AMENDMENT 596
Amendment: The Commentary to §2B1.1 captioned "Application Notes" is amended by striking Note 4 in its entirety; by redesignating Notes 5 through 16 as Notes 4 through 15, respectively; and in Note 2 by striking the second paragraph in its entirety and inserting the following:
"If the offense involved making a fraudulent loan or credit card application, or other unlawful conduct involving a loan, a counterfeit access device, or an unauthorized access device, the loss is to be determined in accordance with the Commentary to §2F1.1 (Fraud and Deceit). For example, in accordance with Application Note 17 of the Commentary to §2F1.1, in a case involving an unauthorized access device (such as a stolen credit card), loss includes any unauthorized charge(s) made with the access device. In such a case, the loss shall be not less than $500 per unauthorized access device. For purposes of this application note, ‘counterfeit access device’ and ‘unauthorized access device’ have the meaning given those terms in 18 U.S.C. § 1029(e)(2) and (e)(3), respectively.".
Section 2F1.1, as amended by Amendment 595 (see supra), is further amended by redesignating subsections (b)(5) through (b)(7) as subsections (b)(6) through (b)(8), respectively; and by inserting after subsection (b)(4) the following:
"(5) If the offense involved—
(A) the possession or use of any device-making equipment;
(B) the production or trafficking of any unauthorized access device or counterfeit access device; or
(C) (i) the unauthorized transfer or use of any means of identification unlawfully to produce or obtain any other means of identification; or (ii) the possession of 5 or more means of identification that unlawfully were produced from another means of identification or obtained by the use of another means of identification,
increase by 2 levels. If the resulting offense level is less than level 12, increase to level 12.".
The Commentary to §2F1.1 captioned "Application Notes", as amended by Amendment 595 (see supra), is further amended in Note 12 in the first sentence by striking "fraudulent identification documents and"; by striking the second sentence in its entirety; in the third sentence, by striking "the case of an offense involving false identification documents or access devices," and inserting "such a case,"; and by adding at the end the following paragraph:
"Offenses involving identification documents, false identification documents, and means of identification, in violation of 18 U.S.C. § 1028, also are covered by this guideline. If the primary purpose of the offense was to violate, or assist another to violate, the law pertaining to naturalization, citizenship, or legal resident status, apply §2L2.1 (Trafficking in a Document Relating to Naturalization) or §2L2.2 (Fraudulently Acquiring Documents Relating to Naturalization), as appropriate, rather than §2F1.1.".
The Commentary to §2F1.1 captioned "Application Notes", as amended by Amendment 595 (see supra), is further amended by redesignating Notes 15 through 20 as Notes 18 through 23, respectively; and by inserting after Note 14 the following:
"15. For purposes of subsection (b)(5)—
‘Counterfeit access device’ (A) has the meaning given that term in 18 U.S.C. § 1029(e)(2); and (B) also includes a telecommunications instrument that has been modified or altered to obtain unauthorized use of telecommunications service. ‘Telecommunications service’ has the meaning given that term in 18 U.S.C. § 1029(e)(9).
‘Device-making equipment’ (A) has the meaning given that term in 18 U.S.C. § 1029(e)(6); and (B) also includes (i) any hardware or software that has been configured as described in 18 U.S.C. § 1029(a)(9); and (ii) a scanning receiver referred to in 18 U.S.C. § 1029(a)(8). ‘Scanning receiver’ has the meaning given that term in 18 U.S.C. § 1029(e)(8).
‘Means of identification’ has the meaning given that term in 18 U.S.C. § 1028(d)(3), except that such means of identification shall be of an actual (i.e., not fictitious) individual other than the defendant or a person for whose conduct the defendant is accountable under §1B1.3 (Relevant Conduct).
‘Produce’ includes manufacture, design, alter, authenticate, duplicate, or assemble. ‘Production’ includes manufacture, design, alteration, authentication, duplication, or assembly.
‘Unauthorized access device’ has the meaning given that term in 18 U.S.C. § 1029(e)(3).
16. Subsection (b)(5)(C)(i) applies in a case in which a means of identification of an individual other than the defendant (or a person for whose conduct the defendant is accountable under §1B1.3 (Relevant Conduct)) is used without that individual’s authorization unlawfully to produce or obtain another means of identification.
