We saw this fine article on AARP.Org.
Scams Unmasked!
Identity thieves have more tricks than ever—and so should you. Here are the best and latest ways to keep crooks from stealing your name and your money (adapted from Scam-Proof Your Life)
Spreading the word on how to sidestep scams is my business. And sometimes I get to practice what I preach.
I had just finished speaking with one fraud victim—a retired salesperson from Georgia bilked out of $4,500 in a bogus work-at-home scheme—when my telephone rang.
“Hello,” said a pleasant voice. “I’m calling from your mortgage company. And I see from our records that you may qualify for a lower loan rate.”
Interestingly, she did not mention the name of the company that gets my monthly mortgage check. Even more telling was the fact that I had refinanced just two months earlier—and mortgage interest rates had climbed since then.
“Really?” I replied, glancing at the caller ID gizmo on my desk. “Tell me more.” The incoming call was marked private. It was about 8:00 in the evening, a time when most mortgage-loan officers are home digesting dinner.
“Well, sir,” she said, “based on your excellent credit history, I think we can save you hundreds of dollars a month with our much more attractive rate.”
“Is that right?” I encouraged her. “What’s the rate?”
“Before I can answer,” she replied, “I just need to verify some information—your Social Security number and bank account numbers—to make sure they match our records and that you really qualify for this great mortgage rate.”
Hmm. “Do you know my name?” I asked her, since she hadn’t used it yet.
She gave the one listed in the phone book—which is not Kirchheimer. To spot telemarketers, who continue to phone my home despite my enrollment in the National Do Not Call Registry, I use a pseudonym as my white pages listing (having an unlisted number costs extra).
“Seriously,” I said, “do you expect me to fall for this?”
She gave a harsh little laugh. “You’d be amazed how many people do,” she sneered. And then she hung up.
Actually, I wouldn’t be amazed—and neither should you. Last year almost 9 million Americans were robbed of private financial information, and half didn’t know how the damage was done—their credit cards maxed out, bank accounts cleaned out, or credit ratings sunk after criminals took out loans in their names.
Yes, the national epidemic of identity theft is still with us, courtesy of telephone and email scams, card “skimming” at cash machines and merchants, wayward checks, stolen wallets, and wholesale downloading of company data.
AARP: Access to Info About Financial Planning for People Over 50
AARP provides information about financial planning and consumer protection. Members save on insurance, travel and entertainment. Joining online is fast, easy and only $12.50/year. Join or renew online today!The biggest source of U.S. consumer fraud, identity theft takes an enormous toll. Criminals posing as other people last year ripped off a record $56.6 billion in cash, goods, and services. While two thirds of victims had no out-of-pocket expense (because banks and credit card companies seldom ask victims to cover any charges), for about 3 million folks the average cost of repairing their credit was nearly $1,200. And for all victims the average time to set the record straight was 40 hours.
Fortunately, the growth of ID theft seems to be slowing. After cases reported to the Federal Trade Commission (FTC) nearly tripled from 2001 through 2004, last year’s increase was just 3 percent. And the biggest annual survey on the subject, by the Better Business Bureau and Javelin Strategy & Research, showed the number of victims declined slightly for a second consecutive year.
But that doesn’t mean you can let down your guard. On the contrary, with consumers getting wise to the ways of identity thieves and altering habits to thwart them, you can bet the scamsters will do their best to sabotage your basic protective measures. Which is why, in addition to the time-tested actions everyone should take, I recommend an additional layer of safety that even the wiliest crook will find tough to crack.
Your Documents
Good Move: Lighten the Wallet The most frequent source of information for ID thieves is you. According to the Javelin survey, among victims who knew how their numbers were pilfered, 30 percent of frauds began with a lost or stolen wallet, checkbook, or credit card. So rule number one is “Leave home without it.” Don’t carry a crib sheet with PIN codes for your plastic; don’t carry your Social Security card. And that check you tote everywhere “just in case”? It’s a needless risk. One credit card will pull you through most emergencies—and is easy to cancel in case of theft.
Better Move: Lock ‘Em Up Here’s a statistic that may surprise you: one in seven cases of ID theft traced to a source turns up a family member or other trusted associate the victim shouldn’t have trusted. So it’s no use leaving things home if they’re vulnerable there, too. Your checkbook, cards, and any important papers (such as mortgage, insurance, and investment records) should be under lock and key wherever they are. A locking metal file cabinet or desk drawer may be the answer.
Your Credit
Good Move: Monitor All Accounts Though some banks alert you to unusual activity on a credit card, it’s more likely you’ll detect a crime before your bank does. In 2005, Javelin found, frauds first noticed by victims were uncovered a month sooner than those financial institutions fingered. Besides regularly checking credit card and bank statements, it’s good to scan your credit history for inquiries on existing accounts and applications for new loans. You can get one free credit history annually from each of the three major bureaus (Experian, Equifax, and TransUnion) at www.annualcreditreport.com. By rotating your requests, you can receive a report every four months.
