CLARIFICATION: This story was updated Feb. 1 with additional information about Kathy Sandy’s Work Number disclosure report.

The Equifax credit reporting agency, with the aid of thousands of human resource departments around the country, has assembled what may be the most powerful and thorough private database of Americans’ personal information ever created, containing 190 million employment and salary records covering more than one-third of U.S. adults.

Some of the information in the little-known database, created through an Equifax-owned company called The Work Number, is sold to debt collectors, financial service companies and other entities.

"It's the biggest privacy breach in our time, and it’s legal and no one knows it’s going on," said Robert Mather, who runs a small employment background company named Pre-Employ.com. "It's like a secret CIA."

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Despite all the information Americans now share on social media and websites, and all the data we know companies collect on us, one piece of information is still sacred to most people: their salaries. After all, who would post their salary as a status update on Facebook or in a tweet?

But salary information is also for sale by Equifax through The Work Number. Its database is so detailed that it contains week-by-week paystub information dating back years for many individuals, as well as other kinds of human resources-related information, such as health care provider, whether someone has dental insurance and if they’ve ever filed an unemployment claim. In 2009, Equifax said the data covered 30 percent of the U.S. working population, and it now says The Work Number is adding 12 million records annually.

How does Equifax obtain this sensitive and secret information? With the willing aid of thousands of U.S. businesses, including many of the Fortune 500. Government agencies -- representing 85 percent of the federal civilian population, including workers at the Department of Defense, according to Equifax -- and schools also work with The Work Number. Many of them let Equifax tap directly into their data so the credit bureau can always have the latest employment information. In fact, these organizations actually pay Equifax for the privilege of giving away their employees' personal information.

Equifax turns around and sells some of this data to third parties, including debt collectors and other financial services companies. 

Equifax declined to be interviewed, but in an emailed statement to NBCNews.com, it confirmed that it shares "employment data" with debt collectors and others, and said it does so in compliance with Fair Credit Reporting Act guidelines. 

"In all cases, these entities must have a permissible purpose to request employment information," Equifax spokesman Timothy Klein said. 

He also said consumers give these third parties the right to access the data "at the time of application" for credit.

"A consumer grants verifiers (creditors) and their assigned debt collectors the right to verify employment should the consumer default on their account," he said. 

Data for debt collectors
Companies sign up for The Work Number because it gives them an easy way to outsource employment verification of former workers. Firms hate taking these calls, which usually come when a former employee is applying for a new job, because they are a costly distraction for human resources departments and open the firm up to lawsuits if someone says something disparaging about the former employee. So they contract with The WorkNumber, which automates the process. In exchange, firms upload their human resources data to The Work Number, which was part of an independent St.Louis-based firm named TALX until it was acquired by Equifax in 2007 for $1.4 billion.

The Work Number offers consumers some benefits. It provides an easy way for prospective landlords to verify an applicant's income, for example. Consumers tell the Work Number they want a one-time access code, which they then give to a landlord so he or she can verify that the potential tenant can really afford the apartment.

But The Work Number serves dual purposes. It’s also a massive database that Equifax monetizes in a variety of ways, despite the reassuring-sounding messages found all over TheWorkNumber.com.

"Can just anyone get my income information from The Work Number?" reads one passage. Answer: "No. You have to give someone authorization to get your income information from the service."

Employers who sign up for the service go to great pains to reassure workers that their data is safe and secret. Columbia University, when it explained to employees it was transitioning to The Work Number, posted this on the school's website:

"You are the only person who can authorize access to your salary information."

But Kathy Sandy of Sommerville, N.J. was surprised to find that a debt collector had accessed information from her report two years ago, something she learned only when she obtained her "consumer disclosure" from The Work Number. Because the data is considered a credit report, consumers are entitled to one free report every year. The report shows what data the report contains, and what entities have seen it.

Sandy's Work Number report, which she shared with NBC News, is 22 pages long -- an amazingly detailed history of every paycheck she had received for years. The first page of the report lists "verifiers who have requested your data in the past 24 months." On the list is "Pressler and Pressler," a law firm that specializes in debt collection. The firm had sued her in small claims court over a credit card debt that she says she was already repaying. It is not clear from Sandy’s report what employment data was shared with Pressler and Pressler; Equifax says it does not provide salary information to debt collectors, but it does provide other information.

"I found out debt collectors can access this information, which is strange," Sandy said. "I assumed with The Work Number, for that information, you had to have a (passcode) … but they got in, and got it somehow without my consent."

In brochures where Equifax advertises sale of the data, it's not shy about the source.

"The Work Number specializes in employment and income verification. It's direct from the source: the employer. It's current, as of the last pay period. It's delivered quickly -- on demand," says one brochure, titled "Portfolio Monitoring."

In his statement to NBC News, Klein confirmed that "pay rate" information is shared with third parties, including "mortgage, auto and other financial services credit grantors," as authorized under the Fair Credit Reporting Act.

He denied that salary information is sold to debt collectors, however.

"Debt/Collection agencies may request employment information -- which may be nothing more than verifying that a consumer is working where they say they are – if it qualifies under permissible purpose," he wrote. "Collections agencies are not provided salary information."

That contradicts an assertion made recently by Equifax CEO Richard Smith in 2009, when he talked about how detailed The Work Number data is.

"With FirstSearch and TALX we can provide information about a debtor’s location, income and employment," said Smith in an interview published on NYSE Magazine’s website, referring to The Work Number’s former parent company. "That can help prioritize which accounts to pursue first. If they’re employed, that business has a better shot at collecting what is owed to them."

