It’s no secret that identity theft is the fastest growing crime in North America. Every year, millions of dollars in fraudulent transactions leave victims in debt and financial uncertainty. It can seriously damage your credit, cost you money, and create a trail of financial devastation and legal liability that can take years to resolve. But the good news is that you can be proactive in protecting yourself.
This usually happens like this: First, an identity thief obtains one or more pieces of your personal information, such as your social security number or your mother’s maiden name or your date of birth, address, etc. Then, without his knowledge, the thief uses that same information to commit one or more acts of fraud or consumer theft. Since the identity thief is disguised as you, the trail of legal and financial liability leads back to you.
our own worst enemy
Many victims should start by looking in the mirror. We are often our own worst enemy by default. Sometimes we are passive rather than proactive in enforcing our privacy rights. For example, at a doctor’s office, you might enter your private social security number on the new patient information form simply ‘because it’s on the form.’ However, neither the doctor nor the office staff intend to pay you any salary or deduct employment taxes from your earnings. They are there solely to provide medical service. Why should you give your social security number to people who are not entitled to it?
At other times, you may provide other sensitive or sensitive identifying information to strangers you would not normally think of giving access to. Although not always, often people who apply for your social security number simply want your number for their own self use and benefit – not yours.
There is no ‘composite’ description of an identity thief. He may be an illegal alien who has entered the country illegally using his social security number to obtain employment, housing, or consumer goods, such as furniture or a car. He could be a terrorist seeking to hide any true identity by disguise of his name and personal information. The 9/11 terrorists had several pieces of identification with different names and addresses, and used credit cards to pay for hotels, car rentals, and airline reservations.
But not all identity thieves are terrorists. Most are cunning and opportunistic thieves who steal identities or create documents based on real people to facilitate quick and often overwhelming financial crimes. Although most identity thieves are motivated more by financial greed than terrorism, that doesn’t make them any less damaging. The point remains. Those who are susceptible and vulnerable to identity theft are the ones who will suffer its financial consequences.
Be proactive to prevent identity theft
The key to protecting yourself from identity theft in the first place is to minimize the risk of loss due to identity theft before it happens. There are many things you can do to be proactive and protect yourself. In my book, 21st century privacy (Mt. Vernon Press) and in my asset protection and wealth preservation workshops across the country, I offer a series of practical, easy-to-follow guidelines for protecting yourself against identity theft. Among them:
- Start by looking carefully in your wallet or purse. Do you really need to take everything you have there? Do you need all those ID cards every day? Do you really need to carry your social security number with you? Probably not, most people have it memorized. Also, you don’t need your birth certificate or passport, except when you have a specific reason to.
- Double check to make sure your social security number isn’t showing up on your driver’s license or health insurance card.
- When talking to a stranger on the phone, be careful to limit exactly what information they give you, especially if you didn’t initiate the call. They probably don’t need your date of birth or your mother’s maiden name or the name of your favorite hobby or dog.
- Don’t put your address on your keychain. Make it harder for a thief to tie you to a specific vehicle or appear as the owner if you are caught later.
- Keep a list of all your credit card numbers, bank account numbers and PINS (personal identification numbers) and long distance calling cards in a safe place. Don’t use information for passwords or pins that thieves can easily discover, such as the last four digits of your SSN or your date of birth or pet’s name.
- Write ‘Request Photo ID’ near the signature line of your credit cards and insist that store clerks and others who take your credit card ask for your photo ID. Praise them and thank them when they do. It is for your own protection.
- Create passwords that are not easily detected by taking the first letters of words from a favorite line of poetry, like ‘TCJOTM’ for ‘The cow jumped over the moon’.
- Protect your computer and financial passwords. Keep them safe and secure. Avoid keeping them in your wallet or purse or Palm Pilot. If they get lost, you’re going to have some inconvenience to begin with, and perhaps much worse if you’re not proactive.
- Register with your state and/or national Do Not Call registry. It is easy. Just call 1-888-382-1222 from the phone number you want to register.
- Shred your old tax returns, bank or other statements, credit applications, and other financial forms once you no longer need them.
- Get your free annual credit report from each of the consumer credit reporting agencies and check it for anything that might be suspicious.
- Be careful when filling out forms online. Many identity thieves phishing for information by asking you to reset account information over the Internet.
- Consider changing the way you hold legal title to property, cars, investment accounts, etc. Perhaps you should consider transferring title to your home to your living trust or transferring the name on your investment accounts to a family limited partnership that you control.
What to do if you become a victim
If your wallet or purse is lost or stolen, or your home or car is broken into, or suddenly charged for items you didn’t order, etc. your May they just became an Identity Theft statistic. In that case, don’t panic, but you will need to take quick action. Here are some immediate steps:
- Report the crime to the police immediately. Then get a copy of the police report to verify the crime with your bank, credit card, and insurance companies. Distribute copies of the report to protect against fraud.
- Report the theft to your credit card companies on their toll free line. Credit card company fraud departments are very good these days and can be very helpful in helping you quickly protect yourself from unauthorized access.
- Call the major consumer credit reporting agencies right away. Report the theft of your credit cards and request that your accounts be ‘flagged’.
- Request your credit report periodically to monitor possible fraudulent activity.
- Notify your banks of the theft. Talk to a representative from your fraud department and ask for their help. They can immediately move their funds to a new account number.
- Ask your bank to provide you with a new secret password to use for all future banking transactions. Stop payments on any outstanding checks if you suspect fraud.
- If you use an ATM card for banking services, get a new card, account number, and password. Do not use the old password.
- If you have a passport, notify the State Department’s passport office so they can watch for anyone applying for a new passport in your name.
- Call your telephone, electricity, gas and water services. Alert them to the possibility of someone trying to open a new service using their ID. Also notify your long distance provider if it is a separate provider from your local telephone service company.
- You may want to change your driver’s license number if someone has been using yours as identification on ‘bad’ checks and credits. When applying for a new number from the Department of Motor Vehicles, provide the DMV with a copy of the police report you filed.
- Notify the federal Postal Inspection Service. They are located in the Federal Building and have one of the best responses to Identity Theft. Also notify the US Secret Service, which also has an excellent record of service in responding to identity theft.
- You may want to change your Social Security Number if your number has been associated with bad checks or fraudulent credit transactions. Sometimes the Social Security Administration is reluctant to allow the change, so you may need to be pushy and explain why you are taking this step. Provide a copy of the police report and any reports you have provided with any other agency.
- If your keys have been stolen, change the locks on your house and car immediately.
Protect yourself in the future
One of the best ways to protect your home, investments, rental properties, business, and financial privacy is to use a legal entity, or perhaps more than one.
For example, you might consider establishing a Limited Liability Limited Partnership (“Triple LP”) to own your investments, such as stock in a company, LLC memberships, options trading account, mutual funds, etc. The Triple LP is also an effective means of asset protection against lawsuits (if it is established long before the lawsuit occurs). With your mutual funds, stocks, option trading accounts, LLC memberships, and company shares within a triple LP, you are “lower profile” in terms of exposure to outsiders, and therefore more likely your personal name is not associated with these valuable possessions.
In the end you have to take the bull by the horns. You should investigate identity theft websites, including those made available by the government. See http://www.idtheft.gov, for example. You can be your own worst enemy or your best ally in protecting yourself and preventing identity theft.