Identity Theft

Back in 2005 a friend of mine received a letter from the IRS shortly after he filed his income taxes for the previous year. He discovered that four people had been working under his Social Security number and the IRS wanted to assign him a temporary number for filing his taxes. He started getting calls at his office from transportation companies demanding payment for hundreds of gallons of gasoline he spent traveling between Texas and Arizona hauling freight. Thing was, my friend had not stepped out of California in over 20 years.

My friend spent hundreds of hours writing letters, filling out forms, and talking on the phone with bill collectors demanding affidavits, more forms, and proof he did not step out of California when the purchases were supposedly made by him. He had to show proof to his current creditors to not raise his interest rates based on the fraudulent information on his credit reports. This whole situation cost him time. A lot of it. Things did not resolve fully until late 2007.

This was my friend’s introduction to the wonderful crazy world of “Identity Theft”.

The Federal Trade Commission (FTC) reports about nine million Americans experience identity theft each year. Recognizing this trend, insurance companies have created a variety of optional “Identity Theft” coverage products that can be added onto your homeowners insurance to help you in the event your personal information is stolen and used to commit fraud.

Identity theft insurance can cover lost wages, lawyer fees if you get sued by creditors over fraudulent bills, any incidental costs that you spent such as long distance phone calls, paying notaries to verify your signature for all those forms, even stamps and envelopes from writing to all those companies to clear your name. Most policy endorsement products of this type involve reimbursing you for expenses and time lost in restoring your good name. Other perks of having this kind of coverage may include hiring a company that specializes in clearing up identity theft related issues on your behalf so you can get on with daily living and leave the fact checking and investigation to someone else.

Identity theft can really cost you a bundle if you don’t plan ahead. Some tips that can help you:

1) Do not carry your Social Security Card. Keep it in a secure place until you really need it.

2) Get a shredder that has cross shred action and use it once a day. Set up a small area where all you do is go through the mail, put aside the stuff with your name on it, and shred it.

3) Take advantage of where you are allowed to obtain one free credit report from each of the three major credit bureaus (Experian, TransUnion and Equifax) every 12 months. One nice thing about this is you get a list of all the creditors contact information at the end of the report if you do find something that should not be on there.

4) When you get an ATM or credit card receipt, don’t toss it in the trash in a public place. Make it a habit to toss them in your shred pile at home.

5) Pay attention to your bank statements. You know where you have been. Make sure the purchases reflect it. You can always call customer service and have them help you go over the purchases on your statements.

Having identity theft coverage on your homeowner’s insurance is an added layer of reassurance that if your personal information is compromised, you are not alone in getting your name back.