As shoppers give their credit cards a hefty workout during the holiday shopping season, identity thieves would like to do the same.
Fortunately there are simple protective measures consumers can take to reduce the odds of someone stealing their identity, according to the Insurance Information Institute.
“The hustle and bustle of the holidays creates the perfect opportunity for thieves bent on stealing your credit cards or other financial information,” Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I., said in a statement. “Shoppers are tired, stores are crowded and it’s easy to become less guarded about personal information that appears on personal checks, drivers licenses and credit cards.”
Thieves can take information from identifying documents and use them to impersonate a victim, steal from bank accounts, establish phony insurance policies or open unauthorized credit card accounts.
Identity fraud is defined as the unauthorized use of another person’s personal information to achieve illicit financial gain, according to Javelin Strategy & Research, which reported a 13 percent increase in this type of illegal activity in 2011.
While many identity theft schemes rely on credit card data, there are many other ways of accessing a victim’s private financial information. Some employ electronic means, such as online “phishing” scams—where thieves use email inquiries purporting to be from financial or other online organizations seeking sensitive account information.
The advent of “no-swipe” credit cards, which transmit account and user information through a radio frequency, makes it possible for identity thieves to use an electronic device to capture the information. There are, of course, still the old-fashioned methods such as “dumpster diving,” rooting around in people’s garbage to collect financial information.
No matter what the ruse, identity theft victims are often left with lower credit scores and spend months trying to get their credit records corrected. Frequently they have difficulty getting credit, obtaining loans and, in some cases, even finding employment.
“Consumers should carefully monitor their bank balances and credit card bills to make sure that they actually made all of the transactions attributed to them,” Salvatore said.
More than half of all identity theft victims discover that their identity was stolen by monitoring their bank and credit card accounts, according to the Federal Trade Commission.
The I.I.I. has the following tips for shoppers to help protect their identity this holiday season:
1. Keep the amount of personal information in a purse or wallet to the bare minimum. Avoid carrying additional credit cards, a social security card or passport, unless absolutely necessary.
2. Guard a credit card when making purchases. Use a hand as a shield when using automatic teller machines or making long distance phone calls with phone cards.
3. Always take credit card or ATM receipts. Do not throw receipts into public trash containers, leave them on the counter or put them in a shopping bag where they can easily fall out or get stolen.
4. Proceed with caution when shopping online. Make sure to buy from a reputable, familiar retailer with a secure network. And never buy anything online from a site that does not have SSL (secure sockets layer) encryption installed—at the very least. If the site has a SSL the URL for the site will start with HTTPS:// (instead of just HTTP://).
5. Monitor all accounts. Do not rely on a credit card company or bank to alert of suspicious activity. Carefully monitor bank and credit card statements to make sure all transactions are accurate. If a problem is suspected, contact the credit card company or bank immediately
6. When entering names, numbers and addresses into an electronic device, keep them as generic as possible. Include only as much information as is necessary, and never use monikers like “Hubby,” “Sweetheart,” “Best Friend,” or “Mom and Dad.” Do not store important social security or banking information on a personal digital assistant or cell phone—if it is stolen, the thief will have all the necessary information to use your identity.
7. Place passwords on credit card, bank and phone accounts. When creating a password, avoid using easily available information like a mother’s maiden name, a birth date, any part of a social security number or phone number, or any series of consecutive numbers.
8. Do not give out personal information. Whether on the phone, through the mail or over the Internet, do not divulge sensitive information or a social security number unless you initiated the contact, are familiar with the person or company and are confident that they have a secure line.
9. Shred, shred, shred. Tear or shred any documents that contain personal information such as credit card numbers, bank statements, charge receipts or credit card applications, before disposing of them.
Identity theft insurance
Identity theft insurance, when purchased as a stand-alone policy, often provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports.
It generally covers expenses such as phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees (with the prior consent of the insurer). Some insurance companies also offer restoration or resolution services to guide you through the process of recovering your identity. An insurance professional can help find out what kind of coverage a consumer may already have or offer details on what additional coverage might be needed.
A number of insurers now include coverage for identity theft as part of their homeowners insurance policy. Other companies sell it as an endorsement to a homeowners or renters insurance policy, which can run about $25 to $50 annually.
Most homeowners and renters policies provide coverage for theft of money or credit cards; however, the amount of coverage is limited (usually $200 in cash and $50 on credit cards). After reporting the loss or theft of your credit card to the issuing company, a cardholder is responsible for only $50 of unauthorized use.
In order to make it more difficult for identity thieves to open accounts in your name, consumers can also contact the fraud department of any of the three credit reporting agencies to place a fraud alert on their credit report—by law, the agency you contact is required to contact the other two agencies. The fraud alert tells creditors to contact the consumer before opening any new accounts or making any changes to existing accounts. The three major credit bureaus are Equifax, TransUnion and Experian.
Anyone who believes they’ve been victimized should report the crime immediately to the credit card issuer and police. Ask for a copy of the police report as it will be needed when filing an insurance claim, or report the crime to the FTC for their assistance. Victims of identity fraud can call the Federal Trade Commission at 877-IDTHEFT.