Examples of conduct to which this subsection should apply are as follows:
(A) A defendant obtains an individual’s name and social security number from a source (e.g., from a piece of mail taken from the individual’s mailbox) and obtains a bank loan in that individual’s name. In this example, the account number of the bank loan is the other means of identification that has been obtained unlawfully.
(B) A defendant obtains an individual’s name and address from a source (e.g., from a driver’s license in a stolen wallet) and applies for, obtains, and subsequently uses a credit card in that individual’s name. In this example, the credit card is the other means of identification that has been obtained unlawfully.
Examples of conduct to which subsection (b)(5)(C)(i) should not apply are as follows:
(A) A defendant uses a credit card from a stolen wallet only to make a purchase. In such a case, the defendant has not used the stolen credit card to obtain another means of identification.
(B) A defendant forges another individual’s signature to cash a stolen check. Forging another individual’s signature is not producing another means of identification.
Subsection (b)(5)(C)(ii) applies in any case in which the offense involved the possession of 5 or more means of identification that unlawfully were produced or obtained, regardless of the number of individuals in whose name (or other identifying information) the means of identification were so produced or so obtained.
In a case involving unlawfully produced or unlawfully obtained means of identification, an upward departure may be warranted if the offense level does not adequately address the seriousness of the offense. Examples may include the following:
(A) The offense caused substantial harm to the victim’s reputation or credit record, or the victim suffered a substantial inconvenience related to repairing the victim’s reputation or a damaged credit record.
(B) An individual whose means of identification the defendant used to obtain unlawful means of identification is erroneously arrested or denied a job because an arrest record has been made in the individual’s name.
(C) The defendant produced or obtained numerous means of identification with respect to one individual and essentially assumed that individual’s identity.
17. In a case involving any counterfeit access device or unauthorized access device, loss includes any unauthorized charges made with the counterfeit access device or unauthorized access device. In any such case, loss shall be not less than $500 per access device. However, if the unauthorized access device is a means of telecommunications access that identifies a specific telecommunications instrument or telecommunications account (including an electronic serial number/mobile identification number (ESN/MIN) pair), and that means was only possessed, and not used, during the commission of the offense, loss shall be not less than $100 per unused means. For purposes of this application note, ‘counterfeit access device’ and ‘unauthorized access device’ have the meaning given those terms in Application Note 15.".
The Commentary to §2F1.1 captioned "Application Notes", as amended by Amendment 595 (see supra), is further amended in redesignated Note 18 (formerly Note 15) by striking "(b)(5)" each place it appears and inserting "(b)(6)".
The Commentary to §2F1.1 captioned "Application Notes", as amended by Amendment 595 (see supra), is further amended in redesignated Note 21 (formerly Note 18), by striking "(b)(7)" and inserting "(b)(8)".
The Commentary to §2F1.1 captioned "Application Notes", as amended by Amendment 595 (see supra), is further amended by striking redesignated Note 23 (formerly Note 20), in its entirety and inserting the following:
"23. If subsection (b)(5), subsection (b)(8)(A), or subsection (b)(8)(B) applies, there shall be a rebuttable presumption that the offense also involved more than minimal planning for purposes of subsection (b)(2).
If the conduct that forms the basis for an enhancement under subsection (b)(5) is the only conduct that forms the basis of an enhancement under subsection (b)(6), do not apply an enhancement under subsection (b)(6).".
The Commentary to §2F1.1 captioned "Background", as amended by Amendment 595 (see supra), is further amended by striking the sixth paragraph and all that follows through the end of the "Background" and inserting the following:
" Subsections (b)(5)(A) and(B) implement the instruction to the Commission in section 4 of the Wireless Telephone Protection Act, Public Law 105–172.
