Identity Theft

Should you worry about identity theft?

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As you continue to invest your money and increase your net worth, it is critical to protect your capital against all possible threats. Identity theft is on the rise and it is costing Americans billions of dollars. As of 2013, 7% of US households were affected by identity theft each year and that number has been rising for years. Millions of Americans are discovering that they are thousands of dollars in debt for goods and services that they have never purchased. Others are shocked to find out that their tax refunds have been claimed by an impostor, that their airline miles have been stolen, or that they are getting billed for someone else’s medical bills. This nightmarish scenario can take months, sometimes years, to be resolved and can ruin a person’s credit. If you Google the words “identity theft” and then click on “News”, you will likely find dozens of articles about recent data breaches. In fact, given the number of database breaches in recent years, it would be smart to assume that your personal information has already been compromised.

It is important to understand that identity theft takes on many different forms and it can affect more than your finances (as if that wasn’t bad enough!). In December of 2011, Stratfor, an American private intelligence company, was hacked by the group known as “Anonymous”. The hackers stole thousands of credit card numbers and emails and published many of them on WikiLeaks’ website for anyone to read. Those emails can now be found via a simple Google search. My advice is to be mindful of any information that you send or store in any format on the Internet, be it email, voice messages, or anything that you save on “the cloud”. If any of those databases are compromised at any point and the hackers decide to publish the data, there is little you can do to control or remove the information once it is on the Internet. If you ever fall for the illusion that your data is safe, just think of the thousands of customers of Ashley Madison’s adultery-facilitating website who were recently caught, shall we say, with their pants down when hackers published their personal information in a searchable database. This is a site that supposedly specializes in keeping people’s secrets! The key is to remember that any data that is stored on a device connected to the Internet could potentially be compromised and/or published.

Going back to the financial aspect of identity theft, if your personal information is ever stolen, it will likely be broken down into individual bits of data which will then be sold as quickly as possible to identity thieves via underground websites. According to Bankrate.com, your credit card number is only worth between $4 and $7 on the black market. Your Social Security number, which is one of the most important and sensitive numbers in your life, is worth about $30 to a thief, while your date of birth is only worth about $11. These are small prices for identity thieves to pay but they can be devastating to you as an individual.

So how do you protect yourself against these types of breaches? Should you sign up for a credit monitoring service, such as LifeLock? It is Inveduco’s position that credit monitoring companies only offer limited protection against identity theft and they mainly alert customers once their identity has already been stolen. In the case of LifeLock, the most well-known identity monitoring company, their CEO’s identity was stolen numerous times and the company was fined $12 million for deceptive marketing.

While there is no foolproof way of securing your identity, the most powerful weapon available to consumers today is what is known as a credit freeze. In short, a credit freeze is a method that prevents your credit information from being released to businesses or financial institutions. Although it costs money to freeze your credit report, this method is cheaper than paying for credit monitoring services in the long run.

The next article will list step-by-step instructions on how to place a credit freeze, as well as the pros and cons of this method. We will also look at alternative methods of protecting your identity.

 

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