In terms of financial liability, it depends to a certain extent on where you live and who you bank with but, as long as you behave in a responsible manner, don’t give your personal information away and report any unusual transactions as quickly as possible once they come to light, your liability will be limited. That is very comforting to know of course – but there are considerations over and above the financial impact of identity fraud.

The amount of time that you will require to dedicate to sorting out the whole sorry mess can be considerable. Generally speaking, the longer the crime goes undetected, the longer it will take to straighten things out afterwards. There will be a whole lot of forms to fill and officials to speak to. Apart from the police, you will need to contact your bank and credit card companies to cancel existing accounts and arrange for new cards to be issued.

It can take a long time, and you may well feel like you are being passed from pillar to post as you sort out details with a variety of different companies and departments. Some people even need to take time off work in order to sort out their identity theft problems. It can be a very time consuming and frustrating process.

That’s annoying enough, and hugely inconvenient into the bargain, but there are even worse possibilities. The nightmare scenario for anyone, worse even than the thought of financial loss, must surely be the consequences of someone committing a crime whilst using their stolen identity. For example, someone convicted as DUI whilst using someone else’s driving licence could cause real problems for the genuine licence holder.

It’s a horrible thought. As with financial irregularities, you do have some protection and can, quite reasonably, expect the whole mess to be cleared up – eventually. However, just as with financial fraud, it may take some time to sort everything out. Whilst the real facts are being established, you may be in for a stressful time.

Medical identity theft is another growing problem area. People use the identity of others to obtain free medical services. The trouble with this is that you may not notice that it has taken place – until you are subsequently refused medical treatment of your own. Again, you can reasonably expect things to be sorted out – in the end. It will take time and, depending upon the type of medical treatment that you’re waiting for, that may be unpleasant and uncomfortable for you.

There are all sorts of different identity theft precautions that you can take, including identity theft insurance should you wish. Different policies will cover you for different contingencies. Even without identity fraud insurance – your liability is limited as long as you behave responsibly.

But the simple fact of the matter is that prevention is better than cure. Take sensible precautions to avoid identity theft and avoid the worry and stress that goes with it altogether.

When Vikki, a 29 year old bank worker from the UK,  had her handbag stolen last July, she knew she was in trouble.

She was moving home and her passport and key personal documents were in the stolen bag.

“I cancelled everything that day, including my passport and reported the theft to the police. But I was still worried about the possibility of ID theft.”

Vikki’s nervousness was justified when she received a call from a car loan broker asking her when she would like her new loan repayments to start.

Vikki had not bought a car.

“I told them that whoever had applied for the loan was not me and decided to check my credit record immediately.”

Vikki found that a fraudster had used the stolen ID to obtain car loans worth more than £20,000 in her name.

Vikki also found that two direct debits had been set up on her bank account without her knowledge.

After a month, the loan company concluded that a fraud had taken place and told Vikki that she would not be liable for the loan.

“The fraudsters have caused a serious amount of damage.

“I was recently turned down for a credit card because my credit rating has been damaged.”

Vikki is trying to get the two major credit reference agencies, Experian and Equifax, to amend her credit record.

“The whole process is not something I would want to repeat, I have spent hundreds of hours trying to sort everything.

“I still fear that the fraudsters will strike again, even though I have done everything I can to stop it from happening.”

However, according to Vikki, one good thing has come of the experience:

“The day that the fraud emerged my boyfriend bought me a shredder which we now use.”

Identity Theft Defined

Identity theft – also know as identity fraud, ID theft and ID fraud – is fraud perpetrated by a criminal who assumes someone else’s identity in order to profit illegally.

There are different types of identity theft – but in simple terms, someone pretends to be you in order to sign up for goods and services in your name – or they may simply use your details to access your already existing bank and/or credit card accounts.

You will probably be completely unaware of this until you receive a bill for something you haven’t ordered or your credit card statement arrives with a number of high value purchases of which you have no previous knowledge.

The Extent of Identity Theft

Identity theft is one of the fastest growing forms of crime and hundreds of thousands of people worldwide are victims each year. In the UK, identity theft is the single fastest growing white-collar crime and is currently increasing at a rate of 500% each year. At that rate of growth, says the UK banks’ fraud avoidance bureau “this type of fraud will become the most serious, with significant financial losses”.

