Identity theft is a serious, yet often mysterious problem. There’s a lot of buzz around the topic, usually in the form of businesses telling us they should pay for their identity theft protection services. But it’s rare that anyone ever actually explains what ID theft really is, what we can do to protect ourselves, or what those services actually do to protect us.
That’s what this article is for: to clear the air and answer some questions. That way, if you decide to get coverage for ID theft, you’ll know what you’re paying for, and how much good it’s doing.
Types of ID Theft
What many people think of when they hear identity theft is someone using their credit card, or getting a new card in their name. While that’s part of it, there are other forms of theft that are potentially more dangerous.
Credit ID Theft
This is the stereotypical form of ID theft. Credit ID theft is when a thief gains access to some of your personal information (be it your credit card information, name and address, or something like that) and either uses your existing avenues of credit without approval, or opens new accounts or cards and begins demolishing your credit that way. Left unchecked, thieves can rob you of thousands, severely damaging your credit and leaving you unable to open new bank accounts, get a loan, or even rent an apartment or get a job.
Tax ID Theft
When a thief is able to gain access to even more sensitive information, like your social security number, Tax ID theft is often the result. The individual files for a tax return in your name, potentially stealing thousands that the government owes you. Then, when you go to file your taxes as normal, the IRS suspects you of fraud.
Medical ID Theft
Perhaps most dangerous is the prospect of medical ID theft, where thieves use your medical information to pose as you and receive treatment or medications in your name. Aside from potential legal consequences that might arise from both of you trying to fill prescriptions for controlled substances, medical ID theft has the potential to cause life-threatening mistakes from confusion between your actual record, and what the thief has added to it. Imagine, for instance, that you need blood, and the thief has their blood type on record in your file.
Child ID Theft
Child ID theft is an ID theft of any other category that’s done using the personal information of a child. This kind is particularly nefarious because, as the child isn’t trying to open accounts or get loans, the individual likely only learns of the theft when they reach adulthood and find their credit in a state of total disaster.
What ID Theft Protection Does
There’s a lot of protection to be had out there, from services like Lifelock to services offered by your local bank. In most cases, though, they all do pretty much the same things.
A fraud alert is simply a warning that is placed on your name at the three credit bureaus. As a result, those who check your credit will be alerted to be more cautious before issuing credit to an individual (yourself or the thief) trying to use your information. It’s not foolproof, as it’s up to the individual issuing the loan/credit card/etc. to use good judgment about whether to issue the credit.
A credit freeze functions much as it sounds—it freezes your information, so it can’t be used to open new accounts or do anything other than be used by those who are already using it. That means the loans and credit card you already have are fine, but while the freeze is in place, you can’t get any others. It can protect you from theft, but it can also be frustrating if you’re looking to buy a new house.
A key part of what protection services do is monitor your credit, to see if anything suspicious pops up. If there are charges on your card at a location across the country, they will alert you, and ask if this was you (say, on vacation or a business trip). If it’s not, they’ll help you freeze your assets, so no further damage is done.
Some services offer insurance, helping to cover for lost wages, mitigate damage to your credit, and generally help resolve the issues and complications that come from someone stealing and using your information.
What You Can Do
Even without protection services, there are a lot of steps you can take to minimize the risk of identity theft. Here are some of the most important ones.
Fraud Alerts and Credit Freezes—you can actually set up fraud alerts and credit freezes all by yourself, though there’s usually a fee involved with the freezes for each time you turn it on or turn it off.
Credit Reports—check your credit score regularly, to see if anything funny pops up. You’re entitled to one free report each year from each of the three credit bureaus: Equifax, Experian, and TransUnion.
Buy a Shredder—making sure you shred documents with sensitive information (even junk mail with just your name and address) can deny thieves of one of the most common avenues of gaining your information
Verify Your Mailing Address—sometimes thieves will submit a change of address for your name to the USPS, so that you won’t immediately receive overdue notices and the like. Check with the USPS to make sure this hasn’t happened to you.
Protect Passwords—many times, thieves are actually collecting your information electronically. Use secure passwords, and don’t use the same ones for every account. Use a password manager, if you have a hard time keeping track.
File Taxes Early—filing your taxes early in the season will ensure that thieves who try to file in your name will have their submission arrive later than yours, sending the suspicion and fraud allegations their way, instead of yours.
Monitor—most of all, keeping an eye on things like your bank accounts and your medical records (and those of your children). ID theft thrives on secrecy and going undetected. And while there’s no guaranteed method to protect yourself, you can put a stop to problems early if you monitor your accounts and information properly.
For more information on identity theft and how to avoid it, call the experts at Insurance Center Associates.