IS SOMEONE ELSE YOU?

By Chuck Cencibaugh, CFP®

The angry reality of identity theft really hits home when the discussion is with someone you know who has had it happen to them.

Five out of the seven people in this office have had the experience of ID theft. Are we unique? Not according to John D. Sileo, the author of a book Stolen Lives. At a conference Mark and I recently attended Sileo said that each of us has roughly a 1 in 10 chance of facing this problem in the next two years unless we take steps to protect ourselves. And there are many things we can do. Best of all most are surprisingly simple.

What follows is not intended to be an exhaustive study. Rather, I want to examine where the risks lie and to offer some suggestions intended to prevent dissemination of your information, contain the problem if it gets out and repair the resulting damage.

PREVENT

Affirmatively protect

I was inclined to think that electronic theft (i.e. computer hacked information) was the biggest risk. But that is not the case. The chart below shows the risk attendant to the most common origins. It is reconstructed from a chart on p. 35 of Mr. Sileo's book.

How can we reduce the odds of being a victim? Just physically protecting items bearing our private information is far and away the single most important thing we can do (as the commercial asks, “What's in your wallet?”). Carrying only the minimum number of items; and keeping at home a copy of them so we can quickly make the proper notifications if they are lost/stolen is a simple way to do this. Protecting our information also includes keeping our information private, even from friends and relatives. Mr. Sileo noted that 50% of identity theft is perpetrated by someone you know.

While not representing the biggest risk, protecting electronic data is definitely an important issue. This applies not only to our desktop computers, but also to laptops, cell phones and other “mobile” electronic media. Useful measures here can include changing passwords (hopefully, themselves coded in some way), installing preventative spyware software, firewalls and even resorting to some form of data encryption. Acting to protect your mail and shredding trash are also simple but effective steps you can take.

Do not give out information quickly . . .or easily.

Although not specified in the above chart, protecting your private information by not sharing it is HUGE. Not sharing includes not divulging such information to anyone else without establishing who they are and determining that there is a valid reason why they should have it.

We all see the obvious scams, such as those that come in the form of an email (like the one purporting to be from a Nigerian banker) saying there are millions of dollars to be had if only you respond confirming your name and address. Less obvious are those purporting to come from the IRS or even your own bank, Paypal or similar organization requesting that you confirm some information such as your Social Security number. The IRS will NEVER request such information, nor will any legitimate group that contacts you without your having contacted them first. Be on the alert!

If you receive any such contact on the telephone from someone representing themselves as from your bank or other of your business contacts, give out NO information until you establish to your satisfaction that it is appropriate and in your interest. One way is to ask them for their name and a phone number where you can call them back. If they won't give that to you, terminate the call. Legitimate callers will give you that information and understand why you want it. If they do give you the information, call your bank branch or other business contact directly and verify that the person and the phone number given are, indeed, as represented before you consider calling back.

Opt Out and “Just say no”

Another simple way you can help reduce the amount of your information that gets “passed on” is to Opt Out of information sharing by those with whom you do business. This includes those offering credit cards, loans or lines of credit (go to www.optoutprescreen.com or call 1-888-567-8688).

Insurance companies, financial institutions and other businesses send privacy statements. These offer you the opportunity to have them NOT share your information, but generally require you to take an affirmative action to take them up on the offer. It is worth the effort to do so.

You can stop signing up for additional (unneeded) credit cards, discounts, contests and surveys. Also, stop filling out warranty cards unless necessary. Such items most often are primarily marketing tools and ask for far more information than appropriate for the “stated” purpose, but which is valuable for other uses.

The fewer sources these criminals have to mine for our information, the better off we are.

CONTAIN

Monitor your own credit

One of the most effective ways to protect yourself is to monitor your own credit. As you may already know, by law you are entitled to one free credit report each year from each of the three credit reporting agencies (Equifax, Experian & TransUnion). Reports from all three can be obtained from www.annualcreditreport.com or by calling 1-877-322-8228.

You can also order from each of the three agencies a monitoring service of their records. There are other such services out there, but why not go to where they already have your information? For a nominal (particularly so in light of what you have at stake) charge of about $15.00 per month you can get from any of them a credit monitoring service that covers the records of all three. With this service if there is any change in your credit report you are contacted immediately. The sooner you know of a potential problem the more effective you can be in containing it.

Also, spouses should each monitor their own credit. And don't forget to check your children's credit; this is an apparently fertile new area attracting ID thieves. Mr. Sileo pointed out that almost any identity (no assets needed) can be worth around $300,000 to these crooks

REPAIR

Communicate

If you see on your credit report an account you do not recognize, contact the credit agency immediately. If you still do not recognize the account after talking with them, have them put on a temporary fraud alert on your credit file while you follow up on the account. This is among the most important things you can do in this area, and it does not cost anything. It warns anyone considering extending credit to take extra precautions as fraud may be a real potential. The ultimate in safety is to freeze your credit. This locks your data at the agencies until you (temporarily) remove that freeze. If you subscribe to a credit monitoring service freezing and unfreezing your credit may be an included service. If you do not, it can be well worth the nominal (about $10.00) fee each time you place or remove the freeze.

If you see unused accounts, call the companies that issued them (not the credit agencies) and cancel them.

CONCLUDING THOUGHTS

Always remember criminals are cowards. They do not want to be exposed and caught. They will, therefore, go for the low hanging fruit.

So you do not have to be perfect in your protective measures; you just have to be a little better than the next guy. Like the story of the two hikers in the forest who encountered an angry bear. When one of them slipped off his backpack his buddy said “Don't be crazy. You can never outrun that bear.” To which the first hiker replied “I don't have to outrun the bear. I just have to outrun you”.

This is not to make light of a serious subject, and identity theft is very serious. The more we all understand and the more strategies we apply, the more effective we will be in fighting this very personal crime. We noted earlier that in order to be most effective we need to:

•  Prevent the dissemination of your information
(don't divulge, monitor credit)

•  Contain the problem if your information gets out
(fraud alert, freeze credit)

•  Repair (communicate with credit issuers and credit agencies)

While there are many defensive steps we can take to protect ourselves, the underlying premise is to take control of any situation in order to minimize any vulnerability. A mindset that questions any request for your private information is your greatest ally.

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