The U.S. Justice Department’s announcement last week that it had uncovered one of the largest identity theft schemes in U.S. history is a reminder for consumers to protect their financial information, say the insurance industry.
“With the sophisticated computer hacking techniques being used today, consumers should carefully monitor their credit card bills and bank balances to make sure that they actually made all of the purchases,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the Insurance Information Institute (I.I.I.).
Identity thieves take personal information and use it to impersonate a victim, stealing from bank accounts, establishing phony insurance policies, opening unauthorized credit cards or obtaining unauthorized bank loans.
In the recent identity theft case, it was alleged that the defendants stole the credit and debit card numbers of unsuspecting consumers via a technique known as “wardriving.” This involves using a laptop to locate accessible wireless Internet signals, which enables technologically savvy criminals to hack into the wireless computer networks of major retailers and capture card numbers, as well as password and account information.
According to the Federal Trade Commission’s (FTC) 2006 Identity Theft Survey Report, 8.3 million Americans were victims of identity theft in 2005, and 37 percent of those victims discovered that their identity was stolen by monitoring their accounts. Victims of identity theft are often left with lower credit scores and can spend months, or even years, getting credit records corrected. They frequently have difficulty getting credit, obtaining loans and even finding employment.
Some insurance companies include identity theft coverage as part of their homeowners policy, selling it as either a stand-alone policy or as an endorsement to a homeowners or renters insurance policy. This coverage provides the customer with reimbursement for the expenses associated with the identity and credit restoration process including phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees (with the prior consent of the insurer). They may also include the added services of a fraud specialist to assist and guide victims through the process of restoring and protecting their identity.
The I.I.I. has the following tips on guarding financial security against identity theft:
* Keep the amount of personal information in a purse or wallet to the bare minimum. Avoid carrying additional credit cards, a social security card or passport unless absolutely necessary.
* Guard credit or debit card when making purchases. Shield the card with when using ATM machines or making long distance phone calls with phone cards.
* Always take credit, debit card or ATM receipts. Do not throw receipts into public trash containers, leave them on the counter or put them in a shopping bag where they can easily fall out or get stolen.
* Proceed with caution when shopping online. Make sure to buy from a reputable retailer with a secure network.
* Do not give out personal information. Whether on the phone, through the mail or over the Internet, do not give out personal information unless initial contact has been made with the retail outlet.
* Do not fall for online or e-mail scams. Be wary if receiving e-mail solicitations for personal information. In online scams like “phishing,” thieves use e-mail inquiries purporting to be from financial or other online organizations in order to obtain sensitive account information.
* Monitor accounts. Do not rely on a credit card company or bank to send an alert of suspicious activity. Carefully monitor credit and debit card statements to make sure all transactions are accurate. If a problem is suspected, contact the credit card company or bank immediately.
* Order a copy of your credit report from each of the three major credit bureaus.
* Place passwords on your credit card, bank and phone accounts. Avoid using easily available information like a mother’s maiden name, birth date, any part of a social security number or phone number, or any series of consecutive numbers.
* Shred, shred, shred. Tear or shred any documents that contain personal information such as credit card numbers, bank statements, charge receipts or credit card applications, before disposing of them.
In order to make it more difficult for identity thieves to open accounts, contact the fraud department of any one of the three credit reporting agencies to place a fraud alert on the credit report — by law, the agency is required to contact the other two agencies. The fraud alert tells creditors to contact the identity theft victim before opening any new accounts or making any changes to their existing accounts. The three major credit bureaus are Equifax, TransUnion and Experian.
If someone is a victim of an ID theft crime, report it to the store in question and the police immediately. Ask for a copy of the police report, which is needed to file an insurance claim or report the crime to the FTC for their assistance. Victims of identity fraud can file a complaint on the FTC Identity Theft Web site, or by calling 877-IDTHEFT. The FTC also offers information on the laws concerning theft of credit cards on their Consumer Protection page.