Combatting identity theft
Later this year Vinny Lingham will launch a service that has the potential to solve a persistent problem that South Africans seem blissfully unaware of: identity theft.
“We are trying to solve the identity problem for consumers,” he told me last week when he returned to SA to speak at several conferences.
The affable Lingham is now best known as one of the judges in the local edition of the televised business ideas competition Dragon’s Den. But in geek circles he’s a legend who has built three technology start-ups.
The last two are Yola (for building websites), which received $30-million in venture funding, and Gyft (to aggregate gift cards and other loyalty schemes), which he sold for a reported $50-million to First Data, the largest payments company in the world.
He started his first company (Clicks2Customers) when he was 24. He says it “drove more than $100-million in annual paid-for search marketing for its clients”.
Now, Lingham is turning his knack for spotting a good idea towards the pressing problem of identity fraud.
“It cost hundreds of billions of dollars in the past year alone,” he says, pointing out how companies like US retailer Target and Sony had tens of millions of people’s personal details, sometimes credit card information, stolen in hacks, or data breaches, as they are known.
“There have been lots of high-profile data breaches, putting consumer data out there [on the Internet]. It is happening more and more often,” he says.
Revelations in the past week that fraudulent cellphone Sim cards have been used to reset bank account passwords (which are verified by SMS), costing some consumers tens of thousands of rand, are just the tip of the iceberg.
“In SA a large number of people have been affected by identity theft. And it’s going to get worse,” he warns.
“I think this is a huge area of growth, in a bad way. Cyber crime is growing.”
This is the problem his new company, Civic, will address. He said in January it had attracted venture funding in California, where he is now based.
“I think it’s the first of its kind. The problem we’re solving is that identity theft has gone worldwide. And there is no mechanism or gateway that controls what companies do.”
Once your personal details (name, address, date of birth, identity number and so on) have been stolen, they can be used to get credit cards or retail store credit, to apply for tax refunds, or to open a bank account.
The amassed debt is mostly left to the innocent victims to pay off.
Identity theft caused losses of $15.4-billion in 2014, according to figures from the US justice department, released in September 2015. In 2012, the last time the report was released, it cost $24.7-billion.
About 7% of American adults, or an estimated 17.6 million people aged 16 or older, had personal information compromised in 2014, the Bureau of Justice Statistics reported.
Lingham says the consumers are usually not the ones at fault. They don’t do anything wrong. Rather, companies are not able to protect the information that they have been entrusted with, he says.
But he does warn against some actions taken by consumers: “You shouldn’t e-mail your password. E-mail is not secure.”
It’s one of my persistent bugbears: companies that blithely ask you to e-mail a copy of your identity document or passport as proof of identity, not realising that e-mail is the least secure way to transmit such information.
The chances are that those copies are never stored securely, or are left on company laptops that themselves don’t have proper security settings.
SA has not experienced the scale of identity theft that has ravaged the US for the past decade. But it won’t escape for long as faster broadband speeds create more opportunities for cyber crime.
Sadly, Lingham’s new company is likely to be just as useful at home as it is in the US.
Shapshak is editor and publisher of Stuff magazine
This article first appeared in Business Day