Simple precautions are starting to turn the tide on identity theft

– Feb. 25, Bank of America reports that it lost a backup tape with private information on 1.2 million people.

– Feb. 15, ChoicePoint reveals that thieves accessed 145,000 personal files.

And that’s just a few of the dozens of violations of private information reported this year, which the Privacy Rights Clearinghouse estimates potentially affected as many as 50 million accounts.

The breaches left many consumers feeling that their private information may
end up in the wrong hands through no fault of their own.

Many experts, however, say this rash of disclosures probably didn’t result from an unprecedented surge in identity thefts. Instead, it’s because companies are now required to inform people whose information has been breached. Such thefts of data probably have been happening all along, the experts say — we just didn’t know it.

Some evidence indicates that cases of actual identity fraud, in which information is not only taken but also misused, have begun to slow. Javelin Strategy & Research’s 2005 Identity Fraud Survey concluded that cases of fraud dropped from 10.1 million in 2003 to 9.3 million last year.

“It’s a significant problem when (identity fraud) happens to 9 million people,” says Don Phan, who oversaw the Javelin survey. “But some aspects are overblown. There’s been some hyping.”

Despite publicity about online scams, the survey concluded that people are much more likely to be ripped off through more traditional means. About two-thirds of the identity frauds in the survey occurred when people lost their wallets or checkbooks or when friends and family used the victim’s information. Only 12 percent involved computer hackers, viruses or fraudulent e-mails. Javelin could not determine how the remaining frauds occurred.

“I tell people not to panic,” says Beth Givens, director of the nonprofit Privacy Rights Clearinghouse in San Diego, “but that doesn’t mean they shouldn’t be vigilant.”

By taking a few simple measures, such as shredding all financial records and closely monitoring bank and credit card accounts, consumers can often prevent or blunt the impact of identity theft, experts say.

CALL TO ACTION

Even if it’s hyped, all the news about identify theft has had the advantage of spurring some people to take action.

Terry Currier, 57, of Anaheim, Calif., makes sure his computer’s virus protection is updated, and he never puts mail with checks out on the doorstep to be picked up by the mail carrier.

Givens at the Privacy Rights Clearinghouse goes one step further than Currier does — she doesn’t pay any bills through the U.S. Postal Service. Instead, she pays most of them through electronic transfers or automatic
charges to credit cards.

“Mail theft is one of the ways thieves get personal information,” she says. A check can pass through many hands before it is cashed, providing numerous opportunities for mischief, Givens says. In the Javelin survey, mail theft accounted for 8 percent of the identify fraud.

You don’t have to be computer-savvy to guard against theft of your private information.

“I call my credit cards and checking account every other day just to make sure the balance is OK,” says Vaughn Curtiss, 77, of Capistrano Beach, Calif., who describes himself as “electronically illiterate.”

He also set up one more safeguard — substituting a new identification number to get phone access to his bank account so he doesn’t have to use his Social Security number.

“I don’t think nine out of 10 people know they can do this,” he says. “I feel safer. Wouldn’t you?”

Javelin’s Phan says monitoring accounts closely through the Internet, an ATM or a telephone — to make sure that there are no erroneous charges and that the balance hasn’t changed unexpectedly — may be the best way to protect yourself.

Phan said waiting for a paper statement to review typically requires 114 days for fraud to be detected; checking online, by electronic notification or by phone turned up questionable actions in 18 days.

“Going online or calling is active, so people are checking for changes,” Phan said. “A lot of people with (mailed) statements don’t look at them closely or may just throw them away.”

TO FREEZE OR NOT

Consumers in California have another resource that can foil efforts to open unauthorized accounts — a freeze on your credit report that prevents would-be thieves from opening a new account.

To implement a freeze, consumers must jump through a few hoops — a certified letter must be sent to each of the three major credit reporting agencies with name, Social Security and other identifying information. It costs $10 per agency. If for any reason you want to access your credit, you have to send another letter and $10 to unfreeze the report. Because freezing and unfreezing your report can take time, the expert consensus is to only take this step if you have been a victim of fraud or if you have no plans to access your credit any time soon, such as for buying a house or a car.

Givens and Phan think most consumers should instead consider setting up electronic fraud alerts, which advise you when there’s been activity or critical
changes in your credit report. The alerts, available through the three credit agencies, usually are part of a package costing about $50 to $150 a year for various services, including copies of credit reports from all three major agencies.

“Freezing, for many of the consumers I know of, is an extreme measure,” says Givens. “I prefer that people get an extended financial alert.”

Heather Harding, 34, of Coto de Caza, Calif., learned the value of alerts after someone with a similar name appropriated her identity last year.

Harding did not have an alert on her report and didn’t know anything unusual was going on. The first hint came when Capitol One sent her a letter asking if she had requested credit, citing an address that didn’t match hers.

“I thought it was a mistake,” Harding recalls.

A few months later, however, she got notices about a series of other credit requests she had never made, including one from her bank, one about a Chase credit card and one from a local auto dealership. She put a freeze on her credit report, but the thief already had a big jump on her. Before it was over, the person had run up $10,000 in bills. Harding had to pay only $200 of that, but it still took more than a year to clean up all her accounts.

Having been burned so badly, she was skeptical that the credit-report freeze would work. She tested it by applying for some credit and was relieved to get a letter from the credit agencies asking her about the application.

Harding’s advice now: “I would definitely put a credit alert on your report.”

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