An elderly professional couple recently applied for a credit card, in this case from a major oil company, and, to their great surprise, the request was turned down. They have a net worth of well over a million dollars, have always paid their bills on time, and couldn’t imagine a reason for the rejection. Then came a follow-up letter from one of the credit bureaus indicating that the bureau had reported to the oil company a judgment filed against the Maryland couple by SBC Communications in Michigan six years earlier for unpaid bills totaling around $600.
Luckily, the couple had recently become clients of Peter Winer, a planner with Winer & Jones in Lutherville, Maryland, who makes identity theft a major topic of conversation with every client. “It’s part of my normal process,” he says. “I put together an ‘identity theft kit’ that I provide to every client.” Winer points out that his kit is composed strictly of material in the public domain and available from the Federal Trade Commission and other sources.
Once Winer was informed of the situation with the credit card, he jumped into action. “I got my identity theft kit out, and filled out the letters to all three credit bureaus. They sent them in. We filled out the identity theft affidavits. We filed police reports and we were able to get most of it resolved. They’re still not able to get the credit card. This is six months later and I don’t think it’s been totally removed from their credit report yet. This is the only case I’ve had where someone was a victim, but with most of my clients I try to do everything we can for prevention.”
Building awareness of the problem and taking a proactive approach to confronting it should be part of every advisor’s client service. Winer’s approach includes discussing his three-part identity theft kit with each client. The first part, “prevention and detection,” covers what Winer sees as the two most important issues: shredding documents and having a current credit report. “The second section is about what to do if you’re a victim. Mostly I skim over that with my clients and say, ‘Hopefully we’ll never need this, but it’s here if you do,’” Winer explains. The final component is a tracking report for credit bureau requests. Under one of the provisions of the Fair and Accurate Credit Transactions Act of 2003, signed into law by President Bush last year, as of December 1, 2004, everyone is entitled to a free credit report from each of the three major credit bureaus every year. Winer’s tracking report is a spreadsheet that allows clients to track when they request a credit report and when it is received, so they can follow up a year later and get another copy.
What Your Peers Are Reading
Among his new clients, Winer says awareness of the problem of identity theft is high. “The big problem is they just don’t know what to do about it. They hear about it, they read about it, they see the Citibank commercials [humorous ones highlighting the issue]. Some of them have shredders, but beyond that, it’s sort of this nebulous threat that’s out there, but most people aren’t sure just what to do.”
A Fast-Growing Crime
By now most Americans are aware that identity theft is a problem, but unless they or someone close to them has actually experienced it, they probably don’t know how big a problem. According to the Federal Trade Commission, there were 9.9 million victims of identity theft in 2002, the most recent year for which figures are available, with a cost to businesses and consumers of almost $53 billion. The FTC also notes that on average it takes a full year before the victim realizes their identity has been lifted. According to the FBI, identity theft is one of the fastest growing crimes on the criminal landscape. A recent study by the Identity Theft Resource Center, a national non-profit organization based in San Diego, estimates that the average identity theft case costs the victim $16,000 in cash and forces them to miss more than 600 hours of work as they attempt to reestablish their names. On its Web site (www.idtheftcenter.org), the ITRC breaks down identity theft into four types:
Financial Identity Theft–which usually involves using the victim’s name and Social Security number to apply for telephone service, credit cards and loans, or to lease cars or apartments.
Criminal Identity Theft–where the criminal will provide the victim’s personal information when stopped by law enforcement officers. Any penalties, and the eventual arrest warrant, will be in the name of the person named in the citation.
Identity Cloning–where an impostor uses the victim’s personal information and good credit history to establish a new life.
Business or Commercial Identity Theft–where a criminal opens checking accounts or credit cards in the name of a targeted business, which remains blissfully unaware until the collection notices start arriving.
Like so many other aspects of modern life, identity theft has gone high tech. Just about anyone who has an e-mail account has probably been offered bait by some potential scam artist on a “phishing” expedition. Rather than mining the ocean, these phishers use e-mail and the Internet to cast their nets far and wide. The bait might be an offer of anywhere from several hundred thousand to a few million dollars for letting a Nigerian you’ve never met transfer a huge sum of money he can’t get out of the country into your bank account. Lately, it’s more likely to be an e-mail or pop-up message seemingly from a legitimate business or organization, such as this recently received e-mail supposedly sent from Citibank, with the subject “Identity Theft Solutions.”
The message, with Citibank logo, reads:
“Dear Citibank Customer:
Recently there have been a large number of identity theft attempts targeting Citibank customers. In order to safeguard your account, we require that you confirm your banking details.