90 days.

But if it was a credit card statement, you would just say to the credit card company, I didn't make the $800 charge, so when I remit the amount, I'm going to remove the $800 and you can send me an affidavit form to sign. But I'm not paying the $800.

Again, you're only exposing their money. You're not taking your money. It makes common sense to me. Why should I put my money at risk if I can put the credit card company's money at risk?

VELSHI: Last question, life more fun on this side, or more fun on the other side?

ABAGNALE: It's just as challenging chasing criminals as it is being the criminal. So, I find it just as much fun and just as challenging to do what I do today.

(END VIDEOTAPE)

VELSHI: All right, a few key tips from him.

ROMANS: Right.

VELSHI: Use a shredder. Don't use checks. Don't use debit cards. But the thing that I thought is interesting is he says when you think you're a victim of identity theft, you've got to file a police report.

ROMANS: You have to file a police report. And you're going to find that in some local communities they don't want to take -- they don't want to deal with this kind of crime. And they might not even have a form for it.

The FTC has something on its website that can you print out, that you can hand to the police department and say, no, no, you have to take my complaint. And if they won't, then you ask to file a miscellaneous incident report instead. The FTC says it's very, very clear, you've got to get a police report and don't let somebody tell you they won't take a complaint. You've got to get one. VELSHI: FTC.gov, it has all sorts of information if you think you've been a victim, or want to defend against becoming one.

ROMANS: All right, up next, on IN THE MONEY, how some big credit card firms are pushing the retailers to ramp up security for your information.

(COMMERCIAL BREAK)

ROMANS: OK, so if someone steals your identity, one of the first places you might see the evidence is on your credit report.

VELSHI: But to spot the problem and to clean up the mess, you need to know how the credit agencies operate. For advice on that, we turn to Evan Hendricks, he's the author "Credit Scores & Credit Reports: How The System Really Works, And What You Can Do". He's also the editor and publisher of "Privacy Times" newsletter.

Evan, the credit score, your credit report, these are the official record of everything that's happened with you and credit?

EVAN HENDRICKS, AUTHOR, "CREDIT SCORES & CREDIT REPORTS": Yeah, the credit report has your credit history. It shows what payments you have, do you have a mortgage, auto loan, credit cards, the works. It shows your name, address, your Social and your date of birth. And it shows who's pulled your credit and why.

ROMANS: So the biggest part of your credit score is your payment history. So, this is the important part for someone who might have lost their identity to a thief. If you can see that payment history, late payments on credit cards, and the like, you can start to see something's going wrong.

HENDRICKS: Yeah, the 35 percent of your credit score is that payment history. And the identity -- victims of identity theft are hit very hard because what lowers your score the fastest, and the hardest, is a recent negative item showing your 90 days' late or 120 days late. And that's exactly what happens because the thief has taken out credit in your name and then all those unpaid charges get dumped onto your credit report.

ROMANS: We see 10 percent there, is inquiries, credit inquiries. That is sort of like, if you live in New York and someone is inquiring about credit in San Antonio at a Best Buy, you know there's something wrong.

HENDRICKS: That's right. That's your best early warning sign is when you look at those inquiries showing someone out of town has pulled your credit, that's a red flag that means you have to go into action immediately to try and find out what's up.

VELSHI: We spoke to Frank Abagnale who was saying some people find things on their credit report that they didn't do, a car that they didn't buy. But the payment was made and so they don't worry about it. If anything is on your credit report, even if it's not negative, that's reason to look into it? HENDRICKS: That's true. And that goes for identification information, too. Because a lot of times identity thieves will use a different address to have the goods delivered to that different address. But if it's reported by the creditors to the credit bureaus, they'll put that on as your current address, so keep an eye out for that as well.

ROMANS: And then how do I check my credit? What do I do?

HENDRICKS: You either use your rights to a free credit report and you go through the federally created website, annualcreditreport.com, and that way you can get one free report a year from each of the big three.

Then you have rights to other free reports if you think you're a victim of identity theft, they'll get another free report for that. If you're in certain states, contact each of the three credit bureaus, directly, or you can pay for a monitoring service and try and get the real-time alerts that Frank was talking about.

VELSHI: Yes, Frank says you need to have it real-timed because most folks don't find out, in fact, most people I know who tell me they have been victims of identity theft find out when they go for a mortgage or car loan or some sort of a credit card.

