Identity theft occurs when someone uses your personal identification information without your permission to commit fraud or other crimes. The crimes take many forms including obtaining credit cards, establishing utilities, or securing a loan. If you are a victim of identity theft, you can spend many hours and hundreds of dollars in the hopes of repairing your good name.
How Thieves Can Steal Your Identity
Identity theft starts with the misuse of your personal information, such as your name and Social Security number, credit card numbers, or other financial account information. Identity thieves may use a variety of methods to obtain your information, including:
- Dumpster Diving. They rummage through trash looking for bills or other paper with your personal information on it.
- Skimming. They steal credit/debit card numbers by using a special storage device when processing your card at the point of purchase.
- ATM Spoofing. They install fake or doctored ATMs and point-of-sale terminals to capture ATM cards or information stored on the cards. Cameras, casual observers or the decoy machines record your PIN as you enter it. Fraudsters may clone your ATM card using information from the magnetic strip to produce the false cards that can be used to access your accounts.
- Phishing. They pretend to be financial institutions or companies and send spam or pop-up messages to get you to reveal your personal information. They contact you by phone and promise awards, gifts or request donations thanking you for providing business or support previously (even though you have not) and ask you to provide a credit card for contributions or handling charges.
- Changing Your Address. They divert your billing statements to another location.
- Stealing. They steal wallets and purses; mail, including bank and credit card statements; pre-approved credit offers; and new checks or tax information. They steal personnel records, or bribe employees who have access.
- Pre-texting. They use false pretenses to obtain your personal information from financial institutions, telephone companies, and other sources.
Remember, identity thieves don’t have to be strangers; they can be relatives, friends or even employees.
Technology and Identity Theft
Advances in technology are continually under development to overcome identity theft by improving ways that individuals and organizations conduct financial transactions and by increasing authentication methods. Because account takeovers make up a large percentage of identity theft, several potential authentication techniques are possible now or in the near future, such as:
- Digital certificates or tokens. In addition to user ids and passwords, customers must have a digital certificate to access corporate electronic banking applications, to approve payment transactions, or both
- SiteKey. Online bank customers select one of a thousand different images, write a brief phrase and pick three challenge questions. The challenge questions, combined with a customer ID and a pass code protect access to the account. The questions pertain to things that only the customer would be able to provide, such as the name of their favorite pet when they were growing up.
- Chip and Pin Technology. Banks and retailers are replacing traditional magnetic stripe equipment with smartcard technology, where credit/debit cards contain an embedded microchip and are authenticated automatically using a four digit personal identification number (PIN). Once the card has been verified as authentic, the customer enters a the PIN, which is checked against the PIN stored on the card; if the two match, the transaction completes.
- Biometrics. Biometrics is a means to automatically recognize a person based on that person’s physical traits. Biometrics can involve scanning fingerprints to determine a person’s identity or even scanning a person’s facial features.
While new technologies are being developed to prevent identity theft and many believe that advances in technology will solve identity theft problems, they may make identity theft more problematic. Criminals will adapt their actions to fit the situation and will find ways to utilize new technology to their advantage. If people erroneously believe their information is safe, they are more likely to let their guard down.
Protecting Your Identity
Awareness is the most effective weapon against identity theft. Here are some tips to help protect your identity:
- Keep your personal information in a secure place, e.g. a locked safe or safety deposit box at a bank. Safeguard this information as diligently as identity thieves go after it. If you utilize a signature stamp, secure that stamp at all times. Signatures are powerful so it is important to not allow anyone else to sign on your behalf.
- Review, or have a third party review, your finances. Review your bank and credit card statements as well as your other bills. Review checks disbursed from your account via online access. If preferred, have an independent, reputable party, e.g., an accountant or lawyer who does not have authority to perform financial transactions from your accounts, periodically review your financial information including bank activity and investment accounts for reasonableness and propriety.
- Secure your computer. Never use obvious passwords like your birth date, the last four digits of your social security number, or your mother’s maiden name and don’t share your passwords with anyone. Periodically change your passwords. Use firewalls, anti-spyware, and anti-virus software and keep them up-to-date.
- Shred documents containing personal information before you discard them. Your mail and other financial items contain valuable information. Thieves are not opposed to checking your trash to obtain these documents.
- Never give your private information over the phone, through email, or over the Internet unless you are sure you know who you are dealing with. You may feel comfortable emailing private information or sharing that information through instant messaging services, but the fact remains that all of that information may be compromised, especially since information you share can easily be passed on or can remain on computer servers.
- Do periodic checks on your credit. Under the Fair and Accurate Credit Transactions Act, the law requires the major nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to give you a free copy of your credit report each year if you ask for it. Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free credit reports each year. You also can write: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
- Always keep your credit card and checkbook hidden. As demonstrated in the true story of “Catch Me If You Can”, there are people who have mastered the skill of photographic memory and they can remember your numbers in a very short space of time.
- Contact your credit card companies and see what their fraud policy is. If you don't know what your credit card policy is, then you won't know how you can be protected. Know what your credit card company can/will do should you be a victim of identity theft.
If You Are a Victim
If you discover that you have been a victim of identity theft, the Federal Trade Commission recommends that you take the following four steps:
- Place a fraud alert on your credit reports. Fraud alerts can help prevent an identity thief from opening any more accounts in your name. You only need to contact one of the three companies, TransUnion, Equifax or Experian, to place an alert. The company you call is required to contact the other two, which will place an alert on their versions of your report, too. If you do not receive a confirmation from a company, you should contact that company directly to place a fraud alert.
- Close the accounts that you know, or believe, have been tampered with or opened fraudulently. Call and speak with someone in the security or fraud department of each financial institution. Follow up in writing, and include copies (NOT originals) of supporting documents. It's important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures.
- File a complaint with the Federal Trade Commission. You can file a complaint with the FTC using the online complaint form; or call the FTC's Identity Theft Hotline, toll-free: 1-877-ID-THEFT (438-4338; or write Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. Be sure to call the Hotline to update your complaint if you have any additional information or problems.
- File a report with your local police or the police in the community where the identity theft took place. Call your local police department and tell them that you want to file a report about your identity theft. If the police are reluctant to take your report, ask to file a "Miscellaneous Incident" report, or try another jurisdiction, like your state police.
Keep a record with the details of your conversations and copies of all correspondence.
While there is no way to completely eliminate the possibility of your identity being stolen, safeguarding your personal information helps thwart the efforts of those would be thieves.