Identity theft is a very real possibility for everyone and it is important to make sure you are taking the appropriate precautions to protect yourself. Below is an excerpt from my paper on identity theft written for my Accounting Fraud Examination Concepts course at FAU. If you would like to read the entire paper, click the PDF link.
If you have not already been a victim of identity theft, it is likely you will experience this situation in the future. Although we are all aware of circumstances where someone’s identity was used to obtain loans or receive tax refunds, the theft of your identity can be as simple as someone using your credit card information to make a purchase. It can be quite unnerving when this happens since it can cause a huge disruption to your life. The last time I had this happen to me I was on vacation in Ireland and received a notification from my credit card company that my card was used at an Enterprise Rent-a-Car location in Homestead, FL. Luckily, we carry two credit cards with us when we travel so having the one card cancelled due to this breach was inconvenient but not devastating. So, what can you do to reduce the chance of becoming a victim? And if you, unfortunately, become a victim, what steps should you take to protect yourself?
Engaging in preventative measures is the best line of defense to ensure you do not have to deal with the negative impacts of identity theft. Some steps take very little effort, and others can seem time consuming and inconvenient. However, it is far less convenient than having to experience someone stealing your identity and having to deal with the aftermath of that situation. The list that follows is not exhaustive. You should always be thinking about how your actions can impact the ability for someone to steal your identity and adjust accordingly.
Social media – If you do not need to be on social media, consider not participating. If you want to be on social media, set your accounts to private and control who has access. Only accept invitations to connect from people you know and trust. Be selective about the information you share especially any Personal Identifiable Information (PII) like your birthday.
Personal documents and paper – Your Social Security number is the most valuable piece of information you have so it needs to be protected. Do not carry your Social Security card with you and store it in a safe place. Only provide your Social Security number when absolutely necessary. If you have paper documents to dispose of, check if they contain any PII before throwing them away. If they do have PII then shred them with a cross-cut shredder. You can buy one on Amazon for less than $40. Opt into paperless options with banks, credit card companies, or any other companies that send you statements or invoices. They will often send you reminders when a statement or invoice is ready so you can go directly to their website to see it and pay it. If they do not do this, put reminders on your calendar so you do not miss payments. Make sure to review all transactions on statements to ensure they are legitimate and known. If you do not recognize something, reach out to the company immediately to question the charge.
Alerts – Banks and credit card companies allow you to set up alerts so you can be informed when transactions happen on your account. Set these alerts up and watch for them. In today’s world where we are overwhelmed with email and text messages, we may not want to add to the noise, but these alerts can be invaluable in stopping identity theft. You should also monitor your accounts on a frequent basis for charges you do not recognize.
Tax returns – File your tax return as soon as you can each year. Tax refund fraud happens when someone uses your Social Security Number and other PII to claim a refund on your behalf.
Email, Passwords and Two-Factor Authentication – Be careful with email because phishing is very common. Never open a website from a link in an email, especially anything related to your financial information. Instead, type the website address into your browser and access it that way. Choose passwords that are unique and contain a combination of letters, numbers, and special characters. You can also use a password manager service, like Dashlane or LastPass, that will generate complex passwords for you and store them securely. If you are given the option of implementing two-factor authentication for your website accounts, you should do this. It often means you will get a code via text when you try to log into your account that will need to be entered. Alternatively, some websites use an authenticator app, like OKTA Verify or Microsoft Authenticator, that is tied to your account and the code is auto generated in the app. You would then enter the code to gain access. This might seem inconvenient, but it provides a layer of protection to ensure only you can get to your personal information.
Credit Reports and a security freeze – You are entitled to receive a copy of your credit report on a yearly basis from all three credit reporting agencies (Experian, Equifax, and TransUnion). Make sure to take advantage of this so you can confirm your information is up to date and that there is nothing on your reports that is unknown to you. In addition, you can put a security freeze in place with these three agencies as well as the additional specialty bureaus,
more than 16 in total. Most people are unaware of these additional bureaus which are used in the banking, insurance, specialized lending, and utilities industries (VanderPal, 2015). By placing a freeze, you lock down your credit file. You are usually provided with a PIN code and need to provide permission to unlock your file which means you control when someone can access that information. Without access to your credit file, opening credit card accounts, bank accounts, or other credit lines is almost impossible.
What to do if you are a victim of identity theft
Even if you take all the precautions that have been discussed, and others that were not, it is still a possibility you will find yourself a victim of identity theft. If this happens, there are steps to take to protect yourself. If someone has used your credit card to make purchases, contact your credit card company to dispute the charges. This will start an investigation and the credit card company will gather the appropriate documentation from the merchant. You should request a new card with a new number be issued to you if they do not offer that as an option. In addition, you should file a complaint with the FTC which is discussed below.
If the situation is more dire, you should file a police report as soon as possible. Under Florida Statutes ss. 817.032(3)(b), a police report is needed as proof of a claim of identity theft. Second, you should file a complaint with the FTC using their website www.identitytheft.gov. This will allow you to file a report and will also provide you with a recovery plan to help you with next steps. One of those steps will be completing an Identity Theft Affidavit which may be required by various entities as you deal with the situation. Third, you will want to contact the credit reporting agencies and place a fraud alert on all your credit reports. This will ensure no further accounts can be opened using your identity. Lastly, you will want to close the accounts that have been compromised or opened in the identity theft. The police report and ID Theft Affidavit will be critical as you go through the process of undoing the harm that was caused by the criminal(s) who stole your identity. Make sure to keep detailed records of all correspondence and conversations you have including who you spoke to, date, and time, as well as costs incurred by you. If the perpetrator is caught, you will be entitled to restitution, and if you decide to pursue a civil action to seek damages, the information you have will be important.
Identity theft has become so pervasive it seems that it is not a question of whether but when someone will use your identity to commit a crime for financial gain. Being diligent in your everyday life to protect your identity is essential to reduce the likelihood of this happening. Think about your actions and always be asking yourself if what you are about to do exposes you to the risk of identity theft. If you are unfortunate enough to have to deal with identity theft, swift action is needed to reduce the damage. Using the resources available to help you through the process will ensure the best outcome and will help you deal with the situation is a methodical manner during what will be a very emotional time.