Protecting
Yourself Against Identity Theft
By
Janet Hill
Your
credit cards suddenly max out. Your mortgage application gets
rejected. Your savings disappear. And in extreme cases straight
out of an Orwellian nightmare, you could be accused of a crime
you didn’t commit. You have become a victim of identity theft;
the crime whereby someone else fraudulently uses your personal
and financial information for their gain. Perpetrators can be
anyone from computer hackers to international criminal gangs to
your garden-variety pickpocket.
A
Costly Concern
The
Privacy Rights Clearinghouse estimates damages due
to identity theft are upwards of $4 billion a year, victimizing
between 500,000 and 700,000 individuals. But it’s hard to quantify
the true extent of this growing crime—because financial institutions
don’t want to admit how widespread the problem may be. They fear
stricter government-imposed guidelines for issuing credit to consumers,
and that would be bad for their bottom lines. For them, it’s merely
a cost of doing business, much like postage or payroll.
But
if you think identity theft only affects the individual whose
credit line has been wrecked, you’re wrong. It’s a crime for which
we all pay via increased interest rates, APRs, and exorbitant
late fees. Credit card companies raise their fees to merchants,
who, in turn, increase their prices to keep up, so consumers are
affected on another front.
Steps
to Protect Yourself
While
there’s no guaranteed way to prevent yourself from becoming a
victim of identity theft, there are precautions you can take to
make it more difficult for someone to steal your good name.
Safeguard
your trash. It sounds
far-fetched, but many criminals go dumpster diving for
discarded paperwork. Put your trash out for collection as late
as possible. Better yet, spend $30 on a paper shredder. Shred
bills, statements, and even those annoying credit card offers
you don’t respond to.
Be
skeptical when asked for personal information.
You are well within your rights to ask why your cell phone provider
needs your mother’s maiden name. Find out why they need it and
how it’s used.
Limit
your credit. It sounds
almost anti-American to preach austerity, but don’t open a lot
of credit accounts. Reduce your exposure (and your APR) by closing
your department or specialty store cards; most chain stores also
accept Visa, MasterCard, and American Express. Be sure you get
a letter from the issuer declaring your account closed.
Secure
your social security number. Never carry it in your wallet. Very few places that ask for it really
need it. For example, many states use your social security number
as your identifier on driver’s licenses. Ask to be assigned another
number.
Monitor
your mailbox. If your
bills stop appearing, someone might have redirected them by filing
a change of address form with the post office. Be sure you recognize
every purchase or phone number on your bills, and report the ones
you don’t.
Travel
light. Don’t keep credit
cards in your wallet if you don’t use them. If you go on vacation,
remove the cards—credit, phone, library, or otherwise—you know
you won’t be using. Always sign the cards the moment you get them.
And don’t keep PINs with them.
Get
your credit report annually. Equifax, Experian, and TransUnion are the major credit bureaus. In some
states, you are entitled to a free copy of your credit report;
in others, you may pay up to $9—but it’s a small investment when
it comes to your peace of mind and security. Report anything that
doesn’t match your records. The credit bureau will then send you
a copy of the updated report.
Check
out “disposable” credit cards. American Express and Visa have developed credit card numbers
for their members that can be used only once for Internet shopping.
The charge shows up on your regular statement.
What
If You Become a Victim?
In
1998, Congress made identity theft a federal offense. Numerous
government organizations have established programs to help. Call
your financial institutions and report the theft as soon as possible
to limit your exposure.
Contact
your local office of the Postal Inspection Service if you think
someone has submitted a change of address form with the post office
to allow them to receive your mail, or has posed as you to commit
fraud through the mail. The Social Security Administration’s Inspector
General’s office has a special hotline (800-269-0271) to report
instances of identity theft.
The
Federal Trade Commission (FTC) also has a special Identity
Theft Hotline (1-877-ID-THEFT). Your information goes into a secure
database and may be shared with law enforcement agencies and private
companies. The FTC also offers the ID Theft Affidavit, which you
can use to alert companies where a new account was opened in your
name. Not every company accepts the affidavit; the FTC’s identity
theft Web site, www.consumer.gov/idtheft/victim.htm,
offers a list of those that do.
Depending
on how widespread the identity theft was, you might also need
to retain an attorney. While, ultimately, the financial institution
will usually absorb the costs of unauthorized charges, you may
spend years trying to regain your credit standing to simply write
a check at the grocery store. A lawyer can best advise you of
your course of action.
Be
Proactive
On
average, it takes 14 months for you to discover you are a victim
of identity theft. By then, the perpetrator has burned countless
others. But the damage has been done, and the long arduous battle
to restore your creditworthiness and identity has just begun.
Being aware of the ways in which criminals can steal your identity—and
taking steps to safeguard yourself—will help you prevent years
of heartache.
Janet
Hill is a financial consultant practicing in Salt Lake City, Utah.
She offers investment, wealth management and insurance services
as a registered representative of Commonwealth Financial Network—a
registered investment advisor and member firm of the NASD/SIPC,
Boston Stock Exchange. She can be reached at janetellen@meridianmagazine.com
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