Five Facts About Identity Theft And What To Do About It

The idea of having your identity stolen is terrifying. The fact that someone can literally take your information and pose as you to fraudulently conduct transactions can leave us feeling very vulnerable and violated.

Identity theft is one of the fastest growing criminal activities in our world today, and it’s not going away any time soon. With our world becoming increasingly digital, there will always be new ways by which thieves try to get our information.

One of the scary things about identity theft is that many people are completely unaware of it sometimes. This is an issue that we need to be proactive about, at least to the degree that we can.

Consider some of these facts about identity theft.

The most common type of identity theft involves a family member or someone close to them. No one wants to believe that a member of their family or a close friend would make fraudulent transactions in their name, but it happens all the time. One consumer study revealed that nearly 847,000 Americans had their identity taken by someone they knew, and some experts believe that number is a severe underestimate.

Jennifer Peters, a certified credit counselor with Consumer Credit Counseling Service of West Georgia/East Alabama, states that
“Based on my experience, it’s pretty regular and it’s pretty underreported. Very often [victims] know and aren’t going to do anything about it.”

Identity theft incidents frequently go undetected for years. Many times, a person will suddenly receive a letter from a credit card company demanding payment for thousands of dollars, and the person will have no idea what to say or do because the transactions were fraudulent. Some callers into The Dave Ramsey Show say on a regular basis that a family member was taking out cards in their name for years without their knowledge, and they only just discovered it. Identity theft is not a crime you immediately feel necessarily, it may take quite a long period of time for the truth to come to light.

Your debit card is a particularly vulnerable component of your financial life. Debit cards are often given the Visa or MasterCard label. The debit card allows you to make transactions online, in stores, and access your checking account at the ATM. The debit card requires typing in a PIN (personal identification number) to process the transaction. This is where the vulnerability comes in.

One thing that Dave Ramsey says on his radio show is that debit cards are guaranteed against fraud in the same way that credit cards are. Visa, MasterCard, etc. do not place the liability for fraudulent charges on the consumer if their card number is stolen and used for unauthorized purchases.

However, this fraud protection may not apply if you use your debit card PIN. One identity theft agent I recently spoke with revealed to me that she has had quite a few clients who have had their debit card PINs stolen, and the thief used the numbers to make various fraudulent transactions. The consumer informed the bank of the fraudulent charge, and the bank refunded the money under the Visa fraud protection.

But once it was revealed that the thief got a hold of the PIN and used it to make the purchases, the reimbursement was revoked because the Visa fraud protection did not apply to purchases made with the PIN.

Unexpected people need to be protected from identity theft. Believe it or not, identifies of deceased people can be stolen and used fraudulently.0 Even your children can have their identity stolen. It can be easy to gloss over a deceased parent’s or your children’s information, but thieves can and do access their information and open credit cards in their name.

So if you have a deceased relative who lived in your household, having some sort of monitoring of their information may be a good idea. If you have identity theft protection, make sure your children are covered under the plan so that if they have their identity stolen, the company will accept the claim.

When your children reach adulthood, you don’t want them to be in a situation where they are turned down for a bank account, mortgage, or apartment because of old debts that were fraudulently made. Having your children covered in your identity theft protection policy is absolutely necessary to protect their future.

Speaking of which…

Not all identity theft protection services truly offer what they claim. One of the most popular companies that advertise their identity theft protection plans is LifeLock. This company claims that they are one of the most comprehensive identity theft protection plans out there, but that’s not necessarily true.

Some companies, in their policies, spell out that they do not cover incidents from a family member. Since it is frequently someone in close proximity, why would someone take a policy that doesn’t cover this?

LifeLock also does not do the restoration of your identity. All they do is pretty much give you a manual on how to restore your identity. The restoration process can take over 600 working hours to complete. Why pay for a policy that does not cover the most labor-intensive part of the entire situation?

Bottom line: look at the fine print of the policy and see what is and is not covered.

What now? In light of all this, you may be asking yourself what the next step is. Now that you know some ways that thieves take others’ identity, how do you prevent it?

Well, unfortunately, there is only so much that can be done to prevent it, it’s mostly the recovery side where the action takes place. We can be proactive though, and here are some suggestions I make:

First, and probably most obvious, is to actively monitor all of your open accounts. If you have existing credit cards open and are paying them off, actively monitor the accounts to make sure there are not new charges being made. This also applies to your checking and savings accounts and any other financial account you have open.

Second, get an identity theft protection plan that truly does what the company claims. One great company that I use personally is Zander. Their team actively monitors your information and will send an alert if your information is used to open an account, and their family plan covers your children. If a transaction was fraudulent, Zander’s team takes over all of the recovery work on your behalf.

Third, when using your debit card out and about, only run it as a credit. When you slide your card or insert the chip, do not put your PIN number into the keypad. Always select the credit option. This is how your information will be protected against fraud. Using the PIN risks bypassing the fraud protections as some people have learned the hard way.

Fourth, place a freeze on your credit with the three bureaus and review your information in the reports. When your credit is frozen with TransUnion, Equifax, and Experian, identity thieves cannot open new accounts. Even you cannot open a credit card account, apply for an auto loan, or get a mortgage while your credit is frozen unless you manually authorize the transaction. Each year, request a copy of your credit report from each of the three bureaus and review everything there.

Fifth, use a Virtual Private Network when shopping online. The VPN scrambles your IP address and makes it more difficult for hackers to get your information. Think of it as a bridge over water. Yes, you can swim across that body of water, but it is much safer to cross the bridge in the comfort of your vehicle.

Bonus: Use the most secure form of payment when shopping: cash!

While identity theft is a major issue in our world, we don’t have to be completely unprepared. It may happen at some point and has happened to hundreds of millions of people over the past decade, but you can take proactive steps to protect yourself and your family.

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