Klein said Smith misspoke when describing TALX’s services, and reiterated that salary information on consumers is not sold to debt collectors.

'Unbelievably scary'
With or without the income data, The Work Number data is incredibly valuable to debt collectors -- and it may come as a surprise to many workers that their employers, directly or unwittingly, help debt collectors.

Equifax markets The Work Number specifically to student loan issuers. In another brochure on the firm's website, Equifax brags that The Work Number makes debt collectors' jobs easier.

"The Work Number produced a 5.5 percent lift in Right Party Contact and a 7.3 percent lift in Collections Resolution versus current skip-trace methods," the "case study" brochure says.

Equifax’s resale of The Work Number data doesn’t stop there. It also offers "portfolio monitoring" to financial firms who might want to market their products to consumers … or to get early warning on someone who might soon land in financial trouble. It calls this "proactive managing of risk." 

"The Work Number is part of our employment and income verification service. It provides continual track of changes to your customer or client portfolio, delivered on demand per your schedule," it says. "Simply submit a portfolio of customer or client accounts and The Work Number does the rest. ... Using The Work Number to stay abreast of employment changes can expand your ability to mitigate risk while maximizing product and service potential."

Mather has been in the employer data business for more than 20 years, and he says that if Americans suspected their employers were giving away their personal information to a credit bureau, they'd be shocked.

"The story here is how (The Work Number) is getting this information," he said. "When people find out, no respectable employer will continue to do this."

Larry Ponemon is a privacy expert who operates The Ponemon Institute, a consulting firm. He said he’d never heard of companies selling employer data to debt collectors.

"Are you joking? Oh my god, I'm shocked," Ponemon said when the business was described to him. "This is unbelievably scary. I consider payroll information very sensitive and private." In studies he's conducted, salary data is always among the information consumers say is most private.

"If the public knew about this, there would be such outrage," he said. "It's just ... really depressing."

Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse, had heard of The Work Number, but only because some consumers have complained to his agency that the data in its database is inaccurate. Some workers find that when they try to use the information for employment verification, their titles are outdated or otherwise misrepresent their work history, which can be embarrassing for a job applicant.

When told that the data is sold to third parties, he said he was under the impression the data was not shared.

"I think it is something that would be offensive to many people. One typically considers salary information to be shared by your employer just with IRS," he said. 

A glance at the language on The Work Number's website suggested to Stephens that the firm is legally within its rights to share the information, however.

"You get into the 'permissible purpose' doctrine," he said. "Debt collectors have a permissible purpose to look at your credit information. It was my impression that the data was only being given out when employees released it."

'Secret' process?
Data brokers are under heightened scrutiny in Washington, D.C., lately. There are two separate congressional investigations of the industry, and the Federal Trade Commission announced in December that it had begun an inquiry into how brokers obtain their information. Equifax received an inquiry letter from the FTC, but only for the data broker portion of its business involving non-financial data, such as criminal background records and address information.

Credit reporting agencies, such as The Work Number, are distinct from data brokers and are governed by special rules. Ironically, those special rules may open the door for Equifax -- and the credit-reporting side of its business -- to resell the salary information, says Katrina Blodgett, a lawyer with the Federal Trade Commission. She is one the agency’s experts on the Fair Credit Reporting Act. 

The FTC filed a case against TALX and Equifax in 2008 for allegedly failing to provide employers with sufficient notice about their disclosure responsibilities under the Fair Credit Reporting Act. Equifax admitted no wrongdoing and paid a small fine.  

Blodgett said the Fair Credit Reporting Act and subsequent updates give consumers specific legal rights, such as the ability to dispute errors in credit reports. But it also creates permissible purposes for access, including giving financial service companies the right to review credit reports of consumers they do business with. 

"It’s not as easy as it should be to say whether debt collectors can get your consumer reports, because it depends on the circumstance," she said, adding that she believed Equifax could have the right to sell the salary information to debt collectors because it is part of a credit report.

Much attention has been paid to the use of credit reports by human resource departments in recent years, and Congress gave job applicants special rights when a credit report is used during the job interview process. The reverse isn’t true, however, Blodgett pointed out.

"There are special restrictions on how credit reports can be used in hiring decisions, but there are no special restrictions on how employment reports (such as salary information) is used for non-employment purposes," she said.

She said she wasn’t surprised that Equifax is selling the information in The Work Number.

"They are a credit bureau. They sell credit information to lenders," she said.

Mather wants the sale of employee information halted. His firm also performs third-party employment verification, but he does not resell the data he collects.

"I strongly believe there is no reason to resell employee information to debt collectors without the permission of the employer and employee," he said. "This 'secret' process needs to stop. I hope eventually a simple law is passed making it required to get the permission of the employee BEFORE his information is resold. It simply should NOT be used for any other purpose except for employment purposes without permission. In my view, it is a betrayal of trust."

Consumers who want to see what information The Work Number has on their employment history can visit this page on the TheWorkNumber.com. While reports are available online, consumers may have to fill out a form and mail it to The Work Number in some cases.

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More from Red Tape Chronicles:

• Telecom firms can't say how 'crammed' charges were billed to unused phone
• Proposed 'privacy tax' would penalize firms that profit from consumers' info
• Net users fall for fake online lovers all the time, victims advocate says

Yankee fans root for a first-place team and usually watch their heroes win when they visit the new Yankee Stadium in New York. But fans of the Bronx Bombers have recently lost something too, something many sports fans around the country will probably lose soon: the right to sue the team for damages if there's a terrorist attack. Meanwhile, another team can claim victory every time the Yankees take the field -- tort reform advocates.

