How to Protect Yourself from Identity Theft
Identity theft can ruin your family's financial history. Here's how scammers operate and how you can stop them.
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Moryt Milo is no stranger to identity theft. As editor for a newspaper in Campbell, California, near the Silicon Valley, she had written a number of stories about a rash of a new kind of theft in neighborhoods nearby. So when a local police officer called to say they had found a forgery kit in the trunk of a car -- a kit that included a check she had mailed to her son's school -- she could hardly believe she was a victim of this new crime.
"The thieves had taken that one check from my mailbox, and were able to change the amount from $17.50 to $1,750," she says. But beyond altering the amount, the thieves also had a wealth of information from that check -- the address, the bank's account and routing numbers, and the signature itself -- which they could have used to masquerade as Moryt, stealing her identity.
The United States Federal Trade Commission (FTC) in Washington, D.C., defines identity theft as the stealing of personal information in order to illegally get credit or medical care, or to hide from the law. In the past five years, the FTC estimates about 27.3 million Americans have been the victims of identity theft. Nobody's safe from this kind of theft -- not parents, not grandparents (adults over age 60 make up 11 percent of victims), and not even your children (who make up 2 percent of victims).
Identity theft is frightening, not just because victims don't realize what's happening, but because its effects are long-lasting. If a thief gets credit in someone else's name and runs up a lot of debt, it can take years to straighten the problem out. In that time, a victim's credit history may be damaged to the point that she could be refused financing for loans and mortgages, or have difficulty getting insurance. Older parents and family members could get bilked out of retirement savings. If a child's information is compromised, their financial and credit history could be harmed.
Identity thieves get the information they need through a variety of ways: Lost or stolen wallets; telemarketing scams; stolen mail; sifting through garbage; by posing as landlords or employers to credit reporting agencies; and, increasingly, off the Internet.
The Web is one of the easiest means to obtain personal information, either through hacking into databases or through what law enforcement calls "phisher scams," says Dan Clements, chief executive officer of CardCops.com, a Malibu-based card protection service. In this scam, thieves pretending to be a business send bulk e-mails saying that the recipient's account information has been compromised or lost and the account holder needs to key it in again. Sometimes, the e-mail will link to a Web page, and other times it will ask a recipient to fill in the e-mail form and send it back. Citibank, Best Buy, Amazon, Earthlink, eBay, and PayPal customers were targets of the scam in the past year.
Online customer databases are also targets, because thieves can get thousands of credit cards at once, says Clements.
Once personal information is out there, there's no telling where it will end up. Credit card information can turn up on illegal "carder," or credit card trading Web sites, along with thousands of card numbers posted with other personal data. Other legitimate Web sites sell lists of personal data for marketing purposes. But thieves can buy that data and use it to create fake IDs and checks.
Buying personal information is all too easy for tech-savvy thieves, says Jamie Court, of the California-based Foundation for Taxpayer and Consumer Rights (FTCR) and author of Corporateering: How Corporate Power Steals Your Personal Freedom and What You Can Do About It (Tarcher, 2003).
"Acquiring Social Security numbers is a matter of just $26 dollars and 24 hours," Court says. "You give information to a bank, insurer, or brokerage, and it's shared with hundreds of affiliates, affiliates sell it to other companies, all with little or no controls or cross-checking," he says. And if thieves are caught, law enforcement doesn't always respond as it should. Although various agencies around the country are beginning to deal with this new crime, historically police have claimed that such crimes are "too small" to investigate.
What You Can Do
In a perfect world, families would have the time and money to sue credit card companies and banks whose slack security enables identity theft. In the end, a storm of litigation would probably be the quickest way to stop the flood of personal information. Catherine Meyer, a privacy attorney with the international law firm, Pillsbury Winthrop, says that new federal privacy laws are in development that can help protect consumers. But laws take time.
Meanwhile, families can learn how to protect their own information by following some basic protective tips.
- Don't give your numbers to anyone who calls. Never divulge your credit card or Social Security number to a telephone marketer, even if they say they have personal information about you and even seem to know the first few numbers on the card. Most credit cards begin with common four-digit sequences, such as 5490 or others, so this is an easy trick to gain your confidence.
- Get a shredder. Most office-supply stores and many department stores carry inexpensive shredders that sit right on top of a standard wastebasket. Get in the habit of regularly shredding statements, receipts, credit card applications, and other material with personal identification information. Identity thieves have no shame about diving into trash to find this information, and once the garbage truck hauls it away, it's fair game for the bad guys.
- Observe the mail. If expected periodic mailings -- bills, statements, even magazines you subscribe to -- do not arrive, contact the sender to find out why. Some scammers fill out change of address forms to intercept mail.
- Never carry important numbers. Keep Social Security number, bank card PIN numbers, and mother's maiden name out of your wallet. People should memorize the numbers they need.
- Pore over credit card and telephone statements. It's surprising what people might overlook. One particular scam is to make small charges against thousands of cards hoping victims won't notice -- and many don't. According to the FTC, 52 percent of victims stopped further identity theft by reviewing their statements and contacting their credit or telephone companies immediately when an error was spotted.
- Don't respond to e-mails asking for personal information. That holds true even if it looks like the messages came from establishments individuals are likely to do business with. Do not follow the link in the e-mail. That's how victims are routed to a decoy site that looks exactly like the real thing, but it's just a front to get personal information. Close the message and key in Web addresses manually. Or telephone the company's 800 number and ask for a customer service representative. This way, you'll be assured of getting in contact with the real company, at which time you can inquire about any recently sent message to determine if it's legitimate or if it's a scam.
- Order a credit report. To make sure an identity hasn't been compromised, order your credit history once a year by contacting the three major credit reporting bureaus, Equifax (800-685-1111), Experian (888-397-3742) or TransUnion (800-916-8800). For as little as $10 per report, consumers can check their history, look for suspicious activity, and close old credit accounts (which could be vulnerable to exploitation). Each bureau also has detailed information for reporting fraudulent activity so that consumers can protect themselves against any future bad credit reports.
Protecting Your Child
The key to shielding your kids from identity theft is to protect their personal information, says Carolyn Cheezum, spokesperson for the Social Security Administration. For example, schools and pediatric offices routinely request children's Social Security numbers for registration purposes. That creates a database ripe for thieves.
"But there's no law that says you have to give these places your child's Social Security number," she explains. "I personally, did not give my children's numbers when they registered for school." Before giving information, always ask: Why is it needed? If you don't like the answer, don't provide the data.
Eleven percent of identity-theft victims are 60 or older, according to the Federal Trade Commission (FTC). The same safety rules that apply to you also apply to your retired parents, says Deborah Zuckerman, senior attorney for the American Association of Retired Persons. Educate them about the Internet, about cosigning for loans, and about people claiming to be telemarketers.
"Assess the capacity of your relatives and see if they need supervision," says Betsy Broder, supervisor of the FTC's identity-theft program. "They shouldn't be carrying their Social Security numbers with them. Any accounts they have, including their phone bills, should be scrutinized." Also inform them of the possibilities of junk mail scams or, if needed, read their mail.
Go to the Federal Trade Commission's Web site at www.consumer.gov/idtheft. Or call the FTC at 877-382-4357.
Originally published in Better Homes and Gardens magazine, March 2004.