ATMs, the internet and credit cards make transactions of all kinds faster and more convenient. But how much of our clients’ private information can fall into the wrong hands in the name of convenience? According to the most recent numbers from the Federal Trade Commission (FTC), approximately 10 million Americans were victims of some sort of identity theft in the last year.
Identity theft victims spend anywhere between $500 and $1,200 out of their own pockets to clear their name.
Unfortunately, many of those victims had no idea they had been victimized until creditors started calling and demanding payment. Their credit rating had already been decimated, or worse, their bank accounts depleted. Identity theft is often regarded as a “silent crime,” because it can occur without its victims’ knowledge.
It’s important for advisors to make their clients aware of identity theft, by educating them through newsletters, a seminar or even a special meeting. Let clients know that anyone can be a victim of this crime regardless of their socio-economic background or accumulated wealth, and provide them with some solid tips on preventing identity theft. Here are some bullet points to pass on:
- Watch your credit and check it regularly.
- Be stingy with personal information.
- Don’t carry ID that contains sensitive data, including your Social Security card.
- Shred and destroy documents with personal information before you discard them.
- Keep watch when waiters, clerks and others take your card for transactions.
- Beware of small, privately owned ATMs in convenience stores and other locations; they have been used to steal bank card numbers and passwords.
- Guard against “shoulder surfers”—avoid making sensitive transactions over your cell phone or in public areas.
- Install firewalls and virus detection software on your computer.
- Deal only with reputable websites.
If identity theft does occur, it is important to catch the problem quickly. Stress to your clients the importance of regular credit rating checks. With early detection your clients can avoid hours of legal entanglements and possibly tens of thousands of dollars.
According to the FTC, identity theft victims spend anywhere between $500 and $1,200 out of their own pockets to clear their name. However, no out-of-pocket expenses were incurred by 67 percent of those who discovered their identity had been stolen within five months of the theft. Victims can spend 30-60 hours just untangling the red tape necessary to resolve the problem and restore their credit. But 76 percent of victims who discovered the misuse of their information within one month spent fewer than 10 hours resolving their problems.
If the worst happens
Even with the proper safeguards your clients can have their identity stolen. If the worst happens, the FTC recommends they take the following actions:
- They should contact the fraud department of the three major credit bureaus (Equifax, Experian and Trans Union) to place a fraud alert on their credit files. This will require creditors to contact them before opening new accounts or making changes to their existing accounts.
- Your clients should close the accounts that they know or believe have been stolen or are fraudulent. They should use the FTC’s ID Theft Affidavit when disputing unauthorized accounts.
- They should file a police report and submit a copy of that report to their creditors.
- Finally, they should file a complaint with the FTC, which maintains a database of identity-theft cases for law enforcement. Please note that this does not take the place of filing a report with local law enforcement.
Clients can also contact their banks, credit cards and any other creditors to let them know their identity has been stolen. Often these creditors have their own set of procedures for identity-theft cases. Putting these procedures in place immediately can save clients time and money.
Making your clients aware of identity theft and briefing them on methods of prevention and detection will position you as a trusted financial advisor. Being on hand if their identity is stolen and helping them through the financial mess can only help solidify this position. Therefore it is vital for advisors to be educated on this issue and have the necessary tools at hand if a client becomes the victim of the silent crime.
For more information on identity theft, visit the FTC’s central website on identity theft at www.consumer.gov/idtheft/.
Don Bennett is an independent associate for Prepaid Legal Services Inc., which provides identity theft protection and restoration. He can be contacted through his website, www.prepaidlegal.com/idt/donjanbennett.