Identity Theft is a relatively new phenomenon. Unfortunately, this new phenomenon is also highly misunderstood by the general public. In Part One of our series on Identity Theft Protection, you learned some high-level facts about Identity Theft and some various precautions you can take to guard your Identity. While Part One gives some practical tips to reduce your exposure to Identity Theft, you must first gain a better understanding of what Identity Theft actually entails.
Identity Theft – It’s Not Just Financial
Unfortunately, most people believe Identity Theft is just about “Financial” Fraud. The fact is, “Financial Fraud” accounts for approximately 30% – 40% of all Identity Theft. While this form of ID Theft is the most obvious, it is also the easiest to discover and recover from. Most financial institutions (Banks & Credit Card Providers) have systems in place to detect fraudulent activity on a person’s account. These same institutions typically have “reimbursement” plans in place to return any funds taken from or charged against their customers’ accounts. There are limitations and time constraints placed on these “reimbursements”, so it is imperative you read your financial institution’s policies as they relate to fraudulent activity.
While you know about Identity Theft with regard to Financial Fraud, you must also understand that the majority of Identity Theft involves theft for something other than Financial Fraud. Let’s look at a break down of the Non-Financial Forms of Identity Theft:
- Driver’s License
- Medical (fastest growing segment)
Of course, you could potentially break down Identity Theft into many more segments and categories, for our purposes we will focus on these major categories.
Who Are The Victims?
According to a recent study, there were approximately 10 million victims of Identity Theft in 2008. As should be expected, households with higher incomes were twice as likely to be victims of Identity Theft as low-income households. What may be unexpected is that those households considered to be “higher-income” had household incomes of $70,000 or higher (that is only a man and wife making $35K each).
Discovery & Recovery
One of the disturbing facts about Identity Theft is that 38%-48% of people discover the theft within three months and that approximately 18% of victims do not discover the theft until 4 or more YEARS have passed. While identity thieves have access to advanced technology and systems to steal our identities, there are similar technologies and systems in place for the public to discover these thefts. The problem is, the general public has been slow to adopt these strategies (the “it won’t happen to me syndrome”).
As disturbing as the previous statistics are, the most important statistics deal with the Recovery of one’s identity. The average victim of Identity Theft (according to a 2004 study) spends 330 hours repairing the damage caused by theft. The vast majority of victims spend between 3 months to 1 year. As we all know, time is precious. The fact is the actual monetary loss resulting from Identity Theft is only about $1,200. The real cost of Identity Theft is in the time spent recovering from a theft. The math is simple, take your hourly wage rate and multiply by the time spent recovering your ID (for example a person that makes $30K per year earns approx $14.42 per hour / multiplied by 330 hours (average) equals $4,758).
Hopefully, this article has given you an understanding of the types of Identity Theft as well as the cost(s) associated with theft. Combined with the knowledge gained in Part One of this series, you should now be prepared to determine if you need to look for “Insurance” and what “Insurance Plan” is best.