Victim of Identity Fraud? Recover Your Finances With the Help of a Financial Planner

As a young mother, I cautioned my kids to “beware of strangers.”

While binge watching television over the holidays, I caught an old episode of “Bones” in which an ex-roommate and college friend of Dr. Camille “Cam” Saroyan came to visit, stole Cam’s identity and then went on a one-year shopping spree that cost Cam time and sleepless nights until the “friend” was caught.

As parents, we don’t caution our children to “beware of friends.” But when it comes to identity theft, you are just as likely to be victimized by someone you know.

What is identity fraud?
By its simplest definition, identity theft is using someone else’s identifying information without their permission. It can include using your credit card information when making purchases. Or using your insurance information to take care of a broken arm because they don’t have insurance. Or using your social security number so they can get a job.

Identity theft victimizes across race and gender. However, according to a 2016 study from the U.S. Department of Justice’s Bureau of Justice Statistics, more women (13.5 million) experienced identity theft than men (12.5 million). The same study showed that whites (12%) had a higher rate of identity theft than Blacks (7%) and Latinos (6%).

There are many different types of identity fraud but, in many of them, the impact on the victim can be devastating and long term. When the person who steals your identity is someone you know and love, it can be particularly hurtful. As you age, you are more likely to rely on friends and family to assist you with making appointments and handling your banking. This trust potentially opens you up to becoming a victim if you don’t take care and monitor your banking and investment accounts.

There are five different types of identity fraud:

• driver’s license
• medical
• financial (credit card)
• criminal
• Social Security

For this article, I am going to focus on the one that is more likely to be perpetrated by a friend or family member. The Federal Trade Commission estimates that nine percent of the identity theft that occurs happens when a friend, family member or employee misappropriate our identity with information they found in our home or office.

Easy Access
We make it easy for others to commit fraud because we leave bills, statements and other identifying information lying around in our homes or office. How often have you walked into a friend’s home and seen a piece of paper with all their passwords taped to their computer? It leaves them vulnerable to being victimized.

At home, we also are less likely to use password protection on our computer. Anyone who is invited into our home, can sit down at our computer and easily gain access to all our accounts because for our own convenience, we’ve foregone security protocols.

When you think about it, it’s madness.

By contrast, at your work site, your employer often requires you to use a password to protect their property and information. Work environments often ask us to change our passwords on a set schedule and not use the same password with the next required update. At home, we tend to be more casual and often use the same password on multiple sites.

This casualness translates to not thinking to protect ourselves from identity theft from the people we invite into our homes. By contrast, we lock our doors to keep out strangers, but do little to lock out our family and friends from our personal information.

It can’t happen to me
In fact, one of my clients had a family member take out a home loan in his name. Since she was family, she knew his name, date of birth, mother’s maiden name and his Social Security number.

He ultimately chose to repay the loan himself rather than allow her to damage his credit by not repaying the loan on time. It damaged their relationship and has limited his involvement with his sister for more than 20 years.

But no one in my family would do that
No one wants to think ill of the family or friends. But in the last year, 900,000 people were victimized by someone they knew. It cost victims of identity theft $50 billion in the U.S. alone with an average loss of $4,800. In addition to the financial cost, LifeLock, the credit monitoring service, states that the average person will spend seven hours dealing with an instance of identity fraud. At worst, it can take up to 1,200 hours over many months to restore your good financial name.

It doesn’t end there
Some victims of identity fraud had to borrow from other friends and repay debts. They had to take time off from their jobs. And some people even had to sell some of their possessions to pay for expenses caused by their identity being stolen.

If you’ve been a victim of identity fraud, here are three things you should do:

1. File a police report. This can be complicated since you may have no desire to get your family member in trouble with the law. In addition, other family members may pressure you to not press charges. But if you don’t file charges, you will remain liable for paying the tab.

2. Put a lock on your credit file so no one else can apply for credit using your personal information. The way it works is the credit bureaus freeze your credit profile, and you have to unfreeze it before you can apply for new credit. It’s a bit of a pain each time you unfreeze your credit profile, but it keeps unscrupulous people from continuing to use your personal information to take out more credit. Learn more about watching your credit report.

3. And finally, let the CFP® professional you work with know that you have been a victim of identity theft. They can support you in monitoring your accounts during your reviews. Depending upon their practice, they might be able to put in a trigger similar to what you get from your bank, i.e., “Did you make this transaction?” To find your CFP® professional near you, visit letsmakeaplan.org.

The most important thing you can do is keep your private information secure. No one wants to raise their kids to “beware of friends.” But a dose of caution about the information you leave unprotected will reduce the opportunity for them to be victims of identity theft from someone they know.