What is Identity Theft?
Identity theft has evolved far beyond just credit card fraud and, unfortunately, is a rapidly growing crime that most people will be impacted by — either directly or indirectly — at some point in their lives. By learning about the types of fraud that exist and the best practices to employ, you can help avoid becoming part of the statistic — digital thieves stole $14.4 billion from US consumers in 2018.
Be aware of unknown criminal records
The consequences of identity theft can go beyond just damaging the victim’s creditworthiness. Once caught, the crimes committed by the identity thief can become part of the victim’s court and criminal record, ultimately resulting in the victim being wrongly arrested or denied employment upon a routine background check.
What are the types of Identity Theft?
1. Synthetic Identity Fraud
Often a prerequisite to committing other types of fraud, synthetic identity fraud involves stealing a victim’s Social Security Number and attaching it to a new name, date of birth, and additional personal info required to create a “new” person essentially. According to Experian, synthetic identity fraud represents 80-85% of all current identity fraud.
2. New Account Fraud
Once a victim’s personal information and identity have been stolen, the thief will often use this to obtain products and services using the victim’s good credit standing. Opening new utility, cell phone, and/or credit card accounts are all common forms of new account fraud.
3. Account Takeover Fraud
Account Takeover fraud is becoming increasingly common, particularly as traditional credit card fraud has become less prevalent due to the widespread adoption of EMV chipped credit cards. In an account takeover situation, a thief would log into the victim’s existing accounts, often using stolen credentials, and then add themselves as an authorized user. For example, the thief could log into your bank and then request a new credit card under your existing account. In this scenario, traditional credit monitoring would be unable to alert to this activity, because the thief is technically using a current line of (your) credit.
4. Medical Identity Theft
A growing area of concern involves medical identity theft, which gives thieves the ability to access prescription drugs and even expensive medical treatments using someone else’s identity. When successful, medical identity theft frequently results in erroneous entries being put into the victim’s medical records, which in turn may even lead to inappropriate and potentially life-threatening decisions by medical staff.
5. Business Identity Theft
Using a business’s name to obtain credit or even billing those businesses’ clients for products and services represents a significant risk, particularly to a small business or sole proprietorships. Because new businesses sometimes need to overlap between business and personal, this type of fraud can impact budding entrepreneurs both personally and professionally. Worse, the perpetrators who commit business identity theft are often insiders — current or ex-employees — with direct access to operational documentation, which pad the books in favor of their scheming.
What personal information is generally taken when a breach occurs?
The type of information taken during a breach can vary widely depending on what personal info the company has stored, and what the perpetrator can access. Sometimes, the types of info stolen can also depend on the purpose of the breach, which could vary from making a political statement to a hacker only “showing off.” Perpetrators that are committing offenses for financial gain generally target personal information that can be resold on the dark web and be used for identity fraud, focusing on info like full names, email addresses, passwords, Social Security number, date of birth and driver’s license number to name a few.
What is the risk of Criminal Identity Theft?
Criminal identity theft can create a myriad of headaches for the victim after the fact. Though a less common form of fraud, a thief could get caught for a traffic violation or a misdemeanor and sign the citation with your name. Then you get stuck paying those annoying fees and fines. If a thief uses your name when getting arrested for a crime, you could end up with a criminal record, which could affect your ability to get a job or buy/rent a property. Another case is when the thief commits a crime using your identity, and then a warrant is issued for your arrest. But instead of looking for the criminal, they are looking for you—you could have a warrant out for your arrest and not even know it!
How to stay protected
So, if you have a few of these concerns on your mind, fear not – there are steps you can take to stay protected. Start by following these best practices:
• Review your account info. Regularly reviewing online bank/credit account transactions can help you spot suspicious activities or purchases. If you do stumble upon something fishy, be sure to report it to your bank or credit institution immediately. Most banks these days also have a way to report suspicious transactions directly in your list of transactions.
• An identity theft protection service can monitor your accounts, alert you of potential problems, provide reimbursement options if you’re a victim of ID theft, and help you regain your peace of mind and get remediation guidance to recover from identity theft.
