Identity Theft has become so rampant as technology advances. Statistics show that a victim falls prey every 2 seconds. Perhaps, you might not even be aware that you are already a victim yourself and the thief has already collected mystery bills, denied loans and credit collections that might someday surprise you.
As a popular maxim states, “knowledge is power,” it is best to get as much information as possible about identity theft and be ready.
Identity theft is when a person steals another person’s personal information with an intent to commit fraud. It is a crime punishable by 15 years in prison and fines. The identity thief can do a lot of things with your stolen information which includes your full name and stolen social security number, among others. They can use this to fraudulently file taxes, get medical services, and apply for credit. Before you know it, the thief has damaged your credit status and your integrity. The damage can cause you time and money to restore your reputation.
There are many types of identity theft. Before you figure out what to do if you become a victim, you should know the different types of identity theft.
|Credit card fraud||This is connected to identity theft in several ways. This includes using a credit card as a fraudulent source for funding unauthorized transactions. Moreover, most cases of credit card scams are large value transactions resulting in huge financial losses. In response, numerous companies and financial institutions have launched products to monitor credit, guard identity, and reimburse lost funds. Some employers also offer identity theft insurance.|
|Application Fraud||The identity theft may use stolen or fake documents like utility bills and bank statements to open an account in another individual’s name. They may also just create fake documents to open a credit card account in the victim’s name and use it for large financial transactions.|
|Account Takeover||A credit card fraudster may also use your personal information like an email address to gain access to your financial accounts. The fraudster will then intercept communication about the account takeover, keeping the victim blind to threats. If you monitor your account frequently, you may discover questionable withdrawals and charges on your monthly payments. This type of credit card fraud has victimized thousands in the past several years since EMV technology made it more difficult for fraudsters to physically clone credit cards.|
|Skimming||Automated Teller Machines (ATMs) are convenient tools that may still be compromised. “Skimmer” devices are inconspicuously attached to the machine along with a miniature camera to detect the magnetic strip and PIN at the same time. ATM users in South America, Europe, and Argentina have often fallen prey to this method that uses keypad overlay and wirelessly transmits keylog.|
|Checker||This method uses random generation to select valid and active credit card accounts.|
|BIN attack||This method is one of the less common types of credit card fraud. It involves obtaining a good card number and generating more valid card numbers as credit cards are produced in BIN range. It is less common as it is made more difficult with the presence of the CVV, Valid date, and Expiry date.|
|Phishing||This method is becoming more common with online banking users. This includes websites that pretend to be a bank or payment system to lure victims to provide their credit card information. Telephone phishing can also happen when a pretend call center agent claims to be associated with a financial organization.|
|Balance Transfer Checks||Some offers include an active balance transfer check tied to a credit card account. Stolen checks may be used by fraudsters for a point of sales location that leaves the victim responsible for all loss.|
|IRS identity theft||Tax-related identity theft can happen to individuals, businesses, and tax professionals. The IRS reminds taxpayers that they never contact taxpayers by email, text, or through social media channels to request personal and financial information. Moreover, no one associated with the IRS calls taxpayers with threats of arrests and lawsuits.|
|Check fraud||This method remains to be the largest form of fraud that affects businesses and financial institutions. Organized gangs and independent criminals may manipulate checks to deceive their victims and acquire cash by fraud. There are several types of check fraud such as counterfeiting, chemical, and chemical alterations. Consumers and businesses that accept and issue checks are the most common victims of check fraud. Often the thief will steal a financial document first or steal a blank check. They may also search from an old check or a canceled check in the garbage or remove a check from your mailbox.|
|Forgery||Whenever an employee issues a check without proper authorization from the employer, the case is known as forgery. Criminals may also steal and endorse a check for payment at a bank or retail location using bogus personal information.|
|Counterfeiting||This includes fabricating a check using a scanner, high-grade laser printer, advanced color photocopiers, and sophisticated software.|
|Alteration||Criminals may use chemicals and solvents like bleach, brake fluid, and acetone to modify or remove information on a check.|
|Check-washing||Erasing information from the entire check.|
|Spot Alteration||modifying payee’s name or amount on specific locations.|
|Paperhanging||The perpetrator may be the owner of a closed account or another individual. The person may write or re-order a check on a closed account and use it for financial transactions or other payments.|
|Check Kiting||This crime may happen once the individual opens an account with two or more institutions with the purpose of using “float time” of the available funds for making fraudulent balances.|
There are several things you can do to prevent credit fraud. It may involve some time, effort, or money if you hire the services of a credit monitoring provider or buy a protection identity theft product.
