Everything You Should Know About Identity Theft

Lucy Lazarony
November 10, 2020

Identity theft happens when a thief uses your Social Security number or other personal information such as financial information to open new accounts, make purchases and even make doctor’s appointments. An identity thief can make a mess of your financial information and your credit files. There are different types of identity theft. Here are some of the most common.

One type of identity theft is driver’s license identity theft, in which a thief steals your information on your driver’s license including your name, address, date of birth and license number. A second type of identity theft is Social Security identity theft in which your Social Security number is stolen. A third type of identity theft is medical identity theft when a thief uses your personal information to get medical services and medications and to file phony disability claims and false medical liability claims. A fourth type of identity theft is financial identity theft. With financial identity theft, a thief poses as you and empties your bank accounts, opens and charges up new credit card accounts and loan accounts. Identity theft also may happen when data breaches occur and so many people have their personal financial information compromised. Let’s continue to take a closer look at identity theft.

Warning Signs of Identity Theft

Here are three warning signs of identity theft. If you receive bills for items that you didn’t buy, this is a sign of identity theft. If you start receiving debt collection calls for accounts that you never opened. This, too, is a sign of identity theft. If you are suddenly getting turned down for loan applications, this is another warning sign that a thief has your private financial information.

How to Report Identity Theft

You can report identity theft to the Federal Trade Commission (FTC) at IdentityTheft.gov or by calling 1-877-438-4338. By alerting the FTC, you’ll be getting an identity theft report and a recovery plan. You’ll also receive prefilled form letters to send to creditors plus detailed tips, checklists and sample letters.

You’ll also want to report the identity theft to your local police. Some creditors may require a police report upon hearing about the identity theft.

If a thief has been posing as you to receive Medicare services, you’ll want to report the crime to Medicare’s fraud office. If you are a victim of tax identity theft, you’ll want to report the crime to the Internal Revenue Service.

You’ll also want to report identity theft to the credit reporting agencies, Experian, Equifax and TransUnion. Contact one of the agencies to place a fraud alert or a credit freeze on your account.

A fraud alert, which lasts one year, makes it harder for an identity thief to open accounts in your name. With a fraud alert, a business must verify your identity before it issues credit. A credit freeze, also known as a security freeze, restricts access to your credit report. This is one way to stop anyone from getting credit in your name. No one can access the credit report, even potential creditors.

Also get copies of your credit reports to be sure that no one has already tried to get unauthorized credit accounts with your personal information.

Confirm the credit reporting agency that you contacted will alert the two other credit reporting agencies about the identity theft. Report cases of identity theft due to a stay in a nursing home or long-term care facility to the National Long-Term Care Ombudsman Resource Center.

Victim of financial identity theft? Contact the fraud department at your bank, credit card issuers and any other places you have accounts. Report the crime to companies where the identity thief opened credit accounts.

What Is Identity Theft Insurance?

Identity theft insurance is designed to cover some of the costs related to identity theft. Identity theft insurance reimburses victims for money spent reclaiming their financial identities and repairing their credit reports. These costs range from phone bills to notary fees to legal fees.

An identity theft insurance policy often provides a specialist who can help guide victims through the process of restoring their identities. Interested in identity theft insurance? Check to see if it is already included in your homeowners or renters insurance. If you’ve already got a policy, you are all set.

Homeowners and Renters Insurance May Help

If you don’t have identity theft insurance, you can add it to your homeowners or renters insurance policy or buy a stand alone policy. Identity theft insurance costs from $25 to $50 a year. This cost is the same if you are buying a stand alone policy or adding a rider or endorsement to your homeowners or renters policy. If you don’t have a home insurance policy, let SmartFinancial compare rates for you.

Most identity theft policies have benefit limits and these range from $10,000 to $15,000. An identity theft insurance reimburses for the expenses involved in restoring your identity. These expenses include long-distance phone calls, lost wages, notary fees, mailing documents, legal fees, child care costs and credit monitoring services.

Be aware that identity theft insurance does not cover direct financial losses due to identity theft. Instead, identity theft insurance reimburses some of the expenses that you incur as you work to restore your good name. Identity thieves can do lots of damage and it can take a while to unwind all the damages.

When shopping for identity theft insurance, do plenty of research first. You’ll want to find out the following information from each company you contact. First, find out the policy limits and the deductible, if there is one. Next, find out if the policy covers lost wages. And with lost wages you’ll need to find out what limits apply and what triggers the lost wages coverage. You’ll also want to find out if the policy covers legal fees. With legal fees, you’ll want to know what limits apply and whether or not legal work must be pre-approved by the insurance company.

Once you get this information from each of the identity theft insurance companies that you contact, you’ll be able to choose the company that you like best. So take some time to do some research before choosing an identity theft insurance company.

Identity Theft Protection Services

Are you willing to pay to protect yourself from an identity thief? You may want to consider an identity theft protection service. These are companies that will monitor your credit file activity at each of the three major credit reporting agencies. These companies will monitor your credit score, any change of address requests at the post office, court and arrest records, orders for new utility, cable or wireless services in your name, payday loan applications, check-cashing requests and social media monitoring.

An identity theft protection service also may alert consumers that their personal information has been spotted on the dark web. Identity theft protection services offer two types of services. One is monitoring your personal information in a variety of ways. And the second is recovery services, which help crime victims deal with the after effects of identity theft.

In recovery services, a case manager will walk the identity theft victim through the steps of restoring his or her identity. The costs of identity theft protections services vary widely. So be sure to shop around. Ask identity theft protections services about the kind of information they check and how often. Compare information that is monitored and the price. You want the best monitoring and recovery service that you can find for the best price.

How to Prevent Identity Theft

Want to lower your chances of becoming a victim of identity theft? Follow these tips.

Be Careful With Your Social Security Number. Don’t carry your Social Security card in your wallet. Only give out your Social Security number when it is absolutely necessary.

Guard Your Personal Information. Keep private personal information private. This includes your birthdate, Social Security number and bank account numbers.

Collect Your Mail Every Day. Place a hold on your mail when you are away from your home for several days. Identity thieves go through unlocked mailboxes looking for personal financial information they can steal.

Make Note of Billing Cycles. If bills or financial statements are late, contact the company sending the information and let them know that you haven’t received the most recent billing statement. One way to avoid this type of identity theft is to sign up for online billing statements so a paper statement can never get intercepted in the mail by a thief.

Use Security Features on Your Mobile Phone. Use the passcode or fingerprint recognition so only you will be able to open up your phone and use it.

Update Sharing and Firewall Settings. Be sure to use these settings when you are on a public wi-fi network.

Review Credit Card and Bank Statements Promptly. Check receipts with account statements. Watch out for unauthorized transactions. They could be the work of a thief.

Shred Receipts, Credit Offers and Bank Statements. You’ll also want to shred expired credit cards as well. So buy yourself an affordable shredder and get to work. These moves can help prevent dumpsters dives, when thieves go through garbage to get personal financial information that has been thrown away.

Install Firewalls. You will want to install firewalls and virus-detection software on your home computer. This will help to protect you from identity thieves online.

Create Complicated Passwords. You’ll want to choose complex passwords that a thief won’t be able to guess. Change passwords frequently, and especially if a company you do business with is the victim of a data breach.

Review Your Credit Reports Every Year. Each year you are entitled to a free credit report from each of the three major credit reporting agencies. You can order your free reports by visiting AnnualCreditReport.com.

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