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The Problem of Identity Theft and What You Can Do About It

Red "SECURITY BREACH" revealed in green computer code through aAlmost a year ago, Target first revealed a data breach had compromised millions of its customers’ credit and debit card information. Since then, the news has been dominated by the discovery of new breaches, disasters collectively putting millions of consumers’ information at risk and every consumer on alert. This time around, consumers haven’t forgotten: according to TransUnion’s most recent consumer survey, 95% of Americans are concerned about identity theft this holiday season. Are you?

The Problem of Identity Theft and How to Manage It

Progress in the fight against identity theft?

The FBI files cases against criminal enterprises suspected of stealing consumer identities, often on a wide scale and involving several states and communities. From 2008 through the middle of fiscal year 2013, the Bureau reported 1,600 convictions and $78.6 billion in restitution for identity-theft-related crime. During that same time period, another $4.6 billion has been recovered, and the federal government collected $6.8 billion in identity-theft-related fines. In other words, there is a lot of money involved in identity theft.

Despite the best efforts of law enforcement, identity theft remains a significant, growing problem. The U.S. Treasury Department reports 1.6 million identities were stolen in 2013, up from 271,000 in 2010. Already, billions of dollars have been unlawfully obtained by criminals, and Treasury warns that, over the past five years, the federal government may have delivered as much as $21 billion in fraudulent, identity-theft-related tax refunds.

“Prisoners at jails across the country have obtained stolen Social Security numbers and filed thousands of false returns,” the Boston Globe reported last February. “Criminals in foreign locales have pilfered the personal information of Americans and received refunds. Thieves have even stolen the Social Security numbers of thousands of children, as well as tens of thousands of dead people, to obtain fraudulent tax refunds.”

The Globe reports that even tax preparers have been caught filing tax returns without their clients’ knowledge, collecting and keeping the money for themselves. For now, government efforts have not caught up with identity theft scammers.

The Federal Trade Commission reports 8.6 million households experienced some form of identity theft in 2010. In 2006 and 2007, five percent of people ages 16 and older fell victim to identity theft, according to the U.S. Bureau of Justice Statistics. Per theft, that amounted to an average of $10,000 in losses to financial institutions and victims.

Easy identity protection precautions

Protecting against identity theft is a matter of being cautious about who you share sensitive information with and how you share it. Here are some easy protection steps you can take:

  • Research service providers. When hiring a tax preparer, placing your parents in a nursing home, or enrolling your kids in a daycare, ask their clients how satisfied they are. Google the providers. Check with the Better Business Bureau to see if any claims have been made against these businesses.
  • If any email or social media contact claims to represent the IRS, it is false. The IRS does not use either tool to contact taxpayers. Any phone calls threatening you with arrest or deportation are not initiated by the IRS.
  • Never carry your Social Security card in your wallet. Keep it securely filed away and only provide the original or a copy when absolutely necessary, such as after being hired for a job.
  • Never respond to phone calls or emails asking for financial information. This “phishing” is not a practice of any legitimate financial institution.
  • Regularly check your bills online. Look for unexpected withdrawals or purchases.
  • If you did not receive a tax refund, despite indications you should have, contact the IRS immediately. Filing returns early may reduce the risk scammers will receive your refund.
  • Shred documents. Any document with any account number on it should be shredded.
  • Use strong passwords. Check your passwords to make sure they’re not easily cracked.
  • Use only official, secure websites. Look for “https” to ensure encryption.
  • Keep aware in public places. Do not set your cellphone down, and do not talk loudly when providing a Social Security number or date of birth. In fact, it’s best to verbally address sensitive financial matters from the privacy of your home.

What to do if your identity is stolen

Even if you have taken all the precautions suggested above, you may still become an identity theft victim. Here’s a plan of action should you notice any strange activity on your bills or financial accounts:

  • Ask for a fraud alert to be placed on your credit report. You can do this with one of the national credit reporting companies, such as TransUnion, who will then also contact the other two national credit reporting companies to do the same for you. A fraud alert will advise those who legitimately see your credit report that your identity may have been compromised. That way, any legitimate creditors can take additional steps before opening an account in your name or otherwise acting on your behalf.
  • Get free copies of your credit report from all three national credit reporting companies.
  • Put a security freeze on your credit reports to stop all third-party access to them. You must request a separate security freeze with each of the three national credit reporting companies, and conditions may apply based on the situation and your state of residence. Notify all financial institutions you use that your identity has been compromised.
  • File a fraud report with the FTC and with your local police department.
  • For help in repairing your identity, look for guidance provided by the FTC. The three national credit reporting companies are also good sources of information. For example, TransUnion provides a variety of helpful identity protection tips.

Identity theft is a time-consuming and challenging ordeal. The faster you begin notifying the proper authorities after you detect a theft, the more likely you will be to stop the damage early in the process.

Courtesy of TransUnion – A BIIA Member

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