Identity theft can have a devastating effect on someone's life and finances. According to the 2019 Identity Fraud Study by Javelin Strategy & Research, 2018 had 14.4 million victims of identity fraud. Out-of-pocket costs related to fraud from identity theft doubled from 2016 to 2018 to $17 billion.
Individuals aren't the only ones at risk for problems related to identity theft. Businesses who have been breached by hackers can also be liable for the theft. The best way to protect yourself and your clients is through good data practices.
What Are the Four Types of Identity Theft?
Identity theft can happen in many forms and sources. Most examples of how stolen data is used falls into four primary categories.
Medical Identity Theft
Stealing health insurance information allows thieves to either get medical treatment under your name, which can lead to problems qualifying for life insurance, etc., as well as general fraud. A lot of medical and health insurance forms still require Social Security Numbers, which can be used to open fake financial accounts.
Employment Identity Theft
Someone who can't get a job due to a criminal history might use a stolen Social Security Number to pass a background check and get a job. Not only can that interfere with your own job hunting efforts, the IRS could pursue you to pay income tax on their job.
New Account Identity Theft
This is a very common form of fraud. A stolen Social Security Number is used to open credit card accounts, especially online, then they max out the card and disappear. Or they open bank accounts, deposit bad check, and withdraw the money before the checks are returned for insufficient funds.
Tax Identity Theft
In this scheme, thieves use a stolen Social Security Number to file a false tax return in your name that generates a refund. They pocket the money and run – but then you don't get a refund. Instead you are audited by the IRS for filing two tax returns. One way to thwart this type of identity theft is to file your taxes as soon as possible. That way even if they get your information you can file your return correctly and their fraud is detected sooner.
What To Do When Someone Steals Your Identity?
Taking action quickly is essential when you find proof that your identity was stolen. IdentityTheft.gov recommends the following steps:
- File an FTC Identity Theft Report
- Place a one-year fraud alert on your credit report
- Get a seven-year extended fraud alert
- Dispute and block activity as needed
- Freeze your credit
This proves that someone stole your identity and makes it easier to correct any subsequent problems.
By doing this, when creditors get requests for credit card applications, they should be on the lookout for fraud and request more proof of identity when they get applications for credit. Contact the three major credit bureaus to do this step. Placing this fraud alert will also entitle you to a free copy of your credit reports from those bureaus.
Using the FTC Identity Theft Report, request the extended fraud alert. By giving each credit bureau your contact information, they are supposed to contact you before issuing credit in your name. Each credit bureau should respond to your request by letter confirming the request.
If you find fraudulent information on your credit report, send a copy of your FTC Identity Theft Report, proof of identity, and a letter explaining the item is fraud. The credit bureau should then notify the creditor, which prevents the creditor from turning fake activity over to debt collectors.
A credit freeze or security freeze prevents new credit from being issued in your name. You can request this for free from the three credit bureaus. Just make sure you keep the information needed to unfreeze your credit when you might want to apply for a mortgage, car loan, credit card, etc.
Good data management and destruction is essential to prevent breaches and identity theft. The data and document experts at Storage Quarters can help with all aspects of storing and digitizing your business information, Storage Quarters will keep your vital records safe and secure. To get a free quote or book our services, contact the data management specialists at Storage Quarters today. We can also be reached by calling (516) 794-7300 or you can email us.