By Richard A. McGrath, CIC, LIA
What may be the most rapidly growing crime in the world hardly even existed 20 years ago.
The growth of the Internet and increasing use of technology that identifies us as numbers has resulted in the rise of identity theft, which affected nearly 10 million Americans in 2008, according to the Javelin Strategy & Research Center. That’s a 22 percent increase from the previous year.
Identity theft ranges from someone stealing your wallet and taking possession of your credit cards and license to sophisticated computer hacking operations that obtain thousands of credit card numbers at a time. A credit card number or a Social Security number in the wrong hands can result in thousands of dollars in charges, and irreparable damage to your credit and your reputation.
Identity theft takes many forms. Common types of identity theft, listed by frequency of complaints received by the U.S. Federal Trade Commission (FTC), include:
- Credit card fraud (26 percent), which takes place when someone obtains your credit card number and charges purchases to your card.
- Utilities fraud (18 percent) involves the use of someone else’s identity to open accounts for water, gas and electricity. For example, parents with poor credit sometimes use a child’s identity to open utilities accounts.
- Bank fraud (17 percent) takes many forms, including theft of an ATM code, theft of checks and changing the amount on a check.
- Employment fraud (12 percent) takes place when a person uses someone else’s Social Security number to obtain a job.
- Government fraud (9 percent) includes fraud involving a person’s tax, Social Security or driver’s license information.
- Loan fraud (5 percent) occurs when someone uses another person’s name and other personal information to apply for a loan.
The remaining 13 percent of complaints are for types of identity fraud that are not specified and occur infrequently.
When Your Identity Is Stolen
Many financial institutions are committed to helping customers who have been victims of identity theft. However, to better ensure that your identity is safe, protection against identity theft can be added to your homeowner’s policy at a reasonable price.
Identity theft insurance covers expenses incurred when individuals try to restore their credit history, and regain control of their identity and their financial health. It covers the insured and all family members living in the same household. Identity theft insurance typically covers up to $15,000 per loss, but limits may vary. Your insurance agent can find the coverage that best meets your needs at a price you can afford.
If you are a victim of identity theft, the FTC recommends that you take the following steps.
1. File a report with local police or police in the community where the identity theft took place. File an Identity Theft Report, preferably in person, with your local police department. An Identity Theft Report is a detailed police report.
If the police are reluctant to take your report, ask to file a “miscellaneous incident” report or try filing an Identity Theft Report with state police. You can also contact the state Attorney General’s office for assistant. Go to (www.mass.gov) and search the term “identity theft” or call the consumer hotline at 617-727-8400.
Be sure to ask the police department to provide you with a copy of the Identity Theft Report.
2. Place a fraud alert on your credit reports. Fraud alerts help prevent the person who stole your identity from opening new accounts in your name. To place a fraud alert on your credit report, contact the toll-free number of any of the following major credit reporting companies:
- TransUnion: 1-800-680-7289; www.transunion.com
- Equifax: 1-800-525-6285; www.equifax.com
- Experian: 1-888-EXPERIAN (397-3742); www.experian.com
The company you call is required by law to contact the other two companies.
Once you have a fraud alert in your file, you’re entitled to order a free copy of your credit report from each of these three companies. Once you receive your credit reports, review them carefully and look for inquiries from companies you haven’t contacted, accounts you didn’t open and any debts on your accounts that you didn’t cause.
If you find fraudulent or inaccurate information, send a copy of your Identity Theft Report to the credit reporting company, along with a letter asking to have the inaccurate information removed. Credit reporting companies have a legal obligation to remove inaccurate information.
Check your credit reports periodically, especially for the first year after an identity theft.
3. Close accounts that were affected. Close any affected accounts, and contact the security or fraud department of each company involved with your identity theft. Follow up in writing and include copies of supporting documents. Be certain to notify credit card companies and banks in writing, so you can document your action. Send letters by certified mail with a return receipt requested, so you can document what the company received and when. Keep a file of your correspondence.
When you open new accounts, use a new Personal Identification Number (PIN) and password. Avoid using information that’s easily available, such as your mother’s maiden name, your birth date, the last four digits of your Social Security number, your phone number or a series of consecutive numbers.
Richard A. McGrath, CIC, LIA is President and CEO of McGrath Insurance Group, Inc. of Sturbridge, Mass. He can be reached at firstname.lastname@example.org.
This article is written for informational purposes only and should not be construed as providing legal advice.