Protecting Yourself Against Identity Theft – And How To Fight Back
Michael Kabel
February 27, 2008
Identity theft is a federal crime that ruthlessly affects more than nine million people each year in the United States alone. For families struggling to make ends meet or provide their future, it amounts to no less than a ransacking of their financial security. And the ease with which even the most personal information can be illegally obtained is often chilling.
Loosely defined as the illegal use of someone else´s personal and financial information for personal gain, identity theft amounts to 42 percent of the complaints received by the US Federal Trade Commission – their single biggest source of complaints. Identity thieves use stolen information for an entire spectrum of crimes, ranging from illegal immigration to wide-scale fraud and even terrorism. Yet despite its myriad dangers, for victims and potential victims alike, there´s hope.
An identity theft case study
The US Department of Justice reports probably the most notorious identity theft case, in which a convicted felon was able to incur more than $100,000 of credit card debt, obtain a federal home loan, and even bought guns, motorcycles, and homes with the illegally-gotten money.
Adding insult to injury, the criminal called the victim to taunt and mock his plight, boasting that he wouldn´t serve time for his actions since there was – at the time – no federal anti-identity theft legislation. And indeed the felon eventually only served a minor jail related to the guns, while the victim and his wife spent four years and $15,000 of their own money clearing their name. Shortly thereafter, in 1998 Congress created the Identity Theft and Assumption Deterrence Act, which made identity theft a federal offense.
The high cost of identity theft
Identity theft and ensuing credit card and other forms of financial fraud contributed to over fifty six billion dollars in fraud damages during 2006. While the total number of identity theft victims decreased, the damage per victim rose to more than $6200 dollars between 2003 and 2006.
And the problem is not purely an American issue. The Home Office of the United Kingdom asserts that identity theft and fraud have cost the UK more than 1.7 billion pounds, while in Australia the effect is believed to cost more than one billion dollars each year. While these statistics are sometimes believed exaggerated because of hazy definitions of identity theft as a crime, it points nevertheless to growing international concern.
Besides, financial costs, there is no way to estimate the emotional damage caused by identity theft. More than a third of all identity theft cases take more than three months to resolve, at a cost of sometimes countless hours and thousands in additional expenses. In addition, victims often find credit problems and misunderstandings plaguing them for years afterward.
The four kinds of identity theft
The non-profit consumer watchdog group the Identity Theft Resource Center classifies four different types of identity theft:
Financial identity theft involves stealing one´s banking or other financial information, usually with the purpose of fraudulently obtaining a loan or line of credit. Other forms include forging checks, raiding private checking and savings accounts, and counterfeiting money orders.
Criminal identity theft entails physically posing as someone else – that is, using another´s identity – when committing or getting arrested for a crime. In many cases the criminal will have counterfeit identification documents naming themselves as their identity theft victim.
Identity cloning involves duplicating another person´s personal information, financial information, or other data to use in everyday life. This is possibly the most notorious form of identity theft, as it involves "becoming" someone else over an extended period of time.
Business & Commercial Identity Theft is committed when an individual uses someone else´s business name or reputation to obtain credit.
How identity thieves obtain information.
Identity thieves obtain information through means and techniques ranging from the most erudite to the simplest forms of snooping and prying. Unfortunately, many times a consumer will unwittingly volunteer even their most valuable data.
The Federal Trade Commission lists the following ways thieves steal an identity:
Dumpster diving: stealing or raiding trash cans for credit card information.
Skimming credit card numbers by using a special storage device when a card is swiped.
Phishing involves using a phony email or online pop-up advertisement to obtain someone´s personal information. The duped consumer will respond to the email or bulletin and unwittingly offer their information to thieves.
Changing an address: thieves will use change of address forms to illegally divert a bill to another location.
Stealing and "shoulder surfing:" This is the traditional stealing and prying in the real world that´s nonetheless often hard to detect. Some thieves raid or lift purses, wallets, and mail; others will hover surreptitiously over ATM´s, public computer terminals, and other electronic machines in order to espy information.