In July, Yankee Stadium became the first sports facility to earn the coveted federal "Safety Act" designation. That means the facility has passed a battery of tests and won approval from the Department of Homeland Security, so the Yankees have been granted a wide-ranging immunity from future lawsuits that might stem from terrorist attacks.

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Dozens of defense companies have been named to the Safety Act approved list since DHS started handing out the designation in 2004. But Yankees Stadium is the first of what is expected to be many sports venues whose operators will then be immune from standard lawsuits that might be filed by future victims of terrorist attacks. (The National Football League was placed on the Safety Act list in 2008, but the designation was vague and probably only applies to the Super Bowl, experts say.)

 

Supporters say the Safety Act gives strong incentives for firms to raise their security standards, and encourages innovation. Opponents say it unfairly terminates a basic consumer right, makes people less safe and serves as an under-the-radar version of tort reform. As evidence, opponents point out that the Safety Act framework is being copied for many other legislative initiatives, including the failed effort to pass a comprehensive Cybersecurity Bill this year.

It's the mother of all liability waivers, says George Washington University law Professor Ellen Zavian, an expert in sports law. But the question is, do fans know about it?

"There's waivers on ticket stubs … but I haven't seen any waivers that state, 'Oh by the way  … we can waive (liability) for terrorism attacks.'" Zavian said. "How did this get under the radar? Are people really supportive of that? I think attendees should know what they are waiving when they enter a facility, and I don't think they do."

The Safety Act (SAFETY is actually an acronym for "Support Anti-Terrorism by Fostering Effective Technologies") was passed as part of the legislation that created the Department of Homeland Security in 2002. And that's part of the problem, argues John Bowman, director of federal relations for the American Association for Justice.

"Clearly this was done in haste after 9/11," he said. "It was a fear-driven time. There was dramatic tort reform. It's fair to say these tort reformers took advantage of that moment. ...We disagree with the way the law is structured. We think it's not very helpful for fans if something happened."

The law would clearly be helpful to the Yankees if something happened. A report by the European Organisation for Security, which is helping the European Union consider similar terrorism-related tort reform, says that $40 billion in private claims was paid out by insurers in the wake of 9/11, with billions more in claims still unsettled. The Safety Act would prevent many such lawsuits after a future 9/11-style attack.

'A marketing edge'
But the law does much more than offer the civil equivalent of a get-out-of-jail-free card, supporters argue. Bob Karl, who operates SafetyActConsultants.com and has helped dozens of companies achieve certification, says liability protection is absolutely essential for companies deploying newfangled anti-terrorism technologies. Companies are concerned that with each new gadget they deploy, they incur new liability, he said.

Karl gave the example of a company that had invented a new radioactivity detector for cargo containers on ships. Selling the detectors would be, initially, a tiny $10 million annual business for the multibillion-dollar company, but the firm feared that if something went wrong with its product, victims could sue for the entirety of the firm's value. It makes no sense for companies to take on risk like that, and the firm didn't start selling its detectors until it achieved Safety Act designation, he said. He declined to name the firm.

"It's very real concern, and Congress had that concern when it passed the law," he said.

With Safety Act protection, companies can afford to deploy unproven or newer technologies, knowing their risks are lower, he said. That makes everyone safer.

Also, he insisted, the Office of Safety Act Implementation, which grants the certification, has very high standards, and firms become safer merely by taking on the process.

"The fear is there would be some kind of double-secret handshake and they would just hand these things out. … Well, that's not how it happens," he said. Many applications take years before they achieve final approvals. "I had one application recently that was 5,000 pages long," Karl said.

Meanwhile, Safety Act designation can give smaller companies, "a marketing edge," he said. "It's kind of like a Good Housekeeping seal of approval."

But even Karl agrees that the Safety Act was "tort reform at a very high level." Safety Act designation makes it impossible to sue a company after a terrorist attack for standard negligence – a ticket-holder bringing in an explosive device in a purse that wasn’t detected during standard bag inspection by entrance guards, for instance. But it also grants a host of other legal rights. Victims who wish to pursue legal action after a terrorist attack can only do so in federal court; joint and several liability (in which any involved party can be liable for an entire disaster) is eliminated, which reduces firms' exposure; and there is a ban on punitive damages on interest accumulation related to any potential judgment. Victims cannot sue for negligence; the only way to pierce Safety Act immunity is to prove fraud during the application process, or actual malice by the company.

Another concern expressed by opponents is that the definition of a terrorist attack is left vague by the law – essentially, a terrorist attack is anything the Department of Homeland Security calls a terrorist attack, which could include domestic terrorism, such as the Oklahoma City bombing in 1995 or even the recent Aurora, Colo., mass shooting.

One likely outcome of Safety Act protections could be lower insurance premiums for companies involved, thanks to caps on costs that could arise from a terrorist attack.

Bradley Shear, a civil litigation attorney and opponent of the Safety Act, said he didn't understand what was in it for fans.

"I think this is well intentioned, but can it equally protect businesses and the average consumer?" he said. "In return for the liability shield, what is the public getting? Are Yankees tickets going to be cheaper because they've been able to obtain Safety Act (designation)? Will the cost of a hot dog or a beer be any less?"

Or, as another opponent of the legislation said, has it just created a new consulting industry that earns millions helping companies navigate the Safety Act application process? A quick search of Google shows there is indeed a thriving industry in Safety Act consulting.

David McWhorter, a consultant at Catalyst Partners in Washington D.C., which helped the Yankees with its Safety Act application, said critics have a misunderstanding of the approval process. Most companies are forced to raise their insurance coverage by the Office of Safety Act implementation, he said, adding that he couldn’t think of a single case where firms were allowed to reduce their coverage. And insurance firms aren't yet offering security firms the equivalent of a "good driver discount," either.

