In 2006, I flew to Dallas to take the Certified Financial Planner exam. I used a local shuttle, and when I arrived at the hotel, they took down my credit card number by hand. Two weeks later, I looked at my credit card history and saw charges I had not made to a fast food restaurant and a couple of gas stations.
Fortunately, a quick call to the bank got those charges reversed and the bank was very cooperative in working with us to cancel the card and send a new card out. This is one form of identity theft that almost everyone has experienced. Unfortunately, that isn’t the only way your identity can be stolen. I have a friend whose son experienced the worst kind of identity theft.
He had his ID stolen while at college, and unbeknownst to him, the thieves ran up thousands of dollars of debt. He didn’t find out until his sophomore year, when he started applying for college loans. There were several large unpaid balances flagged on his credit report. Today, at almost 30 years old, he is still working to clean up the mess.
Identity theft is the fastest growing crime in America and has been for over 10 years.[1] Most banks will understand credit card fraud like I experienced, but complete identity theft is a different story. Your most important assets are your reputation, your name, and your social security number. You must do everything you can to protect yourself.
Here are three suggestions that can help you mitigate your risk and reduce the chance of becoming a victim.
First, I encourage you to regularly check your credit reports. This is the most important, but probably the hardest for families to do on a regular basis. There are four agencies who keep a credit report on you, and unfortunately, they do not speak to each other.
It has been estimated that one in five credit reports has an error of some kind, and it is your job to fix any errors that show up on that report.[2] Fortunately, checking your credit report is free at the website AnnualCreditReport.com. The government made it available for you to go in and check those credit reports yourself. I make a habit of doing this every December.
In the first few years, there were some things I needed to clean up. I found some accounts I had forgotten about. Over time, the review goes much more quickly because, as I check them regularly, the chance of mistakes goes down drastically. This is the first area you will spot activity that you don’t recognize. It will give you the chance to get ahead, if you become a victim.
Second, I encourage you to shred every piece of mail that comes in. One of the ways identity theft takes place is through dumpster diving. People will look through your trash to find personal information so they can use it to their advantage.
This is how the identity of the college student I mentioned was stolen. He simply threw his personal information into a trash can and another student pulled it out and used it.
When I talk to students who are going to college, I tell them that the number one item they need before leaving home is a shredder. I believe that every home should own one as well. You can never be too safe.
Third, I strongly advise buying identity theft insurance. Identity theft insurance is affordable and is one of the most important insurance products most families ignore. You want to do your research, however, because some companies are more expensive solely because they do great marketing.
Make sure the company includes the benefit of working to restore your identity after it’s been stolen. It is highly unlikely that any identity theft insurance will keep you from becoming a victim, but it’s been estimated that it takes from 100 to 200 hours to begin the restoration process and any help to relieve that pain would certainly be welcome.[3] Wouldn’t you rather have someone else taking of that responsibility rather than having to take time away from work or family to take care of it?
I imagine identity theft will continue to be the fastest growing crime in the United States for the foreseeable future. The ability to protect yourself exists, if you are diligent. I encourage you to do everything you can to protect yourself from becoming a victim.
At Paradiem, we believe money doesn’t cause problems, but it certainly has the power to reveal and magnify issues you may have been ignoring. Most professionals do a great job helping families create great tax plans that are tragically horrible family plans. Our experience is that beginning with a different perspective, creates outcomes beyond anything your current professionals have helped you develop. I encourage you to get a copy of our whitepaper, “Are there unintended consequences hidden inside your current estate or business plans?” If you would like a copy, email [email protected] with the subject “Unintended Consequences” or give us a call at (985) 727-0770.
[1] https://medium.com/digital-vault/fastest-growing-crime-in-the-united-states-identity-theft-90ef2243e8b9
[2] https://www.brookings.edu/research/the-real-problem-with-credit-reports-is-the-astounding-number-of-errors/
[3] https://blog.infoarmor.com/employees/time-correct-identity-fraud-steps-protection