In addition, many times thieves will sometimes impersonate bank or debtor officials, research groups, survey takers, or other information gatherers as a means to solicit information from consumers. This technique is known to law enforcement officials as pretexting. Thieves will also sometimes use false documentation to obtain records or personal information from creditors or financial institutions.
How to protect against identity theft
Protecting personal and family information involves constant vigilance and a certain amount of online and electronic savvy in releasing information.
Because millions of consumers are especially vulnerable while shopping online, experts recommend installing both a firewall and reputable anti-virus protection that regularly updates, to protect against the latest phishing and hacking schemes. The Identity Theft Resource Center likens remaining online without these safeguards to leaving your home unlocked with a "Welcome Thieves" banner hung across its front.
When shopping online, consumers should use only Web sites that offer multiple encryption and protection features. Microsoft cautions online shoppers to use secure servers that feature a padlock icon on the browser´s lower right side and/or the "https" prefix in its address.
The FTC outlines its consumer defense strategy in a pamphlet called "Deter, Detect, Defend." They recommend that consumers remain vigilant regarding the arrival of their bills and to watch for inconsistencies in credit card statements or financial histories.
All credit card statements, as well as free credit card offers, should be shredded before getting thrown out. Social security cards and extra credit cards should not be carried in the wallet or purse. All personal information should likewise be stored in a hidden, secure location within the home. Personal information, including credit card numbers, should never be given over the phone. Mail should be retrieved as soon as possible from its box.
Consumers should also annually check their credit reports. Under federal law, the three major credit reporting companies – Equifax, Experian, and TransUnion – must furnish one credit report each year to consumers who request them. Inconsistencies on the credit report will often point to instances of credit card theft or misuse. Consumers can request a report by writing to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
A free copy of the FTC´s "Deter, Detect, Defend" brochure is available online at www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt01.shtm.
What to do if you think you´re a victim
The Better Business Bureau reports that one of the leading misconceptions regarding identity theft is the public´s sense of helplessness. In truth, consumers detect just 47% - less than half – of identity theft and fraud themselves. The rest learn their identities were stolen by collection agencies, credit card companies, and even the police.
The FTC suggests that consumers who believe they may be a victim of identity theft should first contact one of the three credit bureaus and request a fraud alert be placed on their credit records. The alert is good for 90 days. Upon receiving a credit report, consumers should carefully review and audit their records to search for fraudulent expenses. Any accounts that have been tampered with or that are suspected of tampering should be closed immediately.
Consumers should then file a complaint with the FTC, either at www.ftc.gov/idtheft or by calling 1-877-ID-THEFT (438-4338). The FTC will have them fill out an ID Theft Affidavit as a means of quickly reporting the identity theft to many different credit organizations.
Consumers should also file an Identity Theft Report with their local police, which can block fraudulent information from appearing on updated credit reports. They can also block agencies from attempting to collect debts resulting from the identity theft. Finally, the Identity Theft Report is necessary to place an extended fraud alert on credit reports. The report must contain specific information about the identity theft. Consumers should bring copies of the FTC´s Identity Theft Complaint and ID Theft Affidavit to the police office when filling out the report.
The Department of Justice recommends contacting the following federal agencies as well:
For mail tampering or theft, fill out and return the Postal Inspection Service´s fraud reporting form at http://postalinspectors.uspis.gov/forms/idtheft.aspx;
The Internal Revue Service is available at 1-800-829-1040 for help with information related to identity theft and tax records;
The Social Security Administration has an online form available at https://www.socialsecurity.gov/oig/public_fraud_reporting/form.htm to help consumers whose Social Security card or number has been stolen or used in fraudulent activities.
Finally, victims can also contact the Identity Theft Resource Center at victims@idtheftcenter.org or by calling its Victim Assistance Center at (858) 693-7935. The ITRC will offer a variety of assistance and strategies for dealing with the theft and its fallout.