In other words, they're not getting Safety Act coverage to save money today, he says. They do it because they become safer through the process, and because they want cost certainty.

"It's important for a facility to get a pre-emptive cap on liability," he said. "For any venue that has met the Safety Act standards, patrons can feel assured they are among the best of the best when comes to security. It’s a win-win for the public and for that venue."

McWhorter said when companies approach him for help with their application, he generally spends a lot of time consulting on how to improve the firm's security guard hiring and training processes. He also helps companies set up "red team" exercises -- mock attacks  -- to prepare them for the rigorous Homeland Security evaluation. 

"It's not inexpensive to provide security to a venue that holds 10,000 to 60,000 people," he said. "You have to consider hiring, training, exercises, cameras, alarms, mass notification systems, definition of the command structure, metal detectors, the auditing process, and so on." 

Sticking out like a sore thumb
Browsing the list of Safety Act designated technologies on the Department of Homeland Security's website, visitors see a list of both familiar and unfamiliar names: ADT Security, Unisys and Securitas are listed alongside Massachusetts-based Ahura Scientific, for example. Many of the approved technologies are what you might expect: In March, American Science & Engineering got approval for X-Ray inspection systems; the aforementioned Ahura – which recently changed its name to Thermo Scientific -- lists handheld devices that identify chemicals using "Raman spectroscopy."

On such a list, the Yankees stick out a bit like a sore thumb.

"New York Yankees d/b/a The New York Yankees Baseball Club provides The New York Yankees Security Program," the Safety Act office announcement says. "The Technology is a comprehensive integrated security system, which is comprised of physical and electronic security measures, tools and procedures designed to detect, deter, prevent, respond to and mitigate Acts of Terrorism at Yankee Stadium during Game Day, Non-Game Day (In-Season), Non-Season and Special Events."

One of these things is not like the other, complains Bowman.

“When you look at the law -- it's for makers and suppliers of technology," he said. "That was their intent, not to protect ballparks and give them a get-out-of-jail-free card, as long as they didn't lie ... during the approval process.”

The Yankees did not respond to a request for comment.

McWhorter says that sports venues are good candidates for Safety Act protection because they host major events that attract attention, and need incentives to go "above and beyond" standard levels of security.

"Yankee Stadium is not unlike the Cincinnati airport, the Stock Exchange, the NFL, or Super Bowl venues, all of which have received Safety Act protection," he said. "The regulations for the Safety Act are very clear that the (Department of Homeland Security) secretary has great flexibility in approving applications. Nevertheless, one criterion is, to paraphrase, 'To get Safety Act protection, you must demonstrate the need for Safety Act protection.'… The Safety Act incentivizes activities like vulnerability assessments and security upgrades, whereas without it some people might simply ignore threats in order to avoid any culpability."

Bowman said he didn't have a fundamental disagreement with the notion of encouraging invention of terrorism-fighting technologies, but feared that the Yankees designation proves the Safety Act is now casting a far wider net than originally intended. That's not a mistake, he thinks: Tort reformers try to gain more ground each time Congress takes up an industry issues or security issues, he said.

"We see this over and over in what we do. The first thing industry asks for are liability protections," he said, citing this year's cybersecurity bill as an example. "But if they are not accountable, they aren't responsible and no one is ultimately safe."

Karl, the Safety Act consultant, said he believes the Safety Act does make America safer, as all manner of security improvements are a standard part of the application process. He expects many more sports teams to apply -- and to receive -- Safety Act designation in the coming months and years, and he plans to pitch sports teams and facilities with his consulting services.

"The law is definitely working the way it's intended to," he said. "The Safety Act protects technologies that deter or respond to or mitigate a terrorist attack. … That makes us all safer."

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Nearly one in six convicted sex offenders is using sophisticated techniques invented by identity thieves to avoid their legally mandated registration requirements, a new study has found. These digital absconders might be able to avoid post-incarceration restrictions by living near schools and playgrounds, and could possibly gain employment working with children.

The study, conducted by Utica College and funded by the U.S. Justice Department, estimates that roughly 92,000 of the 570,000 registered sex offenders across the country are systematically manipulating their names, birthdays, Social Security numbers and other personal identifiers so they can live as they want while appearing to satisfy court-imposed or statutory restrictions.

"These are offenders who are flying under the radar and authorities don't know it," said Don Rebovich, the Utica professor who directed the study. "The authorities really don’t have the resources to keep on checking on these people. Offenders find where the vulnerabilities are in the system and exploit them."

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These digital absconders create two obvious problems. Communities expend energy and resources dealing with offenders who aren't really there -- local police knock on doors and send notices to warn neighbors; public listings are published on the Internet. And sex offenders live where they please as normal adults, without any protective measures kicking in.

"In the worst-case scenario, by thwarting registration requirements, they could potentially have easier access to children," said Staca Shehan, director of case analysis at the Center for Missing and Exploited Children, who is familiar with the study. "(In) those jurisdictions that have residency restrictions that would not allow (offenders) to live within distance of a school, daycare or park, (they) could avoid that type of requirement."

While the study found that an average of 16.2 percent of sex offenders manipulate their identities nationally, some states fared worse: Louisiana, Washington, D.C., Nevada, Tennessee and Delaware all had digital absconder rates of higher than 25 percent.

Officials in Tennessee, Nevada and Delaware challenged the study's conclusions and complained that they had not been contacted by the researchers for additional information that might have clarified the results; officials in the other states did not immediately respond to requests for comment.

