Identity Theft: An Overview

Once upon a time, if a person was the victim of a theft, it was known almost immediately because whatever was once there, was gone. A purse had been snatched from an unsuspecting shoulder. A wallet disappeared from a back pocket on a busy sidewalk. A back window was smashed to allow a thief entry.

Theft is no longer so cut and dry. Today's technology has made susceptible to theft something more valuable than a purse, wallet, or household possessions: one's identity.

As our digitized world continues advancements in technology, the prevalence of identity theft and, more importantly, ways to prevent it will be of major public concern. Already, just a few decades into the digital boom, it is estimated that there are between nine and ten million identity thefts each year. Just to put this number into perspective, it would be enough people to fill Yankee Stadium almost 200 times over; it would be enough people, standing shoulder to shoulder, to stretch across the United States; it would be enough people, laying head to feet, to wrap almost half way around the Earth.

The impact of a single case of identity theft is truly staggering. The average amount of each theft is around $6,000. The average amount of time spent to remedy the theft is over 600 hours; almost 4 months of working full-time, 40 hours per week.

How does identity theft happen?

There are three primary methods in which identity theft occurs. The first method, an individual identity theft, occurs when an individual person does something to makes themselves vulnerable, resulting in a theft. For example, a stolen purse or a dropped credit card receipt. The second method, a physical theft of multiple IDs, occurs when someone or some entity, in the possession of multiple IDs does something to make themselves vulnerable, resulting in a theft. For example, an insurance salesman finding his laptop stolen from a back seat. And the third method, a digital theft of multiple IDs, occurs when someone or some entity does something to make digital information vulnerable, and it results in a theft. For example, a weak business security network breached by a hacker.

What can be done to prevent identity theft?

There are many ways to avoid becoming the next victim of identity theft, most of which are extremely simple but wildly underutilized. Which particular methods are most effective depend on individual circumstances.

Reviewing a free credit report once a year is an annual chore that should be very common, but it is not. Often times, if a theft had been discovered earlier, much of the damage could have been avoided. Annual credit report reviews are a good start.

All credit cards, IDs, frequent flier cards, etc. should be inventoried. Any card with a magnetic strip can potentially contain personal information. Once documented, along with contact information for each card, this should be stored in a secure place away from the cards themselves.

The use of a shredder can deter theft of information at your curb. Anything thrown away with any personal information on it, whether an advertisement or a utility bill, should be shredded before discarding.

Paper checks are problematic. Only include a first and last name on checks while omitting things like address, telephone number, or social security number. Any checks being mailed out should be dropped off at the post office as opposed to leaving them unattended in a residential mailbox.

Lastly, a little common sense can go a long way in helping to prevent the theft of one's identity. Any PIN numbers, for example the number attached to an ATM card, should be kept secret and punched into a machine only when aware of the surroundings. It is usually unnecessary and overly risky to carry every single piece of identification and every last credit card around in a purse or wallet.

What should victims do?

The sooner the theft is addressed, the less damage will be done. Therefore, acting quickly is extremely important. First, disconnect any computers containing personal information from the internet. Especially if the source of the theft is unknown, this is a simple step that can prevent further information from becoming part of the problem.

Next, a complaint should be filed with the FTC. This can be done via the internet on another computer or over the phone. This information should then be taken to the local police for a police report. Both the police department where the theft occurred and the police department nearest the victim's residence should be notified. A police report can prove very useful down the road and is therefore critical to obtain at this stage of recovery.

Once the FTC and police have been notified, and a police report has been obtained, the institutions holding any breached accounts need to be contacted. In today's climate, most banks and credit card companies have systems set up for consumers who have had their identity stolen. It is important to remember that the financial institution stands to lose money due to the theft as well.

All three credit reporting agencies have designed a system where a consumer can contact them to place a fraud alert on the report. This alert can stop the bleeding in many circumstances.

At this point, further theft should be prevented and each account will need its proper attention to restore it as best as possible to its pre-theft state.

Summary

Even though identity theft is very prevalent and growing, the individual actions to avoid becoming a victim are minute relative to the havoc a theft can cause. There are many credit monitoring services available today for a relatively low cost. Also, services are available to help the victim in the recovery process. Just like any other services, diligent research should be done before choosing a particular company.