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Summer 2017  Volume 13, Number 2        
 

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Identity Theft — Bad News and Good News

In 2016, financial losses due to personal identity theft totaled $16 billion and affected 15.4 million U.S. consumers, according to the 2017 Identity Fraud Study, released by Javelin Strategy & Research. In the past six years, over $107 billion has been stolen by identity thieves.

Identity theft affected about 1 out of every 16 Americans in 2016 (6.15%). The total number was 15.4 million consumers — up from 13.1 million the year before. This is surprising to some extent because 2016 was the first year when many retailers were forced to accept the more secure EMV chip cards. The EMV chip prevents criminals from stealing account data to create new counterfeit cards with. But that kind of identity theft is down, way down: 52 percent at EMV-enabled stores.

The problem is that credit card-not-present fraud increased 40 percent last year. Cell phone account takeover — where criminals get access to financial accounts that use two-factor authentication using a text message — also doubled last year. In all, the report said, criminals are trying harder and finding new ways to commit fraud.

The good news is that consumers are becoming more aware of identity theft and trying to take steps to prevent it by understanding how it occurs.

The U.S. Bureau of Justice Statistics defines identity theft as the:

  • unauthorized use or attempted use of an existing account
  • unauthorized use or attempted use of personal information to open a new account
  • misuse of personal information for a fraudulent purpose.

Identity theft occurs when someone uses an individual’s personal identifying information — name, address, credit card or Social Security number — without authorization to open new charge accounts, order merchandise or borrow money. When the bills pile up, the thief disappears. Victims of identity fraud might lose money, but they nearly always lose their credit rating, which can hinder their ability to borrow money or find a job.

The Truth in Lending Act generally limits liability for unauthorized charges to $50 per credit card account. Debit cards have fewer protections. However, when you become the victim of identity theft, it’s your responsibility to clear your credit record.

Dealing with identity theft is costly in terms of time and money. Identity theft victims spend an average of 50 to 175 hours restoring their name and credit history, according to data from California Public Interest Research. Identity theft protection can help you reduce the financial and physical toll of dealing with identity theft.

Identity theft protection takes two forms: identity theft insurance, and non-insurance identity theft protection programs. Insurers often bundle identity theft coverage into other programs, including some homeowners insurance programs. Check your homeowners policy — some insurers, particularly high-end insurers, automatically include some identity theft benefits. Others offer identity theft insurance as an add-on through a policy rider, usually costing only about $25-$50 per year. And some prepaid legal plans also include services to help members deal with identity theft.

If your existing insurance plans don’t include coverage for identity theft, you can buy standalone coverage. Is it worthwhile? Although coverage doesn’t cost much, these standalone policies do cost more than adding a rider to your homeowners or renters policy. Before buying, check the coverage. As with most insurance policies, identity theft policies do not cover any direct monetary losses due to identity theft. Most policies will reimburse you for the costs involved in dealing with identity theft and correcting your credit record. These can include phone, notary and certified mail costs. Some policies also provide some coverage of lost wages resulting from taking time off to deal with identity theft. Some policies also cover attorney fees, subject to policy conditions and limits, and assistance in restoring credit.

Non-insured products typically offer services designed to detect identity theft early and minimize resulting losses. These include credit monitoring and notification services; some provide reimbursement or coverage for costs of repairing credit records. Some also provide education and other tools designed to help reduce the chances of identity theft.

For more information on identity theft protection and other ways to protect your family’s finances, please contact us

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In this issue:

This Just In...

What If Somebody Sues You?

Do You Need a Boat Insurance Policy?

Identity Theft — Bad News and Good News

Are Telematics in Your Future?

 

 


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2015 The Insurance 411. Tel. 877-762-7877. www.theinsurance411.com