What is Identity Theft?
Identity theft occurs when a criminal takes your personal information (such as your social security number, address, birth date, bank account number, credit card number, etc.) and uses it to steal money or obtain services under your name. With every advance in technology, it seems there are those who will quickly find a way to put it to use for their own unlawful gain. For example, some thieves access your information by hacking into personal or business computer systems or stealing laptops that contain personal data. But even more often, they use good old-fashioned techniques like stealing your purse or wallet. Copies of bank or credit card statements, bills or other personal papers can be stolen out of your home, your trash, the trash of businesses you’ve patronized, or your incoming or outgoing mail. Some thieves simply talk people into giving them information by posing as someone who would have a right to know it or claiming they need you to verify your account information.
Identity theft is a serious crime!
Once thieves have this information, they can wreck havoc with your good financial name. They can run up charges on your credit card, changing the billing address so it will be awhile before you realize what has happened. They can open new accounts in your name, including bank, phone and utility accounts; write counterfeit checks; drain your bank account; pay taxes or file for bankruptcy in your name; or get official ID issued in your name. It has even been known to happen that an identity thief will give the victim’s name if they get arrested, and when they don’t show up for court, the police come after you! In addition to the expense of resolving the problem, identity theft victims can also be harassed by collections agents, have their utilities cut off, or have trouble obtaining loans, credit or new bank accounts. They may also be unable to access their existing bank accounts or use their existing credit cards. The bottom line is identity theft can have a serious negative impact on the victim so you need to be informed.
FINANCIAL 1 WEALTH MANAGEMENT GROUP
Financial 1 Tax Services
10211 Wincopin Circle, Suite 620
Columbia, MD 21044-3431
3701 Old Court Road, Suite 24
Baltimore, MD 21208-3901
Tatyana Bunich, CEP, provides financial and tax services through Financial 1 Wealth Management Group and Financial 1 Tax Services.
How Bad Is The Problem?
Identity theft remains the top category of fraud affecting consumers. In the Federal Trade Commission’s “Consumer Sentinel Network Complaint Data Book” report for 2012, it shows the number of identity thefts remained high last year from 278,385 in 2009 to 279,156 in 2011. Identity theft represents 14% of all consumer fraud complaints, followed by third-party and creditor debt collection (10%), banks and lenders (7%), and imposter scams (6%). And while contemplating this enormous number, keep in mind that it doesn’t include those victims who chose not to file a claim, or filed under other categories, such as theft or mail or internet fraud.
With numbers on the rise again, it is even more important that you refresh your memory on the signs of identity theft and the simple precautions you can take to lessen your chance of becoming one of the statistics! Still don’t think it’s all that important? Read on.
The average cost to the consumer stayed in the thousands from $2,297 in 2011 to $2,294 in 2013. Luckily, a full 44% paid nothing at all, because in most cases, victims are not legally responsible for unauthorized charges or accounts. Looking only at victims who did have to pay out-of-pocket expenses, the median amount paid was $535.
The list below is a nationwide ranking of states by number of identity theft complaints for January 1 – December 31, 2013.
Age-wise, people under 50 bear the brunt of identity theft fraud. The graph below shows that nationwide, people are less likely to be victimized the older they get. Of all 2013 victims, 63% of victims were under 50, 17% were in their 50s, 12% were in their 60s, and 8% were over 70.
Government documents or benefits fraud was the most common form of reported identity theft (34%). Credit card fraud was second (17%) followed by phone or utilities (14%) and bank fraud (8%). Other significant types of identity theft reported by victims were employment related (6%) and loan fraud (4%).
It’s no wonder so many people across the nation are becoming slightly paranoid about their personal information and who has access to it. Almost everyone has heard at least one person’s horror story of the long and difficult path to clearing their name (and credit rating!) after identity theft has occurred, and after hearing it, my guess is that everyone shared the same thought—“I hope that never happens to me!”
A New Method For Identity Thieves – Stimulus Scams
Stimulus scams are a new way identity thieves are acquiring your personal information and stealing your money. The Federal Trade Commission sent out an FTC Consumer Alert informing us that the promise of stimulus money in return for a fee or financial information is always a scam. These scams occur primarily via email, an online ad or website saying you are eligible to get an economic stimulus payment. The FTC urges you to ignore it, delete it and throw it out! They strongly suggest you do not even click onto any links or open any emails or attachments. This may cause the installation of spyware, a harmful program which could send your personal information to an identity thief. The IRS does not send emails like this asking for personal information and these emails or websites should not be trusted, regardless of how legitimate it sounds.
What Can I do To Protect Myself?
We understand your concerns on this issue and we wanted you to know that there are things you can do to help protect yourself from identity theft. The following steps are very simple and could save you a huge headache down the road!
