Ten years ago, identity theft was virtually unheard of. Conversely, this insidious crime cost Canadians more than $21 million in 2003, according to statistics compiled by PhoneBusters, a national fraud-watch agency operated by the Ontario Provincial Police. Identity theft is unusual in that victims don't realize they've been targeted until well after the fact.The U.S. Federal Trade Commission reports that 26% of identity theft victims are in the dark for one to five months, and 12% of victims don't discover it for more than six months. By the time a person becomes aware of the theft, his or her credit rating may be ruined, requiring years to recover.
Fortunately, there are a number of steps that will serve to protect your good name and credit rating from criminals. Safeguarding your personal information, making computer and Internet security a priority, and carefully reviewing all your bank and credit card statements are essential to your protection.
Understand Criminal Behaviour
Understanding how identity theft is committed is the first step in protecting yourself. Here are some of the practices favoured by scam artists.
When you pay at a restaurant or store with your credit card or bank card, the card is quickly run through a machine called a "skimmer" before being processed legitimately.The skimmer records the personal information from the stripe on the back of the card.The skimmed information may be used to buy products or services on the Internet or over the telephone. It may also be encoded onto fake bank or credit cards to be used for illegal purchases (see Case Study #2).
Theft of payment cards or documents
Identity thieves steal newly issued credit cards or preapproved credit card applications from your mailbox. "Dumpster divers" go through the garbage looking for bank or credit card statements.The thief contacts the issuing bank and requests a change of address, and then starts spending—at the victim's expense.
The victim is often completely unaware of the mounting charges, since the bills are diverted to another address.
Case Study #1 – Mortgage Mavens
Bill and Mary Smith* had been happily mortgagefree for many years—or so they thought.When they decided to sell their home, they were shocked to discover that someone had mortgaged it without their knowledge.The wily impostors had presented false identification—including Social Insurance Numbers (SINs)—to the bank, and then forged Bill's and Mary's signature on the mortgage documents. By the time Bill and Mary became aware of the situation, the thieves were long gone.
This ploy is simple, but effective; the thief looks over your shoulder as you enter your Personal Identification Number (PIN) at a bank machine or when you use your debit card to pay for a purchase. He or she then steals your card and uses your PIN to withdraw funds from your bank account.
E-mail and Web site spoofing (also called "phishing")
In this electronic scam, the target receives an e-mail, seemingly from a legitimate business, which directs him or her to a Web site where personal information is requested.There is, in fact, no legitimate business, and the real purpose of the Web site is to obtain the victim's SIN and personal financial data.
How to Protect Yourself
The average victim of identity theft spends more than 600 hours and $1,500 trying to undo the damage. As with many crimes, prevention is the best (and cheapest) protection.
Safeguard your personal information
Keep your personal information safe—particularly your SIN, but also your date of birth and credit card and bank account numbers.Your employer, the Canada Revenue Agency and your financial institutions are legally entitled to know your SIN, but there are very few other situations where you are legally required to provide it. Don't give personal information to anyone unless you're absolutely sure you're dealing with a reputable company, and never give out personal information over a cordless phone, a cell phone or a computer using a wireless connection because of the risk of interception.
Protect your passwords
Use different passwords for your credit card, bank and phone accounts. Choose passwords that can't be easily guessed (not your birthday, for example) and change them regularly, as often as once a month. Don't write them down or share them with anyone.When paying by debit card or making an ATM withdrawal, look around to make sure no one can see you enter your PIN.
Be credit card smart
Carry only the personal information and credit cards you actually need. Cancel credit cards you don't use and keep a separate list of the cards you use regularly.
Secure your mail
Always deposit your outgoing mail directly into a mail box, so it's not easily intercepted. Shred or destroy pre-approved credit card applications you don't want, as well as credit card receipts, utility bills and any documents containing personal or account information. A shredder costs less than $40, and protects you against dumpster divers.
Ensure computer and Internet security
You might want to equip your computer with a "firewall," which prevents outsiders from accessing the data on your computer. Deal only with reputable, established companies when using the Internet for credit card purchases or banking transactions, and be sure their sites are secure. Look for digital signatures, data encryption and other technology that enhances user security.
Review your records regularly
Check your bank and credit card statements as soon as they arrive to discover and report any discrepancies immediately. Pay attention to your billing cycles—if your bills don't arrive on time, it may mean your mail is being diverted to another address.
Case Study #2 – The Southern Skimmer
While vacationing in Florida, Frank Jones* used his credit card to pay his bill at a restaurant.The server took the card away from the table to obtain a credit card authorization.
Unbeknownst to Frank, she also ran the card through a skimmer before returning it to him, and then went on a spending spree. Frank was unaware his card was being used fraudulently until he got back to Canada and received his credit card statement.
Check your credit rating
You may want to obtain a copy of your credit report and make sure it is accurate. Canada has two national credit bureaus: Equifax Canada (1-800-465-7166, www.equifax-canada.ca) and TransUnion Canada (1-877-525-3823, www.tuc.ca).
What if It Happens to You?
Please visit www.inkstergroup.com/report/index.asp for a list of things you can do if you think you have been a victim of identity theft.
Norman D. Inkster, President, Inkster Group
* Not their real names.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.