Identity Theft Part II

Kristina Bolhouse, CPA/PFS, CFP®

After many years as an auditor, financial planner and tax preparer, I’ve witnessed firsthand the creative ways that fraud and identity theft occur.  I have developed a healthy respect for “what can go wrong” with financial fraud, and have segmented my concerns into three levels:

Area of Least Concern:  Credit Card Theft

Because of the self-monitoring I do personally, stolen credit cards, bank cards or a hacked Amazon account are the least of my worries.  I’ve had enough incidents where I know the drill of calling the credit card company, reporting to the credit agencies, etc.  I know the credit card companies are very good about reversing these charges and issuing new numbers.  So, to me this is a pretty limited area of exposure.  Keep in mind the key term I used here was “self-monitoring.”  That means at least once a week I check all the transactions on my credit cards and bank accounts.

Moderate Level of Concern: Tax Return Fraud

Tax-related identify theft is where your Social Security number is used to file a false tax return and give someone an undeserved refund.  This type of fraud was rampant this year, as we have had a high number of physicians who have learned when they filed their 2014 tax return, that their identity had been stolen. That means they couldn’t file (or get a refund) until they went through proper IRS procedures.  This includes filing a police report, contacting the IRS and completing paperwork, etc.  There is little I can do to prevent this type of theft, and the IRS has been slow to develop preventative procedures. Identity protection services such as LifeLock® and Identity Guard® don’t prevent this, since the IRS has its own protocol to follow. However, they can help monitor the after affects. 

High Level of Concern:  Targeted Identity Theft 

Identity theft could be an “inside job”, when someone with whom I have routine contact elicits enough of my personal information to open a credit card or obtain a bank loan using my financial information.  This person could also divert my mailings by opening a P.O. Box for such a purpose or submitting an address change.  This type of theft could take years to detect. 

While I used to self-monitor by getting my annual free credit report at www.annualcreditreport.com, I realized that too much time was slipping away between reviews. So my defense now for this level of concern is LifeLock® or similar identity protection organization.

My personal concern pales compared to the paranoia I am feeling for some of my older relatives.  I’m thinking a gift this year may be a subscription service where a few of us are monitoring Grandma’s ID (with her permission, of course).  The elderly are among the most susceptible to financial fraud and identity theft – and many times it is an inside job.

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