Investigating Fake License Fraud with Guest Tony Poole

Fake IDs are everywhere. Go to any college and 60% of students have or have had a fake ID. Is the danger just a few drinks and a fender bender? Add in fatal accidents, fugitives that want to hide in plain sight, drug dealers, and the undocumented. Add in the financial cost to companies that are duped out of hundreds of millions by those that have stolen retail items and then return it under a false ID, or purchased vehicles with a fake ID with the intent of never returning the vehicle or making a payment. Tony Poole, the President of the Document Security Alliance, will outline these issues and give us an in-depth analysis of the national impact.

Transcript

Narrator: Hello and welcome to the FraudKast, brought to you by LexisNexis Risk Solutions. The series that shines a light on fraud and theft across numerous government benefit programs. FraudKast is hosted by Larry Benson, Director of Strategic Alliances for LexisNexis Risk Solutions Government division, and the creator and principal author for the Fraud of the Day website. And now, here’s Larry with today’s guest.

Larry Benson: Welcome to the FraudKast. I'm Larry Benson, your host, and with me today is Tony Poole, the president of the Document Security Alliance. And Tony is going to help us understand what's going on with fake IDs. Tony, welcome. 

Tony Poole: Larry, thank you very much. I'm delighted to be here and looking forward to our discussion.

Larry: So Tony, let's start off by giving everyone a brief on what the Document Security Alliance is all about.

Tony: Absolutely. So I need to reel back about 20 years to 9/11, actually post 9/11. There were a group of individuals from government agencies and from industry that we're meeting at a, actually was an [unknown] meeting in Canada. Thrust of the discussion was that the folks from government needed to better understand the fingerprints that were left by printers that were used to counterfeit driver’s licenses to gain access to the airlines during 9/11. That precipitated a series of meetings at the behest of the United States Secret Service to really get to the bottom of these issues that the government was seeking to identify. But through those discussions, it became very clear that the interaction that was being had needed to continue and that there were other issues that needed to be addressed as a collective group. Thereby DSA was formed, and what was a relatively small group of people at that time has since grown into an organization that is now made up of just over 100 organizational members from government, industry, and academia and well more than 300 individuals from those groups that have become what we now call DSA. Then those individuals are the real engine behind the organization and are involved in our deliberations, our continuing deliberations as we look at the issues of fake IDs and what to do about it.

Larry: So when we look at fake IDs, obviously everyone thinks of, you know, kids in college etcetera. I know goes far beyond that. Do we have any ideas to the volumes of fake IDs that are entering the country or being produced even here? And can you expand on that?

Tony: Well, we have a very good idea, Larry, but we certainly don't know it all. What we've been able to do is some in depth calculation about the number of individuals that fall into an age category which is likely to acquire a fake ID. And we understand based upon the last US Census that there are roughly 26 million people that fall into the age category of 15 to 20, which is sort of the target age category for underage drinking. We also understand, based upon information from the Alcohol, Tobacco, Tax and Trade Bureau, which is part of the US Department of Treasury, that roughly 60% of those individuals possess some form of a false ID. What's a false ID? Well, it could be a, a look alike from an older brother or sister, it could be a hand me down, or it could be an actual counterfeit driver’s license. One that's obtained primarily through online websites. From this information, we also understand that roughly 25 to 27% of these individuals that possess a false ID actually possess a counterfeit, and this is a counterfeit that they have purchased online. And these online websites typically deliver two fake IDs, as, it's a two for one if you will. So that for, whatever it is, 90 or $100, you get a primary and you get a backup in case the primary has been seized in your quest to use it. So what that means is that we're looking at a little over 8,000,000 fake IDs coming into the United States from these online websites. What this doesn't calculate though, Larry, is the number of fake IDs that are actually manufactured here in the US. Although I would venture to say that most of the underage stuff is coming from overseas, but it also doesn't calculate what might be purchased over the dark net and licenses that are used for far more nefarious purposes.

Larry: What are the risks that these kids run? I'm just going to talk about college students here, or, you know, high school students. What risk do they run by exposing their own personal information to these sites?

