Identity theft occurs so frequently that the Federal Bureau of Investigation cites it as "America's fastest growing crime problem." Thieves steal and fraudulently use the names, addresses, Social Security numbers (SSNs), bank account information, credit card numbers and other personal information of some 10 million Americans each year, according to the Federal Trade Commission. Learning about how thieves get your personal information is the first step toward protecting yourself from this devastating attack on your financial well-being.
At the Corporate Level
Thieves make headlines when they break into large consumer databases and steal hundreds or thousands of names, but that's not the only way identity theft occurs on a corporate level. It can occur also from the inside. Insiders may use an employer's access to credit reporting information to get a hold of confidential personal data, or steal information directly from the employer's files or trash. Employees can also be conned or bribed by an outsider to obtain information.
At the Personal Level
Identity theft is less publicized when it occurs on the individual level, but the number of ways that fraud can occur on this level is just as distressing. The simplest method involves stealing or finding your wallet, or digging through your trash. Identity theft can also be as simple and easy as peering over someone's shoulder as they use the ATM at the local bank. (As criminals are becoming more savvy, your money is becoming more vulnerable.
More sophisticated methods include targeting the information of the deceased through the use of obituaries, stealing or diverting your mail and obtaining credit card or bank account information via skimming. This is a high-tech theft that uses an electronic device to steal credit card or bank account information. Skimming generally occurs when your credit card is used to make a purchase, and the person processing your card uses a skimmer to capture personalized access information. It has also been found on ATMs.
Phishing is one of the most widely publicized methods of personal identity theft. Phishers create a website that looks very similar to the site of a legitimate enterprise, sending emails out to lure unsuspecting individuals to enter their personal data, which is then used by the thieves.
Once Your Identity Is Stolen
When an identity thief steals your personal data, the thief "becomes" you by assuming your financial identity. The less sophisticated criminals go on a spending spree with your credit cards, sometimes opening new credit cards in your name, writing checks or establishing cell phone accounts.
The more sophisticated thieves will do more than simply spend your money; they'll use your name and identity to do anything they want or need. They'll obtain personal identification, such as a driver's license, and use it to take out car loans, open bank accounts and even file for bankruptcy to, say, avoid eviction from a house or apartment, or get out of making payments on debts they've created in their victim's name. Some of these thieves will also use your identity when they're arrested.
Offense Is the Best Defense
While high-profile hackings of corporate databases demonstrate that nobody is completely safe from identity theft, there are precautions that can minimize the odds of being victimized.
- Protect Your Social Security Number
You SSN is a critical piece of personal information. Do not print it on any form of personal identification. Never have it printed on your checks; simply write it on the check in the rare occasions it's needed. Never carry your Social Security card in your wallet, and avoid using your SSN as a personal identifier if at all possible. Although colleges, medical clinics, purveyors of hunting/fishing licenses, employers and other entities often request your SSN, think twice before giving it out. You don't know who will have access to that data when you're not around.
- Protect Your Mail
To make your mailbox a less attractive target for identity thieves, try to reduce the amount of unsolicited offers. Opt out of pre-approved credit card offers and insurance by calling 888-5OPT-OUT or by logging onto https://www.optoutprescreen.com. Choose five-year or permanent opt out. When you do receive offers in the mail, shred them before you discard them.
Remember to cancel mail delivery when you go on vacation. If you don't, that mountain of mail makes a tempting target. Outgoing mail requires protection too. When you write a check and mail it to your credit card company, don't include information that is complete enough for someone to use: only write the last four digits of your account number – your credit card company has all the information they need to identify you.
- Protect Your Trash
The items you discard, including credit card offers, ATM receipts, bank statements, credit statements/receipts and utility bills, all contain personal information. With a bit of effort, thieves can collect this information and use it to steal your identity. To minimize this possibility, buy a shredder and use it. Similarly, when you discard of old credit cards, be sure to destroy them completely first.
- Beware of the Telephone
High-pressure callers often demand personal information with scams such as the promise of an extravagant vacation at an attractive price if only you will act now or lose the offer. To avoid these scams, never provide personal information over the phone if you did not initiate the call. To limit the number of these calls you receive, ask the callers if you can join the do-not-call list. When you do receive a call, simply hang up.
- Safeguard Your Computer
Never respond to unsolicited requests for personal information and always use virus protection. Protect your computer with a password, change it frequently and don't share your password with anyone. From time to time, search the internet for your name and the last four digits of your SSN. You never know what you might find.
- Protect Your Wallet
On the backs of your credit cards, write "photo ID required" in place of the signature. If your credit cards are stolen, it will be more difficult for a thief to make purchases. Photocopy everything in your wallet, including credit card numbers and the contact numbers of the issuers, and store this information in a secure location. If your wallet is lost or stolen, all the information you'll need to cancel your credit cards will be readily accessible.
- Protect Deceased Relatives
It's a sad fact of life that even the dead are not immune to identity theft. When a loved one passes away, obtain a dozen copies of the official death certificate, and notify all financial institutions, insurance companies, credit card companies, loan holders, etc. Be sure to remove the deceased relative's name from all joint accounts. Finally, contact the credit reporting agencies and request a deceased alert. This places a notice on the deceased's credit report, telling companies that the person has died and cannot be issued credit.
