This is the first in the Smarter.Loans series of articles on the topic of a real 21st century threat to credit and finances; namely, identity theft. Night and day, news reports worldwide broadcast the devastating consequences of this crime such as bad credit, lost time and money, stress and much more.
According to one of the leading credit reporting agencies, there are 19 new identity theft victims every minute. Each person whose identity has been stolen faces financial hardship on some level.
Part one of this series covers these subjects:
In early 2018, a major research company released a study on identity fraud which determined that in 2017 over 16 million people in the United States had their identity stolen, with approximately $16 billion lost. Unfortunately, this financial crime is still growing.
Like its name implies, identity theft involves stealing a personal profile to be used by an imposter. The fraudster then opens a line of credit, personal loan, auto loan, or other credit in the victim’s name. The intent is to run up as much debt as possible with no intention to pay.
In order to commit identity theft, criminals need certain private information to apply for credit that is usually only known by the consumer, such as:
With some or all of this data, the opportunistic criminal can wreak havoc upon an unsuspecting person’s finances. Even worse, it can be used in criminal activity which can result in false criminal charges against the victim. The information is also utilized to drain bank accounts.
Sometimes information is uncovered by accident (due to computer failure, for instance) but not used illegally. And many Good Samaritans have returned cash or credit cards which have been dropped unknowingly. But often, people lose their purse or wallet and it is found by a thief who uses what it contains. Theft also occurs when identifying information is revealed and then used without authorization due to a data breach.
Other ways identities are stolen:
Highjacked identities and data breaches of all shapes and sizes have become more rampant recently. As soon as new security measures are put in place, criminals find ways to get around them. Increased consumer awareness, coupled with preventive measures, serve to lessen the blows in some cases. Watching for signs of a security breach is always a good idea.
It has become commonplace for people to get notices from credit card companies, banks, or stores that their customers’ personal data has been compromised. The company may offer free credit monitoring for a year. Most banks will shut down a debit card and issue a new one if it suspects the customer’s account has been compromised. Usually, the media also blasts these incidents everywhere to warn the public.
Then there are instances when a person has no idea that a perpetrator has been digging around in their credit card accounts, taking out personal loans in their name or other illegal mischief until it is far too late. There are signs to look out for that can serve as a heads-up that something is terribly wrong.
These are just some indications that identity theft has taken place. It is extremely important for consumers to be watchful at all times. Yet no matter how vigilant or careful, such disastrous crimes can and do happen.
Identity theft can literally turn a person’s life upside down. For example, when anyone applies for credit, the inquiry can reduce a credit score by up to 10 points or more. Identity thieves typically apply for as much credit as possible before they are caught, which causes the victim’s credit to plummet until the issue is resolved. For individuals unaware of a breach, the missed payments on the illegally opened accounts definitely contribute to a bad credit report. Another negative consequence is the large amount of debt which also severely damages credit. The list is endless; and the financial impact doesn’t end there.
As if the headache and hassle of repairing credit isn’t enough, finances are affected in other ways like:
These are just a few things that happen when identity is violated. There are actions that a victim can take to stop the offender from causing further damage so they can begin to fix the damage.
Anyone who discovers that their identity has been stolen should immediately start on the road to financial recovery. Some of the process takes time; other steps provide immediate relief. In time, though, things will turn around.
As soon as possible, individuals should:
Victims should take advantage of any and all resources to help them get relief from their financial woes. Although they can expect to spend many frustrating hours untangling the mess that identity theft creates, the process can save many years of ruined credit and financial rejection which happened through no fault of their own.