Tony: Well, Larry, that's something that, it's a very, very important issue and something that we at DSA are trying to get people to understand. But simply put, what is happening is that these individuals are putting all or part of their personal information into a website to get one of these fake IDs. And I will say that simply a photograph is personal information, an address, probably your home address is personal information. But any information that these individuals put in there is PII, and these organizations, primarily in China, are not only making money off the sale of these licenses, but they have a much longer game that they're playing and that is identity theft. In New York State, for example, there was information that was recently shared that 50% of the individuals that had applied for a fake ID had their identity stolen within a year. I mean, that is just remarkable and people just don't understand that this is a very dangerous world that we're playing in today, and we don't know what the long game here is that these organizations are playing. But you may have a fake ID and 10 years from now something happens because they're holding on to your information until you become something of note. 

Larry: Tony, I mean, let's go a little beyond this and let's look at the ramifications. If I get your personal identifiable information, then I go sell it off to somebody else with a fraudulent license. Why wouldn't I do that 10, 15, 20 times and just circulate? There could be 10 or 15 people out there running around with a license that has all your information on it.

Tony: Absolutely, absolutely. I mean, we are just scratching the surface here, Larry. This is an extremely dangerous situation that I don't think any of us really, truly understand the magnitude of. But as you start to sort of unpeel the onion, it is an extremely scary situation that people need to take very, very seriously.

Larry: There was one case that I was reading about where an individual's identity was taken. Fraudulent license was made up. The person with that fraudulent license actually got in a serious bar brawl, and they ended up being able to name the person and they were using the name of the person that had their identity stolen. Now they have law enforcement trying to chase this poor innocent person down because his identity was being used by someone that had a fake license. 

Tony: Right, exactly. I mean, it's an incredible, tangled web that becomes more and more complicated. As I said earlier, as you peel this onion. 

Larry: So who are the organizations, the people that are doing this? Is this over in China? Is it Vietnam? Is it here in the US? Is it individuals? Is it organized crime? Can you put a wrap around it and give us an idea of who are the really bad actors?

Tony: It's really hard to say. I think it's a fair assessment that some of these organizations are government sponsored. It's a fair assessment to say that a number or most of these organizations come from China, but I'm not sure we truly know. There was an initiative a number of years ago. Everybody's heard of the website ID Cheat, and there was an initiative by U.S. Congress to Shut ID Cheat down and they were successful. But if you remember the old carnival game, whack-a-mole, you know, you shut one website down and two more pop up, and that's what's going on here is that the moles are sticking their heads out of the sand as people tried to shut them down, but they are definitely coming from nefarious organizations in Asia.

Larry: Now let's start taking students out of the picture. The other players that I would assume we're seeing fakes coming into the country for. You've got fugitives on the run from law enforcement. They're going to be interested in fake IDs. You've got the undocumented that have come into the country, and they want to stay here. They're in a state that does not issue a license out to undocumented individuals. They're going to be looking for it. And of course there's drug dealers because they want to try and stay below the radar, so they're going to have a fake ID created in someone else's name. Are there other areas that you're seeing that fake IDs are being used for?

Tony: Well, you know something, that's a great question. And an area that I was unfamiliar with until quite recently is what's called returned goods fraud. And as you dig into this, this is where goods are stolen from a store and they are returned to that store using a fake ID. And since they don't have a receipt, they're either given a store credit or cash, or, I don't know what the recompense is, but nonetheless, the fake ID is used to facilitate the return of goods that were actually owned by the store to begin with. So, and this is something that in the US, is now a $10 billion a year problem. So very, very significant and fake IDs are a part of that. Check and bank fraud is something else that fake IDs are used for. You know that's, you know, more than a $4 billion problem a year. Identity fraud or identity theft is a $13 billion a year problem. And you mentioned underage drinking, I mean, that's over a $60 billion problem. All these, well, let’s not forget counterterrorism. Many people don't know that the major terrorist events that have occurred over the last 20 years were precipitated by the use of a fake ID, whether it was to board an airline or rent a truck. This has been going on for a long time. If you boil all these expenses that are born by the, in the United States, it's $250 billion a year. Now I can't tell you that counterfeit licenses is a 100% contributing factor to that $250 billion, in fact it's not, but it is a contributing factor and to say it's 10%, 100%, 10% contributing factor, that's $100 a year for every adult in the United States. I mean, for some people, that's a lot of money. I mean, for anybody, that's a lot of money.

Larry: That's real money when you add it up.

Tony: Absolutely, absolutely.

Larry: Now, how is law enforcement seeing these entering the country? Is this being shipped in in packages? Is this being air freighted in? Is it coming in by ship? What have they seen?