HENDRICKS: That's usually the way it happens. Or you get a call from a debt collector saying, you owe this loan. And you say, I don't owe it. It's a very nasty experience.

Yeah, the credit report is at the epicenter of identity theft because it enables the crime by allowing the thief to get credit in your name, and then it becomes the main source of damage. You really want, if you're a penny pincher, you can use your free report rights and do it. If money's no object, then apply for a good monitoring service, subscribe to that, and get on top of your credit.

ROMANS: All right, Evan Hendricks, thank you so much for joining us. "Credit Scores & Credit Reports: How The System Really Works and What You Can Do".

Thank you, Evan.

VELSHI: Identity theft is something you can do something about and it can happen to you, not because you were careless, but because maybe a store wasn't careful enough after you bought something there.

ROMANS: All it takes is maybe a pair of shoes to send you down the drain. Jennifer Westhoven joins us now to look at what some retailers have and haven't done to protect their customers.

JENNIFER WESTHOVEN, CNN FINANCIAL CORRESPONDENT: And it was exactly shoes that did it for people who were at Designer Shoe Warehouse, or people who bought at T.J. Max or Polo Ralph Lauren. These are all just some of the companies that got involved with this.

What's happening now is that -- we know what happened, you know, thieves were able to hack in. What's happening now is that VISA and MasterCard -- the two big gorillas on the scene here -- are turning to all these retailers and saying, you've got to do something. They came up with an industry standard. It's called PCI, Payment Card Industry. They want firewalls, they want encryption, they want a lot.

It's really expensive. But they're taking a look. They're giving these companies a long time. And they're using the carrot and the stick.

So MasterCard has big fines that it will give them. VISA has $20 million in rewards that they say they'll divvy up for everybody who meets these deadlines and is ready by August, this summer.

VELSHI: Because there's been no incentive until now. The credit card -- if you buy something on a credit card, the credit card company's responsible at least for the money, it doesn't absolve you of the hassle of redesigning your life.

ROMANS: Which is why you use a credit card, and not a debit card.

VELSHI: Right.

ROMANS: Because debit card, you are on the hook. A credit card, the credit card company is on the hook.

WESTHOVEN: Right, so these companies had no responsibility. Now, even now, with these big companies, they don't want their names in the news. You think, T.J. Max wants their name in the news for something.

ROMANS: Yeah, a PR nightmare.

WESTHOVEN: Exactly. But even though it's so expensive for them, this kind of scared me a little bit. But for the August deadline only one-third of big companies are estimated to be compliant with this new standard. So you can imagine, it's a lot worse for the small companies.

ROMANS: You know what, really, I couldn't believe about this, some of the credit card information that's being captured when you go to a retailer includes PIN information, includes -- there's a way --

VELSHI: They capture all sorts of things.

ROMANS: I couldn't believe driver's license gets into some of these things.

WESTHOVEN: It's crazy what can get out there.

VELSHI: I would definitely be one of these people who would make a shopping decision based on knowing that the place I'm shopping tries to keep my information little safer.

WESTHOVEN: Then I really want to tell you this, so you don't punish the small retailer. Because they are seen as a little bit last on the security here. But Verisign says that your online transactions are so much more vulnerable to any kind of a fraud than anything that is happening to retailers. They say 3 percent of all online transactions could have some fraud attached to them.

VELSHI: Wow.

ROMANS: Good to know, good to know.

Jennifer Westhoven. Thank you, Jennifer, for all that valuable information about identity theft.

Up next, on IN THE MONEY, the fear and hassle of I.D. theft, straight from a victim. And later, see why using your pet's name as an online password could be catnip to a crook.

(COMMERCIAL BREAK)

(NEWSBREAK)

VELSHI: All right, there's really no way to understand how serious a crime identity theft is, like I don't often take it seriously, until you actually hear from folks who have been hurt by it.

ROMANS: And "hurt" is the operative word there. We thought we'd show you a unique perspective from one victim who became and I.D. theft victim's advocate. Her name is Mari Frank and she is an attorney in Orange County, California, who now specializes in helping prevent and fight I.D. theft.

Mari, thanks for joining us. Your I.D. theft nightmare, you say, took longer than a year, $10,000 of your own money, 500 hours to fix it. It sounds like devastating.

