Identity Theft: Who's Fault Is It?

Sep 28, 2011

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Recently a close friend had a life changing event. He went to purchase a car and was denied a loan due to poor credit. After he investigated the cause of the poor credit he found out that someone else had been using his identity for over a year. This person had taken out loans and then never paid back a cent, all in my friend's name. According to the credit report he had defaulted on nearly 30 thousand dollars of loans.

I found out from my friend that a little common sense and effort on his part could have helped him avoid this entire scenario. Together we identified 5 things that we felt would have helped my friend mitigate the effects or possibly stop the identity theft he experienced. Most of these are just common sense.

The 5 simple things we came up with were...

  1. Use your credit card before your debit: The monitoring and protection associated with a credit card are much better than that of a debit card. I frequently get calls from my credit card company that have stopped a charge because it was suspicious, but my bank has no such service.  The liability with a credit card is usually limited to a small sum, but debit cards can have an unlimited or much higher liability amount.
  2. Actively monitor your accounts: I cannot tell you how many people I know that don't look at the bank statements except to check the total available balance. I have close friends that pay their credit card bill every month without reviewing any of the charges. You can't know there is an issue if you don't look at your accounts. 
  3. Look at your credit reports: Most people only check their credit when it's time to ask for a loan. This is a scary way to find out there is an issue. Checking our credit report is incredibly easy and gets easier and cheaper all the time. I suggest you check your credit report 3-4 times a year at least.
  4. Don't shout out your private info: I am still shocked when I am standing in the line at the grocery store and I hear someone reading their credit card info out loud over their phone to another person. This is a simple suggestion: Be cautious and discreet when giving out your personal information. Look around before you start giving out info on the phone, look over your shoulder before you type in your debit card code. Be smart about how and where you share info.

    Here's a concept for you: If your bank account secret question and answer is your birthday, and your birthday is published on your Facebook page how secure is your bank account?
  5. If someone asks you for your info, question why and make sure it's a legit reason: Although it is still considered theft, I have a hard time feeling bad for the person who gives out their SSN, credit card info and other personal details to the anonymous caller  who is just calling to verify your bank account info. I was once asked at the Doctors office for my SSN, when I asked why they needed this info. The receptionist told me that she “didn't really need it. I then responded “then I won't be sharing it with you.

I will be honest, I don't think these steps are the end all solution for protecting your identity, but I think they would be a good step in the right direction.  Do you have any other ideas?