Tony: Yes, yes and yes. It's coming in at all different ways. Often it comes in in a large package, basically, to go to an intermediary here in the US who does the distribution. It can come in in the box, you know, in the sole of sneakers, there are very creative ways that these things are coming in. But you see, and it's all over the news. The Customs and Border protection will interdict a shipment and discover thousands and thousands of fake IDs. It's really remarkable.

Larry: And let's talk a little bit about the quality of the fakes that are coming in. I mean, traditionally they've made licenses. Obviously, they put some holograms on there and they put a barcode on the back, etcetera. Have the criminals been able to duplicate these types of security features, and how often are states adding in new security features?

Tony: Well, I can tell you, Larry, that the fake IDs that I have seen in some cases are incredibly good. In fact, in some cases they are better than the actual licenses that are issued here in the US. Every state has different security features that they use to protect their licenses. Some security features are more effective than others. I think in some cases the counterfeiters have figured out how to simulate those security features in a convincing way. In other cases, they're less successful. In fact, there are websites out there that very specifically rate the ease of state issued drivers licenses to counterfeit. So if you are a consumer and you want to order a fake driver's license, you can go to this website and it'll simply tell you well, these are the states that are the easiest to kind of fit, therefore, the counterfeit will be more convincing. It's a really remarkable industry that is very scary.

Larry: I have to assume that there's probably an awful lot of money tied to it. What's the going rate for a fake license these days?

Tony: Well, I think it's around $90 or $100. And if you were to just do some simple math and you multiply, just call it $90, you multiply that by the number of fake licenses that are coming in on an annual basis. So roughly 4 million. You're looking at about $400 million a year in revenue that's going to these counterfeiting organizations.

Larry: Yeah, that’s real money.

Tony: I can assure you that $400 million is far more money than they need to produce those licenses, and that, that excess money, if you will, is being used for far more nefarious purposes.

Larry: So Tony, let me ask the question. Obviously, a fake license is a fake license. That's clear. How do you classify a license that's produced by a DMV worker that has decided to go into business for themselves and is actually issuing licenses out the back door? Is that a fake or do you call that a real license?

Tony: Well, it's a wrongfully issued license. Then that's a whole other problem that you might have greater insights into than I do. But when you have a rogue employee who's issuing legitimate licenses out the back door, that's a real problem, because it's not only a legitimate license issued by a legitimate state, but that gets somebody's information into the state records to make them be more authentic.

Larry: Right, exactly.

Tony: And that, that's a big problem.

Larry: Now, it can go 2 directions. One, the issuing entity that works for the DMV that's doing this illegally could be using your identity or mine, and now all of a sudden somebody's out there with a legitimate license with one of our identities and get us in trouble. Or they could just make up somebody in total, that that person doesn't exist. And if law enforcement wants to try and chase them down, there's no one to really find.

Tony: Right.

Larry: It's almost like a ghost individual.

Tony: Well, it's creating a false identity, but it’s legitimizing a false identity because you are a part of a government system.

Larry: Yeah, so that's another, another huge problem. So what are the ramifications that you get for individuals that you've seen out there that have had their identities taken and utilized by these organizations that are issuing out fakes? So have you seen different crimes created by these individuals? 

Tony: well, when you say ramifications, I mean there are ramifications that span a spectrum. One ramification is you are caught using a fake and so, depending on the jurisdiction in which you're caught, you may receive some sort of a ticket a summons, a fine, a slap on the wrist, I don't know what, but that's at the very lowest level. If you then order a fake and you give your PII in ordering that fake, you could be subject to identity theft, and the costs associated with fighting to get your identity back, and the time. I fortunately don't have firsthand experience with this, but I have colleagues who have, and it's an excruciating process that they have gone through to fight to get their identity back. Then, if you were to use a fake ID to commit a crime, whether it's, you know, stealing through returned good fraud, or some other crime, and you're caught using a fake ID, then the penalties can be much more severe. So it really crosses the whole spectrum of downsides if you will. There's no upsides to getting a fake ID.

Larry: So the lowest level would be you're just caught with a fake ID and you could get a slap on the wrist, but if you've utilized that to commit a crime, then obviously it goes up from there.

Tony: Sure, absolutely.

