Last year, my wife and I both received a letter from Capital One informing us that we applied for a credit card. The problem is, we did not apply for a Capital One Card. It turns out that Capital One received a rash of applications that contained name, addresses, date of birth, and the last four of the Social Security number. This triggered fraud alerts in their system and they sent us a letter.
Identity fraud is on the rise in the U.S., despite continued efforts by legislatures, regulatory agencies and businesses. Identity theft statistics show that more people have had their identity stolen (fraud) in 2013 and the thieves took more money according to a Javelin Study. Instances of identity fraud were up from 8.5 million in 2010 (U.S. Department of Justice) to 10.5 million in 2012. Identity thieves stole an average of $2,000 per fraud incident.
Who Is Affected by Identity Theft
Everyone is affected either directly or indirectly by Identity Theft. Just two years ago, only 7% of households had an incidence of stolen identity and last year that number jumped to 9%. When you go to work tomorrow and pass 10 people on the way to your desk, at least one of your coworkers was a victim last year.
Now, let’s widen the net. In the incident that I opened with in this article, I was not a victim of identity fraud or theft – I was a victim of a data breach. According to a Risk Based Security Report, “With 2,644 incidents recorded through mid-January 2013, 2012 more than doubled the previous highest year on record (2011). On a positive note, however, although the number of reported incidents increased, the number of records exposed decreased. Over 267 million records were exposed in the 2,644 incidents, significantly less than the 412 million records exposed in 2011.” So what does this mean? More attempts are being made and more people are being careless with your information.
How Does Identity Theft Affect You
In short, Identity Fraud is a big pain in the arse. According to Blogiversity, “Millions of people have become victims of identity theft in the past few years, and the recovery process, on average, takes about 500 hours and costs about $3,000.” The simple instance of losing one of my credit cards took me about 6 hours to review my transactions and get all of my monthly bills switched to a new credit card.
Direct Impacts of Identity Theft
- Your Credit Score Will Decrease – The fraudsters will be opening accounts in your name and not paying off the bills.
- Phone Calls From Creditors – Once the creditors figure out you are not paying your bills, they will call you to get their money.
- Your Tax Refund Could Be Delayed – A common tactic is to use your personal information to file a fake tax return to get a refund. If this happens to you, it will take longer to get your refund and you may be audited.
Indirect Impacts of Identity Theft
- Family and Work Suffers – When you are stressed, your family will suffer and it will show in your job performance.
- Higher Prices – When the fraudster opens a credit card in your name and uses it, someone has to cover the loses – either the credit card company or the business merchant. In many cases, the merchants will have to cover the cost of the stolen items and that will drive up prices.
- Higher Interest Rates and Fees – Companies spend billions of dollars every year trying to protect your information. The money for these efforts come from higher interest rates on loans and fees paid to the bank.
How Can I Prevent Identity Theft
There are many steps you can take to prevent identity theft and fraud so you do not become a statistic. However, thieves are smart and nothing is foolproof. Follow this five step plan to help combat identity theft and fraud.
- Read this Article about protecting yourself online.
- Read this Article about protecting yourself offline.
- Pull your Experian Credit Report every January 1st.
- Pull your Equifax Credit Report every Memorial Day.
- Pull your Transunion Credit Report every Labor Day
- OR – You can sign up for my email updates and I will remind you to pull your credit reports every four months.
- 2014: February Financial To Do List
- I Used My Credit Card at Neiman Marcus – Free Equifax Credit Report
- Requesting Your Experian Credit Report Video
- Identity Theft Protection For Kids
- This Should Scare You – Identity Theft and Fraud Offline
- Yikes! – Identity Theft and Fraud Online
- How the Hell Did They Steal My Credit Card – What To Do And How To Prevent It
- How Can I Get a Credit Report? – A Step-by-Step Guide to Requesting Your Experian Credit Report