Identity Theft 101
Identity theft continues to be one of the fastest-growing crimes in the
United States. Sadly, many victims are robbed of their identities without even
realizing it, and by the time they find out, many of them will have had their
credit ratings severely damaged — or worse.
Identity theft is…
So what is identity theft? Simply put, it's when a thief uses a victim's unique
identifying information — Social Security Number, credit card accounts, even
home address — to commit fraud or other crimes in the victim's name.
Identity theft generally takes two forms: “account takeover,” which occurs when
the thief uses the victim's existing financial accounts to buy things; and
“application fraud,” which is when the thief uses the victim's personal
information to create new accounts — or even a whole new life — in the victim's
Identity theft will continue to grow
Identity theft is a costly crime — banks and other businesses have attributed
annual losses of up to $48 billion to identity theft expenses, while consumers
have lost up to $5 billion each year.
Experts predict that identity theft will continue to grow as electronic
technology advances. Interestingly, however, recent data shows that 68.2% of
identity theft crimes happen offline, while only 11.6% of instances occurred
online (Privacy Rights Clearinghouse;
How identity theft happens
Check out the following scenarios for an idea of how identity theft can happen,
as well as what can happen to your financial standing:
John Doe sets up a phony website that claims to offer “discounts on
prescription drugs.” Jerry Smith responds to a phishing e-mail from the
website, visits the site to place an order, and enters the requested
information, including his credit card number. Mr. Doe collects the data from
the website and goes on a shopping spree with Mr. Smith's credit card. The
credit card issuer then attempts to collect payment from Mr. Smith for Mr.
Jane Doe steals her sister Mary's credit card number. Jane uses Mary's card
number to buy a plane ticket across country, put a security deposit on a new
apartment, and buy items for her new home. All of these purchases will appear
as charges on Mary's credit card statement.
Jack Loe moves from one home to another but fails to notify the post office,
his bank and others of his change of address. Tom Green moves into Jack's old
home, then opens Mr. Loe's mailed bank statements and uses that information to
transfer money in Mr. Loe's bank account to a new account in Mr. Loe's name
that Mr. Green created.
These are just a few of the ways that identity theft can occur. Basically, any
document you have, any unsecure website you visit, any conversation you have on
a cordless or cell phone that contains personal, identifying information about
you can be used by a thief to take possession of your identity.
Preventing identity theft
All is not lost, though: You can still uncover identity theft if you're willing
to monitor your financial records regularly. Your credit reports can show
unauthorized activity made in your name; so can your bank and credit card
statements, depending on how the identity thief targets you. There are also
programs available that can alert you to changes in your credit report, and
some credit card issuers make an attempt to contact their customers if they
detect unusual buying patterns or other signs of abnormal card usage.
Your first and best defense against identity theft, however, is personal
vigilance — safeguarding your credit and debit cards, installing firewalls on
your computer, protecting or shredding documents that contain your personal
information, monitoring your credit report and other financial records, and
turning down telephone or Internet offers that promise you the world in
exchange for “just a little information about you.”
Bottom line, you do not need to store your money in a mattress or commit your
personal information to memory and destroy a seemingly vulnerable paper trail.
Protecting yourself from the threat of identity theft generally involves some
minor adjustments to your habits. With common sense and the proper protective
steps, you can significantly reduce your personal risk of identity theft.