Identity theft is one of the fastest growing crimes in the country. It happens when your personal information, like your social security number, credit card number or full name, is stolen and then used in order to commit fraud. An identity thief may, for instance, use this information to apply for credit in your name, get medical services, receive benefits or file taxes. Doing so can – and generally will – damage your credit report as well as cost you both time and money.
Did you know the average financial loss of an identity theft victim is $1,500? (CreditSesame.com)
One of the worrying things is that many people never know that they have been victimized until they start receiving credit collections or mystery bills, or find that they are denied loans. Once this happens, the thief has already done the damage.
There are a number of specific types of identity theft that are most common. These are:
- Child ID theft, whereby a child’s identity is stolen. This is a popular form of theft because it can take years before it becomes clear that this has happened. By the time they reach adulthood, their identity will already have been completely damaged.
- Tax ID theft, whereby your social security number is used in order to file a tax return in your name in the hopes of receiving a tax refund.
- Medical ID theft, whereby medical services are used in your name. This could be in order to receive treatment, but also to issue fraudulent bills in return for payment.
- Senior ID theft. Seniors are particularly vulnerable because they often require contact that involves sharing their medical information.
- Social ID theft, whereby your identity is used to create fake social media platforms.
How to Prevent Identity Theft
Did you know $16 billion was stolen from 15.4 million U.S. consumers in 2016, compared with $15.3 billion and 13.1 million victims a year earlier!! In the past six years identity thieves have stolen over $107 billion. (2017 Identity Fraud Study)
The first thing you must understand is that there is no way to 100% prevent identity theft from happening. However, there are steps that you can take to at least minimize the risks. These include:
- Always keeping your social security number (SSN) secure. Do not keep your card in your wallet or write the number down on checks. You should only give someone this number when it is truly necessary.
- Never reply to people asking for your personal information. Your date of birth, full name, bank account number, social security number etc, are yours and yours alone. Do not share them in person, online, by mail or by telephone.
- Be on the lookout for shoulder surfers. These are people who look over your shoulder in places such as ATM machines in order to get your details. Make sure your card and the keypad are always shielded when you use them.
- Always collect your mail. If you are away for a while, ask your mail operator to hold your mail until you return.
- Be vigilant in terms of your billing cycles. If you expect a bill or statement and it hasn’t arrived, find out whether it has been sent. It may have been intercepted by an identity thief.
- Always look at your receipts. Check that no other amounts have come out of your statements. Do also look at whether any unauthorized transactions have taken place, no matter what the amount.
- Make sure you shred any paperwork that includes your name and account details. Consider spreading the pieces of shredded paper across different trash bags so that the pieces cannot be puzzled back together.
- Have a safe and secure location, such as a safe, at home to store your important documents.
- Keep your computer protected with an up to date virus scanner and firewall.
- Never take your home network security lightly because hackers can gain access to your private records through your computer. An example of this is ransomware, which is a virus that locks your device and threatens to delete all of your personal information unless you pay a fee. The virus can steal this information, as well. Your home router could also be a target, as infecting the router makes it possible to gain access to any device that connects to it. Software like TrendMicro does an excellent job of securing the entire home network, making it virtually impossible for a hacker to gain access.
- Use unique, complex passwords for all your accounts that cannot be easily guessed. Passwords should include both letters and numbers and preferably capitals as well. If you hear that a company you deal with has had a security breach, make sure you change your password straight away.
- Ask for your free credit report copy once a year and look it over to make sure that there are no unknown accounts on there. If you believe you have been the victim of identity theft, you will need to check it more often, You can either purchase your report from the credit bureaus, or you can sign up with a credit protection service.
Always Report Identity Theft
If you have been the victim of identity theft, you must make sure that you report it straight away. You must inform your local police department as well as the Federal Trade Commission. As soon as you have filed a report with the FTC, you will receive an ID Theft Affidavit. Once you have this, you will need to go to the local police and receive a police report from them. Put together, you will have your identity theft report. This report is vital to help you resolve the issue you will now face with banks, creditors and any company where the identity thief opened up accounts. Additionally, you can report a number of specific types of identity theft.
- Long term care identity theft, which must be reported to the long term care ombudsman of your personal state. This is needed if the theft occurred due to staying in a long term care facility like a nursing home, hospice or rehabilitation center.