MARI FRANK, FMR. I.D. THEFT VICTIM: It was really devastating. And it happened in 1996 and to be honest with you, the victims that I've been helping since that time are still experiencing the same kind of drama and nightmare that I went through.

Because a lot of the things that have the not changed. Yes, we've had some improved laws, but the reality is, is that it is a growing crime. In fact, last year, we find out from the Gardner study there were 15 million new victims of identity theft last year.

VELSHI: But they range. The degree to which you're victimized ranges, right? Do you count the fact that a bunch of people who have my information have lost those lists, or are you talking about what happened to you where someone is either being you or taken money out in your name, or somehow compromising your ability to go on with your life?

FRANK: That's a very good point. There is the lowest form, or easiest form to fix, is credit card fraud. In fact, I tell people you should use a credit card because you are absolutely zero liability, if you tell the credit card companies within 60 days of receiving your statement.

So, if someone uses your credit card, you are not going to be responsible. So that's about the safest thing to use.

But if someone gets your checking account number and siphons some money out of your account, you're not as well protected. That's the Electronic Funds Transfer Act. You have to beg for your money back. Same thing with using a debit card.

But you're right, getting your Social Security number is truly the key to the kingdom of identity theft. From that, not only can someone get credit card, credit lines, but they can also get health care in your name. They can get a job in your name and then you get the IRS bill. They can commit crimes in your name.

Or, of course, you remember the 9/11 terrorists, over half of them had committed total identity takeover.

ROMANS: Let's talk about --

FRANK: There are myriad types of things that can happen to you besides just getting your credit cards. That is probably the least problem ever. In fact, I use credit cards everywhere and I don't use checks. I don't use a debit card ever.

ROMANS: That's very good advice for people. Let me ask you about some of the war stories then that you have. You are talking to these people. You're advising people, you're an advocate for them. What are some of the war stories?

FRANK: All right. Some of the worst things that can happen nowadays, one of the things that people haven't talked about much is cyber identity theft. Claire Miller, who was a woman who called me from New York City, found out that someone had gone online into one of these dating-type ISPs and they had put up a whole invitation, so to speak, for men to come, and come to her apartment and go out with her, and call her. And this was terrifying for her because that was identity theft and it was so insidious because you have no idea who it is.

Another terrible type of crime is, I had a gentleman who called me from New Jersey who found out that he could not file his own IRS tax return. Why?

ROMANS: Why?

VELSHI: Someone else had done it?

FRANK: Someone else had already gotten a refund in another state. This was a well-respected doctor. Also, I had a friend who you may have seen him on TV, Eric Drew, who was in the hospital. He had leukemia, and he was literally dying and his lab tech took his identity, like a vulture. And he went through not only the hell of trying to get his life back, but also, trying to survive his illness. So that was really terrible.

Another woman that I've been helping was the victim of identity theft when someone committed crimes in her name, and she was convicted of the crime. Another gentleman that I helped for a whole year to get his life back, someone had not only committed financial identity theft, but they had gotten all sorts of problems with the DMV, DUIs, et cetera, and he couldn't get a license. He couldn't get insurance. And then, that person committed crimes in his name. And so he was a victim of criminal identity theft and couldn't get a job.

ROMANS: Mari Frank, thank you so much. This is why, this hour of "How To Protect Yourself" is so important because she's outlining some really horrific stories about identity theft, and what you can do to make sure that doesn't happen to you -- or after it happens how to you, to fix it.

VELSHI: One of the things that's useful, you're going to be so distraught when it does happen. When you find out that it does happen that it's worth doing some of the research ahead of time and knowing exactly where you go in case there's a problem.

We're going to take a break. Just ahead on IN THE MONEY, don't put a dime-store lock on the door to all your valuables. Learn how to better build an online password.

See how much you know about identity theft. Stick around for our pop quiz.

(COMMERCIAL BREAK)

VELSHI: All right, I don't know about you, I'm pretty sure that my passwords are not very good.

ROMANS: I'm pretty sure mine are not very good, too. There are so many I can't even remember, sometimes I'm just guessing -- just on line -- guessing.

VELSHI: Just randomly what you might think you might have put in?

ROMANS: One time I got into some woman's AMEX card because she had the same lame password that I had. If you think that you have pretty good passwords for all those many computer accounts. You just don't. Think again.

