CR Tells You How to Combat Identity Theft
By Consumers Union on Monday, September 8th, 2003
b>For Immediate Release:
September 8, 2003
Lauren Hackett (914) 378-2561 or
Joan E. Quinn (914) 378-2436
CR October Cover Story Exposes How Thieves Zap Your ID;
Ways Business and Government Could Prevent ID Theft
YONKERS, NY – At a time when your good name and credit are used to judge you as never before, your good name and credit have never been more at risk. In the October 2003 cover story titled “Stop Thieves From Stealing You,” the experts at Consumer Reports take an in-depth look at identity theft: what consumers can do to prevent it, how thieves zap your ID, and what businesses and government could do better to protect your financial information.
Identity theft, the fraudulent use of your name and identifying data by someone else to obtain credit, merchandise, or services, claimed seven million victims last year in the US. The Consumer Reports story concludes three important findings:
Victims typically lose $800 and spend two years clearing their name.
ID theft insurance is typically not worth paying for and credit-monitoring services don’t prevent the crime.
Government and business could be doing a lot more to protect your credit and your identity by investing in security systems and passing stricter laws.
HOW TO COMBAT ID THEFT
Identity theft is a crime of opportunity. Along with guarding your mail, checking your financial statement properly, and ordering annual credit reports, the following tips will help reduce your chances of becoming a victim of ID theft.
Be stingy with information. Never disclose your Social Security number, birth date or mother’s maiden name unless you initiated the transaction.
Just say no. Opt-out of information-sharing at your financial institutions. Call the Credit Reporting Industry Pre-Screening Opt-Out Number to opt-out of pre-approved credit offers.
Shred and destroy. Before throwing out files containing Social Security numbers, account numbers, and birth dates, shred them with a cross-cut shredder.
Beware of strange ATMs. Avoid using private or strange-looking automated teller machines, because they may be rigged to skim data off your card’s magnetic strip.
Our complete, in-depth report on ID theft including six tips on what to do if you become a victim and eleven steps you can take to reduce your chances of becoming a victim are available for free on our Web site www.ConsumerReports.org.
SHREDDERS CAN FOIL ID THIEVES
A shredder can be a valuable tool for getting rid of old documents that contain credit-card account numbers, your birth date, and your Social Security number – pay dirt for identity thieves.
Consumer Reports ratings of shredders priced from $15 to $130, the types sold in office-supply stores, yielded two important conclusions:
Our tests showed that for maximum security, cross-cut shredders work better than the strip kind.
Expect to pay at least $40. Less expensive shredders are typically the strip-shredder variety which left long paper bands that could be reassembled.
HOW THIEVES ZAP YOUR ID
All that ID thieves really need to open credit or bank accounts under your name or to drain your existing accounts are three pieces of information: your name, Social Security number, and date of birth. They can get by with less when financial institutions fail to check identifying information.
Thieves can zap our identities in ways that most of us are aware of including stealing our mail or dumpster diving through our trash to get personal information to take over bank and credit accounts. But consumers can also fall prey by responding to e-mail spam and telemarketers asking for personal information. Millions of identities can also be stolen through organized schemes in which company databases or commercial Web sites are hacked.
BUSINESS AND GOVERNMENT COULD PREVENT ID THEFT
Until recently, identity theft seemed to be regarded by police and many financial institutions as a victimless crime. Even today, only 678 of some 18,000 law-enforcement agencies participate in a federal ID theft database to share tips and leads.
Meanwhile, lenders and merchants chalked up losses to “bad debt,” which can be written off on income-tax returns and may cost less than paying for security. Also, businesses have seldom been held liable in lawsuits stemming from ID theft, so there has been little incentive to act.
Business could do a better job of tightening security by using secure Internet technology and investing more in systems to detect fraudulent applications. Also on the horizon are “trustworthy” computing systems that require authentication and verification before allowing information to be shared among computer networks.
“Identity theft is a problem largely because financial institutions, merchants, credit bureaus, and the government do not adequately safeguard vast databases and other records containing consumers’ sensitive information, making it relatively easy for thieves – often insiders – to access these data,” said Mari McQueen, Associate Editor, Consumer Reports. “Many institutions use Social Security numbers when other identifiers would suffice, fail to notify consumers when security breaches occur, and provide little help or recourse for consumers stuck cleaning up the mess.”
Many victims don’t even know they are victims of identity theft for a year or more, and learn the truth only after something goes terribly wrong, because thieves often shield their actions by using a different address when they open new accounts in the victims’ names. Typically, federal laws cap monetary losses to consumers, but even in routine cases, it takes victims two years on average to clear their names. Some victims say that during that time, they haven’t been able to get a car loan or a mortgage; they couldn’t even use their cell phone. Moreover, all consumers end up paying for ID theft: Businesses recoup the $4.2 billion that they will lose this year to the crime, a figure expected to mushroom to more than $8 billion by 2006, by charging consumers higher fees and prices.
While some businesses and governments are taking steps, more needs to be done. California leads other states and the federal government with its identity-theft laws. “Proposed fixes to existing laws don’t go far enough in giving consumer’s significant leverage to prevent damage to their credit or to repair it when it happens,” said Jim Guest, president of Consumers Union.
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