Most readers know this as one variation of "phishing," where a thief sends a stranger an e-mail requesting that he or she click on a link and supply confidential information. What makes Feight's case unusual is that the thief first gained his trust, and then lured him in with a promise to share something of interest, rather than what might have more commonly been an attempt to gain access to his financial accounts.
As Feight proved ... if the thieves are getting smarter, so are their intended victims. Some, that is. But unfortunately not the woman Carol Friedhoff met while conducting an identity theft presentation in Ohio this June for the Women and Money conference. "In my session, there was a young college student who had attempted to rent an apartment but was turned down," says Friedhoff, owner of Savvy Outcomes in Dublin, Ohio. "She learned someone had been using her Social Security number since she was 13. Two years after her rental attempt she was still recovering from the incident."
What's remarkable about this is that thefts involving Social Security numbers often take longer to straighten out, but also, the theft occurred when she was a child! This isn't uncommon, it turns out. This author's own daughter had her identity stolen in high school when it was discovered that the ID tags the students wore around their necks during school hours thoughtlessly displayed the kids' Social Security numbers, which the school had adopted as student ID numbers.
Now, let's take the circumstances of Friedhoff's case and make them more relevant to you. Suppose the young woman in Friedhoff's story had been a high-net-worth client for whom you were managing a trust account. You charge her 1% on $1.5 million and, for that fee, you manage her investments and just about anything else she needs-even finding her a cat sitter (don't laugh; some advisors do this and more). Who is she going to turn to when she finds out her identity has been stolen?
How Not To Prevent Identity Theft
(While Thinking You Are)
The three major U.S. credit bureaus-Experian, Equifax and TransUnion-would have you believe that monitoring your credit report is the best way to prevent ID theft. After all, if someone steals your identity and begins opening bank accounts, credit cards or-God forbid-lines of credit, that activity is going to show up on your credit report. It makes sense to monitor that report, right?
Apparently, many financial advisors think so. Jorie Barnett Johnson of Financial Futures LLC in Manasquan, N.J., recently sent an e-mail to clients exhorting them to review their credit reports annually. In every one of his financial plans, Marc Schindler of Pivot Point Advisors LLC in Bellaire, Texas, includes the following: "As a pre-emptive first line of defense against identity theft ... we recommend getting a free [credit] report every four months." And in the paper on its Web site, entitled "Identity Theft and Credit Monitoring," Pinnacle Financial Advisors LLC of Marlton, N.J., starts off with, "Obtain a free copy of your credit report from each of the three major credit reporting agencies yearly."
What's wrong with this advice? It's certainly well-intended, but does it go far enough? Not even close, says Todd Davis, founder and CEO of LifeLock (www.lifelock.com) of Tempe, Ariz., a leader in the field of ID theft prevention. Checking one's credit report periodically or subscribing to a credit report monitoring service is closing the gate after the horse has already escaped. "LifeLock differs from all other ID theft services," says Davis, "by preventing theft. Learning that your credit has been tampered with after the fact is too late," he emphasizes.
And the key to prevention is deceptively simple and effective-so effective that Davis prominently displays his Social Security number (457-55-5462) on his company's Web site for all to see. (Davis says every week or two someone tries to buy a Dell computer, or maybe 500 pounds of meat, using his credit, but they get nowhere. "The system works," he says.)
There are four steps to LifeLock's process: 1) Set up fraud alerts with the three major credit bureaus; 2) every 90 days when the alerts expire, set them up again; 3) remove your name from pre-approved credit card mailing lists; and 4) only after these three critical steps are taken do you check your free credit report. If a LifeLock client still has his identity stolen, LifeLock will cover his related losses and expenses up to $1 million-a guarantee they've had to uphold only 14 times even though they have 350,000 customers.
If these steps are so simple, you ask, why does anyone need LifeLock? They don't, says Davis, but hundreds of thousands of customers use them anyway, because how many of us-for every one of our clients-want to keep track of expiring fraud alerts and write the necessary renewal letters, much less spend time trying to get off of junk mail distribution lists? LifeLock's annual fee of $110 per adult and $25 per child is small change for anyone with accounts worth protecting, and it's more convenient to have LifeLock guarantee that these tasks will be done than to remember to do them yourself.