Last week, the Federal Trade Commission came out with its annual report on consumer fraud, and for the 11th year in a row, identity theft has topped the list of complaints, with 250,854 Americans checking in on the matter. In total, some 9 million Americans fall prey to identity theft every year, with credit card fraud being the second highest category on that list, right after fraudulent government documents.
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But, according to some experts, financial identity theft isn’t all we have to worry about. In addition, there’s medical identity theft, criminal record identity theft, and the possibility of someone completely assuming your name and creating a new life by buying a home, getting a job and even taking over your social security payments.
According to the FTC, here’s how it works. Sometimes the thief will steal your credit card or its information and then rack up charges that you may not know about until you get your next statement. Some thieves submit a change of address on the account so they can have longer access to the card before anyone catches on. Other crooks may steal your name, driver’s license and social security number and use them to open new credit card accounts, get bank loans, rent houses or incur medical bills. Once they scar your credit, it can result in your not being able to buy or rent a home, being turned down for a job, or even being denied medical insurance.
We hear weird and wacky stories every day of people who have been arrested because a criminal stole their identity and used it to commit a crime, or of a mother accused of giving birth to a drug addicted baby because an identity thief used her name to check into the hospital. And to hear the most commonly known identity theft experts tell it, you need some pretty serious protection to keep your personal information out of the hands of these criminals. There are an abundance of companies offering to sell you this protection at a range of prices, from the seemingly reasonable to the ridiculously expensive.
But we noticed something that wasn’t quite right—it seems that behind every one of these experts who are telling us that we need to pay to protect ourselves, is a company that provides just such a service. We decided to go to an expert who stands nothing to gain and try to get to the bottom of one simple question: just how serious is identity theft, and what are we supposed to do about it?
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Paul Stevens, the Director of Policy and Advocacy of the Privacy Rights Clearinghouse, says that identity theft of all types is a very real risk and the problem is growing rapidly. But the solution may not be in the companies that want to charge you for their services. “Our position is that you can do it yourself,” he told me. “I’m not aware of any company that can prevent identity theft.” In short, these companies can tell you when someone has falsely used your personal information, but by then, it’s too late. But there are preventative measures that you can take. We asked Stevens what he did to protect his own credit, and he gave us these tips.
So, if the services that offer protection can’t really do anything to keep you from becoming a victim of the very real threat of identity theft, what should you do? Me? I’m going to do what the experts do—keep a watch over my own financial affairs and become proactive in preventing the theft from happening in the first place.
Tim Chen is head nerd at NerdWallet.com, a site dedicated to helping consumer understand credit card offers.