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Understanding Identity Theft

What is Identity Theft?

The Federal Trade Commission estimates that as many as nine million Americans have their identities stolen each year. Identity theft or identity fraud are terms used to refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data (such as a person’s name, Social Security number, or credit card number) in some way that involves fraud or deception committed typically for economic gain.

Criminals can easily obtain personal data without having to actually break into a home. For example, in public places, criminals may engage in “shoulder surfing,” in which they watch as an individual punches in a telephone calling card number, credit card number, or pin number for a bank account. They may also listen in on conversations and write down personal information that an individual gives over the telephone (such as a credit number to a hotel or rental car company. Some criminals engage in “dumpster diving,” ­and rummage through garbage cans or communal dumpsters or trash bins  in order to obtain copies of checks, credit card or bank statements, or other records that typically bear your name, address, and even your telephone number. These types of records make it easier for criminals to gain control over accounts and assume another’s identity.

The Internet has become perhaps the most common (and best) place for criminals to obtain identifying information. Criminals often use “phishing,” in which they try to lure victims into giving personal information in response to an unsolicited email. Pharming is another cyber swindle in which criminals or “pharmers” redirect Internet users from legitimate commercial websites to counterfeit web pages to trick them to disclose their financial and personal information. In addition, according to the Center for Disease Control, 57 percent of office-based physicians now use electronic health records, a 12 percent jump from last year. Many of these digitized records have fallen into criminal hands. By stealing simply one laptop containing thousands of patient records with identifying information, a thief is able to commit identity fraud, costing victims not only out-of-pocket financial losses, but substantial additional costs associated with restoring their reputation and correcting erroneous information for which the criminal is responsible. Some victims of identity theft may lose out on job opportunities, or be denied loans for education, housing or cars because of negative information appearing on their credit reports. In rare cases, they may even be arrested for crimes they did not commit.



How to Avoid Becoming a Victim of Identity Theft

To reduce or minimize the risk of becoming a victim of identity theft or fraud, follow these basic steps and tips.

1. Adapt a “need to know basis” when it comes to giving out personal data. For example, a credit card company may need to specific details (such as a mother’s maiden name) in order to verity identity when answering account inquiries, but your bank does not need that kind of information, especially if it is already on file. In addition, the less personal information you have printed on your checks, the better. Limit the amount of personal data given out on a daily basis.

2. While traveling, have the post office hold your mail until you return or ask a trusted neighbor, friend, or family member to retrieve your mail. If you have to give out personal information over the telephone, be extremely cautious and move to a less public location if you cannot wait to return home, to your hotel room, etc.

3. Check your financial information regularly and look for what should be there and what should not. For example, if you have bank or credit card accounts, make sure that you continue to receive the monthly statements (either online or through the postal service). Call your financial institution or Credit Card Company if you stop receiving these statements. Carefully check these monthly statements to make sure there are no unauthorized charges or withdrawals. Immediately report any unauthorized withdrawals or charges.

4. Ask for a copy of your credit report periodically. Credit reports list all bank and financial accounts under your name, and will provide indications of whether someone has wrongfully opened or used any accounts in your name.

5. Maintain careful records of your banking and financial accounts. Though financial institutions are required to maintain copies of checks, debit transactions, and similar transactions for five years, you should keep your monthly statements and checks for at least one year. These records will aid you if you ever have to dispute a particular check or transaction.

6. Remove your name from the marketing lists of the three credit reporting bureaus—Equifax Information Services, LLC, Experian (TRW), and TransUnion. This will limit the number of pre-approved offers of credit you receive in the mail. (If you toss these into the garbage, such solicitations are a potential target of identity thieves who can use them to order credit cards in your name.)

7. Register your telephone number with the National Do-Not-Call Registry. This registry prevents telemarketing calls to the registered number with the exception of calls from political organizations, charities, telephone surveyors and companies with which you have an existing relationship. In addition, you can remove your name, home address, and home telephone number from many mailing and telephone lists through the Direct Marketing Association’s Mail Preference Service and Telephone Preference Service.

8. When you pay bills, do not leave the envelopes containing your checks at your home mailbox for the postal carrier to deliver. If your checks are stolen, they can be altered and then cashed. If stolen, credit card payments contain all the necessary information that an identity thief needs. Do not write your credit card account number or Social Security number on your checks when making a payment. It is best to mail bills, tax payments, and other sensitive items at the post office rather than from your residence or neighborhood drop boxes.

9. To avoid becoming a victim of phishing, never disclose your personal information in response to an unsolicited e-mail. Never click on a link embedded in an unsolicited e-mail, regardless of who sent it. Before entering important personal or financial information on a webpage, verify the site’s authenticity. Verify the authenticity of a website before entering financial or personal information via that website by using the site’s certificate of authority, such as VeriSign.

10. Keep separate passwords for each account you have online and update anti-virus software weekly.



What to do if You Think You are a Victim of Identity Theft

1. Contact the Federal Trade Commission to report the situation. Under the Identity Theft and Assumption Deterrence Act, the FTC is responsible for processing complaints from people who believe they may be victims of identity theft, providing informational materials to those people, and referring those complaints to appropriate institutions, including the major credit reporting agencies and law enforcement agencies. You can also call your local office of the Federal of Investigation or the U.S. Secret Service to report crimes relating to identity theft and fraud.

2. Contact creditors with whom your name or identifying data have been fraudulently used.

3. Contact financial institutions where you have accounts that an identity thief has taken over or that have been created in your name but without your knowledge or permission.

4. Contact the major check verification companies (listed in the CalPIRG-Privacy Rights Clearinghouse checklist) if you have had checks stolen or bank accounts set up by an identity thief.


Additional Resources

Common Fraud Schemes and Tips for Avoiding Them- This resource provides information on the most common scams that the FBI investigates and offers tips on how to avoid becoming a victim.

Tips Every Tax Payer Should Know About Identity Theft – This resource offers tips from the IRS help you avoid becoming the victim of an identity theft.

Taxpayer Guide to Identity Theft – This website provides information on tax fraud and offers advice on to avoid becoming a victim.

Avoiding Internet Investment Fraud- From the U.S. Securities and Exchange Commission, this website offers information on how to invest wisely and avoid fraud on the Internet.