Protect Your Identity and Data

What Identity Theft Could Cost You — and 5 Ways to Prevent It

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Identity theft protection is becoming more and more popular among consumers. One big reason for the strong interest in identity protection is the staggering numbers behind the problem: In the U.S. alone, there were 16.7 million victims of identity fraud, with $16.8 billion stolen from U.S. consumers and 30 percent of them notified of a data breach at some point during 2017.1 If you fall prey to identity theft, what’s the financial impact on you?

Understand the financial toll of identity theft.

Identity theft robs you of what many people consider the most precious commodity of all: time. It’s estimated that recovering from identity theft takes an average of six months and between 100 and 200 hours of work to resolve.2

From a financial perspective, identity theft comes at a high price. According to the Identity Theft Resource Center’s “Aftermath 2017 report, as a result of having their identity stolen:

  • 38 percent of respondents reported their ability to get credit cards was affected and/or they were denied a credit card.
  • Almost 35 percent indicated their ability to obtain other types of loans was affected and/or were denied other types of loans (student, mortgage, personal).
  • 26 percent of respondents had to borrow money from family or friends.
  • 21 percent of respondents reported collection agencies were still calling them about the fraudulent accounts.

Consider the legal costs.

Hopefully, with a lot of legwork and cooperation from creditors, government agencies and financial institutions, you may be able to resolve the situation on your own. However, you could find yourself needing legal assistance to help you restore your good name or credit. With attorney fees in the U.S. averaging $368 per hour3, just a few hours of an attorney’s time spent reviewing documents, writing a letter on your behalf or appearing in court could cost you well over $1,000. And that’s not even counting court costs, filing fees and more.

Identity theft prevention

All of this may have you wondering how to protect your identity and how to prevent identity theft. The good news is that you don’t have to sit back and wait to become a victim of a stolen identity. You can avoid the costly and time-consuming process of restoring your identity by taking the following basic steps: 

1. Protect your identity online.

  • Change your passwords and PINs monthly and don't use common codes like birthdays, spouse names or pets. If two-step authentication (which requires you to enter a unique code even after logging in with your password) is offered, use it!
  • Never use the same password or few passwords for email, social media and banking accounts.
  • Pay with credit cards, which have more guaranteed federal protection than debit cards. Under the federal government, you are only liable for unauthorized credit card charges up to $50.4 For debit cards, the amount you’re responsible for is greater if you take more than two business days to report the loss or theft.
  • Learn to identify phishing — fraudulent offers and promises aimed at luring you into providing your personal information. Never open emails or attachments from unknown sources. And never trust emails that appear to be from your bank or other familiar vendors with urgent requests to verify your personal information. Go directly to the company website instead.
  • Always verify a website before entering personal data. (Check for the little padlock symbol next to the address or that the address begins with “https” instead of just “http.”)
  • Don’t save payment information on websites — it might save you a few minutes every time you shop, but if the shopping site is hacked and your payment information is stolen, it could cost you more time (and money) in the long run.

2. Take care of hard copies.

  • Keep important financial and legal documents, such as Social Security cards, passports, birth certificates, property and vehicle titles, and insurance policies locked in a waterproof and fireproof safe.
  • Shred old credit cards and all personal information (including “junk mail” that has any personal details on it) before tossing. “Dumpster diving” is still a tried and true identity theft pastime.
  • Carry only the credit cards you use regularly.
  • Send your bill payments directly from the post office or pay online.

3. Check your financial information regularly.

  • Don't rely solely on your bank or retailer to notify you about a data breach. Many times it takes months for the companies to report a breach. Instead, check your store or bank account frequently for suspicious charges or small, random purchases that thieves make to "test" the card before they sell it.
  • If you spot unknown charges, contact your financial institution immediately to help limit your liability.
  • Keep monthly statements and checks for at least one year.
  • Once a year, request your free annual credit report from each of the three major credit bureaus: Equifax®, Experian® and TransUnion®. Go to annualcreditreport.com to get started.

4. Be stingy about giving out your personal information.

  • Adopt a "need-to-know" approach. Find out why the information is needed, how it will be kept safe, whether it will be shared and, if so, with whom. Do this with employers, doctors or other health care professionals, businesses and your children’s schools.
  • Never give out personal information (especially your Social Security number) over the phone unless you made the call.

5. Use a legal plan for help.

When you face a legal issue that stems from identity theft, a legal insurance plan from ARAG can offer you:  

  • Access to network attorneys for legal counsel, document review and representation.
  • Access to identity theft case specialists, who can provide next steps and resources to address the situation. 
  • A wide range of coverages with network attorney fees that are 100 percent paid in full for most covered matters.

Plus, you can view online educational articles and guidebooks that provide legal and financial tips to help keep you and your family protected from identity theft.

1 “2018 Identity Fraud: Fraud Enters a New Era of Complexity.” Javelin Strategy & Research. Al PascualKyle MarchiniSarah Miller. Feb. 6, 2018.

2 https://www.economist.com/finance-and-economics/2017/09/14/how-to-protect-yourself-against-the-theft-of-your-identity

3 $368 Average hourly attorney rate for attorneys with 11 to 15 years’ experience according to The Survey of Law Firm Economics: 2018 Edition, The National Law Journal and ALM Legal Intelligence, October 2018.

4 https://www.consumerfinance.gov/ask-cfpb/am-i-responsible-for-unauthorized-charges-if-my-credit-cards-are-lost-or-stolen-en-29/

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Limitations and exclusions apply. Depending upon a state’s regulations, ARAG’s legal insurance plan may be considered an insurance product or a service product. Insurance products are underwritten by ARAG Insurance Company of Des Moines, Iowa, GuideOne® Mutual Insurance Company of West Des Moines, Iowa or GuideOne Specialty Mutual Insurance Company of West Des Moines, Iowa. Service products are provided by ARAG Services, LLC. This material is for illustrative purposes only and is not a contract. For terms, benefits or exclusions, call 800-247-4184.