Identity theft is an increasingly frequent crime. According to Javelin Strategy & Research identity fraud cases rose by 12 percent in the U.S. last year (2010), to 11.1 million. Victims should have some way of recovering their financial losses when it happens. This type of theft is not generally covered by a basic homeowners insurance policy, though it may be an optional endorsement on a homeowner’s insurance policy. While you may or may not need to insure against the risk of loss from identity theft, for sure you need to pay attention to how to minimize its occurrence. Check with your Washington home insurance agent to see how you are covered.
Our increasingly electronic world has created many more opportunities for identity theft. Credit cards, funds transfer cards, ATMs, wireless payments, slipshod business practices and the Internet all contribute to making identity theft a problem for individuals and businesses.
ID theft is a term that describes virtually any dishonest and unauthorized use of private information. In the past, it described forgery or passing oneself off as another person to trick someone out of money or property. Today, it may describe any use of another person’s confidential information to fraudulently obtain goods, services, or other financial benefits. The gold mine of information for identity thieves is a social security number. This can be been used to get other private information such as driver’s history, credit information, bank accounts, loan information, credit cards, occupational history, military records, mortgage information, investment accounts and so on. This may allow a criminal to use another person’s accounts, secure loans, and charge a host of goods or services; the list of opportunities is limited only by the criminal’s resources and imagination.
It is basically up to the individual consumer to guard against ID theft – even if businesses and government regulations are ramping up security activities.
Even when financially protected, ID theft victims typically have costs associated with clearing up the aftermath. These include correcting a credit history and straightening out accounts and records. This often takes months and may involve legal fees.
There is insurance coverage ID theft that may reimburse legal fees or pay costs related to correcting records. The most effective protection is for individuals to prevent becoming ID theft victims. Here are some ways ID thieves work:
- Dumpster Diving – rummaging through trash looking for stuff with your personal information on it.
- Skimming. — using a special storage device to steal credit/debit card numbers when you are using your card.
- Phishing. — pretending to be a financial institution or company (on-line or in email) to get you to reveal your personal information.
- Changing Your Address — diverting your billing statements to another location by completing a change of address form.
- Old-Fashioned Stealing – your wallet or purse; mail, including bank and credit card statements; pre-approved credit offers; and new checks or tax information. They also steal personnel records, or bribe employees who have access.
- Pretexting –thieves may use false pretenses to obtain your personal information from financial institutions, telephone companies, and other sources. For example calling and claiming they are you.
There are ways to defend yourself:
- Keep banking information and your Social Security Number safe, perhaps in a locked file.
- Use care in on-line transactions. Is the Website you use secure?
- Verify that websites for online transactions are legitimate
- Use password protection on smart phones and don’t leave them unattended
- Shred paper thoroughly. ID thieves steal mail by going through garbage.
- Check bank and business records for irregularities. Track down the unusual transactions or entries.