VELSHI: Lance Ulanoff is an editor at "PC" magazine. He has some pointers for us on creating the perfect password. I don't know what pointers you can give me, Lance, because I'm done. This hard drive is totally full. I can't take any more passwords.

LANCE ULANOFF, EDITOR, "PC" MAGAZINE: The list of commonly used passwords we have is such an indication of how difficult it is for people to manage them. Our friends at In Technology gave us some, like, "password", "one, two, three, four, five, six", "let me in", "monkey".

ROMANS: Monkey?

VELSHI: These are common passwords people use?

ULANOFF: These are common. This is what people are using because they just can't memorize all of them, but the fact of the matter is, if you don't have good passwords, you leave yourself open to some pretty serious trouble.

We manage our bank accounts, we manage our office documents. We manage our lives electronically. And we do it with an electronic key. So, you need longer passwords. You need something that's at least eight characters long, 12 better, even longer if you can.

ROMANS: Twelve characters?

ULANOFF: You do. You also need to stop using common characters. We talk about alphanumeric. Right?

ROMANS: Right.

ULANOFF: You know, numbers or letters. What if you substituted every "A" for the pound sign?

VELSHI: Can you commonly do that? Some places don't let you, right?

ULANOFF: Absolutely. Absolutely, can you do that. Most places will accept these characters. So, if you do sort of a substitution thing, that can help you get around it. You just -- you have to make sure that it's not something that's tied to anything that is really about your personal information. Are you using your street? So many people use part of their home address, or they use their maiden name. They use things that --

VELSHI: Like a phone number.

ULANOFF: Phone number. They use things that people think no one can figure out.

ROMANS: But there are so many different passwords. You can't use the same one for all of them, right? You need a different password for --

ULANOFF: In fact, you absolutely should not, that is, now you really walking around with a single digital key to your life.

ROMANS: But then I want to write them all down on a piece of paper and someone can steal my purse, and it's going to be worse.

VELSHI: I don't know what world you guys are living. Twelve character password, that has little pound signs? I mean, because is there at least some way to think about ho I might do this. Because I'm going to be like Christine. I'll design this fantastic password and I will never know how to access it again.

ULANOFF: Well, there are ways that do some. When I talked about substitution, you can do things like using a word that you would know, but if you substitute different letters for symbols, you know, like the pound sign. You will know that substitution and you know that phrase or that word, a pass phrase. You love a particular song, or you've come across a song with a phrase that you really like. Some websites, some services, will allow you to do an entire phrase as a password. That's something you can remember, but someone else can't.

But again, you can't use that same phrase over and over again. For people like you and me, everybody, it is difficult to remember all those passwords. So something like roboform, which is an application that actually manages the passwords for you, and does something where can you put a single password then to access all that, which can you change. It's also, by the way, encrypted. Everything is encrypted.

And I'll tell you why that's important. All right, you're on your computer, you're typing in your password. Say you've come up with a really good password. Well, you can't remember it all the time, but your browser can for you. Congratulations, you go online and go to your favorite website, put in your user nature and pops in with your password and hit enter and go.

Well, the problem is if somebody puts spy wear on your system, they can also get to that information. If you go to a website that drops spyware onto your system, guess what else can it do, it can watch your key strokes. So now the best password in the world has just been grabbed by somebody waiting for it.

There are so many ways people can get at you. So, it is a multi- pronged effort to protect yourself. So, it's not just good passwords, it's making sure no one can access the good ones you created.

ROMANS: You say change them every month at least. All of them?

ULANOFF: Look, if you -- if we all changed it once every three months, that would be a huge deal. Because, honestly, people aren't changing them at all. If they create one, so they create one, maybe they change it once a year. Most corporations are now forcing people to change it once every month, or so.

ROMANS: Well, now I'm scared to death, Lance Ulanoff. I'm going to change all of my --

VELSHI: An excellent smart guy, from an excellent magazine. It's going to take me some time to digest this, but just so you remember what he said: Change your passwords often, long passwords, substitute letters and numbers and symbols.

Whew. I'm going to give I was few minutes to take a break.

Coming up next, what one man says the government should be doing to protect you.

