Rudy Giuliani, yes, the former New York City mayor, is on a mission. He wants you to know it’s important to be protected. No, he has not suddenly endorsed the NRA or Planned Parenthood. The former politician is concerned about something far more mundane and, frankly, much more common: identity theft.
According to Javelin Research(2), which provides both data and advice to major financial institutions, out-of-pocket costs to consumers hit by this crime have actually decreased since 2004. On the other hand, the number of identity fraud cases rose 13% in 2011, affecting more than 11.6 million adults.(1) In other words, while more people are being victimized by identity fraud, the average cost per victim has declined.
This doesn't mean you are safe. Part of the reason for the drop in cost-per-victim is the fact that several federal laws now limit your liability. For instance, if someone makes fraudulent purchases using your stolen credit card, the most you can be held liable for is $50- provided you notify your credit card company within 60 days after you receive the monthly statement that includes the false transactions. To limit your loss to $50 in the case of a stolen ATM or debit card, you’ve got to act a lot faster: You must notify the card issuer within two days after you discover your card is lost.
Keep in mind that although you are out $50, your bank or credit card issuer has to eat the rest of the amount. To cover these costs, banks institute higher fees, interest rates and other charges to all cardholders. The bottom line is that we all pay for this ever-expanding crime.
“It’s grown exponentially,” says Giuliani, who, prior to serving as mayor from 1994-2001, was U.S. Attorney for the Southern District of New York. “When I was in law enforcement in the 1980s, there was always identity theft, but it wasn’t a major issue,” he says. “In the 1990s it began to be a problem. In the past decade, it became a major epidemic. It may now be the most common crime in this country.”
Because the overwhelming number of cases involve stolen credit or debit cards, that’s what most folks think of when they hear the phrase “identity theft.” But thieves have become increasingly sophisticated and are targeting more sensitive data. Armed with, say, your Social Security number and birthdate, it’s possible to apply for a driver’s license or medical insurance under your name or access your bank records. In Giuliani’s words, “those are areas of greater concern.”
Keep in mind that your liability on these types of accounts is not protected by the federal laws that cover credit/debt card fraud. Guliani says those laws “are almost harmful” because they give people the impression that the maximum it will cost them if they are a victim of any type of identity fraud is $50. “Not if they get your Social Security number. It will cost you a lot more than that.”
It is no coincidence that the increase in identity theft cases has mirrored our technological advancements. The convenience provided by the myriad of digital devices we can’t seem to live without have provided new and seemingly endless ways for criminals to gather our most sensitive personal data.
Identity thieves are salivating about the fact that 10 million more of us signed up for mobile banking last year. That means that one-third of U.S. adults who have mobile devices can now use them for paying bills and accessing account balances. It’s a mother lode waiting to be mined and we are aiding thieves' efforts unknowingly.
According to Javelin, if you use social media or a cell phone (I suppose there are still a few dozen Americans who don’t), you are 33% more likely to be victimized by identity fraud. That’s not just because ID thieves are getting smarter--although they are--it’s because we’re getting sloppy. A third of us don’t bother to update the security software on our mobile devices and 62% don’t use a password on our home screen, which means anyone can access the information stored on the device if it’s stolen or lost. And, guess where 32% prefer to store our login information? Yep, right on the phone itself!
What’s more, Javelin found that we think nothing of posting extremely personal information about ourselves on publically-accessible websites:
Despite warnings that social networks are a great resource for fraudsters, 68% of people with public social media profiles share their birthday information (with 45% sharing month, date and year), 63% shared their high school name, 18% shared their phone number and 12% shared their pet’s name—all are prime security question answers.
Not all identity theft is committed via technology. Stealing credit card bills and Social Security checks out of your mailbox or trash is still a common way for thieves to access critical information.
Perhaps the prize for the most creative low-tech method of amassing personal data goes to the “doctor” in New York City who interviewed a slew of potential employees to work in his new medical offices. Job candidates and investors alike were required to fill out paperwork that asked for their Social Security number, address, date of birth, etc. “It was a complete sham,” says Giuliani. The whole purpose was to stead their identities so the guy could open lines of credit in their names.”
These days the former mayor and prosecutor heads up his own security consulting firm and is a spokesperson for security company LifeLock.
Giuliani readily admits that there is “great advice” available for free about steps you can take yourself to significantly limit the chances of being victimized; the issue is whether you have the time and inclination to do this on a diligent basis.(3) “I run a security business. I’m an expert on security. I don’t have time to do this myself,” he says. “I’m not going to check my bank records every month or my credit rating every four months.”
If you want to minimize your chances of being a victim of identity theft, Giuliani recommends minimizing your use of modern conveniences, including cell phones and credit cards. “Don’t use your credit card in a restaurant. Use cash. If you buy online, try to stick with one website, such as Amazon. Give out as little [personal] information as possible.” You can also put a freeze on your credit accounts.
If you’re a victim of identity fraud, says Giuliani, “even if you don’t lose a lot of money, you lose a lot of time” trying to correct the damage to your credit history and other records. In the words of this former prosecutor, “Get a service to protect you. Don’t go unprotected.”
1. In recent years children have become an increasingly popular target of identity thieves. In many cases, the perpetrator is a family member.
2. Javelin: 2012 Identity Fraud Industry Report: Social Media and Mobile Forming the New Fraud Frontier.”
3. Consumer Reports lists a number of things you can do.
Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content.
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