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. Learn how to avoid it; read Debit Card Fraud: Is Your Money At Risk?)
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. (For further reading on this and other ruses, see our tutorial on Investment Scams.)
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. (Learn more in Keep Your Financial Data Safe Online.)
- 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. (For more on this, check out, see Consumer Credit Report: What's On It and Identity Theft: Who To Call For Help.)
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.