Keeping Up with Fraud

Have you ever noticed that when you build a 10-foot security fence, thieves find an 11-foot ladder? Unfortunately, in recent years there has been a rush on identity theft: someone stealing your personal information and obtaining credit cards, cell phones and loans in your name, and maybe cleaning out your bank account. There have been numerous recent reports that credit card processing companies have experienced security breaches and millions of confidential records stolen. The ultimate result of such activity is stolen identities, ruined credit reports and untold misery as innocent citizens unravel the mess made of their lives. In the meantime, credit reporting bureaus are slow to make amends and obtaining needed new credit is virtually impossible.

The general consensus is that the escalating struggle between commerce and criminality will not be resolved quickly. Organized crime rings have boosted their sophistication in using Internet and "crimeware" programs to circumvent the defenses that have been erected against them. These crime rings are organized, have done their homework and remain a few steps ahead of the business community. We're not talking about teenage "hackers": identity theft is now the province of smart, relentless, organized criminals intent on gaining access to personal information to obtain credit cards and access to bank accounts to steal assets. The information age is not likely to reverse itself with computers, ATMs and credit cards becoming things of the past: we can anticipate heightened identity theft in the future. Between 2001 and 2004, identity theft complaints to the Federal Trade Commission raced upward by 186%. What can we do?

Start by acknowledging that identity theft is a problem that merits our concern and precautions are warranted. Obvious things like shredding sensitive documents, not providing vital information to unauthorized people, protecting computers with anti-virus, spyware, and firewalls, and monitoring our credit reporting activity must become routine. While the liability limit of a stolen credit card is only $50, the resulting impact on a credit rating can have shattering effect on the ability to obtain needed credit at a reasonable interest rate, insurance at the standard rate or even being considered for a new job. Additionally, negative information generated by identity theft can linger in a credit file for years. The theft of a Social Security number and enough other personal information to obtain credit cards, loans, or divert assets is a more serious matter that cannot be corrected without a commitment of substantial resources - financial and otherwise. In fact, the average identity theft victim in 2004 spent about 330 hours over a six to nine month period to mend the damages. Based on average wages, this translates into $8,000 in lost or potential income - not counting payment for bogus charges that creditors refused to forgive or extra interest paid due to a diminished credit score. In many cases the victim did not discover their identity theft for months, and in some cases years, after the fraud.

The best defense against identity theft is to monitor your credit faithfully. Early detection is the key, and the best way to accomplish this is to hire a service to watch over your name and credit report daily. Before you dismiss this as too expensive, be aware that identity theft monitoring comes free with some financial products offered by insurance companies, or at very low cost from banks. Ask your financial advisor if there is a free service to protect you against identity theft. While you are now entitled under federal law to a free credit report from each of the national credit reporting agencies, you have to take the initiative to obtain and then understand what they have provided. The identity service that most likely can be obtained free through your financial advisor will provide all the credit reporting agencies information in one easy-to-read document. In addition, you get daily credit activity monitoring from all three national credit reporting agencies; notification by e-mail or regular mail of certain activity that occurs in your credit file; and automatic quarterly notification, even if nothing changes in your credit file. Daily monitoring will notify you of any new inquiries, derogatory information, accounts, public records, or change of address that have been added to your credit files as reported by any of the major credit reporting agencies. If no information has been added or changed, you will still receive quarterly notification.

Whether your financial advisor provides identity theft protection or you obtain it on your own, this ounce of prevention is worth a pound of cure. If you haven't already, I encourage you to take steps now to protect your identity. More information is available at www.idtheftcenter.org.

Summers Asset Management Group
Russell D. Summers, CAC
Certified Annuity Consultant
http://seniortaxsavings.retirerx.com/
727-678-2778

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