Identity theft is the fastest-growing crime in the United States, with an estimated 9 million Americans becoming victims each year, according to the watchdog website IdentityTheftFacts.com.
Identity theft happens in two ways: Either someone takes all of your information and opens new accounts or enters into new contracts, or they have enough of your information to take over your existing accounts and use them to their advantage. This definition of identity theft, says Kim Duncan, an enterprise fraud manager at SunTrust Bank, is an important distinction from fraud.
“People think if someone stole their credit card and used it to make five transactions they've been a victim of identity theft, when that's simply credit card fraud,” Duncan says. “Someone actually needs to impersonate you and take control of accounts for it to be identity theft.”
Identity theft is a serious crime that can cause consumers serious problems. Just ask Jean Webb, a 56-year-old mom in Palm Beach County, Fla., who nearly had her identity stolen five years ago. Webb's credit card, Social Security card and several checks were stolen from her wallet at a preschool and used to purchase several items, including a $12,000 piece of jewelry. Rebounding from the ordeal took about a year, and to prevent other accounts from being opened with her information she had to monitor her credit reports constantly.
Taking preventative action, such as taking advantage of free ID theft protection programs through your bank or signing up for additional protection, is one of the best ways to protect your identity. Don't think it's worth it? Here are three reasons it is.
1. Your identity can be stolen from multiple places. Identity theft isn't something that only happens to online shoppers. Your information can be stolen from a doctor's office, the university you or your child attends, an insurance company—anywhere that has enough of your personal information that, if leaked, someone could impersonate you. You should always ask questions about why a place needs your vital information (social security number, birth date, etc.) not because you don't trust the organization, but because the more institutions that have your information, the more at risk you become.
2. You're not always covered. There is a misconception that every place you do business with will protect you in the case of fraud or identity theft, such as credit card companies or hospitals. Sure, most institutions have some sort of monitoring for fraudulent activity. (Didn't make that $1,000 spa purchase in Venice?) But it's much more difficult for them to detect identity theft since, to the organization, the criminal will look and sound like you in every way. “It just won't be you,” says Duncan. On the other hand, an identity protection program monitors new accounts opened in your name and asks you right away if that indeed was your doing.
3. Protecting your identity is like buying insurance. With identity theft, early detection is key: Webb was able to prevent accounts from being opened in her name by alerting the Social Security Administration and her bank of the fraud within days. Several ID theft protection programs out there help with this early detection, which is key to preventing potentially thousands of dollars in liability. Buying ID theft protection is much like buying other forms of insurance. “I think taking specific action like this is taking responsibility for yourself. It's not making an assumption that you're safe—it's really taking the stance that everything can be compromised at some point and as a consumer you're going to take a protective stance,” Duncan says.