Larry: And then you mentioned businesses that are being impacted with returned goods, et cetera. Overall cost of society? What's the impact there? You've got citizens that have had their identities stolen. You've got businesses that are being ripped off. You've got fugitives that can run wild. You've got drug dealers that can run wild. It just seems like such a broad spectrum that the overall cost, not just in dollars and cents, but to society at large, is enormous.

Tony: It's staggeringly enormous Larry. You know I mentioned earlier the topics of underage drinking, and counterterrorism, and identity fraud, and check and bank fraud, and return goods fraud, and the calculations that we at DSA have done to determine what the monetary impact is of those. And that's about $250 billion a year. As I said earlier, you can't attribute all that to counterfeit driver’s licenses or fake IDs, but counterfeit driver’s licenses or fake IDs for a major contributing factor to those costs. But, as you said a minute ago, I think we're just scratching the surface, that the costs are much larger. And I don't know that we know how much larger they are, but it's staggering.

Larry: Do you have any suggestions on how to reconcile and solve this problem in any given way?

Tony: Well, I think it starts with education. It's education of the issuing authorities, and it's education of policymakers, and it's education of the consumer. People need to understand what the dangers are in ordering a fake ID. What the dangers are associated with using a fake ID, what the dangers are, or costs are associated with issuing a driver's license which is more easily counterfeit. Because the downstream costs associated with issuing a substandard form of identity are far beyond the costs of what you might incur in improving the security of those documents. So there's no one answer. It's a multi-pronged approach that needs to be embraced by multiple different audiences.

Larry: Has the DSA done any type of outreach to high schools and colleges, just to educate the kids that are coming in, giving thought to getting a fake ID? Because if that's where the majority of this is starting, that might be a way to explain to these kids your identity is likely going to be stolen if you go out and get a fake ID.

Tony: So in fact, a couple years ago, DSA started what we call the Identity Security Campaign, and this was started at the Cincinnati Airport on the monitors that you see around the airport. With basically a public service announcement, or a series of public service announcements, that were designed to attract people's attention as they were walking through the airport. And these were designed for different audiences, primarily underage boys and girls who fall into that 15- to 20-year-old category, their parents, as well as the population in general. These individual posters, if you will, electronic posters, each had a QR code on them that you could scan with your smartphone, and there was a very short informational website that was designed primarily for underage readers, to get them to understand what the dangers were associated with fake IDs.

Larry: Umm-hmm.

Tony: I'd like to say that millions of people have seen this, but that's not the case. But I can tell you that of the individuals that did click on the website, 75% of them read the entire thing, and we know that just based upon the amount of time that each person was on the website. We don't track individual, you know, information about who was reading it. But the other thing about this campaign is it has gradually expanded. It's expanded into universities. It's expanded into local police forces, as well as state police forces, and it's continuing to grow. It's certainly not growing as fast as we'd like it to, because this is something that's, as we said earlier, it's very important that we get the message out. And so we are continuing to work as an organization to increase the number of individuals that have the opportunity to see this campaign. And the universities so far that have adopted it are really targeting those semesters where new kids come on campus. Trying to get them to understand before they get themselves in trouble, that there are downsides and there are significant downsides that they need to be thinking about before they make this investment.

Larry: Sure. At this point, Tony, I think we've covered most of the topic. What have we left out?

Tony: Well, I'll leave you with this, Larry, and that is that everybody needs to be working together to continue to make the importance of this topic known. The important message that we need to leave this podcast with today is that we all need to be working together to continue to let people know why this is such a dangerous activity that's going on, and how we can come up with reasonable solutions to address it. We're not going to solve it 100%, but we can certainly make an impact. And it's really, really important that we, and I say we, industry, government, and academia all be working together to find these solutions and to take on board the importance of addressing the problems that we have today.

Larry: Well, it’s kind of like what you said, Tony, it's all education. We've got to educate the population as to what the risks are. Tony Poole, president of the Document Security Alliance, thank you for your time. We certainly appreciate it.

Tony: My pleasure, Larry. Thank you.

Larry: Have a great day, Bye bye.

Narrator: Thank you for listening to this episode of the FraudKast. If you’re interested in learning more, head over to our website at FraudKast.com for more episodes, transcripts, and social media links. And remember, that’s FraudKast with a K, not a C. And to stay current on what’s occurring in the world of fraud, be sure to check out FraudoftheDay.com.