Identity Theft

What is Identity Theft?

The short answer is that identity theft is a crime. Identity theft and identity fraud are terms used to refer to all types of crime in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain. These Web pages are intended to explain why you need to take precautions to protect yourself from identity theft. Unlike your fingerprints, which are unique to you and cannot be given to someone else for their use, your personal data ­ especially your Social Security number, your bank account or credit card number, your telephone calling card number, and other valuable identifying data ­ can be used, if they fall into the wrong hands, to personally profit at your expense. In the United States and Canada, for example, many people have reported that unauthorized persons have taken funds out of their bank or financial accounts, or, in the worst cases, taken over their identities altogether, running up vast debts and committing crimes while using the victims's names. In many cases, a victim's losses may include not only out-of-pocket financial losses, but substantial additional financial costs associated with trying to restore his reputation in the community and correcting erroneous information for which the criminal is responsible.

In one notorious case of identity theft, the criminal, a convicted felon, not only incurred more than $100,000 of credit card debt, obtained a federal home loan, and bought homes, motorcycles, and handguns in the victim's name, but called his victim to taunt him -- saying that he could continue to pose as the victim for as long as he wanted because identity theft was not a federal crime at that time -- before filing for bankruptcy, also in the victim's name. While the victim and his wife spent more than four years and more than $15,000 of their own money to restore their credit and reputation, the criminal served a brief sentence for making a false statement to procure a firearm, but made no restitution to his victim for any of the harm he had caused. This case, and others like it, prompted Congress in 1998 to create a new federal offense of identity theft.

How does Identity Theft happen?

Stolen Wallet/Purse or other personal theft. The earliest cases of identity theft were probably related to personal information obtained by a pickpocket or burglar. The classic novel, A Tale of Two Cities, is resolved through an assumed identity, and the concept probably goes further back than that. There have been movies depicting identity thieves, like Sommersby, and Catch Me If You Can, that cast a kinder light on the criminal – but the crime is still identity theft.A large number of cases involving children's identity theft are due to a parent's misuse of their own child's identity, but there are still plenty of cases were a friend of the family or even another family member was the culprit. The best thing to do is lock personal information in a safe, although bank deposit boxes are still a great idea if you can afford one. The worst place to keep birth certificates, Social Security cards, insurance documents etc. is in the top right-hand desk drawer.

"Dumpster Diving" has been around for quite awhile, too, but up until recently it was confined to detectives, private investigators, and occasionally industrial espionage (like trying to find out who your competitors clients are). Most Americans don't realize that once you throw something in your trash and put it out to the curb for pickup, you don't have any "expectation to privacy", even though there are sound legal arguments otherwise.There is a fairly simple fix for this, though. Keep a paper shredder or "burn bag" next your desk, and use it on mail that has your personal information, like bank statements, credit card statements, utility bills, or letters from bill collectors.Mail/Phone/eMail Scams are all still categorized as "Low-Tech" because they rely on the Law of Averages to collect information. The Law of Averages basically says "If you do something often enough, a ratio will appear." This is where we get things like batting averages, poker odds, and door-to-door sales. Email scams are probably the most well-known, because the scam artist can send out thousands at one time. But these are really just phishing techniques to drag you into conversations by telephone, so the telephone scam is the real danger.

These scams go by many names, but "phishing" is the most commonly used. There are hundreds of scams in this category, but they all can be avoided by using a few simple, common-sense rules:

Reputable financial organizations will not contact you by eMail to discuss financial matters. Period. You may get prospecting letters in the eMail asking you to use a certain investment firm or apply for loan at a certain bank, but legitimate business is still done by phone, fax or in person.

Do not give out personal information over the phone. If you originated the call, or you are certain you know the person on the other end, you can feel fairly safe. If you're not certain, ask for a number you can call back. Then call the business the caller said they represent. Ask if the person works there. If so, again, you can be fairly confident that your information is going where it should. If not, you have a phone number to help law enforcement track down the criminal.

Don't let someone repeat your credit card number over the phone. You never know who may be standing behind the pizza girl taking your order on Friday night. She will want to make sure she's got the right credit card number, though, just let her know you'll read the number twice for verification.

Don't send mail in your mailbox. Drop it off at the post office. Identity thieves love to collect bill payments or credit card payments. Not only do they get your credit card number, but if you're paying by check, they get your account number as well.

How do I prevent Identity Theft?

1. Remove especially risky items that shouldn't be in your wallet to begin with: your Social Security card; "cheat sheets" noting PINs or passwords for bank cards or online accounts; blank checks; and spare keys for your home or car. Rather than carry your Medicare card day-to-day, make a photocopy and cut out the last four digits of the number (but bring the original for doctor appointments).

2. Make photocopies of the front and back of every card you keep in your wallet — driver's license, credit and insurance cards, even your library card (yes, ID thieves have been known to run up fines with a stolen library card, which if unpaid can ding the real holder's credit score). Keep these copies safely at home as a record of all your account numbers, back-of-card security codes and contact information.

If your wallet does go missing, follow up with these steps:

3. Call your credit card issuers and request an "account number change." Don't say you want to cancel the account; that may be misunderstood as meaning you want to close it, which could inconvenience you and hurt your credit score.

4. File a report with your hometown police department and the one where you think your wallet went missing. Get a copy of the reports and send duplicates to your bank and credit-reporting bureaus.

5. Alert your bank to change PINs, cancel your missing ATM card and send you a new one. Get a new checking account number if your checkbook is missing.

6. Place a "fraud alert" or "security freeze" on your file at the three major credit bureaus: Experian at 888-397-3742 toll-free (experian.com), Equifax at 800-525-6285 (equifax.com) and Trans-Union at 800-680-7289 (transunion.com). Alerts are free for everyone; freezes are more secure and sometimes free for people 65 and older.

7. Contact your DMV about a replacement driver's license and ask that a stolen/lost warning be placed in your file.

8. Ask private medical insurers for a replacement account number to avoid insurance fraud. Call Medicare. Notify your auto insurer to be sure you'll avoid problems if the thief makes an accident claim from your policy. Ask if your homeowner's policy includes ID theft protection; some do.

9. Check your credit report about two weeks after the wallet's loss. To get a free report, visit annual creditreport.com or call 877-322-8228 toll-free. Two weeks is enough time for thieves to apply for credit in your name, but generally not enough for new cards to be issued. Recheck your credit report two to three months later.

10. And don't forget to replace that library card.