|Check credit||Experts recommend that you check your credit with one of the three bureaus that offer credit check services at least once a year. You may get a free report every year from the likes of TransUnion, Experian, and Equifax. It is also important not just to scan your report but to review it for errors, abnormal financial transactions, as well as accounts and credit cards you did not open. However, take note not to fall victim to faux free credit report advertisements. Furthermore, don’t forget to alert any one of the three credit bureaus once you notice suspicious activity on your credit report.|
|Credit monitoring services||You may scan and review your credit report every year but that may not be enough. A credit monitoring software can help you by alerting any changes to your credit report and sending you notifications of potential fraud and identity theft. Before you choose any credit monitoring service provider don’t forget to do your research. A good provider monitors a couple of reputable credit reporting agencies and CRA reports frequently. Others monitor daily. Some providers also include access to credit scores in their list of services.|
|Credit Freeze||An employer needs authorization from his or her employees before acquiring a credit report. As an individual, you may choose credit freeze to limit access to your credit report to companies you have a pre-existing credit relationship with. You may choose to include mortgage, credit card, auto loan, or any company that you have a credit relationship with from checking your credit report.|
When a person pretends to be someone else to gain access to money, credit, and medical care, among others, this is identity theft. They may steal your identity and use your personal information such as your Social Security number, government ID number, credit card, or bank account number for their own fraudulent activities.
Your data with medical offices, financial institutions, universities, and businesses may be stolen and used against your will. Before you divulge information with any type of business that will maintain records of your personal data, you may need to ask privacy questions, such as: Why is this information necessary? Be wary of giving out your Social Security number, phone number, and other personal information with a retail store and other businesses that may not really need to keep that kind of information in their system.
You need to know why a company needs your Social Security number. They may need it to access your credit report or identify your records. You may also have to ask if they will relay your information to third-party vendors. Know that the law states that banks should give their clients an opportunity to opt-out of sharing their non-public personal data with other businesses.
A good business will have security policies to keep their clients’ information safe. Computer data should be encrypted and protected by a firewall. Data transmitted online should use a secure system. Also, ask about the employees in the business who have access to your personal data.
Most state laws like in California implement that businesses should announce theft or loss of personal data, so you may want to know about the time their system was hacked. Search online for companies that had security problems in the past, how they dealt with them, and the current situation of their security policies.
Ask how long your personal information will be kept in their system and how it is removed from their system after your transaction? This may include document shredding and using software to permanently delete your files from their records.
Criminals may steal records from your employer, gain access from employees, or hack into the company’s system. If you are in the habit of throwing your bills, credit statements, and even your old computer in the trash, stop. Criminals will “dumpster dive” and look for personal information in your trash. For fraud protection, always know who you are transacting with. Fraudulent credit reports may be obtained by posers who pretend to be authorized by the bank, your landlord, or employer. They may also steal your purse and wallet, your mail, credit and debit card account numbers, or tax information. High-profile criminals may also break into your home.
Always be suspicious before divulging your personal information. Ask security questions and make sure you know how your information will be protected and deleted from other systems.
Use strong passwords and PINs and change them often. Avoid birth dates, addresses, and names. Use a hard-to-guess code disguise like Vigenere Cipher or combine lowercase and uppercase letters with numbers, hyphens, asterisks, and other characters. Avoid using the same password for multiple accounts.
Turn on two-factor authentication that notifies you through text of any attempt to hack into your account.
Protect your computer against spyware and keyloggers that steal sensitive information. Choose a strong and updated firewall, anti-spyware, and antivirus program for personal and business files.
Encrypt your hard drive.
Choose a reputable company for document shredding and permanently removing data on your computer.
Protect your snail mail with a high-security locking mailbox or post office box. Also, choose paperless statement programs for bank and credit accounts.
Opt out of prescreened credit offers.
Secure your WiFi network and avoid using public WiFi networks to view a client’s personal information.
Avoid tampered ATMs and machines in out-of-way places.
