- Property & Casualty
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Identity theft is a form of fraud that has been around for as long as there have been dishonest people. It is a high-profile problem because technology has created many more opportunities for this crime. Credit cards, funds transfer cards; ATMs, debit cards, smart cards, wireless payments, slipshod business practices and the Internet have all combined to make identity theft a major problem for individuals and businesses.
ID theft describes any dishonest and unauthorized use of private information. In the past, the term rightfully described forgery or passing oneself off as another person to trick someone out of money and/or property. Today, it refers to an unauthorized party who secures goods, services, or other financial benefits by the fraudulent use of another person’s confidential information.
The favorite piece of information is a social security number. This information has routinely been used for gaining access to other private information such as driver’s history, credit information, bank accounts, loan information, credit cards, occupational history, military records, mortgage information, and investment accounts and so on. Having this critical bit of information can allow a criminal to use another party’s accounts, secure loans, and charge a host of goods or services; the list is only limited by the criminal’s resources and imagination.
A complication of ID Theft is that it is a by-product of modern commercial life. Lenders, retailers, supermarkets, gas stations, airlines, travel clubs and everyone else have elevated cashless payments into the premiere way to do business, either live or electronically. This “ease” comes at great cost. As naïve as it sounds, business still operates on the assumption that everyone is honest. Few businesses have adequate safeguards to protect the information they collect on customers. Many businesses commonly mail out or electronically transit communications and solicitations that include private account information. It is common for electronic transactions to be transmitted through wireless networks and thieves are now able to intercept such data. Further, since businesses are often embarrassed that information has been stolen or compromised by hackers, many businesses keep such invasions secret or substantially delay reporting incidents to authorities and to their customers.
In light of business practices and attitudes, it’s basically up to the individual consumer to guard against ID theft. Though, in recent years, business best practices and government regulations are ramping up security activities.
Unfortunately, even as instances of ID theft grow, insurance is not a particularly important anti-ID theft tool. The type of loss is not something that an auto, home or similar insurance policy may be adequately adapted to handle. While homeowner policies do typically protect against credit card loss, coverage is usually just for the amount that falls below the minimum liability imposed by federal law (currently $50 per card). The serious harm suffered by ID theft victims are the costs associated with clearing up the aftermath, such as correcting one’s credit history and straightening out various accounts and records. This effort routinely takes months and hundreds to thousands of dollars in legal fees.
More insurers offer coverage for ID theft. Typically, the coverage reimburses legal fees or paying costs related to dealing with third parties to correct records. The most effective protection is for individuals to prevent becoming ID theft victims. Following are some suggestions:
- Keep your account information and Social Security Number (SSN) safe. One idea: keep home records in a locked file.
- Keep details about your various account numbers in a safe place so you can rapidly take care of stolen or lost cards.
- Be very careful with on-line transactions. Is the Website you use secure?
- Find out the privacy guidelines and safeguards of the businesses and parties you deal with.
- Make sure that you verify that websites for online transactions are legitimate
- Use password protection on smart phones and never leave such devices unattended
- Challenge those who request an SSN. Why is that information needed? Can some other information be used as an alternative?
- Think about buying and using a paper shredder. Many information thieves steal mail by going through garbage.
- Write companies who send unsolicited charge cards and request removal from their mail list.
- Check bank and business records thoroughly for irregularities. Track down the reason for any unusual transactions or entries.
- Ask stores that use credit cards if they transmit the information with a wireless network. If yes, ask what safeguards they use to prevent airwave theft.
- If you ever have a charge card transaction involving an imprinter that uses a carbon set for copies, ask for the carbon or watch the clerk destroy the carbon before it’s thrown away.
- Collect mail from mailboxes quickly and don’t put outgoing mail in your own mailbox. These practices give thieves fewer opportunities to fish for checks and private information.
Remember that these are just a few suggestions. Taking steps to minimize the chance of ID theft is a lot of work. That is a major reason that ID theft will continue to be a problem to individuals and businesses.