'Strategic' manipulation
Shehan said there are generally two kinds of sex offender absconders: those who simply fail to keep their records current, and hope they fall through the cracks; and those who are more systematic in their evasion, intentionally altering their identities so they can circumvent the restrictions. 

"That takes a lot more thought," she said. "They are much more strategic about what they are doing ... and so that's much more concerning."

In one celebrated case of sex offender identity manipulation, a convict named Frank Kuni changed his name to Jamie Shepard and was able to get a job as a U.S. Census worker in New Jersey. Kuni was recognized by a mom after he knocked on the door of her Pennsauken home, and he was later sentenced to three years in prison. Kuni’s case attracted national headlines because of the fear it created surrounding temporary Census workers.

The Utica study, believed to be the first attempt to quantify these more strategic absconders, was conducted by Utica College's Center for Identity Management, set up to examine a variety of identity issues in the digital age. Rebovich is director of the center.

It's well known that some sex offenders neglect their registration requirements, dropping off the grid and accepting only cash-paying jobs to remain hidden. But the Utica study found something more subtle, and perhaps more disturbing -- sex offenders who appear to be satisfying their registration requirements while living a digital double life.

In a parallel survey of 223 law enforcement agencies from 46 states, Utica found that awareness of ID-theft style registry evasion was low -- only 5 percent of respondents said they knew of an identity manipulation case within their jurisdiction. 

And nearly 40 percent of the agencies responded that they had zero absconders, suggesting some law enforcement agencies are unaware of the problem.

The power of the Utica study lies in the use of sophisticated algorithms developed by private firm ID Analytics, a fraud-fighting company used by many large banks and other financial institutions. ID Analytics receives more than 1 billion credit applications and other credit-related events from clients every year. It uses sophisticated software to track the behavior of identity thieves across the credit system, and can find fraud that individual firms miss. It knows, for example, if a criminal uses a systematic series of birthdays or addresses on a set of credit card applications at various banks in an attempt to evade fraud detection. The ID Analytics tool has enough data that it can generally tell the difference between honest typographical errors and systematic fraud attempts. 

ID Analytics ran sex offender data through its massive database of credit-related events, and found evidence of rampant identity manipulation among the offenders.

Kristin Helm, a spokeswoman for Tennessee's sex registry, challenged the study's findings, saying that fewer than 1 percent of that state's sex offenders are absconders. Criminals have always used false identities to try to evade police, but law enforcement systems are geared to handle that issue, she said. "Fingerprints obtained by law enforcement identify individuals regardless of a name or Social Security number," she said, adding that names sometimes change for legitimate reasons, too, such as marriage. 

But Stephen Coggeshall, chief technology officer for ID Analytics, said his technology is well-versed in screening out mundane reasons for identity changes and finding patterns that specifically indicate active evasion is taking place.

"This goes way beyond typos," he said. "These are people who have slightly adjusted or substantially adjusted their personally identifiable information for a reason. They are actively doing so, and we are observing them use these aliases relatively recently."

Nevada spokeswoman Julie Butler also questioned the validity of the study, which she had not seen. She said that Nevada uses fingerprints to track sex offenders, so identity manipulation techniques would be ineffective.

"Our registry is fingerprint-based. We don't base it on date of birth, or Social Security number, or name," Butler said. "They can put down their name as whatever and we still have them in the database."

But Coggeshall responded that even in states which use fingerprint identification, an identity manipulator would only be discovered when trying to engage in an activity – such as becoming an elementary school teacher – which triggers a fingerprint evaluation. 

"In general it doesn't help you track where they are or if they're living under an alias at an unregistered location," he said. "It can help to find sex offenders as they enroll in certain groups, but many … groups don't routinely fingerprint new enrollees."

SSNs connected to multiple people
Two years ago, using this tool on a database of Social Security numbers, ID Analytics found that rampant evidence of identity theft: 5 million SSNs were connected to three or more U.S. adults in credit applications, and 140,000 were associated with five or more people, indicating almost certain fraud. The tool can also track individual identity manipulators, as ID Analytics calls them, as they attempt various frauds across an array of credit issuers.

This tool was turned on the sex offender registry problem at the invitation of Utica College in Utica, N.Y., beginning last year. ID Analytics took a large sample -- nearly 100,000 -- of the 570,000 active registered sex offender records and ran them through its credit application database, looking for signs of manipulation.

The findings were disturbing. In Louisiana, the study found, nearly two-thirds of offenders' records showed signs of manipulation. Rebovich theorized that Louisiana's problem might stem from the aftermath of Hurricane Katrina, which gave some people a golden opportunity to drop off the grid.

Officials in Louisiana did not immediately respond to requests for comment.

In many cases, the study found, the steps criminals take are subtle -- changing an address from "440 Monroeville Road" to "434 Monroeville Road," for example. In fact, in the majority of cases, digital absconders were much more likely to move across town than across the country. Absconders who fake their address are six times more likely to remain in the same state than to cross state lines, the study found, and 90 percent of those who remain in state stay within 40 miles of their original registered address. In many cases, the data shows, those addresses belong to a family member. That might allow absconders to show up on a moment's notice at their registered address in case local police do a random check, Rebovich said.

But the address change could also allow them to apply for jobs and housing they would otherwise be unable to qualify for, he said.

While half of the manipulations involve bad addresses, plenty of other types of evasion are going on, the study found. One subject studied had five names, three Social Security numbers and four dates of birth, for example.

About 10,000 offenders had used at least four different Social Security numbers, Rebovich said. The evidence indicates this was usually done to evade the court registration requirements rather than commit financial identity theft, the study found.