(COMMERCIAL BREAK)

ROMANS: So, with rampant I.D. theft going on out there, you'd think everyone from your local cops to the feds in Washington would be working around the clock to crack down on this crime, right? VELSHI: and then, you'd be wrong. Because everything from the efforts to catch I.D. thieves to the jail time they receive doesn't eliminate this problem. Jay Foley is the executive director of the Identity Theft Resource Center in San Diego.

Jay, we talked to Frank Abagnale earlier, who said it's probably easier to get away with identity theft today than it was when he was doing it, because there's virtually no deterrent.

JAY FOLEY, IDENTITY THEFT RESOURCE CENTER: That's very true. When Frank was committing his crimes, he actually had to be physically present to do it. Now, I can do it through the Internet without him ever being -- without the person I'm committing the crime against ever seeing me.

ROMANS: You think about one in 700 I.D. thieves get caught and that maybe they're caught four or five times before they ever see the inside of a jail cell.

FOLEY: That, unfortunately, is very true. We're seeing more and more cases where the identity crime is committed, it's being prosecuted, while it's being prosecuted, the imposter is committing another identity crime. The individual who stole my wife's identity actually committed enough identity theft while she was on probation for the judge to revoke her prohibition and send her to prison for three years.

VELSHI: Jay, one of the things that you, and others, always recommend is something to either govern yourself about how much -- how many times you give away your Social Security number, or something that gets the government to remedy that.

Maybe there should be a law when somebody asks for your number that next to it online or the page, it tells you whether they're legally entitled to get that.

FOLEY: I'm not so sure about a law. I think it's more a common sense reason. What we suggest people do is ask four questions: Why do you need it? Who gets access to it? How do you protect it? And when you're done with it, how will you dispose of it?

If you don't get a good answer to any one of those four questions, walk away from them, because they're obviously not bright enough to take care of your personal information.

ROMANS: Can you just say, Jay, listen, you want my Social Security number, I'm just not going to give it to you. I know you don't need it. I'm not going to give it to you. You can give me the business or do the business some other way. Can you do that?

FOLEY: In a lot of cases you can. There are certain restrictions to that. If you're opening up a bank account, if you're doing something that involves taxes, or opening a line of credit, they're going to want your information solely because they want to check out your credit report. That's a legitimate reason.

However, a gym membership, a -- uh, gee, just because it's on the form type answer, that's not legitimate, and it's not necessary.

VELSHI: All right, Jay, people have to be more careful. Thank you for joining us.

FOLEY: You're more than welcome.

VELSHI: Coming up next, find out if you are at risk for identity theft. Al Wastler has a tell-all quiz just ahead. Christine and I are going to take it. But first, Randi Kaye has "Life After Work."

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice over): Mike Kenney looks like your typical retiree, spending his days on the golf course, trying to improve his game. But typically, he's not there to get lessons from the golf pro. He's there to recruit him.

MIKE KENNEY, CAREER SERVICES CONSULTANT, PGA: My job really is almost in two pieces. The first piece is, I work with country clubs, resorts that are in need of a PGA professional. The back half is I work with PGA professionals with their business skills, help them to prepare better cover letters, resumes, negotiate contracts, anything that I can to help them compete effectively for a position.

KAYE: Kenney spent 30 years working at IBM as a sales and human resources exec before retiring from Big Blue in 1997.

KENNEY: So, as I thought about retirement, this is kind of what I get a big kick out of, is helping people, working with the PGA of America in this capacity allows me to work with PGA professionals with their careers, and that's very gratifying.

KAYE: Kenney says he's placed over 300 golf pros at courses around the country including Bill Pantley (ph), a suburban Chicago's Glenn Flora (ph) Country Club.

KENNEY: In a way, you could think of it as making a good marriage work. If we can satisfy the needs of the employer, it's good for the PGA professional. It's good for the employer, it's good for the game of golf.

KAYE: But the real question is, has helping golf pros helped his golf score?

KENNEY: Yeah, I would definitely say it's improved, but that may speak to the amount of improvement that was available.

KAYE: Randi Kaye, CNN.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

VELSHI: All right, in case you think you've learned all about identity theft and how to protect yourself in this show, we're not done. Grab a pen and some paper. ROMANS: CNNmoney.com Managing Editor Allen Wastler joins us now with a little quiz.

ALLEN WASTLER, CNNMONEY.COM: A little quiz, courtesy of privacyrights.org. That's a web site, it's a non-profit. They have all sorts of good stuff.