Subsection (b)(5)(C) implements the directive to the Commission in section 4 of the Identity Theft and Assumption Deterrence Act of 1998, Public Law 105–318. This subsection focuses principally on an aggravated form of identity theft known as ‘affirmative identity theft’ or ‘breeding,’ in which a defendant uses another individual’s name, social security number, or some other form of identification (the ‘means of identification’) to ‘breed’ (i.e., produce or obtain) new or additional forms of identification. Because 18 U.S.C. § 1028(d) broadly defines ‘means of identification,’ the new or additional forms of identification can include items such as a driver’s license, a credit card, or a bank loan. This subsection provides a minimum offense level of level 12, in part, because of the seriousness of the offense. The minimum offense level accounts for the fact that the means of identification that were ‘bred’ (i.e., produced or obtained) often are within the defendant’s exclusive control, making it difficult for the individual victim to detect that the victim’s identity has been ‘stolen.’ Generally, the victim does not become aware of the offense until certain harms have already occurred (e.g., a damaged credit rating or inability to obtain a loan). The minimum offense level also accounts for the non-monetary harm associated with these types of offenses, much of which may be difficult or impossible to quantify (e.g., harm to the individual’s reputation or credit rating, inconvenience, and other difficulties resulting from the offense). The legislative history of the Identity Theft and Assumption Deterrence Act of 1998 indicates that Congress was especially concerned with providing increased punishment for this type of harm.
Subsection (b)(6) implements, in a broader form, the instruction to the Commission in section 6(c)(2) of Public Law 105–184.
Subsection (b)(7)(B) implements, in a broader form, the instruction to the Commission in section 110512 of Public Law 103–322.
Subsection (b)(8)(A) implements, in a broader form, the instruction to the Commission in section 961(m) of Public Law 101–73.
Subsection (b)(8)(B) implements the instruction to the Commission in section 2507 of Public Law 101–647.
Subsection (c) implements the instruction to the Commission in section 805(c) of Public Law 104–132.".
Reason for Amendment: This is a five-part amendment. First, this amendment provides a two-level increase and a minimum offense level of level 12 for offenses involving (1) the possession or use of equipment that is used to manufacture access devices; (2) the production of, or trafficking in, unauthorized and counterfeit access devices, such as stolen credit cards and cloned wireless telephones; or (3) affirmative identity theft (i.e., unlawfully producing from any means of identification any other means of identification). Affirmative identity theft, referred to in the research and analysis conducted by the Commission as the "breeding" of identification means, will result in an enhanced penalty in any case in which there is a transfer or use of another person’s means of identification unlawfully to produce or "breed" additional means of identification, or in which there is the possession of five or more means of identification that were unlawfully produced.
Second, this amendment provides a rebuttable presumption that the offense involved more than minimal planning, and it contains a rule to avoid "double counting" between the existing enhancement for "sophisticated means" based on the same conduct.
Third, the amendment provides a revised minimum loss rule for offenses involving counterfeit or unauthorized access devices. Specifically, this rule requires that a minimum loss amount of $500 per access device be used when calculating the loss involved in the offense. However, for offenses that involve only the possession, and not the use, of a means of telecommunications access that identifies a specific telecommunications instrument or telecommunications account (e.g., an ESN/MIN pair used to obtain telecommunications service in a wireless telephone), the rule provides a minimum loss amount of $100 per unused means.
Fourth, this amendment provides an encouraged upward departure if the offense level does not adequately reflect the seriousness of the offense conduct. Examples of cases in which a departure may be warranted include those in which (1) an identity theft caused substantial harm to the victim’s reputation or credit record; (2) an individual is arrested, or is denied a job, because of a misidentification that results from an identity theft; or (3) a defendant essentially assumed the victim’s identity.
Fifth, this amendment incorporates the statutory definitions of 18 U.S.C. §§ 1028 and 1029, although it also broadens the definitions of "counterfeit access device" and "device-making equipment" for guideline purposes.
This amendment responds to the directives to the Commission contained in section 4 of the Identity Theft and Assumption Deterrence Act of 1998, Pub. L. 105–318(b)(1) ("ITADA") and section 2 of the Wireless Telephone Protection Act, Pub. L. 105–172 ("WTPA"). For the reasons discussed below and because of the overlap in some of the statutory definitions in the ITADA and the WTPA (particularly "access device," "telecommunication identifying information," and "means of identification"), enhancements have been consolidated into a single guideline amendment.
The ITADA and the WTPA directed the Commission to "review and amend the Federal sentencing guidelines and the policy statements of the Commission" to provide appropriate punishment for identity theft offenses under 18 U.S.C. § 1028 and for offenses under 18 U.S.C. § 1029 related to the cloning of wireless telephones.
