IDENTITY THEFT AND CREDIT PROTECTION by Thomas Blake CFP, CPA

IDENTITY THEFT AND CREDIT PROTECTION by Thomas Blake CFP, CPA

Recent, well-publicized, stories of mass identity theft have become a hot topic for many investors. Even retail giant Target saw 40 million of its customer’s accounts compromised over the span of just a few weeks. With these events fresh in our minds, it’s prudent to review a few ways that your identity can be compromised. Additionally, we’ll look at the first steps in reporting potential identity theft.

Often, the least creative methods of identity theft are most effective. Large-scale breaches of credit card and other identifying information are still fairly rare; with most theft occurring on a small scale, close to the victim’s home or work. Shredding all personal mail, including junk credit card offers, is a good first step to prevent “dumpster divers.” Keeping close watch of personal belongings, especially cell phones, is an additional deterrent.

Electronic mail has become a common avenue for identity theft. “Phishing,” or impersonating a legitimate website or email to steal personal information, is a tactic that tends to affect the elderly. Phishing emails will commonly link to legitimate looking websites, prompting users for their passwords and login information to address some vague issue with their account. When in doubt, the best practice is to call and verify, using a known good number for the service provider.

A high-tech method of credit card theft has emerged recently, even being spotted in Orlando. “Skimmers,” small machines that record credit card information via their magnetic strip, are available online of under $100 to any would-be thief. These machines are commonly found at ATMs and gas pumps, fitted over the existing credit card slot. Careful inspection of the credit slot will usually prevent this theft; skimmers are rarely flush with the rest of the ATM or gas pump, and look out of place. In Orlando, a retail employee hid her scanner underneath her skirt, swiping customer’s cards while checking out. The U.S. Secret Service recommends keeping a watchful eye on credit cards after they’ve left your hand.

Even the best deterrents sometimes fail, as evidenced by the unlucky Target customers. Through no fault of their own, they were victims of identity theft. Monthly reviews of bank and credit account statements can limit losses, in addition to biannual or, at minimum, yearly credit report reviews.

If you suspect that your identity has been compromised, your first step is to call your local police and make a report. Your next call will be your credit providers and bank. Each bank will have different identity theft policies and procedures, and your police report will be useful. Your next call should be to the three major credit reporting agencies: Experian, Equifax and Transunion. They too, will have fraud policies in place. Your final step will be to file a complaint with the Federal Trade Commission, who will issue an Identity Theft Affidavit. This affidavit, combined with your police report, will be useful while repairing any damage caused by the theft.

The credit repair process is a long one for victims of identity theft. In this situation, the adage “a ounce of prevention is worth a pound of cure” certainly applies.