Put a fraud alert on your credit report
|Identity theft||stealing personal information to commit fraudulent acts for criminal purposes.|
|Credit Check||individuals and businesses may perform a credit check and look into your credit report. This includes lenders, your employer, creditors, and even landlords.|
|Credit Monitoring Services||the process of monitoring your credit report on a yearly, quarterly, or daily basis and notify the owner of any possible acts of identity theft and fraud.|
|Identity Theft Protection||companies like Lifelock, IdentityForce, and Identity Guard offer protection of your credit report, social security number, public records, and other financials.|
|Credit Card Fraud||stealing your credit card information to file taxes and pay for financial transactions without your knowledge. They may have physical access to your card or hack into your account without your knowledge.|
|IRS Identity Theft||cyber criminals may steal sensitive client data from tax professionals and business to file fraudulent tax returns using the clients’ identities.|
|Credit Protection||credit card companies issue this type of insurance or payment protection that stops payments should you lose your job, become severely ill, injured, or incapacitated. Credit card payments are put on hold and interests are suspended.|
|Check Fraud||individuals may issue a check using a closed bank account. Thieves may also steal your check from the garbage and change information to steal money from the owner.|
|Identity Theft Report||by legal definition, this is a report that alleges ID filed with an appropriate state, federal, or local law enforcement agency. Take note that false reports may lead to criminal penalties.|
|Report Fraud||the process of calling specialist fraud advisers by phone or reporting a fraud via an online fraud reporting tool.|
|Stolen Identity||the deliberate use of someone else’s personal information to gain benefits at the loss of the true owner.|
|How to Report Identity Theft||the process that includes securing your bank account, putting a fraud alert on your credit report, reporting the identity theft to the FTC or Federal Trade Commission, and filing a police report.|
|Security alert||the process of protecting information on your credit report to alert creditors or lenders and protect yourself from identity theft. This is important especially if you suspect that you may be a victim of identity theft.|
|File (Credit) Freeze||the act of preventing prospective creditors from gaining access to your credit file and prevent opening of a new credit account under your name.|
|Fraud alert||a notice sent to one or all of the credit reporting bureaus notifying them of a stolen identity.|
|Victim statement||alerts potential credit grantors that something has gone wrong and may include specific instructions to prevent opening of a new credit account for fraudulent purposes.|
|Data Breach||a confirmed incident of otherwise protected, sensitive, and confidential data disclosed or accessed by unauthorized personnel.|
|FTC||The Federal Trade Commission acts as an independent agency that protects consumers by enforcing antitrust and consumer protection laws.|
|Opt out||the process of requesting removal from pre-approved and pre-screened credit offer lists and divulging of personal information to third-party vendors.|
|Medical Identity Theft||stealing someone else’s health insurance information so the uninsured can get benefits and discounts on health care or prescription drugs in a fraudulent manner.|
U.S. residents experienced 17.6 million cases of Identity Theft in 2014. In 2016, identity theft hit an all-time high resulting in $16 billion fraud losses. Majority of identity theft cases were tax-related and employment fraud accounting to 34% of identity theft complaints. Credit card fraud, phone fraud, utility fraud, and bank fraud remain to be common ID complaints as well. As for the demographics, U.S. residents ages 16 and older are known to be susceptible to identity theft. There is at least one incident of identity theft a day. However, in recent years, personal information is being stolen every minute.
Identity theft in the U.S. includes obtaining others’ personal information for criminal purposes, financial fraud, and obtaining credits or loans in the name of the stolen identity. Other cases include stealing identification cards for employment by those not legally authorized to work in the US.
Identity theft in the U.S. remains to be high-value losses, which account for the top 10% of ID cases. Among the identity theft victims, the most common types of misused information were existing bank and credit card accounts.
Identity theft was also blamed for $4 billion fraudulent tax refunds by the IRS in 2012. 770,000 taxpayers fell prey to tax identity theft in 2013. In 2016, the US has seen a drop of taxpayer identity theft reports by 50% with the launching of a public-private initiative by IRS and employers.
Relevant National Identity Theft Laws, Rules, Regulations, or Recommendations
Identity Theft is punishable by imprisonment and substantial fines. The DOJ prosecutes cases of ID under various federal statutes. The Identity Theft and Assumption Deterrence Act prohibits “knowingly using or transferring” identification of another individual with the intent to commit unlawful activity that violates a federal, state, or local law.
The Fair Credit Reporting Act or FCRA promotes accuracy, fairness, and privacy of consumer information in the files of consumer reporting agencies. The FCRA also regulates collection, dissemination, and the use of consumer credit and other information.
Fair and Accurate Credit Transactions Act of 2003 is a US federal law that allows consumers to request a free credit report annually from any of the three nationwide consumer credit reporting companies. The act also has provisions to prevent identity theft, including alerts on credit histories, and securing disposal of consumer information.