Identity Theft and Fraud and Insurance

June 15, 2006

Identity theft occurs when somebody steals your name and other personal information for fraudulent purposes. It is the act of impersonating another, by means of using the person's information, such as birth date, social security number, address, name, and bank account information.

There are many types of crimes in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud and deception, typically for economic gain. Less commonly, it is to enable illegal immigration, terrorism, espionage, or changing identity permanently.

What are the most common ways to commit identity theft or fraud?  Many people do not realize how easily criminals can obtain your personal data without having to break into our homes. Despite your best efforts to manage the flow of your personal information or to keep it to yourself, skilled identity thieves may use a variety of methods to gain access to your data.  They can steal records or information while they’re on the job, steal your mail, rummage through your trash or dumpster, steal your credit card numbers, steal your wallet or purse, divert your mail to another location, steal personal information from email or phone.  They will watch you from a nearby location as you punch in your telephone calling card number or credit card number or listen in on your conversation if you give your credit-card number over the telephone.  They will use your applications for pre-approved credit cards in the mail and try to activate the cards. They will try and obtain internet passwords or banking information.

How can I tell if I’m a victim of identity theft?  It will likely show up on your credit report.  Review your report carefully. Look for inquiries from companies you haven’t contacted, accounts you didn’t open, and debts on your accounts that you can’t explain.

What are the effects of identity theft?  They may call your credit card issuer to change the billing address on your credit card account, open new credit card accounts in your name, establish phone or wireless service in your name, and open a bank account in your name.  They will file for bankruptcy under your name to avoid paying debts, buy a car or take out an auto loan.  They will obtain your identification as a drivers license to get a job or file fraudulent tax returns under your name and even give your name to the police during an arrest. 

How long can the effects of identity theft last? It’s difficult to predict, but that’s because it depends on many factors including the type of theft, whether the thief sold or passed your information on to other thieves, whether the thief is caught, and problems related to correcting your credit.  Monitor credit reports and other financial records for several months after they discover the crime.  Review credit reports once every three months in the first year of the theft, and once a year thereafter. 

What can I do to avoid becoming a victim of identity theft?  Be stingy about giving out you personal information to others unless you have a reason to trust them.  Adopt a need to know approach to your personal data.  Do not provide your personal data to callers. Have your mail held at your local post office.  Check your financial information (bank & credit card statements) regularly. Immediately report any transactions. Obtain and review a copy of your credit report periodically.  Maintain careful records of you banking and financial accounts.  Minimize your risk by placing passwords on your credit card, bank and phone accounts.  Secure personal information in your home. Ask about information security procedures in your workplace or at businesses, doctor’s offices or other institutions that collect your personally identifying information.  Don’t give out personal information on the phone, through the mail, or on the Internet unless you know who you’re dealing with.  Treat your mail and trash carefully. Deposit your outgoing mail in post office collection boxes or at your local post office.  Don’t carry your Social Security number card and give your Social Security number only when absolutely necessary.  Carry only the identification information and the credit and debit cards that you’ll actually need when you go out.  Be cautious when responding to promotions.  Keep your wallet in a safe place. Pick up ordered checks from the bank instead of having them mailed to your home mailbox.

What’s the department of justice doing about identity theft and fraud?  Prosecute cases under a variety of federal statutes. This offense carries a maximum term of 15 years imprisonment, a fine and criminal forfeiture of any personal property. Federal prosecutors work with FBI, United States Secret Service and the United Sates Postal Inspection Service.

What should I do if I’ve become a victim of Identity Theft?  Act immediately to minimize the damage to your personal funds and financial accounts, as well as your reputation.  Contact the Federal Trade Commission (FTC) to report the situation. Under the Identity Theft and Assumption Deterrence Act, the Federal Trade Commission is responsible for receiving and processing complaints from people who believe they may be victims of identity theft. You can also call your local office of the FBI or the U.S. Secret Service to report crimes relating to identity theft and fraud.  Other agencies are your local office of the Postal Inspection Service, the Social Security Administration, & the Internal Revenue Service.  Call the fraud units of the three principal credit reporting companies: Equifax, Experian, & Trans Union.  Contact all creditors with whom your name or identifying data have been fraudulently used, financial institutions where your accounts and the major check verification companies as CheckRite, ChexSystems, CrossCheck, Equifax, National Processing Co., & TeleCheck.

Should I use a credit monitoring service?  Commercial services are available for a fee.  They will monitor your credit reports for activity and alert you to changes to your account.  Check out the company with your local Better Business Bureau, consumer protection agency and state Attorney General to see if they have any complaints on file.

Where can I find out more about identity theft and fraud?  Government and private organizations have information about various aspects of ID Theft and Fraud.

US Government: California Department of Consumer Affairs, Consumer.gov, Federal Bureau of Investigation, Federal Deposit Insurance Corporation, Federal Trade Commission-Congressional Testimony, Federal Trade Commission-Consumer Alert, US Postal Inspection Service, US Secret Service

US Non-Government: American Association of Retired Persons, Better Business Bureau-Alert, CalPIRG, Center for Democracy and Technology, National Association of Attorneys General, National Consumers League, National Fraud Information Center, & Privacy Rights Clearinghouse.

Is insurance available? Identity theft insurance provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports. Some companies now include it as part of their homeowners insurance policy. Others sell it as either a stand alone policy or as an endorsement to a homeowners or renters insurance policy.

On average, these policies cost between $25 and $50 for $15,000 to $25,000 worth of coverage. Identity theft insurance provides reimbursement for expenses such as phone bills, lost wages, notary and certified mailing costs and sometimes attorney fees with the prior consent of the insurer

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