Identity Theft, Part I

According to the U.S. Department of Justice, in 2016 a whopping 26 million Americans 16 or older reported they had been victims of identity theft during the prior 12 months. The good news is 88 percent had almost no out-of-pocket losses. Still, behind every number is a real person with a real story, and that’s where we begin.

Consider the following true story. A woman receives a bill from a hospital, requesting payment for a surgical procedure which included an amputation of her left foot. The problem? She never had the surgery, as demonstrated by the fact that both her feet were intact.

It’s kind of funny, and would seem this is an easy fix, right? Wrong. Resolutions – especially non-financial ones – don’t come quickly when identity theft is involved. In this case it took hefty payments to a lawyer and over a year of mental stress to finally get the mess sorted out. Her medical files continue to be comingled with the thief’s records, across the medical network universe. This leaves the victim’s personal health and security at risk. More serious issues such as the creation of erroneous medical files like inaccuracies in her blood type, history of drug or alcohol abuse, and wrong diagnosis are now linked to the victim’s medical records. Unfortunately, victims of medical identity theft are not extended the same rights as victims of financial identity theft, which adds the complexity for a timely resolution.

Jim Lapiedra, a colleague of mine, recently told this story during an educational talk for financial advisors I attended. Lapiedra is an experienced ID theft investigator, information security professional, retired NYPD deputy inspector, and author of Identity Lockdown, Your Step-By -Step Guide to Identity Theft Protection.

Another popular scam he shared with us is tax fraud. According to the IRS, the scam usually occurs when, “an identity thief uses a legitimate taxpayer’s identity to file a fraudulent tax return and claim a refund. Generally, the identity thief will use a stolen SSN to file a forged tax return and attempt to get a fraudulent refund early in the filing season.” Paperless e-filing is the friend of the fraudster. At the meeting, a senior manager confessed he had such a problem, so this stuff happens.

Perhaps the scariest of cases, although rare, is when you are arrested for a crime you didn’t commit. The thief who commits the crime uses your identity when being arrested. When he doesn’t show up for sentencing, there is a warrant out for “your arrest.” You could be stopped for a speeding ticket, and the officer is then alerted that you have an outstanding warrant. This could be a very ugly and embarrassing situation, again taking its toll on you as you try to get it resolved.

After some research, I quickly came to realize, that ultimately, the 10 percent of Americans who have been victimized will not owe money, but there’s no reason to be cavalier about the risk. It’s the hundreds or thousands of hours to convince people that don’t care about you, to help you clean up the problem.

Loss of peace of mind and a sense of helplessness and vulnerability often lingers far longer than the resolution. Remember, from the creditor’s perspective, you’re guilty until you prove yourself innocent.

By some statistics, children may be four times more likely to become an identity theft victim than adults. How many of you have received a pre-approved credit card offer in the mail for your 3-year-old and laughed? The thieves know how to obtain the social security number of the child and can manage to stitch enough of the identity together to do a lot of damage to the child’s credit history.

Often, it goes undetected until a college or new employer reviews the credit report. Thieves have a variety of ways for getting the information like hacking into your employment records, raiding your home mail box, or mining the information on social media. Simple common sense steps like buying a safe, using a shredder, and cautious social media friending should be a no-brainer.

And why does it matter to get this corrected? Your credit score is used by any institution that lends money like banks, credit card companies, and mortgage lenders. A poor credit score may impact your mortgage interest rate and even a job, as many employers will review your credit score number before the hire.

The different forms of identity theft are categorized as financial and non-financial. Financial identity theft includes: accessing your checking, savings, or credit account; opening up a new financial account in your name; taking out a new mortgage. Here are some examples of non-financial identity theft: medical identity theft; criminal identity theft; child identity theft; Social Security number misuse; driver’s license misuse; identity cloning and synthetic identity theft; identity theft of the deceased.

If you, a family member, or a friend have been a victim of identity theft, I’m happy to help you find the answers to your questions. In “Identity Theft Part II,” which will appear in the July MMR issue, I will be sharing best practices for identity theft education and resolution. Remember, the ultimate defender to your identity is you.

Stay tuned.

Jaimie Blackman – a former music educator & retailer– is a financial advisor and succession planner. Blackman helps music retailers accelerate business value now through team building, coaching & mentoring. Blackman is a frequent speaker at NAMM’s Idea Center. Visit jaimieblackman.com to subscribe to Unlocking the Wealth newsletter.