In September 2003 the Federal Trade Commission (FTC) issued a report on identity theft which estimated that almost 10,000,000 Americans were the innocent victims of identity theft during 2002. The average identity theft crime involved $10,200 worth of goods or services being fraudulently obtained using the victim’s details – which suggests that the total loss to individuals, businesses and financial institutions was in the region of $33 billion during 2002.

The Cost of Identity Theft

In many cases individuals who are the victims of identity fraud will be reimbursed, in part at least, by the financial institutions involved. However, there may still be some significant loss involved for the individual and there will certainly be a period of extreme disruption. It may be difficult to get credit in future and spurious entries onto credit records may take years to clear up.

In the final analysis, although individuals may receive some compensation, it is still the consumers who have to pay for these fraudulent losses by way of higher insurance premiums, interest rates and general fees.

Other Potential Problems With Identity Theft

The potential financial losses and the inconvenience of hours wasted in repairing your credit report are bad enough – however, there is an even more frightening scenario. There is always a small possibility that the person who has stolen your identity may have done this not purely for immediate financial gain.

It is possible that they may be involved in activities which require them to assume an adopted identity. In such a case, you may become identified as the perpetrator of a crime yourself, rather than the victim. You may even find an arrest warrant issued in your name.

One documented victim of identity theft was a young lawyer in San Diego. On her first day at the District Attorney’s office, she was arrested, handcuffed and marched off to jail for crimes her identity thief had committed. Not the best first day at work.

Take Action to Minimise The Risk of Identity Fraud

There is no doubt that identity fraud is a very serious problem in modern society. It affects both individuals and businesses and is increasing in frequency year on year.

It makes sense to take steps to minimise the risk of becoming a victim of this type of crime. However, it is also sensible to have a plan in place to minimise the impact in the event that, through no fault of your own, you fall victim to identity theft.

Types of ID Theft…

If, despite all the precautions you have taken, you suspect that you may be a victim of identity fraud, then you need to act with the utmost haste. The earlier the fraud is detected and reported, the smaller will be the financial losses for all concerned – and the greater the chances of catching the criminal will be.

Don’t hold back or delay because you feel foolish or embarrassed – millions of people around the world are subjected to this form of fraud every year. Criminals are ingenious and take advantage of the fact that most people assume others to be as honest as they are themselves.

Remember, you are a victim here - you deserve help. Also remember that you have a duty, to both yourself and the financial organisations you are associated with, to act quickly and minimise the eventual costs.

Identity Theft Action Plan

1. Report the crime to the police immediately. Request a copy of the police record so that you can prove to your creditors that you have reported it.
2. Contact your bank and credit card companies and inform them of the problem. Work with them to minimise the damage. Have new cards, PIN numbers and passwords issued as quickly as possible.
3. Get a copy of your credit report and check for any signs of fraudulent activity – remember, the fraud may have been going on for longer than you are aware.
4. If you suspect that any other non-financial documents containing your personal details may have been stolen then contact the relevant authority e.g. – the passport office, the driving licence authority.
5. If you suspect that your mail may have been stolen, tampered with or diverted contact the post office.
6. Open a journal and record all relevant facts relating to the fraud.

What Next?

What happens next will depend upon the individual circumstances, the extent of the fraud and how quickly it was detected. In the huge majority of cases your personal financial liability will be limited to a small amount of money if any.

However, you can probably expect to devote a large amount of time in the aftermath of such a fraud. It’s not unusual in such cases to find that the criminal has more bank accounts in your name than you do yourself!

It will be a stressful time for you – but don’t forget you are the victim, and your personal liability is limited. Work closely with the police, your bank, your credit card company and any other authorities to resolve the matter as quickly as possible.

Prevention is better than cure, no doubt about it. However, in the case of identity theft, early detection is the next best thing. The sooner a victim becomes aware of the problem, the sooner steps can be taken to minimise the extent of the damage.

Take Advantage of Technology

Once again, some people may be surprised to learn that the internet can be a very useful tool to reduce the impact. Referring again to the Better Business Bureau / Javelin survey issued in 2005 it was found that the average amount defrauded from victims who checked their accounts using paper statements was $4,543.

Fraud victims who used the internet, ATM machines or other electronic means to check their statements had an average loss of $551. Based upon these findings, taking advantage of technology to keep close tabs on your account could reduce losses in the event of identity theft fraud by a factor of 8.

Check Your Credit Rating

As a standard precaution, you should review your credit report at least annually. Credit reviews are either available free or cost only a few pounds or dollars. This is a sensible precaution to take even if you are not concerned about identity theft. Something as simple as a clerical error or out of date information can impact upon your credit rating – so make sure your details are accurate and up to date.

