In this MoneyTalk, we will talk about Identity Theft: Prevention and Action.
Have you ever considered that you could become a victim of Identity Theft? Do you know that nearly 42 million Americans were victims of identity fraud last year?
When a criminal gets hold of your personal information, there are several things they can do with the data. Getting hold of such personal details will enable a criminal to do fraudulent things at any time they wish, and many times they will strike with fraud when you are least expecting it to happen.
These fraudulent acts, even though not committed by the victim, can land the victim in a lot of trouble. The victims of financial fraud because of identity theft might find themselves saddled in debt if their details are used to conduct financial transactions. This can cost the victim time and money along with a negative impact on their credit score. And, if the victim’s credit score is tainted, he might find it difficult to get a mortgage, a new credit card or a loan.
In this MoneyTalk, we will discuss Identity Theft and what you can do to prevent and protect yourself from Identity theft. We will also talk about what actions you need to take if you become a victim of Identity theft.
Let’s first understand what Identity Theft is. Identity Theft also called ID Theft is a crime where the thief steals your personal information and uses it in an unauthorized way for their own personal gain. Criminals use seemingly pieces of information such as your full name or date of birth to commit identity theft. In today’s world, where so much of our information is online, it is very easy for thieves and fraudsters to get hold of your personal information.
For example, whenever we shop online or pay for anything online on any website, we share our first name and last name, our address and then our credit card details. Additionally, some companies may even ask for more personal information as part of their verification process. All of these details and information are stored in data servers by these companies. Even though these companies may be following data security precautions and procedures to safeguard this information, there have been many high-profile data breaches where online hackers have been able to access the personal details of millions of people.
In these data breaches, criminals are able to gain access to information and personal data such as bank and credit account details, email addresses, social security numbers, home addresses, mother’s maiden name, place of birth, pin numbers and passwords.
Financial fraud is the most common crime committed with the information obtained, such as fraudulently applying for credit card loans, getting medical services or even filing taxes. identity thieves can use your identity to commit more serious crimes such as smuggling, committing cyber-crimes, entering, and exiting a country illegally, laundering money, trafficking drugs and much more. Just about any crime, you can imagine can be committed with a stolen identity.
For more serious ID theft crimes, the victim may fall under the suspicion of the police and become a suspect in a criminal investigation. The victims may find it difficult to prove their innocence and in a worst-case scenario, the victim may eventually end up in jail leading to lots of legal trouble.
Let’s now look at the different types of identity Theft as ID theft has taken different forms. They range from the simplest to the most dangerous crimes you can think of. The typical types of Identity Theft are:
1. Financial Identity Theft
Financial identity theft is the most common type of identity fraud. It involves the use of personal information to create or take charge of financial accounts such as credit cards, checking accounts, mortgages, and car loans. If this fraud is not detected in time, credit card fraud which is an offspring of financial identity theft can max out your accounts. If you do not catch this fraud as soon as it happens, it can lead to severe financial impact and will likely dent your credit score as well. Additionally, a thief may use your Social Security Number to falsely file tax returns with the Internal Revenue Service or state government and commit Tax Identity Theft.
2. Employment Identity Theft
In this theft, the culprits use stolen identification such as Social Security Numbers to obtain employment where they would otherwise not be able to work. They use the stolen identity to avoid having background checks into their real, personal and drug use history. This is a serious issue, as any crimes committed at the workplace under your identity may cause you legal troubles.
3. Driver License Identity Theft
Criminals can also use the victim’s personal information to obtain a driver’s license and then use the driver’s license to commit traffic violations that end up on the victim’s record. Due to this, the victim might end up paying fines or even end up losing their driver’s license for violations they never committed.
4. Medical Identity Theft
Medical identity theft occurs when someone steals your personal information, such as your Medicare ID or Health Insurance Number and then uses this information to obtain medical care, buy medication or issue fraudulent billing to your insurance provider. This theft can lead to the victim receiving unexpected large sums of bills charged by the insurance providers. If the victim is unable to prove his innocence, the bills may be sent to the Collections Agency which will hound the victim for the payment of bills.
5. Child Identity Theft
A child’s or student’s identity is a gold mine for identity thieves. This is because children’s identity records are not well established in the various systems and such theft might go undetected for many years. Criminals can use a child’s Social Security Number to falsely claim dependent children or welfare payments from the government. They can even use the child’s details to commit crimes or even apply for loans. Sadly, relatives or friends are usually the culprits who commit child identity theft. They have easy access to the required information, so they use it to obtain credit cards and take loans in the name of the child. By the time the victim is old enough, he/she will learn of the theft and will discover that their credit rating is ruined. The victim will find it difficult to obtain a student or car loan. It will then require several years of credit monitoring and clean up to restore the victim’s credit.
Now that we know the different types of Identity Theft, let’s talk about some of the ways you can protect yourself from Identity Theft.
The methods used by identity thieves to steal information have evolved over time, and they continuously adapt to new technology making it almost impossible to completely prevent identity theft. But that doesn’t mean the likelihood of being a victim cannot be limited or even eliminated, by taking certain precautions. We recommend the following steps to limit the chances of being a victim of identity theft:
Shred receipts, bank, and credit card account statements, and whenever possible only set up to receive e-statements and cancel paper statements
Store personal documents in a safe and secure place at home or work, and keep them hidden and locked
Do not give away your credit or debit card when paying bills such as at a restaurant, and always make sure that the card never leaves your sight
Don’t respond to unsolicited requests for personal information by phone, mail or email, and always check the numbers against what is listed on the bank or credit card company’s website
Secure your Social Security Number and only give out your Social Security Number when absolutely necessary
Install firewalls and virus-detection software on your home computer, and never download or install software or apps on your phone from unverified sources
Promptly compare receipts with the amounts in account statements and check for discrepancies in the amounts
Watch for unauthorized transactions on your accounts by checking your bank and credit card accounts daily
Make sure your passwords are complex so that identity thieves cannot guess them easily, and never keep your passwords written on paper
Collect mail promptly and ask the post office to put your mail on hold when you are away from home for several days
Monitor your Credit Score reports regularly and check for unrecognizable loans or credit cards opened in your name
Most importantly, you should always use MoneyPatrol to monitor your bank and credit card accounts. MoneyPatrol will send you a text and email notification whenever it detects new transactions on your accounts. These alerts will help you spot fraudulent and suspicious transactions on your accounts. You can then immediately contact your financial institution to take further action.
If you realize that you have been a victim of ID theft, we recommend that you contact your financial institution immediately. Many banks and credit card companies will reverse fraudulent charges if you notify them within 15 to 45 days of the crime happening. They will lock your account and will send you a new debit and credit card. You can also call the Credit Bureaus and request to freeze your credit so that any new loan applications will not be approved unless you unfreeze the credit. Additionally, if you are an ID theft victim, you should also look into filing a criminal report with the authorities.
We hope that this MoneyTalk has helped you understand what is ID Theft, what you can do to prevent it from becoming an ID theft and what actions you can take if you, unfortunately, become an Identity Theft victim.