Take steps to avoid identity theft
Identity theft occurs when a person uses personal information, such as social security numbers and birth dates with the intent to commit fraud or to aid in unlawful activity.
When personal information is obtained, the person may open new credit card accounts, bank accounts to write bad checks, or take out loans in stolen peoples' names.
Federal law provides a $50 liability limit for the fraudulent use of credit cards which restricts the amount of direct monetary losses to victims. However, restoring credit and correcting information is a slow and time-consuming process.
Some insurance companies now are offering identity theft insurance.
According to Sandy Praeger, Kansas Insurance Commissioner, identity theft insurance would provide coverage for the cost of reclaiming financial identity, such as costs of making phone calls, copies, mailing documents, lost wages, and hiring an attorney.
Praeger offers this advice.
— Find out the limitations of the policy. Most have limits of $10,000-$15,000.
— Find out if there is a deductible. Some policies require the policy holder to pay the first $100-$500 of costs incurred for reclaiming financial identity.
— Identity theft insurance does not cover direct monetary losses.
— If the policy covers lost wages, verify the limits and requirements.
— If the policy covers legal fees, verify the limits and if legal work needs to be pre-approved by the insurer.
— If a homeowner, check the current insurer. Policy holders may be able to add identity theft insurance to the homeowner's policy for a small fee.
Take these steps to protect identity.
— Avoid carrying the social security number and driver's license number together in a wallet.
— Shred pre-approved credit card offers and bills before disposing.
— Avoid putting outgoing mail in a home mailbox. Place it in a U.S. Postal Service mailbox.
— Be careful using credit cards online. Some consumers have a card they use only for online purchases.
— Check credit report on a regular basis. If there is unusual activity, investigate it promptly by contacting the three credit bureaus: Equifax, www.equifax.com, (800) 525-6285; Experian, www.experian.com, (888) 397-3742; and TransUnion, www.transunion.com, (800) 680-7289.