For a monthly fee you can also get credit-monitoring services to notify you of activity. These services mushroomed in recent years as identity theft reached critical mass, but some take a week or longer to alert you. Sift through the competition until you find one with daily alerts via email.
Better Move: Freeze Access Recent laws in eight states let you freeze access to your credit file to keep anyone—legit or not—from reviewing your standing or opening loans in your name. A burgeoning trend, freeze laws have been under consideration in at least 18 other states. For consumers who don’t plan to apply for new credit anytime soon, it’s a mighty shield, and convenient, too. The rest of us can benefit with just a few extra steps.
Freezes that used to be applied by credit bureaus only after ID thieves struck are available free by law to any citizen in Colorado (starting in July) and New Jersey. Consumers in California, Connecticut, Louisiana, Maine, Nevada, and North Carolina can stop credit tampering cold for a small fee—generally up to $10. And for another $5 or $10 the same eight states allow a credit thaw when you need a new loan. Freezes are also available by law to ID-theft victims in Illinois, Texas, Vermont, and Washington.
Your Trash
Good Move: Shred the Evidence Rather than merely folding, spindling, or mutilating your unwanted mail, feed anything bearing sensitive information into a crosscut (or “confetti”) shredder. This makes it virtually impossible for garbage divers to read your data or use credit card “convenience checks” and new offers. While assiduous tearing by hand can do the job, $75 or less will get you a decent shredder. Heavier-duty models run to $200.
To make sure mail isn’t diverted before it reaches the shredder, get your letters delivered to a secure location. A street-side mailbox doesn’t make the grade. Police say these boxes are favored targets of ID thieves looking for checks to steal. A box by your door is a safety improvement; a mail slot into the house is better still. For even more security, consider renting a box at the local post office.
Better Move: Opt Out of Offers Spend less time sorting and shredding by opting out of solicitations for new credit cards, mortgages, or other loans. To eliminate future trash at its source, call the credit bureaus’ dedicated line at 888-567-8688 from your home telephone or register at www.optoutprescreen.com.
If you call, an automated voice-response system will request your name, telephone number, and Social Security number; don’t worry, the credit bureau has it already as part of your credit history. You can opt out for five years or forever. (And if you haven’t done so already, by all means register your phone numbers with the National Do Not Call Registry maintained by the FTC at 888-382-1222 or www.donotcall.gov. Unless they’re from charities, political groups, surveys, or companies with which you have ties, telemarketers are barred from calling registered numbers. So you’ll know any call you do get is suspect.)
Your Checks
Good Move: Frustrate Forgers All it takes to empty your bank account, says fraud fighter Frank W. Abagnale (the former con artist portrayed by Leonardo DiCaprio in the 2002 movie Catch Me If You Can) is a signed check and a pan of acetone, the active ingredient in nail polish remover.
Here’s the scam: a crook tapes over your signature front and back, then soaks the check in acetone to wash away everything but the printer’s ink and your John Hancock. Dried and carefully peeled, it’s—presto!—a blank check signed by you. And thanks to “bounce protection” from banks, the scamster can even overdraw your account.
Abagnale’s cure? He tested major pen brands as part of his second career advising banks and law enforcement on how to fight check fraud and found only Uni-ball gel pens resist washing; now the pens carry his endorsement.
Better Move: Use a Blanker Check Even tamperproof checks offer thieves valuable tidbits—various account numbers—if you obligingly add them at the payee’s behest. “A check can be handled by dozens of people from the payee’s company, its bank, your bank, and various vendors who process checks,” Abagnale notes.
The solution: skip the numbers or just write the last few. “If you return that payment stub—and you always should—there’s no reason to write your account number,” he says. Crooks can use the information to acquire cell phones and open utility accounts at other addresses, helping them establish an entire separate identity with your name.
Your printed checks can also say less. When you order a new batch, have just your initials and last name printed, and keep phone numbers off them altogether. Order checks from your bank, not from independent vendors, and seek out security features such as paper that acetone stains.
Your Monthly Bills
Good Move: Mail Safe As you’ve probably gathered by now, there’s a lot not to like about checks. Mari J. Frank, a California attorney who became an identity-theft expert after being victimized herself, suggests you stop writing checks altogether. Even if you don’t, drop bill payments at a post office or U.S. Postal Service mailbox. That’s safer than just putting the flag up on your own box or leaving letters in an open mail bin at your workplace.
Better Move: Bank Online Here’s another, possibly stronger, incentive for reducing your dependence on checks: they’re on their way out. More than a third of U.S. households with bank accounts bank online, and because paperless transactions are cheaper, expect banks to do everything in their power to launch your accounts into cyberspace, too. The benefits aren’t just the savings on postage, the ease, and the convenience. Financial services are adding more security—and protections from liability for customers in the case of fraud—as electronic payments of all kinds become more common.
Your Computer
Good Move: Scrub That Software Some measures against online ID thieves are high tech and some are common sense. All are best applied early and often. Every home computer should have security software that updates regularly; every user needs to resist the bait from con artists “phishing” for suckers via email.
