Frequently Asked Questions
Consumer Debt Relief Frequently Asked Questions
Identity Theft Protection
Identity theft is the deliberate misuse of another person’s identifying information. Today, the classic example is when a thief steals a person’s social security number and uses it to open new accounts for financial gain. Identity theft’s loose definition has more broadly come to encompass other forms of fraud that typically take place online such as credit card fraud, medical benefit fraud, impersonating someone to take out payday loans in their name, and more.
An identity theft protection company offers three primary services:
- Monitoring: The company will monitor your accounts for suspicious activity, the web and black market websites for your personal information, and your credit. They will also keep an eye out for any new accounts opened in your name, be they bank accounts, TV subscriptions, utilities, or loans. Whenever they spot something suspicious, the customer is notified so they can take the necessary steps to protect themselves.
- Restoration: If your identity has been compromised in any way, the company will have expert staff on hand to guide you through the process of restoration. This could mean canceling and replacing cards, removing fraudulent charges, and freezing your credit, among other things.
- Insurance: In the event that you suffer monetary damages as a result of identity theft, the service includes insurance to compensate each customer.
A data breach is the most common way that a person’s personal information becomes available to identity thieves. Hackers can breach the servers of banks, credit card companies, retailers, and anyone else who keeps an insecure database of customer records. Those records are sold on the black market, where thieves use the information to conduct identity theft. Data breaches often leak thousands of individual’s information at a time.
Instead of using someone’s personal information for financial gain, medical identity theft is using someone’s identity to obtain medical care or drugs. This happens as a result of a stolen insurance card and other personal info. Besides the financial harm, fraudulent information can be added to a person’s medical records.
Children’s social security numbers are valuable because they are essentially clean slates. They have no information already associated with them. Because a child isn’t likely to need a good credit rating for many years to come, child identity theft can go on for years without anyone noticing. Often a family member or friend is responsible, but strangers are also threats.
Fraud alerts notify companies that require a credit check that the person is at risk, and they take extra care to avoid identity theft. A fraud alert can be placed on your credit report at each of the national credit rating agencies so that if anyone attempts to open a new account in your name and requires a credit check, you will first be alerted.
A security freeze is a more extreme alternative to fraud alerts that completely lock access to a person’s credit file. Creditors cannot check the file and thus no new accounts can be opened. Security freezes should not be enacted lightly, as your current accounts (telephone, utilities, landlords) might need access to them.
Most studies and reports suggest that between 8 million and 12 million cases of identity theft occur each year in the United States.
The most common form of identity theft is government benefits fraud (34%). The second most popular identity theft crime is credit card fraud (17%) followed by phone or utilities fraud (14%) and bank fraud (8%). Employment-related fraud (6%) and loan fraud (4%) are also common.
The most common source of private information is still stolen or misplaced purses and wallets. Private data can be stolen by observing someone write or type personal information in public, such as account numbers or PINs at ATMs. Private information is also obtained from discarded documents in trash or recycling bins, and unsecured mailboxes. Businesses and their employees also are a source of personal information loss along with Internet or database penetration.
Consumers should carefully monitor bills and bank statements for suspicious activity. If you suddenly stop receiving statements, contact the particular source immediately. You should regularly review your credit reports to discover unauthorized activity on your behalf.