Identity theft occurs when someone obtains personal information, such as your name, credit card number, birth date, Social Security number, home address and bank account numbers, and then illegitimately uses this information. This unauthorized use of your personal information can result in great financial loss as the thief amasses credit card debt and tarnishes your credit rating. In 2019, an estimated 13 million people in the US fell victim to identity theft as the result of data breaches, stolen mail, and various other forms of fraud.
How do these thieves get your personal information? Identity thieves get information in a variety of ways, including:
- Stealing personal items such as a wallet, purse, laptop, personal digital assistant and mail
- Picking through garbage for discarded credit card statements, bank statements and pre-approved credit card offers
- Hacking into computers
- Posing as someone else to obtain personal information from a bank, credit card company, etc.
- Conducting telephone and email scams
To minimize your risk, the Federal Trade Commission recommends taking the following precautions to stay one step ahead:
- Check your mailbox daily, and drop your outgoing mail into a secure U.S. postal mailbox only.
- Opt-out of credit card solicitations by calling 888-567-8688.
- Avoid carrying your Social Security Card or other sensitive information in your wallet unless absolutely necessary
- Pay attention to your billing cycles and statements. If you are not receiving bills or notice a billing address different than your own, then you may have a problem.
- Give out your personal information on a need-to-know basis and to legitimate businesses only.
TYPES OF IDENTITY THEFT:
Most identity theft can be classified into one of 5 main types. Keep an eye out for any signs of these situations and report them immediately:
- Child ID theft: Thieves often gain your child’s information through a data breach at a health provider or school and then open new accounts with their information. The sneaky part of child ID theft is that it mostly goes unnoticed for many years, sometimes, until they are an adult.
- Tax ID theft — A thief can use your Social Security number to file fraudulent income tax returns to get a cash payout with the Internal Revenue Service. This further complicate things when you try to file your return, leading to an investigation that can take months or even years.
- Medical ID theft — Health insurance is a major currency in the ID theft market. These people will use your identity obtain medical insurance or to use your policy to pay for their own medical expenses.
- Senior ID theft — Thousands of seniors fall victim every day. They are more vulnerable because seniors are commonly in contact with more people that have access to their sensitive information such as medical professionals and care facilities. Additionally, many scammers target seniors that may be mentally diminished and thus unable to notice the problems.
- Social ID theft — While it may not be a huge financial risk, social media identity theft can cause irreparable damage to your reputation. A thief can use your name, photos, and other personal information to create a phony account on a social media platform.
WHAT TO DO IF YOUR IDENTITY IS STOLEN
The federal government and the IRS take tax identity theft very seriously and are there to help you. If you believe you are a victim of any type of identity theft take these steps immediately:
- File a complaint with the Federal Trade Commission (FTC) at identitytheft.gov.
- Contact at least one of the major credit bureaus to place a hold on your credit reports.
- Equifax, www.Equifax.com, 800-525-6285
- Experian, www.Experian.com, 888-397-3742
- TransUnion, www.TransUnion.com, 800-680-7289
- Contact all your personal financial institutions and closely monitor your accounts.
- Fill out an IRS 14039 form.
WHAT IS IDENTITY THEFT INSURANCE?
Repairing the damage from identity theft can be a daunting—and expensive—task. After losing money to identity theft, the last thing you want to do is spend more money to re-establishing your name and credit. Identity theft insurance is designed to assist you with the financial burden of repairing damages after your identity has been stolen. Many policies to not reimburse loss from theft, but rather helps prevent further loss. Additionally, while some plans may provide free credit monitoring, identity theft insurance does not prevent identity theft. Instead, identity theft coverage helps with expenses as you navigate the identity recovery process, which is useful whether or not you actually lost money to an identity thief.
WHAT DOES IDENTITY THEFT INSURANCE COVER?
If you are fortunate to have identity theft Insurance through your employer’s benefits package, these services can help. Identity theft insurance assists you with the potentially costly and complicated process of recovering from identity theft, and most plans will cover basic expenses incurred during your recovery. Eligible expenses may include the following:
- Postage and certified mailing costs
- Phone bills
- Photocopying charges
- Notary and filing fees
- Legal fees and attorney fees
- Fees for reapplying for loans, grants or other credit lines that were denied due to identity theft
- Lost wages due to time away from work to meet with police, confer with attorneys or engage in other recovery-related activities
- Cost of obtaining credit bureau reports
Additionally, the policy may cover fees for or provide access to a fraud specialist who can support and guide you through the recovery process, and some plans may provide their own experts to assist you.
HOW DOES IDENTITY THEFT INSURANCE WORK?
As a voluntary benefit offered by your employer, your premium for identity theft insurance is usually paid through a payroll deduction, likely giving you a group discount on the premium. After making a claim, many providers will reimburse you for covered expenses you may have already paid minus a deductible, if applicable. In most cases, they will help work with the credit bureaus, the IRS, and your creditors to clear up any instances of fraud or theft. Having identity theft insurance can contribute to your peace of mind and give you necessary assistance should you ever become a victim of identity theft.
Contact your Human Resources Department or Benefits Administer with any questions about your specific plan, if available.
If your group is thinking about adding identity theft protection to your employee benefits program, contact one of our consultants to get started.