The unseen danger comes from “spyware,” which sneaks onto your computer to track your actions online. One kind, known as adware, merely gauges your interests to help websites predict what advertising might grab your attention. A more sinister sort of spyware monitors your every keystroke and reports back to a waiting attacker.
How does spyware infiltrate your computer? By hiding inside a downloaded program. It can even worm its way in from an email you open or Web link you click on.
“You should think twice about installing freebie software, no matter how enticing it appears,” says Doug Tygar, a professor of computer science at the University of California, Berkeley, “and scan your computer once a week or more with a good anti-spyware program.”
Tygar recommends Ad-Aware, itself a free download—but one you can trust. In an impromptu test I conducted, Ad-Aware quarantined more than ten intruders that had escaped the notice of a brand-name $50 anti-spyware program.
To avoid helping crooks invade your computer, remember that messages from strangers always pose a risk—and that strangers sometimes pose as friends. Real banks never send emails asking for your account information. Nor will an Internet service provider. Rather than click on a Web link within email, type the address yourself or link to it from a search engine. Secure sites display the padlock icon in the frame surrounding the Web page, not within it, and have addresses preceded by https—the s stands for “secure.”
Better Move: Evade and Escape The most popular Web browser is Microsoft’s Internet Explorer, which comes installed on most personal computers along with Microsoft’s Windows operating system. Small wonder, then, that most viruses and spyware are geared to infiltrate it. One way of ducking the scamsters, Tygar suggests, is using other browsers such as Firefox or Opera. (Download these for free at www.getfirefox.com and www.opera.com.)
Another maneuver that leaves thieves in the lurch is to get a second (and sometimes third) free email account from MSN’s Hotmail, Yahoo!’s Mail, or Google’s Gmail so you can segregate your online shopping from banking and private correspondence. And don’t use your name or a familiar word as part of any address. Scramble some letters and numbers instead. These measures will make it a lot harder for phishers to find you by chance and lure you to scam websites.
Your Pass Codes
Good Move: Guard the Cards About 9 percent of traceable ID thefts in 2004 occurred during transactions offline, the cyberspace term for being out and about. Perhaps you sent a credit card away with your waiter, who skimmed its numbers in a magnetic reader, noted the security code on the back, and duplicated the plastic later. Or maybe the skimmer was installed over the card slot of a cash machine. Or a perp behind you in line peeked at your card—that’s known as shoulder surfing.
Though I can tell you to never let a credit card out of your sight, paranoia has its own costs to your quality of life. While it’s good to be alert to unnecessary risks, let your liability be your guide. Credit (though not debit) card issuers must by law pick up any fraud tab over $50; monitoring your monthly bill will limit any damage.
At cash machines the basic defense is physical—obstruct the view. When possible, go inside the bank branch to use the automated tellers—or the human ones. To reduce the hazard posed by a pirated cash card, call your bank and request a per-day limit on ATM withdrawals from your accounts.
Better Move: Try Disguises Two can play at switching identities. While you can’t slough off your Social Security number, you can and should obscure other facts, because using your real birth date as a PIN code, or reciting your mother’s maiden name to every bank, invites trouble. Thieves can ferret out public records online, notes ID-theft expert Mari Frank. Instead, she says, “fabricate a maiden name and pick a bogus birthday—ones you can easily remember, of course.”
The same goes for your listing in the telephone directory (it can be changed with a quick call to your phone carrier). Just as dropping your name from email addresses helps you fly below thieves’ radar, a listing under a name other than your own allows you to spot junk mail and telemarketing calls in a snap—as I did with the “mortgage lender” who had my name wrong when she phoned.
Sometimes a good offense really is the best defense.
Read more about Sid Kirchheimer’s book, Scam-Proof Your Life
As we noted before, we at Corra, found this to be a wonderful article and very useful to all who follow Mr. Kircheimer’s advice. You could do a lot worse with a few hours than reading his book. Even as a smaller company, our experience with identity theft and the subsequent spin offs would tend to corroborate the startling figures cited in this article.
Anyone who is skeptical about the frequency of identity theft and the damage it does not only to one’s credit and finances and credit, but to one’s psyche as well is being awfully foolish. While the article reports the average time it takes to repair the damage caused by identity theft at forty hours, we would venture that quite often it requires a lot more time than that. We seriously doubt that’s what you want to be doing with your life–repairing the damage that others have caused you through identity theft.
Since identity theft most often begins with a stolen social security number and knowleddge of your date of birth, we urge you to run periodic credit checks and social security traces with a company like Corra. A social security trace will not only validate your number, which should be no surprise, but will also show what other names are associated with your number. This quite often is a surprise, a very major surprise at that. It is gut wrenching to find anywhere from one to four strangers attached to your social security number.
So run a social security trace. If you are allowing anyone near your financial material, lists of your assets, proprietary property, etc., it may also pay to run a criminal background check on the service workers who enter your house. We always advise background checks on people you might be dating. Online predators are responsible for a great deal of identity theft.
There is no need to be paranoid. There is, however, a need to be careful
You have one identity. Keep it for youself.