- Report Suspicious Activity
Review your credit report at least once a year and contact your creditors immediately if you note suspicious activity. If, at anytime, you suspect that an attempt has been made to steal your identity, contact the authorities. File a police report, and file a complaint with the U.S. Federal Trade Commission, whom you can reach at 1-877-IDTHEFT.
The Bottom Line
Being the victim of identity theft can be extremely devastating not only because it's your money being stolen, but your name. Identity thieves can be very skilled at finding their targets and then exploiting their findings. For this reason, to protect yourself you need to stay all the more alert and knowledgeable.
PREVENTION Your first step should be to review monthly statements from your checking and other financial accounts. The earlier you catch an error, the easier it is to resolve it. Yes, balancing your checkbook may seem a monotonous chore, but understanding where your money goes will help you spot any irregular withdrawals or charges. Reviewing your credit card bill each month is critical as well, especially if you charge a lot of your daily purchases. If you have not already, this may be a great time to sign up for online accounts. It’s easier and faster to review accounts online, on a computer you trust.
Next, order and review your credit reports. The three credit agencies, TransUnion, Equifax and Experian, are each required by law to provide you one free credit report a year. AnnualCreditReport.com has links to all three, and it is the only place to get them free. (Other sites may try to charge you or get you to sign up for monthly services of some sort.) Stagger your requests, and you can monitor your credit history every four months. While you are at it, make sure your name, address and other information are correct. If you find old or inaccurate information, have it removed.
While companies like your health care provider are no longer printing Social Security numbers on member identification cards, a lot of personal information is still out there. Be sure to shred old bank statements, applications for new credit cards and other documents that have personal information.
Secure your personal information online and offline. Do not carry your Social Security card in your wallet. Keep it at home with your other important documents. Be careful about online passwords as well and change them often. And be vigilant about sharing personal information when opening new accounts online. If online advertisements or offers seem too good to be true, they probably are.
ACTION The steps you will need to take to recover from identity theft depend on the type of fraud you believe has occurred. If you are going through your monthly statements and see an error on an existing credit card, monthly bill or financial account, first call the company to report it.
By federal law, credit card companies have strong consumer protections in place, and they have large departments to investigate fraud. For that reason, you may want to consider using a credit card to pay for online and major purchases. That will give you more protection than if you use a debit card, because the money comes directly out of your bank account when you use a debit card. Making purchases with a credit card provides a layer of protection.
Once you have reported the error and determined there is reason to believe a fraud has occurred, the Federal Trade Commission recommends that you place an initial fraud alert with one of the three major credit reporting agencies. (They are required by law to report the fraud alert to the other two agencies.) The alert, which remains on your credit report for 90 days, automatically entitles you to a free copy of your report. Review this for any accounts you did not open or activity you did not conduct, and confirm that the report has your correct name, address and Social Security number.
Once you have determined that a fraud has occurred, you should also file both a complaint form with the trade commission and an identity theft report with your local police department. And you should file these complaints if you see any new accounts on your credit reports that you did not personally open.
After you have filed the reports, make multiple copies of them and save the originals in a safe place. While identity theft is hard to prosecute, these documents will help you investigate your case with the credit agencies and the financial institutions you do business with. Filing with the trade commission may also provide you with certain protections. In addition, law enforcement may use your information in their identity theft investigations.
Depending on the severity of your situation, you may want to consider the second type of fraud alert. The initial alert, which is recommended if, say, you lose your wallet, requires potential creditors to take certain steps to verify your identity before opening new accounts in your name. The extended fraud alert, which lasts seven years, requires creditors to contact you personally before new accounts are opened.
But there is one thing to remember: Fraud alerts help only when a thief is trying to open a new line of credit. They may not prevent a thief from using existing accounts or ordering new cards. Nor can they prevent the opening of a bank account or another account that does not require a credit check.
While they are different in each state, credit freezes are also available. When you place a freeze on your credit report, businesses and creditors cannot check your credit history unless you temporarily lift the freeze. The cost of freezing your credit, the cost of thawing it temporarily and the rules on who can freeze their credit depend on the state.
Regardless of the severity of the problem, be careful when you contact the companies of the compromised accounts or the accounts you think have been tampered with. While the level of risk varies because of credit limit, credit history and other factors, your credit score may be negatively affected if you choose to cancel credit card accounts. Inform the creditor that you have reason to suspect you are victim of fraud, and ask it for the company’s policy in situations like these. One option is to ask that the account be assigned a new number. Another option, when contacting credit agencies, is to place a 100-word consumer statement on your credit report explaining the fraud. This statement will stay on your credit report as long as you want.
And again, be sure to get documentation on all of your conversations and interactions with these lenders.
EXTRA HELP In recent years, the three main credit agencies — and other companies as well — began offering credit monitoring and identity fraud services for monthly or annual subscriptions. Some companies even offer identity theft insurance. Prices and services vary, but over all, the agencies promise to monitor your credit report and send alerts if any questionable activity is found.
Whether it is a wise idea to sign up for such services depends on your wallet and your need for peace of mind. If you have already been a victim of identity theft and have had to spend a significant amount of time and resources to clean up your record, the services may reassure you. But if you have not had any problems and you are already vigilant about reviewing your accounts, it may not be worth the money.Continue reading the main story