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Identity theft: More costly to victims

Wednesday, October 24, 2007

Identity theft may be far more costly to victims than previously believed.

A study released Monday by Utica College's Center for Identify Management and Information Protection (CIMIP) found that the median actual dollar loss for identity theft victims was $31,356.

This figure is based on 470 cases out of 517 where loss data was available to Utica College researchers.

The CIMIP study is significant because it's the first time the U.S. Secret Service has allowed researchers to review its closed case files on identity theft and fraud. It is intended to provide empirical evidence that law enforcement agencies can use to combat identity theft.

A 2007 study by the Javelin Strategy and Research cited an average (not median) fraud amount of $5,720 per victim that year. A 2003 Privacy & American Business survey put the average cost per victim at $740.

One reason for the cost discrepancy between the CIMIP study and past ones may be that the previous cost figures focused on consumer losses.

But the CIMIP study shows that identity theft affects companies as well as individuals: "The findings show that the financial services industry was just as likely to be victimized as an individual," the report states.

"Most studies have focused on the individual victim," explained Gary R. Gordon, executive director of CIMIP and professor of economic crime at Utica College, in a phone interview. "In this case, we're seeing a wider range of victimization.

Because the cases examined by CIMIP were investigated by the Secret Service, the loss amounts involved are likely to be large; the Secret Service simply doesn't get involved in minor scams.

"What we're trying to do here is challenge some of the convention wisdom and provide empirical evidence rather than anecdotal evidence in looking at identity theft crimes," said Gordon.

CIMIP works with corporate, government, and academic institutions to research identity management, information sharing, and data protection. Its corporate partners includeIBM (NYSE: IBM), LexisNexis, TransUnion; its federal partners include U.S. Secret Service, Federal Bureau of Investigation, and the U.S. Marshals Service; and its academic partners include Carnegie Mellon University Software Engineering Institute, Indiana University's Center for Applied Cybersecurity Research, and Syracuse University's CASE Center.

One of the study's most surprising findings is that while the Internet may be helpful for identity thieves, it's not necessary.

"Analysis of the methods employed by the offenders showed that Internet and/or other technological devices were used in approximately half of the cases," the report says. "In some cases, the offenders began with a non-technological act, such as mail theft, to obtain the personal identifying information, but then used devices such as digital cameras, computers, scanners, laminators, and cell phones to produce and distribute fraudulent documents. While the use of the Internet as a criminal tool had a presence, it did not appear to be a necessity for most offenders to reach their goals."

Among the 517 cases analyzed, 102 included the use of the Internet. Nontechnological means of identity theft -- mail theft, mail rerouting, and Dumpster diving -- occurred in 106 cases.

Another unexpected finding is that in half of the identity theft cases analyzed, the crime began in a business. In 274 cases where a point of compromise could be identified, businesses accounted for 50% (137) of the breaches.

"There are a lot of cases where businesses provide the points of compromise," said Gordon.

While about two-thirds of the cases did not involve insiders, one third did. "A third of the cases involved identity theft through employment," said Gordon. "Those numbers we think are significant."

Of the 176 cases where the point of vulnerability was the offender's place of employment, 77 involved the retail industry, more than twice as many as occurred private companies, banks, or government agencies.

The report also suggests that the demographics of identity theft offenders don't conform to the conventional wisdom. "While some of the findings about the offenders may not be surprising, others seem to contradict the image that, in some ways, has been formed by default: that identity thieves are usually white males," the report says. "The results show that identity theft is a crime that minorities are just as apt to commit as whites."

According to the report, "The majority of the offenders were black: 53.8% (467). White offenders accounted for 38.3% (332); 4.8% (42) of the offenders were Hispanic and 3.1% (27) were Asian. The race for 65 of the offenders was not made available."

"We don't have an explanation; we're just reporting on the data set," said Gordon.

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Generation Y

Members of Generation Y -- roughly, the group born between the early 1980s and the late 1990s -- are arriving on the job market armed with up-to-the-minute technology skills, but they're lacking in other areas, such as business communication skills, employers say. Moreover, many are wary of IT as a viable career choice.