The WTPA directed the Commission to review, among other factors, "the range of conduct covered by" cloning offenses. Although cloned telephones may be possessed and used in connection with a variety of offenses, the Commission determined that the possession or use of a cloned phone does not necessarily increase the seriousness of the underlying offense. However, the Commission decided that offenders who manufacture or distribute cloned telephones are more culpable than offenders who only possess them. Accordingly, the new enhancements at §2F1.1(b)(5)(A) and (B) recognize that such offenders warrant greater punishment. However, to ensure that the guidelines apply consistently to similarly serious conduct regardless of the technology employed, this amendment provides for a broader enhancement that applies to the manufacture or distribution of any access device, including a cloned telephone.
The ITADA directed the Commission to assess certain specific factors in its consideration of appropriate penalties for identity theft, including: the number of victims; the harm to a victim’s reputation and inconvenience caused by the offense; the number of means of identification, identification documents, or false identification documents involved in the offense; the range of offense conduct; and, the adequacy of the value of loss to an individual victim as a measure for establishing penalties.
In conducting research pursuant to the ITADA, the Commission learned that identity theft, as defined broadly under the new statutory provisions at 18 U.S.C. §§ 1028(a)(7) and 1028(d)(3), occurs along a continuum of offense conduct. The most basic type of identity theft occurs when a thief steals a wallet and uses a stolen credit card to make a purchase or forges a signature to cash a stolen check. However, after analyzing the legislative history of the ITADA and Commission data, the Commission determined that the more aggravated and sophisticated forms of identity theft, about which Congress seemed particularly concerned, should be the focus of enhanced punishment under the guidelines. Such offense conduct, which generally occurs within the context of financial and credit account take-overs, involves affirmative activity to generate or "breed" another level of identification means without the knowledge of the individual victim whose identification means are misused, purloined, or "taken over". This activity is considered more sophisticated because of the additional steps the perpetrator takes to "breed" additional means of identification in order to conceal and continue the fraudulent conduct. Such sophisticated conduct makes detection by both the individual and institutional victims much more difficult. It also has the potential to increase harm, both monetary and non-monetary, to the individual victims (about whom Congress was particularly concerned in enacting the ITADA), and can result in substantial disruption of record-keeping by governmental agencies and private financial institutions upon which the stream of commerce depends. Thus, the Commission determined that this aggravated offense conduct, in contrast to the most basic forms of identity theft, merits enhanced punishment.
Accordingly, amended section §2F1.1(b)(5)(C) recognizes that the conduct of generating or "breeding" identification means warrants substantial additional penalties. The minimum offense level of level 12 accounts for the fact that the defendant in an identity theft case typically has exclusive control over the "bred" means of identification, making it difficult for the individual victim to detect that the victim’s identity has been stolen until substantial harms (e.g., a damaged credit rating) have occurred. The minimum offense level also accounts for the non-monetary harms associated with identity theft (e.g., harm to reputation or credit rating), which typically are difficult to quantify. However, for cases in which the nature and scope of the harm to an individual victim is so egregious that the two-level enhancement and minimum offense level provide insufficient punishment, the amendment invites an upward departure.
The WTPA directed the Commission to review "the extent to which the value of the loss caused by the offenses. . . is an adequate measure for establishing penalties. . . ." The amendment provides a minimum loss rule in §2F1.1 that extends to all access devices, not just to cloned wireless telephones. In so doing, similar fraud cases will be treated similarly regardless of the technology or type of access device used in the offense. Additionally, the Commission’s research and data supported increasing the minimum loss amount, previously provided only in §2B1.1 (Larceny, Embezzlement, and Other Forms of Theft), from $100 to $500 per access device. However, the data were insufficient to support using this increased amount in cases that involve only the possession, and not the use, of means of telecommunications access that identify a specific telecommunications instrument or account (e.g., ESN/MIN pairs of wireless telephones). (An example of such a case is a defendant who possesses a list of ESN/MIN pairs but has not used any of those pairs to clone wireless telephones.) For such cases, the Commission decided that the minimum loss amount should be $100 per unused means.
Effective Date: The effective date of this amendment is November 1, 2000.