Don’t give out personal information.
Don’t ever provide personal information over the phone, by mail or on the internet unless you have initiated the contact and know exactly how the information will be used and whether it will be shared with others. If someone contacts you and you think it might be legitimate, break the contact and use a listed phone number or web address that you know to be valid to reestablish contact. Never use a number or email link that they provide, as these may be traps set up to look or sound like the real website or automated phone system.
Protect your social security number.
Never have it printed on your checks or driver’s license, and never carry your card in your wallet. Only give out your number when necessary, such as applying for store credit, where it is used to perform a credit check. Even then, ask if you may give your number verbally without putting it in writing.
Don’t leave personal or financial information out in the open.
The latest data in the FTC’s most recent Identity Theft Survey Report shows a shocking 16% of identity theft victims personally knew the thief—family members, friends, neighbors, in-home employees and coworkers were all implicated in these cases. With that in mind, it is always best to keep all personal or financial information in a safe place in your home. Don’t leave it lying around, especially if you are having work done on your home or hire outside help.
Don’t carry unnecessary personal information.
We just discussed not carrying your social security card in your wallet, but there are other documents people sometimes carry with them that identity thieves would just love to get their hands on. Bank account numbers, PIN numbers, passports, birth certificates and blank checks can all provide a huge amount of information to a thief. Don’t carry them unless absolutely necessary.
Destroy personal documents before disposal.
Before throwing anything in the trash, shred or otherwise destroy documents such as credit card receipts, old credit cards, credit offers, or bank, medical or insurance statements. You don’t want these documents lying around on the curb waiting for trash collection.
Protect your mail.
Collect your mail promptly, and use a post office collection box for outgoing bills. Whenever you go on vacation, ask the post office to hold your mail or get a post office box.
You can reduce the amount of unsolicited credit offers arriving in your mailbox (which an identity thief could snatch and use as their own). Call 1-888-5-OPTOUT (1-888-567-8688) and ask them to stop any pre-screened offers from being sent to you. Or, on the Direct Marketing Association’s website (www.the-dma.org, in the section “For Consumers”) you can opt out of direct mail marketing, email marketing or telephone marketing conducted by many companies. You can also write to them at PO Box 643, Carmel, NY 10512.
Pay close attention to your bills.
Know your billing cycles. If your bills are even a couple days late, contact your creditor. Late or missing bills could mean that an identity thief has changed the mailing address on an account to avoid detection.
Review your credit card bills and checking account statements as soon as they arrive, and look into any suspicious checks or charges right away.
Have any cards you don’t need or use? Consider canceling them. A thief could get access to that dormant account, and you would only find out about it once bills started arriving in your mailbox. For those of you worried about possibly hurting your credit score by closing dormant accounts, Liz Pulliam Weston from MSN Money suggests not closing your oldest account (as credit scores are based partly on length of credit history) and not closing several accounts at once. Credit scores are also partly based on your debt as a percentage of your available credit, so closing several accounts would greatly reduce your available credit without changing the size of your debt.
Make a backup list.
If you ever do have a wallet stolen or lose other personal information, you’ll need to act quickly to minimize any damages. Some people suggest making a photocopy of the front and back of your credit cards and debit cards. A simple list is also sufficient, as long as you record account numbers and the phone numbers to call if the card is lost or stolen. However, as you can imagine, it is absolutely necessary to keep this list in a safe but accessible place. If you need to report your cards lost or stolen, you don’t want to risk having it locked up in a safe deposit box, as the bank may not be open when you need to get your list! If you’re going on vacation, take only a list of the toll-free numbers you would need to call to report all your cards lost or stolen, and keep that list in a safe place other than your purse or wallet.
Use creative passwords.
Creative passwords better protect your information. Select intricate passwords on your credit cards, debit/bank cards, phone accounts and internet accounts. Stay away from obvious choices such as your mother’s maiden name, a pet’s name, your birth date, or anything else that might be easily available.
Use caution when using the internet.
The internet provides a wealth of information, financial offers, shopping and other services. However, at the same time, it opens consumers to an array of online scammers and identity thieves. A few ways online scammers commit identity theft is through phising. Phising is when a pop-up or email claims they are from a business that you may deal with, such as your bank, and they ask you to update, validate of confirm account information. These are bogus and can be costly. Make it a policy to never respond to emails or pop-ups that ask for personal or financial information. You should also protect yourself from spam. Many internet providers offer filtering software to help limit the amount of spam that gets through to email users. Some tactics to help prevent identity theft through the internet are:
- Use creative passwords.
- Protect your personal information. Share your information only with companies you know and trust.
- Know who you are dealing with.