If you are ever refused credit always ask the reason for this. There may be a genuine concern on the part of the lender, there may be some incorrect information on your file – or it may be the first indication of identity theft or some other criminal act being committed against you.

What to do if you think your ID has been stolen …

There’s no need to live in fear of identity theft. Having looked at the main methods that criminals use to get their information, you may have been surprised to see just how unsophisticated many of these are.

Forewarned is forearmed and, now that you have knowledge of the exact ways in which the criminals obtain your information there are some very simple steps you can be take to protect yourself. Many of these steps are simple common sense – but some of them may surprise you.

1. Don’t give out personal information to anyone who doesn’t genuinely need it – not even to family and friends.
2. Be careful with your wallet/purse and don’t carry more credit cards or membership cards than you actually need.
3. Consider switching from paper bills and statements to electronic, paperless versions.
4. Pay for goods and services electronically – don’t send cheques in the mail if you can avoid it.
5. Have your salary paid directly into your bank account.
6. Retrieve your paper mail quickly. If you’re going away on business or vacation then either have it uplifted by someone you trust or have the post office hold it until you return.
7. Before discarding any private documentation shred it or tear it into very small pieces. This includes any “junk mail” offers you receive which have your personal data recorded – such as pre-approved offers of credit cards, loans, insurance etc.
8. Keep computer passwords secure and change them frequently. Don’t choose obvious passwords e.g. children’s names, spouse’s date of birth etc.
9. Install, use and regularly update anti-virus, firewall and anti-spyware protection software on your PC.
10. Be very suspicious of, and do not reply to, any email which arrives from a supposedly official source and which asks you to update your details – password, date of birth etc. Reputable companies will never send such emails out.
11. Never discard a computer, or any other device which has personal data stored on it, without first erasing all sensitive data

It’s true what they say – a little common sense goes a long way. If something doesn’t feel right, or if you don’t understand why someone is asking you for certain items of information, don’t feel obliged to go along with things. If it’s a salesperson, or someone who appears to be official simply tell them that you’re not happy to provide the information. Trust your own judgement.

How to detect ID theft …

The internet is everywhere these days and there is a certain amount of paranoia regarding internet security – but, to a certain extent at least, that is exactly what it is – paranoia.

It’s easy to visualise master criminals across the globe hacking into computer systems and stealing your details in order to carry out their devilishly cunning schemes. However, the truth is a little more down to earth.

Tried and Tested Methods

In the past, the most common method of identity theft was the theft of a wallet. The thief would probably gain access to credit cards, library cards, driving licence, other membership cards and various other items which might be used to assume someone’s identity. This method is still widely used but, from the criminal’s point of view, it suffers from the drawback that it is usually noticed relatively quickly.

A report issued jointly by Javelin Strategy & Research and the Better Business Bureau in 2005 analyses the main methods used by criminals to obtain information used to carry out identity fraud in the USA during 2004. These are listed below:

Be Careful Who You share Your Personal Information With

According to the study, 30.2 % of victims knew the person who assumed their identity.

The Role of The Internet

As can be seen from the table, the internet is used far less frequently than people may imagine to collect personal information to use in identity theft scams. Only 11.6% of the identified identity theft cases investigated during the study were attributed to computer related sources. Of these computer and internet crimes, spyware was responsible for around 50% - which can be mitigated against by using appropriate protection software.

Nevertheless, computer security and good internet usage practices should not be taken lightly. Even although the incidence of computer related identity theft is much lower than popular perception, it is still possible for poorly protected information to be used for crimes other than identity theft.

However, even if computers and the internet are not major factors in the collection of the personal information used to carry out identity theft fraud, there can be no doubt that, once the information has been gathered, the internet makes it much easier to use this for profit.

Online ordering of goods and services requires no actual contact between seller and purchaser and transactions can be carried out relatively simply when certain items of information are available.

How to avoid ID theft …

True Name Identity Theft

True name identity theft describes the scenario where the thief adopts your identity using stolen personal information and then uses this to either open new accounts or obtain services.

The thief might sign up for new credit card accounts, open new bank accounts or obtain a new service – e.g. a mobile phone.

Account Takeover Identity Theft

Account takeover identity theft means that the criminal uses stolen personal information to gain access to existing accounts. Usually the thief will change the address associated with the account and then run up a huge bill before the unfortunate person whose identity has been stolen is aware that there is a problem.

How Is ID Theft Carried Out?

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