Vigilance best option to fight identity theft
When the feds announced the breakup of the biggest
identity-theft ring ever in the United States recently, the figures
were staggering: 30,000 victims and millions in losses.
That underscores what experts
have been saying for a while, that identity theft is today's fastest-growing
crime, touching as many as 900,000 new victims each year.
That growth has fueled a growing
field of products that promise to look over your shoulder and make
sure no one has swiped your credit card number or applied for credit
in your name.
In identity theft, an impostor
buys cars, charges up credit cards, rents apartments in your name
and then vanishes, leaving you with the bills. Usually the thief
snatched your Social Security number, credit card numbers, date
of birth and other personal information and has been posing as you
ever since. Your credit is ruined.
Most identity-theft victims
never find out how it happened. They learn of the crime when an
angry creditor calls or a credit card is declined.
"The crime is definitely
on the increase and it shows no sign of stopping," says Linda
Sherry, editorial director at Consumer
Action, a San Francisco-based consumer advocacy organization.
"It's a frightening thing."
Finding out that your identity
has been stolen is not the end of your woes, but the beginning.
Although identity theft victims are not responsible for the debts
incurred by their impostors, they are stuck cleaning up the credit
mess. Restoring your credit and your name is a slow, painstaking
process. It means countless phone calls, letters and time away from
A survey presented to the
U.S. Senate Judiciary Subcommittee on Technology, Terrorism, and
Government Information back in July 2000 found that on average victims
spend about 175 hours on mopping up identity theft damage and that
such cases take an average of two years to resolve.
Remember that's an average.
Mari Frank, an identity theft victim and attorney who has written
Identity Theft Survival Kit, estimated that she spent 500
hours cleaning up her credit nightmare. Her out-of-pocket expenses
were about $10,000.
There is little that a consumer
can do to prevent an inside job like the big federal bust brought
to light. In that case, a help-desk worker at a software company
allegedly sold passwords and codes for downloading consumer credit
Self-help against identity
However, some simple vigilant steps can help protect you from
opportunists and criminals who don't have inside access:
- Avoid carrying your Social Security number
and driver's license together in your wallet.
- Tear up or shred pre-approved credit card
offers, bills and documents with other personal information before
throwing them out.
- Drop paid bills directly into U.S. Postal
Service mailboxes. Avoid putting outgoing mail in your home mailbox.
Folks who are nervous about
identity theft may want to consider putting a fraud alert on their
credit files. With a fraud alert, a credit bureau must contact you
before any new credit can be approved. An identity theft victim
puts fraud alerts on credit files to prevent an impostor from applying
for and receiving credit in the victim's name.
With a fraud alert you give
up the convenience of "instant credit" (so you can forget
about signing up for a new credit card and going shopping with it
three minutes later) but you know that no new credit can be granted
in your name without your knowledge and approval.
For more information about
putting a fraud alert on your credit file, contact the credit bureaus:
Equifax, (800) 685-1111; Experian, (800) 311-4769; or TransUnion,
Don't think that fraud alerts are foolproof, though.
"Not every type of account
is covered by a fraud alert," warns Joanna Crane, identity
theft program manager at the Federal Trade Commission. "You
must maintain vigilance on all the different types of accounts --
investment accounts, bank accounts, credit accounts -- opened in
She offers this for instance:
An identity thief has enough information to open a demand deposit
account in your name. In that case, the bank won't do a full credit
check and is unlikely to see the fraud alerts. The thief can deposit
counterfeit checks into the new account, draw against them, and
you're stuck with the mess when they bounce.
"Even among credit card
issuers, there are different business models," she says. "Some
don't follow the fraud alert to the letter. A credit issuer who
has a higher risk model may not bother ... So you can't sit back."
Although she's not in a position
to recommend a specific product or service, Crane says that individuals
must monitor their credit reports. To what extent is the question.
"Consumers need to do
the math to figure out what works for them," she says.
If you intend to do it yourself,
report basics section can help you.
Crane points out that it takes
time and about $9 a pop to receive a copy of a credit report from
one of the three bureaus, and consumers should really check all
"That's a significant
investment," she says.
"If you know your information
has been compromised or for some other reason feel particularly
vulnerable, you may want to check your credit reports more often,"
Many consumer experts urge identity-theft victims to check
their credit reports every three months. That means the cost in
time and money will mount and you may be better served by shelling
out a fee to a credit-report monitoring service. You have to decide
what level of vigilance you need to maintain, she says.
The monitoring services that
promise to keep a close eye on your credit report and alert you
of any suspicious activity can cost anywhere from about $50 to $100
For $10.95 per quarter, TrueCredit.com
offers Credit Monitor, which provides online access to your credit
report, with a new report four times a year. It also provides weekly
e-mail notices of new activity on your report and identity fraud
For $89.99 per year, PrivacyGuard
from Trilegiant delivers reports from all three credit bureaus,
a credit score and analysis, monthly monitoring reports, forms and
data for checking into driving, medical and Social Security records.
Subscribers can request as many copies of their credit reports as
they wish. Those who want to buy a single report online rather than
subscribe can visit Trilegiant's CreditReportPlace.com.
For $69.95 per year, Equifax
Credit Watch provides e-mail notification within 24 hours of
new activity in your credit file. It also provides access to your
Equifax Credit Report and FICO credit score up to four times per
year, and it allows you to access an online history of all notifications
and reports by date.
In addition, the service also
includes $2,500 in identity theft insurance. After a $250 deductible
is met, it can pay:
- Lost wages as a result of time taken off
from work to deal with fraud, with coverage of as much as $500
per week for four weeks.
- Notary and certified mailing costs for completing
and delivering fraud affidavits.
- Fees for reapplying for loans that were declined
due to erroneous credit information.
- Phone charges for calling merchants, financial
institutions and law enforcement agents to discuss the fraud.
- Some attorney fees.
These provisions are similar
to Identity Fraud Expense coverage offered by Travelers Property
Casualty in a number of states. The coverage limit is $15,000 with
a $100 deductible. For an additional $25 a year, the coverage can
be added to any Travelers homeowner's or rental policy in most states.
The coverage is also provided automatically in a number of states
as part of Travelers High Value Homeowners policy, and it is also
available as a freestanding policy in some states.
Individuals on a group legal
plan may want to check whether there is some identity theft assistance.
For instance, ARAG Group offers plan members a toll-free number
to speak with an identity-theft specialist who can give advice on
how to prevent identity theft or to identify what actions members
who have been victimized need to take.
Regardless of what precautions
you take or don't take, everyone is at risk when it comes to identity
"Ultimately, you cannot
prevent identity theft from happening to you," says Beth Givens,
director of the Privacy Rights Clearinghouse in San Diego. "You
can only reduce your chances."
Caputo is a freelance writer based in Arizona.