Identity Theft – The Do’s and Don’ts
By Valerie Anderson-Jones, CPA, JD
The following abridged article was presented as an in-house seminar for our professional staff. However, we felt it might be useful for our clients to view as well, and we are publishing it in this bulletin roughly as it appeared for our in-house discussion.
In the fall of 1998 the Identity Theft and Assumption Deterrence Act made identity theft a new offense. Congress defined identity theft as “knowingly transfer[ring] or us[ing], without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable State of local law.” The maximum penalty for this offense is 15 months imprisonment, a fine, and criminal forfeiture of any personal property used or intended to be used to commit the offense.
- The personal information being used is often your:
- Social Security Number, Address, Date of Birth
- Bank account or credit card information
- Mother’s maiden name
- Other personal information that a credit card company may ask you to verify your identity
- The thief will use the information to:
- Open bank account(s) in your name
- Make purchases in your name
- Obtain one or more credit cards in your name
- Incur debt in your name
- File a tax return in your name, generally requesting a false refund
- Default on all of the above, leaving you with debt that you did not incur
- Apply for a job
- Once the thief has this information, it can be very costly to restore your credit information and reputation.
How does Identity Theft happen?
- Identity theft happens when personal data is unsecured and accessible to a thief.
- You respond to an email from an unfamiliar sender
- You open an email from an unknown source – this could create a virus and leave your computer accessible to thieves
- Leaving your computer with an outside contractor to fix when the computer contains personal data, passwords, credit card, bank account, etc… information. This may be inevitable – make sure you check out the people you are trusting
- You lose your credit card, driver’s license, etc…
- You toss a credit card application or other document with personal information in the trash somewhere.
How do I find out if I am a victim of Identity Theft?
You can be a victim of identity theft and never know it until something affects your credit report or your tax return.
- Applying for a new credit card can reveal bad information on your credit report
- Applying for a loan can reveal identity theft
- Filing your tax return can reveal identity theft
- Receiving a notice from a taxing agency
- Receiving a collection notice on an unknown bill – this can lead to harassment and threatening phone calls
- But identity theft can go undetected by the individual for a period of time.
I am a victim of Identity Theft – what should I do?
- Act immediately – delays can result in additional fraud being committed, while quick action will limit the damage.
- Check your credit report – let the reporting agencies know that you are a victim and ask that they put a fraud alert on your account. At the same time, request a copy of your credit report from all three reporting agencies. The fraud alert is generally good for 90 days.
- Equifax – www.equifax.com 800-525-6285
- Experian – www.experian.com 888-397-3742
- TransUnion – www.transunion.com 800-680-7289
- File a police report
- If you are a victim of identity theft with the IRS (a fraudulent return has been filed in your name) – File Form 14039 with the Internal Revenue Service – this can be done separately once you know you are a victim and then again with the filing of your tax return. You will need to supply a copy of your social security card or driver’s license with this form.
- Contact the IRS Identity Protection Specialized Unit at 1-800-908-4490
- Contact the Social Security Administration at 800-772-1213
- Create an Identity Theft Report – this can help you deal with credit reporting companies, debt collectors, and businesses that gave the identity thief credit and opened new accounts in your name. This report is used to: remove fraudulent information from your credit report; respond to collection agencies for debts you did not incur, allow you to get and extended fraud alert placed on your credit report and get information on all accounts opened by the thief in your name. This involves reporting the theft to the Federal Trade Commission and filing a police report. The step-by-step process to create an Identity Theft Report can be found at www.consumer.ftc.gov/articles/0277-create-identity-theft-report. The number for the Federal Trade Commission is 877-436-4338.
- An Identity Theft Report can get your protection from marketing lists and pre-screened credit offers for up to 7 years.
- Consider putting a credit freeze in your credit file. This, however, can make it difficult to open any new accounts as the freeze must be lifted to open the new account.
- Close any accounts that have been tampered with or used fraudulently.
HOW CAN I PREVENT THIS FROM HAPPENING TO ME?
- Do not carry your Social Security card or any document with you that contains your social security number.
