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Consumers Must Focus on Protecting Personal Information Offline Despite Headlines of Electronic Privacy Breaches, Offline ID Thefts Prevail

Earlier this year, NAMIC employee Reeda Kindred treated herself to a healthy workout. But while she was playing volleyball, someone else decided to treat herself to the contents of Reeda’s purse. Within a matter of hours, fraudulent charges on Reeda’s cards totaled $8,000.

Despite the slew of highly publicized electronic identity breaches, it wasn’t an online lapse that victimized Reeda. All it took was someone bent on stealing physical information – in this case, actual credit cards. Unfortunately, statistics confirm that Reeda is in some pretty good company.

According to the Better Business Bureau, despite growing fears about online fraud and identity theft, of victims who know the perpetrator’s identity and method used, these crimes are more often committed offline than online. In fact, an early-2005 survey says the most frequently reported source of information used to commit fraud was a lost or stolen wallet or checkbook.

Rounding out the top five sources were friends, acquaintances and relatives who had access to the information; corrupt employees with access; an offline business transaction – in person, phone or mail order; and stolen paper mail or fraudulent address changes.

Findings released this summer, based on a separate survey of older adults by Sun Life Financial, show many people worry about the wrong thing when it comes to identify theft. For instance, most Sun Life survey respondents – 70 percent – fear having personal information stolen while shopping online. They’re least concerned with a family member misusing their identity.

Compare the two surveys, and the disconnects are glaring. For instance, relatives are really the second leading cause of these identity thefts, yet fewer than one in ten respondents worry about them. In fact, the only area where a top-five concern matched a top-five reality was in offline business dealing.

If misperception is a problem, it’s not the only one. The Sun Life survey shows differences between what people think and what they actually do. For instance, almost 40 percent of survey respondents don’t even bother removing their social security cards from their wallets. Twenty-five percent of those surveyed who worry about having personal info lifted out of their wallets have their Social Security number on their driver’s license. Some states call for that. But the Federal Trade Commission says drivers can ask for another number to be used instead.

What experts found – and what insurers and agents should tell consumers – is that the best line of defense is to keep personal information private. And that’s as important offline as on. Maybe more so.

Eliminate Paper

The Better Business Bureau advises customers to cut the number paper bills and printed credit card statements they get, opting instead for online versions. Using electronic bill payment – from the bank or form the biller – lets people stop sending signed paper checks through the mail. An added benefit: visiting these sites to monitor account activity on a regular basis provides for quicker problem detection than waiting for a monthly statement.

When possible, it’s also smart to sign up for automatic payroll deposits. This reduces paper – paper that often travels through many hands after it’s been cashed – and eliminates the risk that comes from placing more personal information, such as account numbers and license numbers, on the physical check.

Protect Information

What paper consumers can’t eliminate they should protect. The Federal Trade Commission says retrieving paper statements or other important items from home mailboxes promptly helps lower the risk of them being stolen or misused. Those who can’t get their mail quickly, or those who fear mail theft for any reason, can install locking mailboxes. It’s also a wise to take sensitive outgoing mail – including checks – directly to the Post Office or corner mailbox, rather than leaving it in a home letterbox for carrier pick-up.

Also, the Better Business Bureau warns, “Be suspiciously reluctant to release Social Security or account numbers, particularly to those requesting such information by e-mail or phone.” And don’t make identity theft or any theft easier by carrying a Social Security card, account numbers, ATM PINs or even extra credit cards in your wallet. “Social Security cards should be put away in a safe for safekeeping,” says Sun Life’s Tony Ferreira. “We found that a good number don’t take that action.”

Even in the home, it’s important to safeguard important personal information. Use a safe or lock-box to reduce the temptation for babysitters, cleaners and other service folks to pry – or worse. And as difficult as it is to imagine, the same protection holds true with family members and so-called friends, as well. Remember to keep computers protected for the same reasons.

Dispose & Monitor

Before discarding private documents, experts say, shred them. Ferreira recommends getting a good cross-cut shredder, which can be found at office supply stores for as little as $20. “Most people – 83 percent in our survey –shred personal documents instead of just putting them in the garbage,” he says, noting that thieves often “dumpster dive” to steal information from trash cans. “When you get unwanted mail or credit card solicitations, shred them, too. Plus, some companies even send blank checks you can use to get cash advances. You’ll want to be able to shred them, as well.”

Experts also say to keep close watch on accounts and records. That way, if a theft does occur, it can be caught early on. The Better Business Bureau recommends reviewing bank and credit card statements weekly, using online account access. Some financial institutions offer e-mail-based account alerts, which notify users when transfers, payments, low balances and withdrawals occur. Use them.

Another way to check activity is by reviewing personal credit reports. The Sun Life survey says 48 percent of those concerned with having personal info stolen from a firm they do business with haven’t gotten an annual copy of their credit report. Sun Life recently started offering, with new annuity sales, a third-party product that provides credit monitoring service for individuals. Consumers can purchase credit-monitoring services on their own, as well. And a new Federal law, which took full effect September 1, lets everyone receive one free credit report from each of the three major national credit bureaus every 12 months.

Consider Insurance

A final resource for consumers is identity theft insurance. The policies generally reimburse crime victims for costs of restoring their identity and repairing credit reports. Some carriers include the coverage as part of their homeowners product. Others sell it as a standalone, or as an endorsement to a residential policy. Standalone coverage is available to NAMIC members through NAMIC Insurance Agency.

Only about 10 percent of Sun Life respondents said they were likely to buy identity theft insurance. Sun Life says the product is not seen as highly important, perhaps due to the relative novelty and unfamiliarity with the product.

Reeda Kindred had such coverage, offered by NAMIC as an employee benefit. And it saved her about $900 in expenses. For her, what might have previously been a novel and unfamiliar product proved to be a time-saver and money-saver in the long run.

Dave Willis is a New Hampshire-based freelance business writer and contributor to Property/Casualty Insurance magazine.

Posted: Monday, October 17, 2005 12:00:00 AM. Modified: Monday, October 17, 2005 3:06:40 PM.

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