- Take your time. Resist the urge to “act now” despite tempting offers.
- Read the small print.
- Never pay for a “free” gift.
Access free annual copies of your credit report.
You can access free annual copies of your credit reports from all three national consumer reporting companies at www.annualcreditreport.com or by calling 877-322-8228. You are legally entitled to one free copy per year, so make use of that. (Note that if you choose to go through the reporting companies individually they can charge you up to $8 for a copy of your report.)
FTC statistics from their June 2014 report show that people over 65 are the least likely to make use of this important method of protecting your identity. Don’t follow the crowd! These reports are free and easy to obtain. Most importantly, they can help you detect suspicious activity on your existing accounts or find any new accounts opened in your name, allowing you to stop identity thieves and minimize losses.
These ten steps do not require much time or effort on your part, but they will make things more difficult for anyone who wants to illegally access your personal information.
Should I Pay For An Identity Theft Protection Service?
The answer to this is in many cases is you may not have to. Many companies now exist that offer to lock, flag or freeze your credit reports; track your credit report and alert you of suspicious activity; help you rebuild your credit if you do become a victim; remove your name from mailing lists or pre-screened offers; limit your liability, etc. However, as you may have already guessed, you can do most of these things yourself for free!
You can put your own fraud alert on your credit report, and this is free if you have reason to believe you have been or will become a victim of identity theft. You can also check your own credit reports for free once a year. The companies that offer to help you rebuild your name typically do so by obtaining a limited power of attorney, which enables them to deal with creditors and others on your behalf. We have already told you how easy it is to remove your own name from mailing offers. And under the law, unauthorized credit card charges can be disputed and unauthorized debit or ATM charges are limited to a $50 liability if you report the fraudulent charges within 2 days of discovery. So if you are considering one of these services, be sure to read the fine print and understand exactly what it is you’re paying for.
Also, remember that criminals love to take advantage of our paranoia! Beware of offers of credit protection which might be scams, charging you money for protection you are legally entitled to for free.
How Will I Know If Someone Is Using My Personal Information?
How and when you find out you are a victim of identity theft depends on several factors. According to the most recent statistics on the FTC website, 40% of victims discover the misuse of their information within one week. However, in cases where the thieves used existing credit cards or withdrew from existing accounts, the victims were twice as likely to find out the very day it started than in cases where the thieves used the information to open new accounts or commit other types of fraud. This is because, as the FTC explains, “the most common way victims discovered the misuse of their personal information was by monitoring the activity in their accounts.” 24% of victims whose information was used to open new accounts did not discover the problem for six months or more (as opposed to only 3% of those having issues with existing cards or accounts).
If your purse, wallet or other personal information has been lost or stolen, that does not necessarily mean you are a victim of identity theft. However, it does mean that your personal information has been compromised. Even a regular “old-fashioned” thief may choose to use this information once he or she has it, or sell it to others who will.
According to the FTC, the good news is that the quicker the identity theft was discovered, the less money the thieves got and the lower the victims’ out-of-pocket expenses. The sobering news is that over half of identity theft victims have no idea how the thieves got their information. What this means is that you need to be on the lookout for signs of identity theft even when you have no reason to suspect your information has been stolen!
So, what should you look for? Some of the more common red flags are bills that are late or do not arrive, unexpected credit cards or account statements, being denied credit or offered very poor credit terms, or calls or letters about unknown purchases.
5 Common Ways ID Theft Happens
Skilled identity thieves use a variety of methods to steal your personal information, including:
1. Dumpster Diving. Someone rummages through your trash looking for bills or other paper with your personal information on it.
2. Skimming. Someone steals credit/debit card numbers by using a special storage device when your card is processed.
3. Phishing. Someone pretends to be a financial institution or company and sends you spam or pop-up messages to get you to reveal your personal information.
4. Changing of Address. Someone diverts your billing statements to another location by completing a “change of address” form.
5. “Old-Fashioned” Stealing. Someone steals your wallet or purse; mail; bank and/or credit card statements; pre-approved credit offers; and/or new checks or tax information. Someone can also steal personnel records from your employers or bribe employees who have access to this information.
I Am A Victim of Identity Theft. What now?
If you do determine that you have become a victim of identity theft, it can feel overwhelming. You may not have much idea of what damage they have done, or what steps you need to take to stop them and start regaining your good financial standing. Of course, you can always turn to our office as a resource. I hope you will also choose to file this letter so that you can pull it out if you ever need it (although I hope you never do!). The FTC website (www.ftc.gov/idtheft) has comprehensive information as well.
The key is to take action as fast as possible. Below, we have provided you with a step-by-step action list that will help you (or someone you know) resolve issues relating to identity theft in an efficient and hopefully less costly manner.
