Helping Clients Avoid the Painful Cost of Identity Theft
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The style of a recent email I received from a client made me laugh – even though the subject matter wasn’t funny:
Hi Rick! We received a letter from Discover denying an application for their credit card due to our credit history. We did not apply for their card. I told my wife to throw it in the trash, but she is concerned this is attempted identity theft. Your thoughts? If you agree with me, she will rest easy. If you agree with her, I will hang my head and admit that she is right, AGAIN!
If I received a similar notification by email, I would simply ignore it as phishing. Usually, the sender wants you to open an attachment and fill in your sensitive data, which is when the damage is done.
In this case, it was a snail mail letter telling them their application was denied. I suggested they view their credit report and see if it showed a recent search by Discover Card. If so, they probably were victims of attempted identity theft.
A day later the client emailed this:
Well, my wife wins. Discover confirmed that there was an attempt to acquire a credit card in my name. I’m mostly upset that I was declined! I placed a fraud alert and a credit freeze at all three credit bureaus.
Placing a fraud alert and a credit freeze is exactly what experts recommend.
The client told me he investigated what information Discover requires to apply for a card. It was pretty simple: your zip code, the last four digits of your Social Security number, and your date of birth. With that information, Discover is authorized to obtain your mobile number from your wireless carrier – which gives them access to your name, address, phone number, and email address.
Think about the social media places where you list your birthday and the city where you live. Your residence address is obtainable from a simple Google search. Then think about how often you give someone the last four digits of your Social Security number. This is not hard data to get.
Unfortunately, attempted identity theft is a way of life in 2023, and it has been for me personally for a decade. Every few months, on average, either my wife or I have been the target of identity theft.
According to a recent report by WalletHub, “2022’s States Most Vulnerable to Identity Theft & Fraud,” South Dakota has the fewest identity-theft complaints (per 100,000 residents) at 76. Rhode Island had the most, with 2,857. South Dakota also has the fewest fraud complaints (per 100,000 residents) at 549, compared to the highest, 1701, in the District of Columbia.
In addition to the state rankings, the article is well worth reading for its advice on preventing identity theft. Katina Michael, a professor at Arizona State University, advised caution in what you share online. “I have seen people post bank details on social media, their phone numbers, and much more. We have become lax, thinking that social media platforms are ‘safe’ or that certain pieces of information (even our full name) are not sensitive pieces of data.”
Fortunately, banks and credit card companies routinely pick up any losses incurred when a card is fraudulently used. I have never lost a dollar in actual funds from identity theft. This does not mean no cost is involved. Shutting down the credit card or bank account, getting a new number, and having to set up any automatic payments all over again can require hours of time. That cost, plus the anxiety and frustration, mean that identity theft is not a laughing matter.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.