One reason sex offenders seem to get away with evasion is that registration requirements are set by states and vary widely. In some states, convicts merely send updates through the U.S. mail to state officials, and are subjected to little, if any, verification. In others, officers try to check on sex offenders, but ofter are assigned hundreds, or even thousands of offenders, to track.

In other states, such as Florida, there are strict requirements and frequent random inspections, Rebovich said. That shows up in the data -- Florida's digital absconder rate is about half the national average, at 9.4 percent.

The study was funded by the Justice Department's Bureau of Justice Assistance, which plans on issuing a comprehensive report later this fall. Requests for comment from the Department of Justice went unanswered.

'System is never going to be perfect'
Shehan, of the Center for Missing and Exploited Children, said she didn't believe that the potentially high rate of digital absconders means the entire sex offender registry program is broken. In fact, she said the situation has improved since passage of the Child Safety and Protection Act of 2006, which instituted some national standards on offender registries.

Still, she said it's important that states move to biometric identifiers, such as fingerprints, to maintain more accurate records of offenders and their whereabouts.

"Criminals are constantly thinking of ways to beat the system," she said. "The system is never going to be perfect."

Rebovich is hoping the study will spur new methods for checking up on sex offenders, including techniques that would seem familiar to those who work in financial fraud. In a model developed by Utica and ID Analytics, offenders could be given a score, similar to a credit score, which would rate the likelihood that identity manipulation was occurring. 

"We are trying to develop a predictive model," he said. "So we can turn it into an alert system, so states can do this in real time, if they want to."  

Coggeshall said such an alert system would have helped police track down Frank Kuni before he was able to get a job with the Census Bureau.

"In retrospect, we know there are things we would have been able to observe" he said.

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Could you be blamed for a car crash because you sent a text message? 

A New Jersey judge will decide later this week if the sender of a text message might be partially liable for a horrific auto accident that occurred because the driver was reading that message on his cell phone and drifted into oncoming traffic.

With nearly half a million U.S. drivers injured in distracted driving-related accidents every year, according to the National Highway Traffic Safety Administration, the judge’s decision could have wide-ranging impact in both the legal and digital realms.

While it might seem absurd to blame someone who isn't even in the car -- or anywhere near it -- for causing an accident, some legal experts say the plaintiff is on firmer ground than you might think.

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Skippy Weinstein, a Morristown-based lawyer, is using similar logic to press the case he filed on behalf of David and Linda Kuber. Both Kubers lost their legs during a 2009 crash in Mine Hill, N.J., after 19-year-old Kyle Best sideswiped their car when driving while texting. Weinstein said Shannon Colonna, who was texting with Best, should also be held responsible for the Kubers’ injuries.

"She was not physically in the vehicle but she was electronically present," Weinstein told msnbc.com. "She and he were assisting each other in a violation of the law."

That word "assisting" is at the crux of Weinstein's novel legal argument. 

Most readers will be familiar with the notion of "aiding and abetting" a criminal act and the guilt it brings: the man who knowingly holds the door for the gang is just likely to be convicted of bank robbery as the safe cracker.

More recently, this notion of aiding and abetting has been extended to civil liability cases, too, creating a basis for what's sometimes called "secondary" or "vicarious" liability. For the past two decades, most civil aiding and abetting cases have been limited to investment and securities fraud: An aggrieved investor might not only sue Bernie Madoff for stealing his money, for example, but also go after a third-party broker who repeatedly executed trades for Madoff. Even if the trader wasn't profiting from the scheme or part of a "joint enterprise,“ a court might find the trader provided assistance to Madoff, and should have known that someone was likely be injured by his actions.

The aiding and abetting argument in injuries that give rise to lawsuits, known as "torts," is only beginning to find its way into other kinds of civil cases.

There's a simple three-pronged test to prove someone is partly to blame for causing an injury by aiding and abetting someone else. It is set out in the Restatement of Torts published by the American Law Institute, which guides most civil courtrooms:

1) The party the defendant assists must do a wrongful act;

2) The party must be generally aware of his or her role in the illegal or "tortuous" act;

3) The party must "substantially assist" in the principal violation.

Weinstein think his argument is easy to make. The driver violated the law by texting while driving. Colonna, the text sender, should have known that Best was driving home from work and had to know texting while driving was a violation, he said. Therefore, it's hard to argue that a text sender isn't substantially assisting in the creation of a text message conversation that violates New Jersey's driving laws.

"That very comfortably satisfies the third prong of the legal test," he said.

Colonna’s lawyer, Joseph McGlone, doesn't think the argument has any merit, and has asked Morris County Superior Court Judge David Rand to dismiss the case. Rand is scheduled to rule this week on McGlone’s motion to dismiss the case.

The sender of a text message has no way to control or predict when the recipient will read it, McGlone argues.

"The sender of the text has the right to assume the recipient will read it at a safe time,” McGlone told the local Daily Record  newspaper. “It’s not fair. It’s not reasonable. Shannon Colonna has no way to control when Kyle Best is going to read that message."

He added that there is no precedent for heaping liability on a person on the other side of a text message conversation that causes injury.

Of course, there's no precedent for a lot of legal areas in the Digital Age. In situations like this, judges usually turn to analogies. In driving injury cases, the judge has a bushel full to choose from.

For starters, it's hard to tag liability on anyone who isn't holding the steering wheel of the car while an accident occurs. Lawyers around the nation have repeatedly tried and failed to make passengers partly responsible for accidents caused by drunken drivers when passengers knowingly get into a car with an intoxicated driver.

There are exceptions, however. A South Carolina court has said a passenger could be judged a "proximate cause" of an injury if the driver and passenger were in some kind of "joint enterprise," such as the passenger steering the car while the driver presses the gas pedal.

