Six Steps To Prevent Identity Theft

Joe Garagiola tells the story of a baseball star who wouldn’t report the theft of his credit cards because the thief spent less than his wife.  In today’s world, identity theft of my medical identity could mean that I end up with someone else’s medical records.  What happens if the thief is in better condition than me?  Would my insurance rates improve? 

In reality, of course, identity theft is no laughing matter where the average “simple” case costs victims 81 to 600 hours, $2,000 to $15,000 in lost wages, and $850 to $1,400 in out of pocket expenses.  Indirectly, identity theft can cost victims by driving up insurance rates and credit card fees, result in being denied loan approval, housing, employment opportunities and even travel privileges.  In a worst case scenario, it can lead to victims being arrested.

Phishing occurs when thieves impersonate someone you know and request private information that they will later use to assume your identity.  The safest rule, of course, is to not provide personal information unless you initiated the correspondence.  Sometimes that is easy to forget, however, especially in the form of e-mails that appear to come from a vendor you use.  When I receive an e-mail from KeyBank, it’s easy to know they’re fishing because I’ve never had an account there.  When it comes from my own bank, it is easier to set my phishing concerns aside, but don’t!  That’s how they get their victims.

I looked at the web traffic on my blog, last night.  Fully a third of the traffic going to my site comes from European and Russian IP addresses.  I’m not too proud to admit it that I know they are not visiting my site to read my investment opinion.  We are up against a worldwide organized crime effort with computer skills that vastly exceed our own.  Fortunately, they tend to write in broken English.  But you can’t guarantee that will always be the case!

Another popular scam is to impersonate a relative in distress.  Using information gathered from Facebook, they can impersonate a grandson who needs bail money (please don’t mention it to his parents because he might get in trouble), or a granddaughter on the side of the road needing car repair money.  Double check all family distress tales before sending any financial help.  These scams are more prevalent than any of us want to imagine.  Of course, these days, the financial distress might come as a result of having bought Facebook shares when the stock came public!

ABM News just released a story about phantom debt collectors from India that harass Americans, demanding money.  Hundreds of thousands of cash-strapped Americans have been targeted by abusive debt collectors in a phantom debt collection scam. 

Retirement Outfitters recently invited an investigator with the Colorado Bureau of Investigation to the Tuesday Noon Lunch series and attendees received a rapid fire list of steps that can be taken to reduce the risk and impact of identity theft.  Here’s an abridged list of suggestions from that workshop.

1. Opt out of receiving junk mail so no one can steal a pre-approved application from your mailbox.
2. To protect against electronic “skimmers” that steal your card information when it is swiped, cover the keypad and pretend to type some extra numbers so that no one can learn your PIN code by watching.
3. Use a separate credit card for travel, or to carry with you, from what is used for monthly utility payments.  If the travel card is compromised, you don’t have to change payment instructions on all of the other accounts.
4. Monitor bank and credit card spending, online or through household spending software (like Quicken), or consider using a credit monitoring service.  The quicker the ID theft is discovered, the less you’ll have to unravel, later.
5. Rotate among the three major credit report services and use www.annualcreditreport.com to check for unusual activity every four months.  You get one free report per year from each service, so rotating among them allows you to check more frequently.
6. Determine if your credit card company offers a smart card, chip card, or integrated circuit card (ICC).  These cards can’t be effectively skimmed because authenticating data changes after each transaction.  However, some of these “contactless” cards emit a wireless signal that can be read by a nearby reader, so customers should also consider buying a credit card RFID blocking sleeve as well.

Retirees are targeted by identity thieves because they don’t use credit as often and are less likely to immediately notice when their card or medical identity has been compromised.  For this reason, retirees who aren’t borrowing money very often ought to consider putting a freeze on their credit record by contacting the three major vendors (Experian, Trans Union, and Equifax).  This can prevent fraudulent applications from being processed in the first place.

Children, newborns even, are also targets.  The beautiful part of stealing the identity of a baby is that it could be 18 years before they grow up, apply for credit, and discover that they already owe thousands of dollars in debt against their social security number.  The Social Security Administration, realizing that its formulaic way of determining social security numbers was part of the problem, is taking steps to make this more difficult.  For years, however, thieves could easily “guess” a new baby’s social security number and they would have an 18-year free pass to spend before they would be noticed.  Children would reach the age of 18 and immediately be faced with paying tens of thousands of dollars in debt.  This doesn’t happen as often as it used to, unless you want to include Congress among the list of criminals.

The Colorado Bureau of Investigation has a small Identity Theft unit, including a Victims Advocate.  The cases they work on usually span multiple jurisdictions, making enforcement action more complex.  The statewide hotline to report identity theft activity is 1-855-443-3489. 

Barbara Traylor Smith, Retirement Outfitters President, also received a stack of materials at the workshop to help educate Coloradans about identity theft prevention.  Email info@GJretire if you want to stop by Barbara’s office to pick up a packet.
 
Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies .

Go to Investments main page.