Identity theft: How to avoid it

Identity theft occurs so frequently that it costs Australians billions annually, statistics have revealed. Thieves steal and fraudulently use the names, addresses, bank account information, credit card numbers and other personal information of millions of Australians each year. Learning about how thieves get your personal information is the first step toward protecting yourself from this devastating attack on your financial well-being.

At the Corporate Level

Thieves make headlines when they break into large consumer databases and steal hundreds or thousands of names, but that's not the only way identity theft occurs on a corporate level. It can occur also from the inside. Insiders may use an employer's access to credit reporting information to get a hold of confidential personal data, or steal information directly from the employer's files or trash. Employees can also be conned or bribed by an outsider to obtain information.

At the Personal Level

Identity theft is less publicised when it occurs on the individual level, but the number of ways that fraud can occur on this level is just as distressing. The simplest method involves stealing or finding your wallet, or digging through your rubbish. Identity theft can also be as simple and easy as peering over someone's shoulder as they use the ATM at the local bank.

More sophisticated methods include targeting the information of the deceased through the use of obituaries, stealing or diverting your mail and obtaining credit card or bank account information via skimming. This is a high-tech theft that uses an electronic device to steal credit card or bank account information. Skimming generally occurs when your credit card is used to make a purchase, and the person processing your card uses a skimmer to capture personalised access information. It has also been found on ATMs.

Phishing is one of the most widely publicised methods of personal identity theft. Phishers create a website that looks very similar to the site of a legitimate enterprise, sending emails out to lure unsuspecting individuals to enter their personal data, which is then used by the thieves.

Once Your Identity Is Stolen

When an identity thief steals your personal data, the thief "becomes" you by assuming your financial identity. The less sophisticated criminals go on a spending spree with your credit cards, sometimes opening new credit cards in your name, writing cheques or establishing mobile phone accounts.

The more sophisticated thieves will do more than simply spend your money; they'll use your name and identity to do anything they want or need. They'll obtain personal identification, such as a driver's licence, and use it to take out car loans, open bank accounts and even file for bankruptcy to, say, avoid eviction from a house or apartment, or get out of making payments on debts they've created in their victim's name. Some of these thieves will also use your identity when they're arrested.

Offense Is the Best Defence

While high-profile hackings of corporate databases demonstrate that nobody is completely safe from identity theft, there are precautions that can minimise the odds of being victimised.

• Protect Your Mail: To make your mailbox a less attractive target for identity thieves, try to reduce the amount of unsolicited offers. When you do receive offers in the mail, shred them before you discard them. Remember to cancel mail delivery when you go on holiday. If you don't, that mountain of mail makes a tempting target. Outgoing mail requires protection too. When you write a cheque and mail it to your credit card company, don't include information that is complete enough for someone to use: only write the last four digits of your account number - your credit card company has all the information they need to identify you.

• Protect Your Trash: The items you discard, including credit card offers, ATM receipts, bank statements, credit statements/receipts and utility bills, all contain personal information. With a bit of effort, thieves can collect this information and use it to steal your identity. To minimise this possibility, buy a shredder and use it. Similarly, when you discard of old credit cards, be sure to destroy them completely first.

• Beware of the Telephone: High-pressure callers often demand personal information with scams such as the promise of an extravagant vacation at an attractive price if only you will act now or lose the offer. To avoid these scams, never provide personal information over the phone if you did not initiate the call. To limit the number of these calls you receive, ask the callers if you can join the do-not-call list. When you do receive a call, simply hang up.

• Safeguard Your Computer: Never respond to unsolicited requests for personal information and always use virus protection. Protect your computer with a password, change it frequently and don't share your password with anyone.

• Protect Your Wallet: On the backs of your credit cards, write "photo ID required" in place of the signature. If your credit cards are stolen, it will be more difficult for a thief to make purchases. Photocopy everything in your wallet, including credit card numbers and the contact numbers of the issuers, and store this information in a secure location. If your wallet is lost or stolen, all the information you'll need to cancel your credit cards will be readily accessible.

• Protect Deceased Relatives: It's a sad fact of life that even the dead are not immune to identity theft. When a loved one passes away, obtain a dozen copies of the official death certificate, and notify all financial institutions, insurance companies, credit card companies, loan holders, etc. Be sure to remove the deceased relative's name from all joint accounts. Finally, contact the credit reporting agencies and request a deceased alert. This places a notice on the deceased's credit report, telling companies that the person has died and cannot be issued credit.

• Report Suspicious Activity: Review your credit report at least once a year and contact your creditors immediately if you note suspicious activity. If, at anytime, you suspect that an attempt has been made to steal your identity, contact the police and the relevant credit providers involved. Be sure to inform them of the fraudulent activity, otherwise you risk being held responsible for any bad debt incurred.

Conclusion

Being the victim of identity theft can be extremely devastating not only because it's your money being stolen, but your name. Identity thieves can be very skilled at finding their targets and then exploiting their findings. For this reason, to protect yourself you need to stay all the more alert and knowledgeable.