Passengers who have directly encouraged drivers to break the law -- by urging them to speed excessively or to drive in the oncoming lane as part of a game, for example -- have also been found liable, Weinstein says.

But to find a passenger liable, the South Carolina court said, "The passenger must have an equal right to control the direction and management of the vehicle." It seems hard to argue that a text message sender has equal ability to control the vehicle as the driver does.

But there are plenty of other situations where someone other than the driver has to pay after an injury accident, an extension of liability called “imputed negligence.” The most common is when the driver is "an agent" of someone else -- when a pizza delivery man driving for work causes an accident, his employer is liable.  Parents are often liable for accidents their children cause if they kids are directly under their care. 

There's also concept called "negligent entrustment": if you knowingly let an unlicensed driver take your auto out for a spin, you will probably be liable for an accident he or she causes. 

Neither of those cases fit this situation well, however. So Weinstein has settled on a simpler analogy.

"If she was in the vehicle and put her hands over his eyes so he couldn't see, she would be liable," he said. "(Texting with him) is as if she put her hands over his eyes."

Is texting the digital equivalent of willfully rendering someone blind? To even make that argument, and to press on with the aiding and abetting claim, Weinstein has to persuade the judge that Colonna knew that Best was texting while driving. Colonna's lawyers are contesting that point, but Weinstein says the pattern of texts between boyfriend and girlfriend make clear that she must have known he was on his way home from work.

But even if he fails on that argument, it's easy to imagine other lawsuits where evidence of knowledge by the sender could be hard to deny. A driver might directly text, "Hey, I'm driving home," for example.

That would make a big difference in a case like this, said Robert Mitchell, a Utah-based lawyer and author of a recent article on aiding and abetting claims.

"If there is conclusive evidence that the person sending the text messages to the driver knew the driver was texting while driving, we see no reason why a claim for aiding and abetting the driver’s negligent or reckless conduct could not be made. The case is probably weaker if there is no evidence of actual knowledge, but only evidence of ‘constructive knowledge,’" said Mitchell, referring to a concept that the sender "should have known" the recipient was driving. "Courts disagree over whether constructive knowledge is sufficient to give rise to aiding and abetting liability."

Courts have found that the contribution by this third party in aiding and abetting cases can't be slight – it must be “significant.” For example, giving directions to the bank robber probably wouldn’t be substantial enough to get you prosecuted, but telling him what time security guard shifts change could be. And, as with most civil liability cases, the harm caused by the action doesn't have to be intentional.

Mitchell said this is the critical phrase in the American Law Institute's guidelines.

"If the encouragement or assistance is a substantial factor in causing the resulting tort, the one giving it is himself a tortfeasor and is responsible for the consequences of the other’s act. This is true both when the act done is (intentional) and when it is merely (negligent)," Mitchell wrote in his review, quoting the guidelines with added parenthesis. In fact, liability exists even if the third-party has no idea he or she is doing something illegal or negligent.

So in Mitchell’s view, it's a relatively easy to argue that the texter "substantially assisted" the driver in causing the accident. 

"The third prong, substantial assistance, would be an easier hurdle to clear (than knowledge) since sending somebody a text message while driving distracts the driver and that distraction may ultimately cause the accident," he said.  "Of course defenses may include superseding or intervening causes to the underlying tort (the first prong), like bad weather, poor road conditions or visibility, avoiding someone or something on the road."

Not all experts agree, however. Maryland-based lawyer Bradley Shear, an expert in digital law, openly fretted about how far liability might extend if Weinstein is successful in his novel legal argument.

"What if someone is hopping on a boat, and they look down at a text, slip and drown? What if a doctor gets a text before a surgery that upsets him and he makes a mistake? Is the sender responsible?" he said. "If you start going down that route where are you going to draw the line?"

Mark Rasch, for head of the Justice Department’s Computer Crimes Unit, said he thinks the case will boil down simply into this question: Can anyone really prove that the sender of the text, Colonna, knew that Best would read it while driving? Absent such proof, there is no case, he says.

But he was concerned with the larger issue of extending liability through digital means.

“The real question here is, do we as a society want to impose a duty on the non-driving texter for accidents that happen when a recipient is driving?” he said. “For now, it seems a reasonable place to draw the line at this: The person driving has a duty not to text. And the person on other end of line has no duty unless there are special circumstances.”

One special circumstance he envisioned: A boss or other person in a position of power who received a message from an employee saying, “I can’t text, I’m driving,” but continued to send demanding texts with an implied threat if they weren’t answered quickly.

“The person in the position of authority might have liability then,” said Rasch, now a cybersecurity consultant with Virginia-based CSC Inc.

Complicating matters, juries can apportion liability, and theoretically could find a driver 90 percent responsible and the sender of a text 10 percent responsible. Damages can be similarly apportioned, although the realities of collections means the party with the deepest pockets usually pays the most in damages.

It’s also possible that Congress or state legislatures might create a chain of liability, as states have done with dram shop laws, which make bars liable for injuries and damages caused by patron who are served after they’re drunk.

For his part, Weinstein demurs when asked if he's trying to set an important legal precedent or make law. He's just trying to win a case for his client, he said.

"The defense ... wants to make this into a cause celebre, but this is not complicated," he said. "A jury may find I'm wrong and thrown me out on my duff. ... All I'm saying is don't (text) while driving, and don't assist someone else in texting while driving."

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The most important tool consumers have to fight against ID theft has been turned against them by hackers, msnbc.com has learned. Websites that offer consumers a chance to see their credit reports are being brazenly used by hackers to steal victims' information.