Tech lifestyle or tech career?

Certainly, when it comes to considering a career in technology, Generation Y is more jaded than generations past. The number of freshmen pursuing a computer science track has fallen by 70% since 2000, according to the Computing Research Association. The reasons are myriad.

Would-be technologists are turned off by the tech crash of the early '00s, the shift of jobs overseas to outsourcing providers, and an overall perception of IT as a go-nowhere, nuts-and-bolts profession, observers say.

And the up-and-coming generation puts a premium on work/life balance, having seen firsthand the toll working around-the-clock took on its parents. As a result, they tend to shy away from jobs that demand the 40-hour-plus workweeks typical of IT.

This is the group that simultaneously IMs, blogs, surfs the Web and downloads podcasts. In the end, ironically, it might be this extreme comfort with technology that most deters these young people from pursuing IT as a favorable, even desirable, career.

"To another generation, IT was cool because no one else knew much about it," notes Kate Kaiser, associate professor of IT (and one of Lee's instructors) at Marquette. "This generation is so familiar with technology, they see it as an expected part of life" -- and therefore not worthy of consideration as a full-time career.

When she's not teaching, Kaiser is an academic liaison with and charter member of the Society for Information Management (SIM). One of her responsibilities there is to work with other universities, technology companies and IT professionals to try to alter the perceptions today's youth have of technology careers.

Another of Kaiser's responsibilities is to work with other SIM members and peer professors to modify the IT curriculum nationwide. The goal is to reflect the need for up-and-comers to have stronger business, communication and project management skills -- all areas where this latest generation comes up short. "People in IT today have to be more well rounded -- they can't just have technical expertise," Kaiser says.

Web-ready collaborators

Technical proficiency is an area where newbies certainly aren't lacking. While they may not possess the tech skills of old -- expertise in outdated areas like NetWare, Cobol, even ColdFusion programming -- this new generation packs a punch with mastery of things like HTML programming and a complete comfort level with business basics like Microsoft PowerPoint and Excel, not to mention Web 2.0 advances like blogging and social networking.

Today's young workers are far more likely than their older counterparts to try using these new social and Web-based tools to solve old business problems, and they have a strong team orientation, which lends itself to the virtual collaboration so vital for today's global economy.

"By and large, this generation is very fluent with technology and with a networked world," notes James Ware, executive producer at The Work Design Collaborative LLC, a Berkeley, Calif., consortium exploring workplace values and the future of the workforce. "They're comfortable working with people in remote locations, they're comfortable multitasking, and they're not afraid to go looking for stuff. They have a sense of all things possible."

IM-speak in an IT world

Communication and basic math and writing skills, on the other hand, are not Gen Y's strong suit. According to a survey of 100 human resource professionals by outplacement firm Challenger, Gray & Christmas Inc., although only 5% of college graduates overall were judged to be lacking in basic technical skills, more than half of entry-level workers possessed deficient writing skills and 27% were underperforming in critical thinking.

Some managers and academics attribute the skills gap to this generation's proclivity for cell-phone- and instant-messaging-induced "textspeak," regardless of whether it's for business or personal communication.

Other industry watchers view Generation Y's preference for virtual interaction in the digital world as a hindrance to developing face-to-face communications skills, a critical asset for a modern IT career. (See this article for more on what today's managers say are the hottest skills right now.)

"Part of the IT job is to teach others how to use technology, and the patience level of this generation is less than that of other workers," says Stephen Pickett, a longtime IT executive and current chairman of the SIM Foundation, a philanthropic organization dedicated to promoting IT as a career option. "We need to teach them how to talk to a leader -- how to relate to someone who's not as technically savvy as they happen to be. But all of that is learned behavior that can be changed."

Marquette's Kaiser has experienced Gen Y's communication shortcomings firsthand. She says some of her technology students often hand in work that isn't written in complete sentences, and their inclination to give an instantaneous response means they're less interested developing in writing and presentation skills.

