Langsam Stevens & Silver Newsletter November 2009

The steep recession of the past years has led to a major upsurge in cases of identity theft. Prior to the recession, the number of people reporting that they were victims of identity theft had been falling for several years. Growing awareness among the public and precautions taken by businesses to protect information had combined to make identity theft more difficult. But economic hard times increase the temptation to commit identity fraud and, according to statistics from the Javelin Strategy & Research Center, the number of victims of identity theft went up by 22% between 2007 and 2008 to almost 10 million. We have certainly seen an increase in the number of victims coming into this office to get help in dealing with the consequences of identity theft.

Despite the fact that the U.S. is coming out of the recession, job growth and business investment is lagging, so that it is likely that economic conditions that encourage crimes like identity theft will continue to be widespread for some time.

time spent on damage repair (an average of 118 hours for an existing account and 158 hours if a new account had been opened);

extended involvement (70% of victims said it took up to 12 months);

difficulty with clearing or inability to clear credit records;

increases in insurance rates;

increases in credit card interest rates;

criminal records;

problems getting credit;

calls from collection agencies;

credit card cancellations;

difficulty in getting a job;

problems with landlords; and

emotional distress.

Who does it to whom?
The threat of identity theft has often been greatly exaggerated. This is particularly true of the danger of loss through information given online. According to Javelin, online methods accounted for only 11% of incidents, down from 14% the year before. Most cases of identity theft result from the use of information in lost or stolen documents. In fact, a significant percentage of such crimes are committed by people who are known to the victim.

The major victims of identity fraud are not the people you might expect. The wealthy are not the major victims: according to Javelin, households with an income under $50,000 are three times more likely to be victimized. Younger people are also more vulnerable. An FTC survey earlier this year reported that 30% of victims are between the ages of 18 and 29, both because this age group has more access to credit than ever before and because they are less savvy about protecting their identity.

So what should I do?
Methods of minimizing your risk of becoming a victim of identity fraud, and of minimizing any damages if you are victimized, fall into two categories: 1) safeguarding your personal identifying information (especially Social Security, credit card and bank account numbers); and 2) checking your credit reports regularly.

Luckily, you no longer have to pay or jump through hoops to get your credit reports. The federal Fair Credit Reporting Act requires the nationwide consumer credit reporting companies to provide you with a free credit report once every 12 months. You can order your reports at annualcreditreport.com. And you don't have to wait 12 months between reports, you can space the three reports out over the year.

If you do become a victim of identity theft and have difficulty clearing up the resulting problems, we can help. Contact us at (215) 732-3255 or hlangsam@langsamstevens.com.