The prices of the reports rise and fall depending on the credit score of the victim. For consumers with credit scores in the 750s, report data might fetch $80; reports from victims with scores in the low 600s sell for about half that, according to "for sale" pages viewed by msnbc.com.

"It shows how people with good credit and a net worth now have a bull’s-eye on their backs," said Dan Clements, who operates the Internet security firm CloudEyez.com. Clements gave msnbc.com a virtual tour of the marketplaces, which he has been observing for months.

The most troubling part of these markets however – many hosted in the .su domain, which stands for the now-defunct Soviet Union – is the ready availability of credit reports and the hackers' bragging about how easy it is to infiltrate websites like AnnualCreditReport.com or CreditReport.com.

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"I'm selling super prime credit reports and scores which include all 3 bureaus and other information," brags one advertisement on one site. 

Clements helped msnbc.com view dozens of credit reports on the forum, many of which had CreditReport.com stamped across the first page. But others viewed by msnbc.com indicated they were stolen from AnnualCreditReport.com and Equifax.com. Clements said most other online credit report and some credit score suppliers were hit, too --  he shared a page showing a victim's score produced at CreditKarma.com.

"We really have no idea how many reports have been used or put up for sale in the 'libraries,'" said Clements, who also operates a consulting firm. 

The credit report trade shows why even simple credit card fraud – long considered a relatively benign form of ID theft – can escalate quickly into a full-blown identity nightmare. Criminals with stolen cards can obtain background reports, credit reports and ultimately open new accounts using the information gleaned about the victim, Clements said.

In one how-to posted on a bulletin board, a hacker describes one brute-force attack used to gain access to credit report websites. Most sites are protected by "challenge" questions such as, "Which bank holds the mortgage on your home?"  But there's a critical flaw, the hacker said:

"Normally all ... of them will ask you the same question," the hacker wrote.

Because the sites use the multiple choice format, it's easy to use the process of elimination and determine the correct answers, he claims.

The hacker explained that the trick is to open several credit report sites and keep trying random answers until one set works.

The recipe is highly detailed, including helpful tips such as, "Take a shot of screen to remember what answers you gave. After that click the submit button and see what it says."

A would-be credit report thief needs additional information to get credit report access, but that can often be gleaned by ordering background checks using the victim's stolen credit card. Reports stolen from Intellius.com and BeenVerified.com, which provide previous addresses and a host of other valuable information, also were found on the site.

One victim whose credit report was spotted on the site told msnbc.com that she found one instance of credit card fraud on her accounts around the time the data theft was first discovered by Clements. She now pays to maintain a credit freeze on her credit reports.

"You hear about this kind of thing all the time but you never think it will happen to you," said the victim, who requested that her name be withheld. "And when it happens, you think, 'Great. Now what do I do?'”

For years, consumers have been advised to visit AnnualCreditReport.com once each year to see their reports. Federal law requires the nation's three largest credit bureaus – Experian, Equifax, and Trans Union – to maintain the site, under the direction of the Federal Trade Commission.

That's still good advice – looking at your credit report is the best way to detect identity theft. But the site is apparently both an ally and a foe now.

The FTC would not comment on hackers' use of AnnualCreditReport.com.

In the past, the FTC has sued companies for inadvertently selling credit report data to hackers, however. In 2011, the agency settled with Settlementone Credit Corp., ACRAnet Inc. and Fajilan Associates after those firms unknowingly sold reports to criminals. The three firms were ordered to submit to 20 years' worth of security audits.

Those firms prepare reports for car dealerships and other credit granters. Raiding consumer-facing sites like AnnualCreditReport.com is even more brazen, however.

CreditReport.com is operated by credit bureau Experian; that firm also provides credit reports to consumers as part of AnnualCreditReport.com.

"Experian is aware of schemes such as this to access reports illegally, and we have taken measures within our systems to mitigate the issue," said Experian in an e-mail to msnbc.com. "We are constantly evolving our systems to prevent fraud and criminal activity, but do not comment publicly on the specifics of our fraud prevention methods." 

Trans Union and Equifax, which also provide reports through AnnualCreditReport.com, did not immediately respond to requests for comment.

Kenneth Lin, CEO of CreditKarma.com, said the firm had received "a handful" of complaints about compromised accounts and worked quickly to shut down access. CreditKarma credit score reports show no account information or other personal data, so the security risk posed by an imposter getting a victim's score is minimal, he said.

"That's intentional. That's a security feature," he said. The site also uses more difficult challenge questions than AnnualCreditReport.com, Lin added.

Solving the problem of credit reports stolen through consumer websites is no small task. One irony of the hackers' ability to easily raid such sites is that many consumers report great frustration getting their own credit reports through AnnualCreditReport.com.  The challenge questions are sometimes so arcane – such as, "Which bank held your previous auto loan?" -- that legitimate consumers can't answer them easily.  

"But anyone who does any research can probably figure out what the answers are before you can," said Jay Foley, who runs IDTheftInfoSource.com. In other words, it's too easy for criminals to get credit reports, but it's too hard for consumers.

One of the websites where Clements observed the stolen card activity – kurupt.su – dropped mysteriously off the Web late last week. The site was well-known as a haunt for criminals and scam artists in the computer underground. But Clements says that will hardly put a dent in the stolen data trade.

"You currently can't stop this scam because the 'soft inquiry' of a consumer pulling their own report doesn't record in the majority of credit files," he said, explaining that a consumer would never know if a criminal pulled a copy of their report. "Unfortunately, it allows the bad guys, by impersonating you, to download your credit file and leave no tracks."

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