In the United States, the consequences and costs brought on by personal identity theft are substantial. According to the most recent data available, 16.6 million persons had at least one identity theft occurrence in 2012, resulting in $24.7 billion in financial losses. That amounts to a loss of almost $1,500 per victim. In fact, it is believed that identity theft costs the American economy $100 billion yearly, and that the cost is easily in the hundreds of billions of dollars worldwide.
The term “identity theft” refers to a variety of offenses, including any successful or unsuccessful effort to use another person’s current account, the use of personal information to open a new account, and other fraudulent activities.
Typical forms of identity theft
The most frequent form of identity theft is called identity fraud and involves using someone else’s credit card to utilize an existing account. In comparison to only a million reports of fraudulent use of personal information to open a new account and a million reports of fraudulent use of personal information for other purposes, there were over 15 million reports of fraudulent use of a credit card or bank account in 2012.
The majority of victims learn about identity theft when their bank or credit card company gets in touch with them about a possible account activity alert. There may already have been significant harm done at this stage.
Identity theft’s true cost
When it comes to the financial and emotional repercussions of identity fraud or theft, some incidents are minor. You are not responsible for any losses incurred as a result of fraudulent use if your credit card number is stolen. Your responsibility is typically limited to $50 ($0 if you notify the loss before any fraudulent activity takes place) if the physical card is stolen. Additionally, there is little chance that you will even pay the $50 because the majority of credit card companies provide no liability protections for fraudulent payments.
Your losses, however, could be significantly higher if your debit card number is compromised. You risk permanently losing the initial $500 that was taken from your account if you don’t discover and report the theft within the first two days. You can be responsible for the total sum after 60 days.
A world of illegal opportunities opens up when your personal information is stolen. Massive fees may accrue before you even realize that your personal information was stolen, if you are one of the unfortunate 1.1 million whose personal information was exploited to register a new account fraudulently.
The true cost of identity theft is extensive and goes far beyond the money lost. For instance, if a robber gains access to your checking account, you can lose the money therein, at least temporarily. Legitimate checks may bounce in the interim due to a shortage of money. You might have to approach each payee separately and there is no assurance that you will be granted a waiver of the bounced check penalties.
And what cost is associated with the victim’s time and labor in correcting the harm? Identity fraud events need victims to spend an average of 12 hours resolving them. Is it accurate to claim that each victim has “lost” at least an amount of money that is equal to their typical income for the number of hours they spent fixing the issues the scam caused?
It could take months or years for victims whose personal information was exploited to open new accounts to clear things up with creditors and credit reporting agencies. Delinquent accounts or other negative things may appear on the victim’s credit report or credit score at this time, and if the timing is particularly poor, the theft-related problems may prevent the victim from carrying out genuine financial goals, like buying a home. The price in terms of suffering for those victims is incalculable.
Each victim ultimately loses a different amount.
What makes you care
These figures call for concern and reaction. Any of us could become the next victim of a hacker or thief without prior notice. Vigilance and preparation are the sole means of defense.
Even being cautious is insufficient to stop fraud because using your card at the grocery store could reveal your identity in the event of a data breach, which we now know happens frequently. The key to preventing identity theft, or at the at least, limiting or even eradicating the penalties experienced when it does happen, is to think about it before it occurs.
It is essentially impossible to completely stop identity theft. Customers who believe their personal information may have been exposed can and ought to freeze their credit reports. Everyone else should diligently check their credit and put up an alert system, regardless of whether they have ever been the victim of fraud. What kind of system you use will depend on how much personal effort you can put forward.
Various identity protection and credit monitoring services are available from Credit Sesame, some of which are free and others which are not. A diverse range of features and advantages are available in each package. They offer free credit monitoring, free identity theft protection, your free Experian credit score, free identity theft insurance up to $50,000, and access to an identity theft resolution professional in the event of identity theft.