• Shred all sensitive documents, both online and offline. While shredding physical bank statements and other confidential documents can help prevent offline identity theft, it’s also essential to “shred” sensitive files as well as PDFs of tax returns and bank statements should a hacker gain access to your PC. Typically, when you delete a file, it isn’t entirely gone; instead, that part of your storage is marked as available to be overwritten with new data. Unfortunately, this means that a savvy hacker could reconstruct the file even if it’s been deleted. Fortunately, many reputable antivirus suites include file shredding capabilities, which effectively make deleted data unrecoverable, often up to military-grade deletion standards.
• Encrypt sensitive files on your PC. Similar to shredding sensitive files, you no longer need, using a file encryption tool like File Lock. By placing sensitive data that you need to keep in your password-protected File Lock Vault, you can keep them hidden from potential thieves and hackers.
• Report missing identification cards. Most criminal identity thieves get your information from stealing your personally identifiable information (PII) from physical cards like your driver’s license, Social Security card, or Identification card. If you report a missing driver license, your state might flag your license number and if another driver is pulled over by law enforcement and presents your license as their own they could be questioned for further information
• Get a background check on yourself. If you feel like someone may be impersonating you, get a background check done. This can be done via online services or by a private investigator.
• Check State and National criminal databases. Search your name in criminal databases like the FBI’s National Crime Information Center (NCIC) database to see if you have a criminal record you’re unaware of.
Identity theft is on the rise.
Identity theft is becoming more and more common each year. In 2017, hackers stole the personal information of 148 million Americans in a single breach. According to the Bureau of Justice Statistics, there are 74 robberies every hour in the United States – but nearly 2,000 identity theft events.
It’s not a matter of if. It’s a matter of when.
If your information has ever been compromised in a breach, you are eleven times more likely to be a victim of identity theft.
Thieves can steal more than just your money.
There are many types of identity theft—financial, criminal, Social Security, medical, IRS—and the list keeps growing. Cleaning up the mess could take you hundreds of hours of work.
Do you need identity theft insurance?
Identity theft insurance, like some identity theft protection services, can help victims of identity theft cover some of the financial costs when identity fraud occurs.
When deciding whether to buy identity theft insurance, it’s important to understand what your policy covers. For instance, one policy may include some legal fees, but another may not.
Similarly, if you have to take time off from work to restore your identity, you’ll want to understand the details of how a policy may reimburse you for lost wages.
In other words, as with any insurance policy, it’s important to understand the fine print.
In comparison, identity theft protection services often help protect you in additional ways for a fee. For instance, they usually offer credit monitoring to help detect suspicious activity that could indicate identity theft.
They may also offer restoration services, including assistance working with creditors. And unlike identity theft insurance, they may also reimburse funds stolen through identity theft.
Things to consider before you decide
If you’re shopping for identity theft insurance, it’s smart to compare products from several insurance companies.
The National Association of Insurance Commissioners provides this list as you do your research.
Find out what the policy limits are. Find out if there is a deductible. If the policy covers lost wages, find out what limits apply and what triggers this coverage. If a policy covers legal fees, find out what limits apply and whether legal work must be pre-approved by the insurer.
Identity Theft Insurance may help
Identity theft insurance is worth considering. Whatever you decide, keep in mind that if you’re a victim of identity theft, it could have other repercussions.
For instance, thieves may still have access to your personal information. They could use that information to fraudulently file taxes or get a credit card or medical care in your name.
Those fraudulent accounts could go on to lower your credit score and your ability to borrow money at favorable rates.
That’s why it’s important to guard your personal information and take steps to help protect yourself. Keep in mind that just by enrolling in Identity Theft Insurance, you are not going to be protected 100%. This type of Insurance should not give you a false sense of security. It is still your job to do your due diligence and to protect yourself. The Identity Theft Insurance is to make you whole in the event you are a victim of ID Theft. It does not prevent Identity Theft.