- Medical identity theft, which you can report to the Medicare Fraud Office. Do also contact the fraud department of your personal insurance company.
- Tax identity theft, which should be reported to the Internal Revenue Service and to your state’s Department of Taxation, Finance or Revenue.
These are the main federal and state government agencies you should report your situation to. Other organizations that you should think about contacting include:
- Credit reporting agencies that will be able to freeze your account or put on a fraud alert for a certain period of time. This means that nobody will be able to apply for credit using your social security number and/or name. Do also contact these agencies to receive a copy of your credit file, so that you know what damage has already been done.
- Financial institutions, including your bank and credit card’s fraud department. They need to know that your identity has been compromised. In most cases, they will need a copy of your identity theft report before they can make any changes.
- Retailers and other such companies, particularly if you have accounts with them or have reason to believe accounts with them have been opened in your name. An identity theft may have even have applied for a job there using your name.
- The Attorney General or State Consumer Protection Offices, where you may be able to access a range of resources to help you deal with your situation. This can include information on how to dispute an error, how to contact your creditors and more. Each state provides different information, however.
Do also check the Taking Charge – What to do if Your Identity is Stolen publication released by the FTC. It is filled with useful tips and checklists, as well as a number of sample letters that you can use to contact the relevant agencies.
Synthetic ID Theft
Synthetic ID theft is one of the newest forms of identity theft. Traditionally, a thief who manage to get hold of all the personal information of a single individual, using this to create a new identity. With synthetic ID theft, however, different parts of personal information from different people is used in order to create a whole new identity. As such, they may create an imaginary person using one person’s name, another person’s date of birth, someone else’s social security number and so on. They then use this information to actually live the life of this made up person, doing such things as renting apartments, getting jobs and applying for credit.
It is incredibly difficult to detect this type of ID theft because it is not linked to a single individual. Hence, even monitoring services and fraud alerts will be unlikely to stop this from happening. These frauds regularly target children’s social security numbers, mainly because children will not check their credit until they reach adulthood, thereby giving the thief several years to take advantage.
Synthetic ID theft truly cannot be prevented. If you feel you have been the victim of it, however, you should receive copies of your credit files and see if any accounts have been opened in your name. Also ask the credit bureaus whether they have a fragmented file, whereby your social security number is used but your name is not, that they can show you. If there is a fragmented file, it is likely that you have been the victim of synthetic ID theft. This should immediately be reported to the Federal Trade Commission.
Tax-Related Identity Theft
Tax related ID theft happens when someone uses your SSN to get a job or a tax refund. It is important you know how to recognize the warning signs. Additionally, do make sure you are aware of what to do if you suspect you have been a victim.
In order to prevent this type of identity theft, the IRS has released a number of signs to look out for. These include:
- That your SSN has already been used to file a tax return.
- That you suddenly owe more tax than you expect, find your refund to be offset against what you owe, collection being taken against you.
- Records with the IRS showing that you were paid by different companies.
The IRS will never email you, nor will they use social media or text messages to receive information form you. If you do receive an email that appears to have been sent by the IRS, do not click on any links and report it straight away. Additionally, there are always interesting tips on protection from US tax season malware campaigns and phishing scams available through the US-CERT (United States Computer Emergency Readiness Team).
How to Manage Tax Related Identity Theft
If you believe someone has used your SSN to obtain employment or a tax refund, you must:
- Immediately respond to any notice you receive from the IRS, which will have a telephone number included.
- Go to your local police department to file a report.
- Complain to the FTC, which is the main federal agency that deals with identity theft. They also have a telephone number, the FTC Identity Theft Hotline, that you can phone on 1-877-438-4338 or TTY 1-866-653-4261.
- Contact the SSA (Social Security Administration) to get information about your SSN.
- Contact all of the three major credit bureaus so that your records are placed on fraud alert (TransUnion – 1-800-680-7289; Experian – 1-800-397-3742; Equifax – 1-888-766-0008).
- Make sure that any account that was opened unbeknownst to you or that was tampered with, is closed.
- Complete the IRS Form 14039, Identity Theft Affidavit. This can be printed and mailed or faxed.
- File your own tax return and pay your taxes normally, by paper if needed.