Late last week Equifax announced they had recently experienced a major data breach of financial information affecting approximately 143 million consumers. In this breach it was disclosed that personal identifying information was compromised including social security numbers, dates of birth, addresses, driver’s licenses (in some cases), and credit card numbers. This data breach probably affects most Americans, in which case you need to take steps to protect your credit going forward. However, for a select group of Americans, this breach could have scarier consequences. In this article we will talk about how seniors could be targeted for identity theft, and what they can do to get ahead of the problem.
What is identity theft?
Identity theft happens when a third party unlawfully obtains your personal information such as your name, date of birth, social security number, etc., and more then attempts to assume your identity. This process typically results in the perpetrator committing some version of fraud. Surprisingly, identity theft happens more often than we may realize. For example individuals can commit identity theft by stealing checks and ATM cards, changing addresses, misusing Social Security numbers, and more.
According to a report released in 2014 by the Department of Justice, most cases of identity theft occurred on existing credit card and bank accounts as compared with opening new lines of credit. Additionally, between 2012 and 2014, Americans aged 65 years and older experienced almost a 22% increase in identity theft claims as compared to the other age groups that collectively experienced a 15% increase. If we remove the 11% decline in those aged 18 to 24 years, then the other groups collectively experienced a 26% increase between 2012 and 2014.
Higher Risk Of Identity Theft Among Seniors
For over 50 years technology has advanced beyond what many believed was even possible. Technology has become so integrated into daily life that almost every person in the developed world has become dependent on it in one way or another. Sadly, this dependency has created an implied expectation that technology will simply work all the time. In fact, when it does not function as expected we become irrationally angry. You disagree? Think about the last time it took a website longer than a few seconds to load. Did you become frustrated and try to find the answer to your question on another website? Technology has become such an integral part of our lives that it is not hard to believe what is considered state of the art today will be obsolete tomorrow.
Now think back to a time when computers did not exist, when cars did not have automatic steering, and when the family would gather around a radio to listen to a broadcast because televisions had not been invented. Arguably, those were easier times. That was the era many seniors today grew up in. Technology has come so far that many people, especially those over the age of 65, have a difficult time keeping up with the new gadgets, widgets, or even social media platforms that seem to pop up every year. It is not far-fetched to believe that many seniors are not as “tech savvy” as their children or even grandchildren. This lapse in knowledge creates opportunity for those who seek to take advantage of them. For this reason we encourage those who have an elderly loved one to assist them with making sure they have taken the appropriate steps to protect their identity in the wake of the Equifax hack.
Protecting Your Identity
Today Americans work hard at keeping their personal information confidential as much as they can. When companies ask for a social security number it is not uncommon for consumers to refuse to give it, and in turn request alternate personal identifying information. However, in light of the security breach, consumers will need to become even more diligent with what type of information they provide to individuals on the other side of a phone call.
To help protect your credit there are four things you can do going forward:
1. Enroll in credit monitoring. This strategy only catches a problem AFTER an identity threat has happened. I have heard Equifax is offering a free one year subscription to their credit monitoring service, but I have also read from numerous sources that they are doing this so people cannot participate in any future class action lawsuit(s). To be fair, an update was published recently stating the breach is not a part of the class action waiver, but I am not sure I would risk signing up for their protection when there are other services that offer similar monitoring.
2. Free Annual Credit Report. Request a free credit report from each of the credit reporting agencies annually, and then you can monitor your own credit.
3. Set Up Fraud Alerts. To do this you need to contact each of the credit reporting agencies and request that they establish alerts to report potential fraud.
4. Credit Freeze. This is the most extreme scenario. To do this you need to contact each credit reporting agency and request they freeze your credit. To freeze someone’s credit each agency can charge $0-$10. Once frozen they issue you a pin number that will allow you to unfreeze your credit at a future date. However, if you lose this pin neither you nor the credit agency will be able to unfreeze your credit. The outcome of this approach will mean that no one, including yourself, will be able to open a new line of credit in your name until you pay to remove the credit freeze. This does not mean you cannot continue using your existing lines of credit. However it also does not prevent someone, who has your identity, from impersonating you to use your existing lines of credit.
5. Two Factor Authentication. Two factor authentication is a security feature many financial institutions provide to their clients. In short it is a two step login where clients login to their banking institution with the username and password. Then the institution sends a text, email, or in some cases the institution initiates an automated call with a security PIN. The client enters the PIN on a follow-up login screen in order to gain entry to their accounts. This process is a little more intensive and may not be a preferred method of those not “tech savvy”, but does offer additional security protection.
It is my belief that identity theft will most likely become the next major crisis affecting individuals across the United States, if not the world. Our identities are our most prized possession, and if they become vulnerable, then everyone’s financial future could be in grave jeopardy. To protect your identity, we are encouraging every client to make sure they take the necessary steps to become informed on how to protect their credit, bank accounts, and other personally identifiable information.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.