Make a list of who you need to contact. Start a file where you can keep all your paperwork together in one easily accessible place, and keep this file even after you believe all your disputes have been settled. Whenever you make phone calls, write down the date and time and the name of the person you talked to, along with any notes from the call, and keep these notes in your file.
Place an initial fraud alert on your credit reports.
This alert, which will stay active for 90 days, will ensure that creditors must verify your identity before making any changes to your accounts or opening new accounts. It is only necessary to call one of the three consumer reporting companies. Their toll-free numbers are:
Experian 1-888-397-3742 (1-888-EXPERIAN)
When you place a fraud alert, you can get a free copy of your credit report regardless of how long it’s been since you last requested a free report. Check it carefully for any companies you don’t recognize, accounts you didn’t open or unknown charges on your accounts. Remember to check your own name, SSN, and employer also, as thieves will sometimes change basic information to suit their own purposes.
After you’ve completed the rest of the steps, you can go back and get an extended alert on your credit report. An extended alert stays active for seven years. To get this, you will need to provide a copy of an identity theft report. You will also receive two free credit reports during the first year after placing the extended alert, and the consumer reporting companies will automatically remove your name from all marketing lists for pre-screened credit offers for five years (unless you ask for your name to be put back on before then).
Close any account that may have been tampered with.
Close any account that may have been tampered with or opened without your knowledge. Ask to speak with someone in the security or fraud department at each company or institution. Ask for fraud dispute forms to dispute any charges made by an identity thief. If they don’t have special forms, send a letter to the address given for “billing inquiries.” If new accounts have been opened in your name, ask if the company accepts the ID Theft Affidavit. (Instructions for completing an ID Theft Affidavit can be found at www.ftc.gov/idtheft.) If not, use their fraud dispute forms or send a letter. Be aggressive and persistent. If someone is not giving you the help or the answers you need, ask to speak to a supervisor.
Follow up any phone calls in writing, especially to banks and credit card companies, and use certified mail, return receipt requested, to keep a record of what the company received from you and when. Keep copies of all correspondence in your file.
Once you have resolved any disputed charges or accounts with a company, ask them to put it in writing for you to confirm that the disputes have been settled. This letter may prove very helpful if any errors crop up later on down the road relating to the fraudulent debt or accounts.
Take precautions with new accounts.
When opening new accounts, use a password that is not obvious. Avoid using your mother’s maiden name, your birth date, a pet’s name or other information that is easily available.
File appropriate reports and complaints.
Whenever you have a problem with identity theft, please file a police report (in person, if possible) and provide as much information as you can. Get a copy of it for your file.
File a complaint with the Federal Trade Commission (www.ftc.gov/idtheft or call 1-877-438-4338) to give law enforcement more information to help fight identity theft nationwide.
To file an identity theft report with the consumer credit reporting agencies in order to get an extended fraud alert put on your credit report, you will need to submit a copy of your police report or report to the FTC, along with any other requested proof of your identity.
Where Can I Get More Information?
If you need additional information about specific problems related to identity theft, such as dealing with stolen ATM cards, credit cards, fraudulent checks, etc., the Federal Trade Commission website has an enormous amount of detailed information. To learn more about Identity Theft and how to deter, detect and defend against it, visit their site at www.ftc.gov/idtheft or write to:
Consumer Response Center
Federal Trade Commission
600 Pennsylvania Ave., NW, H-130
Washington, D.C. 20580
Again, we hope that you never need to use the action list for identity theft victims, but we do encourage you to take the simple precautionary actions listed earlier in this letter to help make it more difficult for identity thieves to access your personal information.
If you have any questions about the safety of your financial information, I am happy to discuss that with you, along with any other aspect of identity theft. I hope this report has helped you. I look forward to talking with you at our next meeting. Our goal is to continuously keep you as our client aware of all important financial issues and topics that can help you.
We appreciate the confidence you have shown in our firm. As always, we thank you for the opportunity to work with you.
Sources: “Consumer Sentinel Network Data Book for January – December 2008 – Federal Trade Commission February 2009”on the website (http://www.ftc.gov/opa/2008/02/fraud.pdf); and “FTC Consumer Alert: Seeing Through Stimulus Scams”; OnGuard Online, Your Safety net (www.onguardonline.gov); “Consumer Sentinel Network Data Book for January – December 2013” as posted on the Federal Trade Commission website (www.ftc.gov/idtheft); Copyright 2015.
Source for graphs: www.ftc.gov/idtheft
If you would like a copy of this report for a friend or family member, please call our office at (410) 908-9293 and we will be happy to mail one to them.
Financial 1 Wealth Management Group
10211 Wincopin Circle
Columbia, MD 21044-3431