"I'm not sure a lot of the technology things kids are doing promote their listening skills -- with IM or even Facebook, it's cryptic one-liners where they respond right away," Kaiser says. "And when you're writing with all this Web 2.0 stuff, no one cares how well you spell a word. It's a very different way of communication."

Chris Dodge is one student who certainly has his tech credentials in line. Thanks to his parents, both of whom worked in the tech sector, Dodge has been exposed to PCs since birth and knows enough to design and launch a blog, produce a podcast, or shoot, edit and post a YouTube video.

Dodge, now a sophomore at Georgetown University majoring in international politics at the School of Foreign Service, doesn't deny that his generation spends hours online in chat rooms or e-mailing and texting. But he takes exception to the suggestion that his generation's communication skills are compromised.

"Five minutes after [students] write their one-line text messages, they go to class and take five pages of notes or go back to their rooms and write 10-page research papers," he says. "I think the world is absolutely valuing speed over quality, but that doesn't mean we're incapable of appropriately expressing ourselves."

Worker Bee 2.0

The Generation Y crowd also has a different take on what it means to be an employee. While their parents may be company loyalists willing to put in long hours or pack up and move for the good of the business, not so for Generation Y.

These young people have seen firsthand the physical and emotional damage that working long hours can have on family life and health, say human resource experts. They also came of age witnessing the trauma of corporate downsizing and the outsourcing of technology-oriented positions to low-cost labor regions like India.

The new generation, therefore, is a lot less willing to bend to corporate politics and policies and has a certain air of entitlement when it comes to employment.

Generation Y, for instance, expects to be handed state-of-the-art technology (read: smart phone, laptop and wireless) as soon as they come on board, and they are less willing to start at the bottom rung and work their way up the corporate ladder.

"Generation Y is interested in wrangling their way through an organization, testing the waters and moving here or there if it so suits them," explains Jeff Alderton, principal for human capital at Deloitte Consulting LLC. "They're eventually going to get where they want to go, but in their way, not in the traditional fashion."

The new generation is also far bolder in asking for entitlements, whether it's a pay raise, training on the company's dime or simply time off. "They ask questions I never would have asked," says Mark Banks, vice president of human resources at Sciele Pharma Inc., an Atlanta-based pharmaceuticals company. "It's not about what they can do for you, but what as a company can you do to develop them."

One of the primary concerns of Generation Y is a flexible schedule and healthy work/life balance. This is a generation raised in the era of 24/7 connectivity, of wireless access and of being able to work wherever and whenever it suits them. The idea of trading in that flexibility for a structured workplace doesn't sit well with them.

Technology, they reason, is the enabler for letting people get their work done independently, without having to be in a certain place for a certain period of time.

"We have different expectations about what a work environment should be like," says Dodge. "I think a lot of us hope the age of the daily commute, the 9-to-5 workday and the cubicle farm are in the past. Certainly, with new technology, there is less of a need for the centralization of work production in an office, so long as the work gets done."

The SIM Foundation's Pickett isn't the only IT executive to say that kind of thinking is much too optimistic, if not downright deluded. Anyone looking to eventually reach a high-level management job in IT or finance -- or nearly any field, for that matter -- needs to be in the office, Pickett says. A lot.

"You can't develop relationships from afar or show leadership from afar. If you want to learn about the business, you pretty much have to be there," Pickett says. "To develop relationships with key executives, you've got to be in front of them. And you can't learn leadership skills unless you're watching how others lead."

Still, smart companies are aware of the misalignment and, where possible, are beginning to implement new policies and procedures to bring their work environments more in line with Generation Y's expectations.

Give 'Em What They Want

That's not to say companies should kowtow to the unreasonable demands of a new generation. Rather, they need to be open to embracing new work styles and finding some sort of middle ground.

"Large organizations that simply try to maintain their way of doing things in a monolithic fashion and which don't listen to and learn from younger folks are going to have problems attracting, retaining and motivating talent," says The Work Design Collaborative's Ware. "Companies have to change a bit."