Let us go. Ready?

VELSHI: Ready?

ROMANS: Yes.

VELSHI: We've not cheated. I haven't looked at this.

WASTLER: Do you receive several offers for pre-approved credit cards each week? Do you?

It's a two-part question. OK, yes, that's five points. This is like golf. You want a low scored.

ROMANS: Five points. Oh, shoot.

WASTLER: Do you throw them away and not shred those offers.

ROMANS: I throw them away.

WASTLER: If you do -- but do you shred them? Tear them up?

ROMANS: No.

WASTLER: No?

VELSHI: I do half and half.

WASTLER: Add another five points to your score. Then add two and a half.

ROMANS: I don't want those people to me those things. Why do I have to have the responsibility to shred them up?

WASTLER: You know that's the whole problem with our laws these days, you've got to go -- you've got to opt out.

VELSHI: That's our problem. Oh, I can opt out of those?

WASTLER: Yes, you know what, because I was studying up for the quiz, I went to the privacyrights.org website and everything, they told me you can opt out and they even gave you this nice little Internet address. You can go do it with the credit bureaus to opt out. But you have got to go opt out.

All right. Number two, all right? Do you carry your Social Security card in your wallet?

ROMANS: No. VELSHI: Yeah, I do.

WASTLER: Oh, 10 points, Ali.

VELSHI: Ten points!?

WASTLER: Ten points, dude. That was a big -- oh, dang, you're getting dinged, dude.

All right, number three, do you use your Social Security number? Do you have to use your Social Security number as your employee I.D., or as a student I.D.?

ROMANS: No, they just changed that.

WASTLER: They changed it here but --

VELSHI: They changed it here, but --

ROMANS: No, no, it's your employee I.D. number now.

WASTLER: It used to be when we had to do something with HR or something, you had to plug in --

ROMANS: Another I.D. number that's impossible to remember.

WASTLER: OK, so if you have to, you have to add five points.

VELSHI: I don't have to, Christine says.

WASTLER: OK. We don't have to anymore because we the employees moves up.

Finally, number four, when was the last time you ordered a copy of your credit report?

ROMANS: Never.

WASTLER: Remember, there's three major bureaus.

VELSHI: I did like six months ago.

WASTLER: You have to do it in the last two years, so you're OK.

Never, Christine?

ROMANS: I haven't.

WASTLER: Oh, Christine, you just whacked for 20 big points.

VELSHI: But this whole show has been about -- that's like the beginning point.

ROMANS: And now I'm empowered. This show has empowered me to go get my --.

WASTLER: So, add it all together.

ROMANS: I got 30.

WASTLER: Oh, dear, dear, dear.

ROMANS: That's bad?

VELSHI: 17.5.

WASTLER: That's bad. 17 and a half, that's -- ideally, remember to be, you can't be totally safe but to be safest, you should be zero.

ROMANS: OK, that makes sense.

VELSHI: Those are things that I can deal with.

WASTLER: So, knock down those points right there.

VELSHI: You could knock 20 points right off.

WASTLER: In fact, in studying up for this little segment here on IN THE MONEY, I went and knocked it out with all the pre-approved credit stuff, I didn't know you could do that. And I just found out you could do that.

VELSHI: It seems like the easiest way on the planet to lose your identity, because these people send you this thing, you're approved. You pretty much fill in a few things. Anyone can figure out.

WASTLER: The checks, they send you the checks and you just go and write them out.

ROMANS: Where do you get this quiz? I need to know where can you get this quiz for other people.

WASTLER: Privacyrights.org. You can go there. They have it all. And they have suggestions on what to do to sort of tighten up your security. Go check it out. You can also go to CNNmoney.com, because, of course, we have all sorts of stuff about I.D. theft. So, check it all out.

ROMANS: All right, Allen Wastler.

VELSHI: Do that and you can opt out of those crazy offers.

ROMANS: OK, thanks for joining us for this special edition of IN THE MONEY: "Protecting Your identity."

Make sure you catch Ali every weekday morning on AMERICAN MORNING.

VELSHI: And later today, 6 p.m. Eastern, check out Christine on "Lou Dobbs Weekend".

ROMANS: We'll see you back here next weekend, Saturday at 1, Sunday at 3. See you then. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com.

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