Michael Kabel is senior staff writer for Corner Stork Baby Gifts.com. Stop by for parenting and baby resources, unique baby gifts, baby gift baskets and baby shower favors.
Loosely defined as the illegal use of someone else´s personal and financial information for personal gain, identity theft amounts to 42 percent of the complaints received by the US Federal Trade Commission – their single biggest source of complaints. Identity thieves use stolen information for an entire spectrum of crimes, ranging from illegal immigration to wide-scale fraud and even terrorism. Yet despite its myriad dangers, for victims and potential victims alike, there´s hope.
An identity theft case study
The US Department of Justice reports probably the most notorious identity theft case, in which a convicted felon was able to incur more than $100,000 of credit card debt, obtain a federal home loan, and even bought guns, motorcycles, and homes with the illegally-gotten money.
Adding insult to injury, the criminal called the victim to taunt and mock his plight, boasting that he wouldn´t serve time for his actions since there was – at the time – no federal anti-identity theft legislation. And indeed the felon eventually only served a minor jail related to the guns, while the victim and his wife spent four years and $15,000 of their own money clearing their name. Shortly thereafter, in 1998 Congress created the Identity Theft and Assumption Deterrence Act, which made identity theft a federal offense.
The high cost of identity theft
Identity theft and ensuing credit card and other forms of financial fraud contributed to over fifty six billion dollars in fraud damages during 2006. While the total number of identity theft victims decreased, the damage per victim rose to more than $6200 dollars between 2003 and 2006.
And the problem is not purely an American issue. The Home Office of the United Kingdom asserts that identity theft and fraud have cost the UK more than 1.7 billion pounds, while in Australia the effect is believed to cost more than one billion dollars each year. While these statistics are sometimes believed exaggerated because of hazy definitions of identity theft as a crime, it points nevertheless to growing international concern.
Besides, financial costs, there is no way to estimate the emotional damage caused by identity theft. More than a third of all identity theft cases take more than three months to resolve, at a cost of sometimes countless hours and thousands in additional expenses. In addition, victims often find credit problems and misunderstandings plaguing them for years afterward.
The four kinds of identity theft
The non-profit consumer watchdog group the Identity Theft Resource Center classifies four different types of identity theft:
Financial identity theft involves stealing one´s banking or other financial information, usually with the purpose of fraudulently obtaining a loan or line of credit. Other forms include forging checks, raiding private checking and savings accounts, and counterfeiting money orders.
Criminal identity theft entails physically posing as someone else – that is, using another´s identity – when committing or getting arrested for a crime. In many cases the criminal will have counterfeit identification documents naming themselves as their identity theft victim.
Identity cloning involves duplicating another person´s personal information, financial information, or other data to use in everyday life. This is possibly the most notorious form of identity theft, as it involves "becoming" someone else over an extended period of time.
Business & Commercial Identity Theft is committed when an individual uses someone else´s business name or reputation to obtain credit.
How identity thieves obtain information.
Identity thieves obtain information through means and techniques ranging from the most erudite to the simplest forms of snooping and prying. Unfortunately, many times a consumer will unwittingly volunteer even their most valuable data.
The Federal Trade Commission lists the following ways thieves steal an identity:
Dumpster diving: stealing or raiding trash cans for credit card information.
Skimming credit card numbers by using a special storage device when a card is swiped.
Phishing involves using a phony email or online pop-up advertisement to obtain someone´s personal information. The duped consumer will respond to the email or bulletin and unwittingly offer their information to thieves.
Changing an address: thieves will use change of address forms to illegally divert a bill to another location.
Stealing and "shoulder surfing:" This is the traditional stealing and prying in the real world that´s nonetheless often hard to detect. Some thieves raid or lift purses, wallets, and mail; others will hover surreptitiously over ATM´s, public computer terminals, and other electronic machines in order to espy information.
