Are you worried about identity theft?
Most Americans are. Identity theft is the number one concern among consumers who contact the Federal Trade Commission. Forty-two percent of all complaints to the FTC are regarding identity theft. The fear is justifiably real.
The FBI says identity theft is one of the fastest growing crimes in the United States. Over 27,000 individuals become victims every single day. That is over ten million victims per year!
We’ve examined a number of strategies you can implement to safeguard property, both from lawsuits and from physical threats, but one more asset needs to be protected . . . your identity.
Identity theft is a federal crime where one person’s identification is used unlawfully by another person for criminal activities.
Most often this occurs when a thief steals a credit card, a bank statement, or a social security number. Once the criminal has this information, your existing accounts are vulnerable and new accounts can be opened and exploited. Thieves can use your personal information themselves, or they can sell it to other criminals.
Criminals will often take advantage of existing accounts by making large purchases on your credit cards, withdrawing money from your bank accounts, writing checks, obtaining loans, and even applying for unemployment benefits or tax refunds. They also frequently open new credit card accounts in your name and make thousands of dollars in charges on those new accounts.
Once they’ve stolen your information, thieves typically change the mailing address on one of your existing credit cards or one they’ve illegally established in your name. They can then spend thousands of dollars over several months—paying just the minimum balance, until they’ve charged up to the card’s limit. Since the account statements and past due notices are going to a different address, you don’t suspect anything is wrong until it is too late.
In a wired world where our paychecks are automatically deposited, where we pay for goods with a debit or credit card, and where our names are secondary to an account number, “identity” is a concept that has nothing to do with our values or personal lives and everything to do with the strings of numbers tied to our lives. Unfortunately, the efficiencies and ubiquity of a digital identity have made it easy, and profitable, for criminals to quickly steal hundreds of the account numbers that tie us to our assets.
What’s the Big Deal about Identity Theft?
If you are asking the question, you have never been a victim. Identity theft is more than an inconvenience; it can be emotionally and financially devastating.
According to a survey by the Identity Theft Resource Center:
- Lost Time – The average victim spends 600 hours recovering from this crime. For many, time is their most precious resource. When finding an extra hour to spend with the family can be difficult and an afternoon of free time nearly impossible, where are you going to find an extra 600 hours?
- Lost Income – Based on a typical 50-hour work week, 600 lost hours represents three months of lost productivity. Thousands of dollars can be lost in time spent reclaiming your identity and repairing the damage. How much income would you lose if you took the next three months off?
- Lingering Effects – Even after the crime is discovered, victims struggle with the impact of identity theft. The ongoing effects can include increased insurance or credit card fees, difficulty securing a job, higher interest rates and battling collection agencies and issuers who refuse to clear records despite substantiating evidence of the crime. This particular theft can follow you for more than 10 years after the crime was first discovered.
- Emotional Impact – The emotional impact on victims is likened to that felt by victims of more violent crime, including violent assault and repeated battering. Some victims feel dirty, ashamed, and embarrassed. Others report a split with a significant other or spouse and of being unsupported by family members after experiencing identity theft.
- Initial Shock – Approximately 85% of victims found out about the crime due to an adverse situation such as denied credit or employment, notification by police or collection agencies, or huge credit card bills for goods never ordered. Only 15% found out through a positive action taken by a business group that verified a submitted application or a reported change of address.
The time to repair your credit can be staggering. Closing accounts, opening new accounts, and pleading your case to doubting creditors can be frustrating and emotionally grueling. In addition to the potential lost income, clearing your name can cost thousands of dollars. You may be denied jobs and loans, even after you provide an explanation. You may even be arrested for crimes committed in your name.
Incredibly, half of all identity theft crimes go unnoticed after a month and one in ten go undetected for two or more years! You could be one of those unaware victims right now. You should do everything you can to protect yourself from this costly, yet rapidly growing, crime.
The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.