Is the Threat of Identity Theft Overblown?

Maybe you used your bank card at the grocery store today, left a personal check in the mailbox for your landlord, or bought a pair of shoes online. Maybe you filed your taxes electronically, or went the old-fashioned route and mailed them. Did you renew your cell phone service, or hand over your Visa to the bartender at your favorite watering hole to run a tab?  Millions of Americans do these mundane activities every day without a second thought, and any of them could allow thieves to steal your identity.

What is the risk?

Identity theft is still a very real risk, despite the myriad security measures taken by banks, credit card companies, and other institutions that deal with your personal information. In the Federal Trade Commission’s (FTC) annual report on consumer fraud for 2010, identity theft tops the list for the 11th year in a row. On average, somewhere between 9 and 11 million Americans are victims of some type of identity theft every year, with total losses over $50 billion.

What are the types of identify theft?

The most common types of identity fraud, according to the FTC, are government document and credit card fraud.  Of the quarter-million identity theft complaints reported to the FTC last year, nearly one in five involved government documents. In these scams, a thief gets a driver’s license or other government ID in your name, then uses it along with your Social Security number to fraudulently collect government benefits or file tax returns.

The problem is growing; while overall identity theft complaints decreased by five percent from 2008 through 2010, government documents and benefits fraud increased four percent; medical identity fraud is also increasing. Other crimes identity thieves perpetrate include phone and utilities fraud (using falsified information to get a cell phone or satellite tv service, for instance), employment fraud, and bank fraud.

Are you at risk?

Anyone can be a victim of identity theft. If you pay bills or bank online, post on social networking sites, or use an unsecured wireless connection, you could be increasing the threat to your personal information. Also at risk:

• Small business owners: People who own their own businesses are 1.5 times more likely to be victims of identity theft. They have more financial transactions than average, and are more likely to use their personal accounts for business use. With a high number of transactions, it’s easier to miss one that might tip you off to fraudulent use.
• Millennials: The 18-to-24 age group is the prime target of marketers, and it seems identity thieves as well. Along with all the personal information this group tends to share online, they take longer to realize they have been victimized; on average a young person takes over four months to realize there has been fraudulent activity on their credit cards or bank accounts. In older age groups, the average is 49 days, probably because they are more likely to monitor their credit and keep track of their financial transactions.
• College students: This subset of the millennial generation can offer easy pickings for identity thieves. Credit card companies target college students with pre-approved credit card offers, many of which go into the trash. Students also tend to give out lot of personal information, both online and off, which also puts them at risk. A recent security breach at Eastern Michigan University involved student workers accessing other students’ files to steal personal information; six EMU students recently reported their Social Security numbers had been used to file false tax returns.

How can you protect against identity theft?

You’ve probably seen the commercials for various services promising to protect you from identify fraud for a low monthly fee, but almost everything they do you could do yourself for free or at minimal cost. It’s up to the individual consumer — you — to protect your own information from falling into unscrupulous hands; the FTC offers this advice, including some basic steps:

• Shred personal documents. Bank statements, credit card bills, medical records, and anything else with personal information can provide Dumpster-diving thieves withinroads to your identity.
• Check your credit report, and keep a credit log. Keep track of charges you make and know when to expect your bills. Federal law requires the three major credit reporting agencies to provide consumers free copies of their credit reports once every twelve months, so request your reports and track of any changes.
• Protect outgoing mail. Put mail, particularly bill payments, tax returns, and the like, directly into a post office box.
• Don’t use easily-guessed passwords. Identity thieves can figure out your birthdate, hometown, or children’s names — often from freely available information on sites like Facebook and Amazon — to hack into your computer or online accounts.
• Secure your personal information. Particularly for young people who have roommates and friends coming and going, make sure your birth certificate, Social Security card, and passport are in a personal safe or otherwise locked up.

There’s no way to guarantee against identify fraud, but there are steps you can take to minimize your risk and decrease the likelihood you’ll be a victim.