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Ideas 2003: Identity crisis

Ideas 2003: Identity crisis

Lesson number one: There is no such thing as infallible security. Lesson number two: The bigger the database, the more tempting it is to identity thieves, who much prefer one-stop shopping.

If identity theft isn't already on your radar screen, this headline will put it there: "13,000 Credit Reports Stolen by Hackers." Ford Motor's customer credit reports, containing a treasure trove of identifying information such as Social Security, bank account and credit card numbers, had been lodged in a supposedly secure database at Experian Information Solutions, one of the nation's biggest credit agencies. The hackers simply bypassed security by posing as employees of Ford.

Lesson number one: There is no such thing as infallible security. Lesson number two: The bigger the database, the more tempting it is to identity thieves, who much prefer one-stop shopping.

"CIOs should stop telling their CEOs that technology is the answer," says Bruce Schneier, founder and CTO of Counterpane Internet Security Inc. of Cupertino, Calif., and a nationally recognized authority on security. "CIOs have to accept the fact that all that security just doesn't work; you have to build your systems assuming they will fail."

The trick is to build them to fail robustly so that if one firewall is breached, you have a dozen other precautions in place to blunt the attack. Because attack they will. Identity theft is a mushrooming problem in corporate America, as companies lost almost US$12 billion to online identity theft in 2001, according to the Identity Theft Resource Center, a nonprofit clearinghouse in San Diego. Approximately 750,000 cases of identity theft are reported to authorities every year, center officials say.

The free flow of customer information via the Internet is one reason why identity theft has tripled in the past five years. But so is the huge desire on the part of credit card companies to extend instant credit and then rely on one identifier to authenticate a customer's identity. There is a growing black market in credit card and Social Security numbers, and the push toward authenticating identity with one supposedly unbreachable identifier, like a fingerprint, has the potential to only make matters worse.

"If I steal your password, a credit card company can issue you a new password," says Chris Hoofnagle, legislative counsel for the Electronic Privacy Information Center in Washington, D.C. "But if people are able to lift a latent fingerprint of yours and reproduce it in a mold--and this can be done--you can't be issued a new fingerprint. So how do you prove you are you?"

Schneier agrees. "The reason identity theft is so powerful is that much of our security today is based on your identity," he says. For example, many insurance companies, financial institutions and government agencies (like the Registry of Motor Vehicles) rely primarily on Social Security numbers as identifiers. So if someone knows your Social Security number and a few other facts about you, he can easily steal your identity.

"As long as security relies on identity, then ID theft becomes an effective way of committing fraud," Schneier adds. "And creating stronger IDs [through biometrics] only makes the problem worse."

Likewise, putting all of your customer information in one central database only heightens the chance that identifying information will be stolen. After all, it's much easier to break into a large centralized database than small separate databases. And resourceful thieves will always find a way around the toughest security, as Ford and Experian have learned to their chagrin.

To avoid a similar disaster on their turf, CIOs should insist their company's customer data be kept in separate databases protected by a number of different security measures. And they should push their company to adopt safer business practices that require customers and employees to use a number of different identifiers to gain access to personal data. For retailers, that might mean implementing other business safeguards, such as matching the shipping address with the home address on customers' credit reports. In the meantime, legislation that bans the use of Social Security numbers and other personal identifiers in instant credit e-mails or letters has already been passed in California and is being considered in other states.

"If you had a dozen IDs and they weren't linked together, now that would be difficult to steal," Schneier says. "Decentralize, distribute. There is never one answer to security."

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