Don't Blame Identity Theft on the Internet

The financial posts you will be seeing from me will not be your regular “stuffy” financial information based on investments and markets. Instead, it will include useful, timely and actionable information for your everyday life. I will explore financial issues that are important to you from a local perspective.

Given the recent issue with Epsilon and Sony and the theft of millions of email addresses and personal information, I thought it pertinent to visit the current state of identity theft, some of the myths of identity fraud and some ways to defend yourself. First, let’s look at a few myths about how and to whom identity theft occurs.

Individuals age 65 and older are actually the least likely to be victims. This may be surprising to some people because of the growth of phishing scams. Phishing is still not a high percentage of the fraud that occurs. The most likely victims of identity theft are young people. That’s right, the most likely group to be hit is people ages 25-35. Some would say this makes sense because they are also the most likely do online shopping, bill pay etc. However, only about 12% of identity thefts are traced to online activity. In fact, almost 80% of identity thefts still occur from stolen mail or trash and lost wallets or purses. Couple this with the factg that young people tend to treat paper and hardcopies with less caution than they do their online activity. People who are between the ages of 25-35 grew up with the inter-net and learned early to be careful with online. They tend to not be as cautious with hard copy information. This is likely because so much emphasis was put on inter-net security and peoples misconception that online is the “preferred” method by thieves.

Online activity may actually keep your identity safer. How can this be? Well, logging into your accounts regularly let’s you possibly catch a fraud early. Most people who make a habit of checking their account balances daily or weekly are more likely to notice a discrepancy earlier than those people who never check and just wait for their monthly statement. Monthly statements could be missing the most recent two weeks of transactions by the time you get them in the mail. Also, let’s be honest, the USPS is not the most reliable at times and mail does get lost or delivered to the wrong address on occasion. If you have your statements delivered to you electronically then there is much less error in the delivery. Plus, by eliminating the paper statements you are less likely to thoughtlessly toss them in the trash without shredding them.

Online bill pay eliminates the need for sending checks through the mail every month to pay bills. Think about all the bills that you pay each month. If you are paying by check and mailing in your payment every month you are increasing your chances of lost mail. Also, think about the amount of information on your checks. Often they have your address, phone number, account number, bank address and your signature. This gives a possible thief a lot of information that they normally are not able to get.

Here are some simple ways to lower your risk of identity theft:

• Sign up for online delivery of your statements
• Participate in online bill paying
• Buy a small shredder and shred your mail
• Do not reply to emails from your banks or financial institutions if they ask for personal information because it is likely a “phishing” scam (they already have your info so why would they ask for it)
• Review your credit report at least annually at www.annualcreditreport.com
• Monitor your accounts online and call your bank or financial institution if anything looks suspicious
• If you have been defrauded report it to the Federal Trade Commission immediately at ftc.gov/idtheft

Remember, you can not make your identity 100% safe but you can definitely help your odds by being somewhat cautious.

Source: Javelin Strategy and Research “2009 Identity Fraud Survey Report”

This post originally appears here.

Matthew B. Brock, CFP®
Senior Partner, Owner
Divergent Planning, LLC

Securities and Investment Advisory Services Offered through H. Beck, Inc., Member FINRA, SIPC.H. Beck Inc. and Divergent Planning are not affiliated.