Sciele Pharma is taking that message to heart. The company, where the average worker is in his mid-20s, equips its employees with state-of-the-art laptops and cell phones and has also implemented a variety of flexible work programs.

For instance, employees can adopt an alternative schedule, if approved by Banks and their managers, where they can work from home one day a week or come in between the hours of 6 a.m. and 9 a.m. and leave as early or late as they want, provided their work is done. Employees work 36.5-hour weeks, the company closes at 4 p.m. on Fridays, and workers are able to leave at noon the day before a holiday.

IT people in particular have the option of working from home. Those who have operational-type responsibilities -- monitoring and troubleshooting systems or doing EDI work, for example -- are encouraged to work at home a day or so a week and are given the equipment to make that happen, says David Bennett, IT director at Sciele Pharma. Those with development jobs are eligible to take advantage of flextime as well.

"Any job that lends itself to routine operations or where there is a need for a lot of solitary time to dig into a problem, [those employees] can work from home as long as it doesn't interfere with any planned meetings," Bennett says. "It creates benefits for the employee and the environment and makes for a better quality of life."

With quantifiable kinds of roles, Sciele can easily measure employees' results and hold them accountable, which in turn helps the company monitor whether its flextime arrangement is working, Bennett explains.

As progressive as Sciele Pharma may be, all of its work/life balance programs have essentially kept it in the hiring game but not necessarily given it an edge. "Employees today come in with these expectations," Banks says. "This has helped us retain our workforce, not attract a new workforce."

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Apple iphone and mac sales

Monday, October 22, 2007

Apple Inc. today announced it had sold 1.1 million iPhones and 2.2 million Macintosh computers in the quarter that ended Sept. 29, with the Mac numbers setting a new record for the company.

Mac sales were up 34% over the same quarter last years, enough to break the previous best by 400,000 machines. Apple sold 817,000 desktop machines and 1.35 million notebooks during July, August and September, a stretch during which Apple ran its usual back-to-school promotion and rolled out a refresh of its iMac desktop lineup.

Apple's data noted that sales of Mac computers had surged 46% in Europe over last year, and 52% in the Asia Pacific region, which includes China but excludes Japan. Although the numbers of systems sold in the latter remained small -- just 155,000 for the three months -- Apple sold nearly half a million machines in Europe, slightly more than the company sold in all its retail stores.

The exchange rate played a part in those sales, said Gottheil, but the weakness of the dollar against other currencies, especially the euro, wasn't the only reason.

Price cut pays off big

The iPhone, meanwhile, reached total sales of 1.4 million since its late-June launch. Its impact to the bottom line, however, was minimal, since Apple spreads iPhone revenue earnings over the 24 months of the life of the AT&T contract customers sign. Apple refused to get specific about payments it receives from its wireless partner, however, even though during the previous quarter's call in July, executives hinted that they would be more forthcoming.

For the record, the Cupertino, Calif. posted earnings of $904 million, up from $542 million a year ago, one revenues of $6.22 billion, compared with $4.84 billion a year earlier. In July, Apple had forecast revenues of $5.7 billion, and said it expected profit margin to drop from 36.9% to 29.5% to fund what it called "product transition."

Apple's actual margin for the quarter was 33.6%, considerably higher than the company projected even after it revamped both the iPod and iMac lines and lowered the price of the iPhone. Apple ascribed the less-than-anticipated drop in profit margin to greater-than-expected sales.

iPod sales were also brisk, said Apple, which claimed it sold 10.2 million of the digital music players during the quarter, an increase of 17% in units over the same quarter last year, but only a 4% boost in revenues. The most expensive model in the new line, the iPod touch, missed all but a few days of the quarter with its late-September launch. Apple, however, said it expected the touch to play a bigger part in iPod revenues going forward.

For the October-December run toward year's end, Apple has pegged revenue at $9.2 billion, said Peter Oppenheimer, the company's chief financial officer. If that carries through, the revenue goal would be about 28% above the same quarter last year, when Apple raked in approximately $7.2 billion.

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