Is Your Identity in Jeopardy?
Identity Theft Now Fastest Growing Crime in the Country
Identity theft is the fastest-growing crime in America, striking some 700,000 people last year from all walks of life. The government received twice as many complaints last year over 2001, with victims reporting hijacked credit cards, drained bank accounts and tarnished reputations. The number of identity theft complaints rose from about 86,000 in 2001 to about 162,000 last year, according to the Federal Trade Commission. The figures come from a database of 380,000 fraud complaints collected by the FTC, the FBI and scores of law enforcement and consumer groups.
Identity theft accounted for 43% of the complaints, topping the government�s list of consumer frauds for a third consecutive year. Gripes about fraud in Internet auctions ranked No. 2, and accounted for 13% of complaints.
In November, federal authorities in New York broke up what they called the biggest identity theft case in U.S. history and charged three men with stealing credit information for 30,000 people. Prosecutors said the scheme began with passwords and records stolen from a software company.
ID theft comes in a wide range of forms. In the most serious cases, thieves have bought cars and even houses by taking out loans in someone else�s name. In other cases, the thief simply obtains another person�s social security number and uses it to get a new credit card.
On average, a victim of identity theft spends 175 hours restoring his or her good name by notifying credit bureaus, canceling credit cards and negotiating with creditors, according to the Identity Theft Resource Center, a San Diego non-profit group. While most creditors will waive fraudulent charges, individuals are responsible for legal fees, long-distance phone calls, travel costs and missed workdays -- expenses that can total thousands of dollars.
Identity theft isn�t a new crime, but incidents of it have skyrocketed since the late 1990s. In the past year alone, the number of reported cases of identity theft has risen 40%, the fastest increase of any crime, according to federal regulators. Beth Givens of the San Diego-based Privacy Rights Clearinghouse blames lenient credit issuers and promotional offers encouraging individuals to sign up for �pre-approved� cards.
What�s being done about the problem?
Along with proposed Senate legislation, a new industry has sprung up to help identity theft victims. Companies are pitching everything from hand-holding in closing fraudulent accounts to insurance that claims to cover the costs of having your identity swiped by a crook.
Promisemark, a closely held company in Fairfax, Virginia, promises start-to-finish help for the victim -- it will even help you gather evidence so that ID thieves can be successfully prosecuted. Truelink, a New York credit-product and services group, will get on the line with you when you call credit bureaus to clean up you record. Identity Fraud of Crayton, C.A., gives you access to a call offering 24-hour advice to identity theft victims.
One hitch: the services are set up almost like insurance policies. You have to pay for them in advance of any identity theft (usually a yearly fee in the neighborhood of $40 to $120) in order to get the full range of assistance. If you wait until after you realize the identity theft has occurred, they generally offer only information and forms on how to correct the problem yourself.
Jeff Brown, a 52-year-old energy consultant from Haymarket, Virginia, found out his identity had been stolen when he received a call pressuring him to pay off a loan he never took out. Over 11 months, he later learned, an imposter had racked up $40,000 in fraudulent charges. Mr. Brown called Promisemark.
For a $50 membership fee, the company gave him forms and the telephone numbers for credit bureau reports and worked with the police to put the man who stole his identity behind bars. Promisemark says it normally would not provide this level of service to someone who hadn�t purchased the plan in advance, but did so for Mr. Brown as part of a special promotion.
Are the services worth the money? Most are too new to evaluate, says a Consumer Federation of America spokeswoman, and they might not be necessary. She says identity theft services don�t do much and individual could not do on his or her own. What the ID-theft services offer is a helping hand through the credit bureaucracy. The Federal Trade Commission will take a report of the identity theft, notify law-enforcement officials and offer advice, but it won�t resolve the problems a thief leaves behind.
Insurance companies also are getting in on the act. Optional fraud riders are now available on some homeowner�s policies, which cover the out-of-pocket costs of clearing your name. For an extra $25 per year, for example, Farmers Insurance Group, Travelers Group, and Encompass Insurance offer between $10,000 and $20,000 in coverage, with varying deductibles. Chubb Corp. has included identity fraud coverage in its insurance plan and offers $25,000 coverage. Travelers insurance offers a stand-alone fraud policy from $50 to $195 annually, with varying coverage.
The Senate is also stepping up to help out identity theft victims, and make it harder to perpetrate such crimes. Sen. Charles Schumer, D-N.Y., said he has asked the FTC to issue and enforce security guidelines for businesses that collect sensitive financial information. The guidelines would include employee background checks and restricting access to customer information.
�We must now take companies to task when identity theft occurs under their watch and the company is at fault,� Schumer said. He said he would propose legislation to tighten corporate security if the FTC does not address the issue.
FTC spokeswoman Cathy MacFarlane said the agency has met with Schumer�s staff and is considering the proposal.
Sen. Diane Fienstein, D-Ca., will introduce several bills in the next few weeks seeking greater protections for Social Security numbers and stiffer penalties for identity thieves, spokesman Howard Gantman said.
What you can do to protect yourself
Of course, preventing identity theft in the first place is the smartest option. Security experts urge consumers to do that by regularly reviewing their credit reports, putting passwords on all accounts, adding a firewall to personal computers, and shredding bills after they are paid.
Here are the steps to take if you�re a victim of identity theft:
- Report the fraud and order credit bureau reports from the three major credit bureaus: Equifax (800-525-6285), Experian (888-397-3742) and Transunion (800-680-7289)
- Use the credit reports to look for accounts you did not open. Inform creditors of fraudulent in your name.
- File a report with your local police or the police in the community where the identity theft took place. Get a copy of the report as proof.
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