- Do not give a business or anyone else your social security number unless you know the reason and are sure of the source. It is best to give this information only when you initiate the phone call, the email or the application.
- Check your credit report annually. This can be done for free once each year with each of the credit reporting agencies. You may want to start with checking one of them now and another every 4 months as they do not all have the exact same information. www.annualcreditreport.com
- Secure your personal information in your home and when you are in public.
- Protect your personal computer by using firewalls, anti-spam/virus software, update security patches, and change passwords for internet accounts on a regular basis. Some say to change your password every 30 days.
- Use passwords that are not easy to crack – those that contain both alpha and numeric characters as well as symbols.
- Do not use personal information as part of your password.
- Secure your list of passwords
- Change your password after using a public computer to protect the integrity of the data.
- Password protect all personal data on your computer and all data you transmit via the internet.
- Only provide personal information on the internet when you initiate the contact and be sure the site is protected before inputting the information.
- Monitor your credit cards, bank loans, bank accounts, investment and retirement accounts on a regular basis. Report any suspicious activity immediately.
- Keep track of your credit cards, bank, and investment records. Keep a list of phone numbers to call in case you are a victim of identity theft.
- Report any lost or stolen driver’s license or credit cards immediately.
- If you believe you are at risk for identity theft due to a theft, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490 extension 245. They are available Mon – Fri 7 am to 7ap local time and Pacific time in Alaska and Hawaii.
- Take immediate action to follow-up on any risk of identity theft or fraudulent use on personal data. Do not wait until you are a victim of multiple transactions and your reputation has been damaged.
- Have your credit report monitored by a identity theft agency. This will not guarantee that you will not be victimized.
WHAT IS BEING DONE TO REDUCE IDENTITY THEFT?
- On February 7, 2013, the IRS reported on results of a coast-to-coast effort against 389 identity theft suspects in 32 states and Puerto Rico. The effort involved 215 cities and surrounding areas and led to 734 enforcement actions in January 2013 alone. These enforcement actions included indictments, informations, complaints, and arrests.
- During fiscal year 2012, there were 2,400 enforcement actions against identity thieves by the IRS.
- The IRS is working with the Justice Department, local U.S. attorney offices and other federal, state and local agencies in an effort to prevent, detect, and resolve identity theft cases as soon as possible. The IRS has increased the number of employees that work on identity theft-related issues. The IRS has trained 235,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.
- The number of criminal investigations in identity theft issues has increased along with the number of enforcement actions including sentencing and jail time. The efforts of the IRS helped protect $20 billion of fraudulent refunds in 2012 and $14 billion in 2011.
- It currently takes the IRS about 180 days to resolve a case of identity theft. This means that refunds are delayed for many taxpayers. These cases are extremely complex and may affect multiple returns and multiple years. The thieves may complicate matters by calling in to get information on the account or by sending in a power of attorney to access the account.
- Protect your personal data
- Keep your passwords secure and change them regularly
- Check your credit report at least annually, if not every 4 months
- Take immediate action if you think your personal information has been compromised
- Respond immediately to an IRS notice re: identity theft
- Be aware of onlookers when using your credit/debit card and entering your PIN number
- Shred personal documents – do not just toss them in the trash
- Do not respond to any email that looks like it is from the IRS – they do not send emails.
- Password protect all documents your send over the internet
- Monitor your financial accounts for suspicious activity on a regular basis – this includes bank accounts, credit cards and investments
- DO NOT
- Provide personal information over the phone or internet unless you initiate the contact – Don’t talk to a stranger.
- Toss documents with your personal information in the trash, this includes offers to open a new credit card account
- Ignore a notice from the IRS
- Share your personal data or leave it unprotected
- Do not carry your Social Security card with you.
- FOR MORE INFORMATION:
Tip to remember the Do’s: S H R E D
- S – Strengthen passwords with alpha and numeric characters and symbols
- H – Handle personal identifying information with care
- R – Read credit reports annually
- E – Empty your purse/wallet of any unnecessary items, especially your social security card
- D – Discuss these tips with your friends.