In addition, many times thieves will sometimes impersonate bank or debtor officials, research groups, survey takers, or other information gatherers as a means to solicit information from consumers. This technique is known to law enforcement officials as pretexting. Thieves will also sometimes use false documentation to obtain records or personal information from creditors or financial institutions.
How to protect against identity theft
Protecting personal and family information involves constant vigilance and a certain amount of online and electronic savvy in releasing information.
Because millions of consumers are especially vulnerable while shopping online, experts recommend installing both a firewall and reputable anti-virus protection that regularly updates, to protect against the latest phishing and hacking schemes. The Identity Theft Resource Center likens remaining online without these safeguards to leaving your home unlocked with a "Welcome Thieves" banner hung across its front.
When shopping online, consumers should use only Web sites that offer multiple encryption and protection features. Microsoft cautions online shoppers to use secure servers that feature a padlock icon on the browser´s lower right side and/or the "https" prefix in its address.
The FTC outlines its consumer defense strategy in a pamphlet called "Deter, Detect, Defend." They recommend that consumers remain vigilant regarding the arrival of their bills and to watch for inconsistencies in credit card statements or financial histories.
All credit card statements, as well as free credit card offers, should be shredded before getting thrown out. Social security cards and extra credit cards should not be carried in the wallet or purse. All personal information should likewise be stored in a hidden, secure location within the home. Personal information, including credit card numbers, should never be given over the phone. Mail should be retrieved as soon as possible from its box.
Consumers should also annually check their credit reports. Under federal law, the three major credit reporting companies – Equifax, Experian, and TransUnion – must furnish one credit report each year to consumers who request them. Inconsistencies on the credit report will often point to instances of credit card theft or misuse. Consumers can request a report by writing to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
A free copy of the FTC´s "Deter, Detect, Defend" brochure is available online at www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt01.shtm.
What to do if you think you´re a victim
The Better Business Bureau reports that one of the leading misconceptions regarding identity theft is the public´s sense of helplessness. In truth, consumers detect just 47% - less than half – of identity theft and fraud themselves. The rest learn their identities were stolen by collection agencies, credit card companies, and even the police.
The FTC suggests that consumers who believe they may be a victim of identity theft should first contact one of the three credit bureaus and request a fraud alert be placed on their credit records. The alert is good for 90 days. Upon receiving a credit report, consumers should carefully review and audit their records to search for fraudulent expenses. Any accounts that have been tampered with or that are suspected of tampering should be closed immediately.
Consumers should then file a complaint with the FTC, either at www.ftc.gov/idtheft or by calling 1-877-ID-THEFT (438-4338). The FTC will have them fill out an ID Theft Affidavit as a means of quickly reporting the identity theft to many different credit organizations.
Consumers should also file an Identity Theft Report with their local police, which can block fraudulent information from appearing on updated credit reports. They can also block agencies from attempting to collect debts resulting from the identity theft. Finally, the Identity Theft Report is necessary to place an extended fraud alert on credit reports. The report must contain specific information about the identity theft. Consumers should bring copies of the FTC´s Identity Theft Complaint and ID Theft Affidavit to the police office when filling out the report.
The Department of Justice recommends contacting the following federal agencies as well:
For mail tampering or theft, fill out and return the Postal Inspection Service´s fraud reporting form at http://postalinspectors.uspis.gov/forms/idtheft.aspx;
The Internal Revue Service is available at 1-800-829-1040 for help with information related to identity theft and tax records;
The Social Security Administration has an online form available at https://www.socialsecurity.gov/oig/public_fraud_reporting/form.htm to help consumers whose Social Security card or number has been stolen or used in fraudulent activities.
Finally, victims can also contact the Identity Theft Resource Center at victims@idtheftcenter.org or by calling its Victim Assistance Center at (858) 693-7935. The ITRC will offer a variety of assistance and strategies for dealing with the theft and its fallout.
Michael Kabel is senior staff writer for Corner Stork Baby Gifts.com. Stop by for parenting and baby resources, unique baby gifts, baby gift baskets and baby shower favors.
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