The holiday season has passed for another year, and for most of us, the frantic spending frenzy that accompanies it. Overspending during the holidays poses a real threat to many bank accounts, but the biggest threat to many consumers’ finances was not overspending. Identity theft is one of the fastest growing crimes in America, costing $52.6 billion in 2004. The hectic holiday season presents an opportunity too good for many thieves to pass up, but it’s a major problem all year-round.
In most cases, as long as you report a lost or stolen card or account information in a timely manner, you are not liable for more than $50, and if you report it before any fraudulent charges have been made, you may not have to pay a single cent. But according to a 2005 study by the Better Business Bureau and Javelin Strategy Research, the average identity theft victim spent 28 hours resolving credit, financial and other problems caused by fraud in 2004. The start of a new year may be an excellent time to re-think financial strategies and to put some precautionary systems into place.
Use an online budgeting program to track your purchases. According to the Javelin study, the fastest method to detect fraud is through self-detection by electronic means. Victims of identity theft who detected the crime by monitoring accounts online experienced losses of about $551, compared with an average of $4,543 when detected from paper statements. The Javelin report states, "Electronic monitoring reflects near real-time activity, can be accessed from almost anywhere, provides greater safety by sharply reducing time to detection, and potentially eliminates the paper records and mail that are possible avenues to many identity theft cases."
A secure online budgeting program like Mvelopes Personal (www.mvelopes.com) makes it simple to track all of your expenses from all of your accounts, including checking accounts and credit cards, all in one place. Review your transactions on a regular basis to make sure there are no unauthorized purchases or charges.
Keep an eye on your card. Make sure the cashier returns your card after each purchase. Place your card in your wallet or purse where it can't easily fall out or be stolen. Also, be cautious of "shoulder surfers" — people watching over your shoulder to obtain your PIN or other account information — at the store, ATM, or when shopping online.
Protect your receipts. Beginning December 5, companies will not be allowed to print the expiration date or more than the last five digits of your debit or credit card number on receipts. Until then, many businesses will still print entire account numbers along with card expiration dates on your receipts. This is the only information a thief needs to make thousands of dollars worth of unauthorized purchases with your card. Be careful not to lose any of your receipts, and shred them, along with any other documents containing this sensitive information, before discarding them.
While there has been considerable attention given to electronic methods of obtaining personal information, the fact remains that the majority of the time, thieves obtain this information through more traditional means, such as a lost or stolen wallet, stolen mail, or misappropriation by family or friends. In cases where the method of obtaining personal information is known, most thieves obtain this information through offline means — about 68 percent of the time, compared to only 12 percent online.
Be careful when using the Internet, however. Consumers are getting more comfortable shopping online. According to a recent study by Forrester Research, U.S. online retail sales were expected to hit $18 billion, a 25 percent increase over 2004. That's a lot of money changing hands over the Internet. Make sure that if you’re doing business online, your money is going where you intended.
Don't give out account or other personal information unless you initiate the transaction. Thieves will sometimes send bogus emails, posing as a reputable business, warning that your account information needs to be updated. The email will link you to a site to enter in your information. Legitimate companies won't request this information via email. If you have questions about your account information, contact the organization by a phone number you know to be genuine, or type in their website yourself. Don't use the link given in an email.
When entering sensitive information on the web, be sure that the site is secure. Secure sites should have a padlock symbol in the lower, right-hand corner, and the URL address should begin with "https" instead of "http".
Check your credit report this month. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. Since your credit report can affect everything from interest rates on your mortgage to job offers, make sure you're taking advantage of this opportunity to ensure everything is accurate, especially after the busy holiday season.
Instances of fraud where a new account is opened to make unauthorized purchases is generally more costly than if an existing account is used, and in most cases cannot be discovered by monitoring existing accounts. Checking your credit report regularly is the best way to detect new, unauthorized accounts.
Some thieves will steal your information and then wait to use it, hoping you will let your guard down. Stagger the reports from the three different credit bureaus, receiving one every four months, to keep an accurate up-to-date watch on your credit throughout the year.
Act quickly to minimize damage. If you suspect any fraudulent activity, call the account provider immediately to close the account. Visit www.consumer.gov/idtheft for more information on steps to take if you suspect you are the victim of identity theft.
With a little caution, you can rest assured that your identity will remain yours, and yours alone. And who couldn't use a little rest after fighting those holiday crowds?
Steven B. Smith is president and CEO of In2M Corporation (www.in2m.com) and author of ‘Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks!’