Preventing Identity Theft

What is identity theft?

Identity theft is the crime of the century, with millions of victims going on record each year. Identity theft refers to the impersonation via scrupulous assimilation of Social Security Numbers, driver's licenses, credit and debit cards, etc. The identity theft also takes place via information readable on telephone calling cards and on evidence of identity from copies of the birth certificate. Criminals use this information to impersonate the victims and spend money from regular bank and credit card accounts, before moving on.

The two types of identity theft:

Research and a dedicated study of the criminal-operation-patterns indicate two primary types of identity theft. In account takeover, the thief acquires your credit account information and makes purchases either via credit card or via accessed account number and expiration date. In the application fraud type or the ‘true name fraud’ type, thief uses your SSN and other forms of identity proof to open new bank accounts. Naturally, these are opened in your name and you will never even know till you receive your ‘payment due’ statement. In the latter type of identity theft, the victims learn about the application fraud after a long time and only when the monthly or semi annual account statements are mailed to your address, the one used by the imposter to open the account!

How does the law protect you in case of identity theft?

Although the law declares that the victims of credit card fraud are liable to pay no more than a pre-determined minimum amount of the loss, in many countries now, the victim is not required to pay any part of the loss at all. This is true in the case of credit card holders only and not those who report identity theft on a debit card usage. Debit card users are offered less protection against fraud. In the case of a debit card holder, the individual’s checking account is closed and the person is held responsible for the total amount of the loss, depending on how quickly the identity theft is reported. The ‘Consumer Handbook’ by the Federal Reserve, offers extensive information on the cover against identity theft offered by the law to credit card and debit card holders.

How does identity theft affect your credit rating?

Even though as a debit or credit card holder you are not held completely liable to pay the imposter-generated bills, you are definitely left dealing with a bad credit report. It could take you months and even years regaining financial health, depending on the extent of damage. The subsequent entry on your credit report could pose problems if you are looking forward to availing credit via loans or in an attempt to rent an apartment and even in your effort to secure a job. As a victim of identity theft, you get little or no help from the authorities, while they embark upon the tedious procedure to first narrow down to the ‘deception point’.

Ways and means by which identity thieves operate:

Identity thieves steal wallets to access SSNs, driver's licenses and credit card numbers. They indulge in ‘dumpster diving’ where thrash bins are searched for credit card and loan applications and documents. They also steal sensitive mail from mail boxes left unlocked and easily access newly issued credit cards and bank and credit card statements. This method also enables them to obtain sensitive information on pre-approved credit offers, investment reports and insurance statements. They also pose as employers, loan sanctioning officers and landlords to obtain names and other personal information.

You should be aware of the ever-so-casual’ ‘shoulder surfing’ at ATM and phone booths. This enables them direct access to PIN numbers. Identity thieves also search for identifying information on public records sites and information broker sites. They are also on record for sending email messages that look just like the ones you receive from your bank! You may not be able to prevent identity theft, but you can reduce your risk of fraud by checking your credit report at least once a year. Also reduce the number of credit and debit cards you own and avoid the use of debit cards as far as possible. Always report any evidence of fraud to the concerned financial institution immediately.