Despite considerable media attention, identity theft continues to increase, and credit unions should step up efforts to educate their front-line staff and members to stem the problem, a risk expert told more than 75 attendees of a CUNA Future Forum breakout session here.
Federal Trade Commission (FTC) statistics indicate identity (ID) theft is the fastest-growing crime in the U.S., and it shows no signs of diminishing, said Roger Nettie, risk specialist with CUNA Mutual Group.
The FTC reports 27.3 million Americans have been victimized in the last five years, including 9.9 million last year.
"Translated, that's one person out of 67 who is impacted by new-account fraud per year, and one out of 42 who is victimized by existing-account fraud, such as having their credit card information stolen," said Nettie.
The costs are significant and rising.
ID theft losses for businesses and financial institutions totaled $48 billion in 2003. State and federal consumer protection laws protect individual victims of ID theft and limit their liability, which means financial institutions and businesses incur most of the losses, said Nettie.
Individuals are impacted, too. "Being an ID theft victim can be a nightmare. On average, people spend between 15 and 60 hours initially trying to remedy the problem, plus they deal with longer-term ramifications from damage to their good name and credit," added Nettie. Examples include getting hounded by bill collectors, being rejected for loans and other financial services and, in extreme cases, being accused of criminal activities.
Victims paid a collective $5 billion last year for out-of-pocket costs to restore their credit, an average of $500 per victim.
Thieves can steal a person's identity in a myriad of ways, said Nettie.
"It can be as high-tech as a keystroke recording device on a computer, or as mundane as someone 'Dumpster diving' to find intact credit card slips."
It can also occur through "phishing," defined as email that appears to be from a reputable source, but is designed to obtain personal or financial information to open a fraudulent credit card or loan account.
Regardless of how it's done, ID theft is a fraud that usually involves financial institutions. Fortunately, there are resources for credit unions to educate staff about warning signs and verify that proper controls are in place to protect members, he said.
In June of this year, CUNA Mutual teamed with CUNA to introduce a comprehensive online set of tools, advice and resources to help CUs and their members fight ID theft.
What's Included In Tool Kit
The online toolkit, which is hosted on both organizations' website includes:
* "ID Theft-Checklist of Credit Union Responsibilities," which guides credit unions in assessing and addressing specific institutional responsibilities for fighting ID theft.
* Links to member education brochures containing best practices to avoid becoming an ID theft victim.
* The industry standard "ID Theft Affidavit" for ID theft victims to send to credit bureaus and financial institutions where accounts were opened or used in their name.
* FTC brochure, "When Bad Things Happen to Your Good Name," the primary resource for any ID theft victim.
* BITS Financial Services Roundtable white paper on financial institution responsibilities pertaining to ID theft.
* Links to ID theft videos from the U.S. Postal Service, FTC, and the Federal Reserve Bank of Boston.
Nettie also provided advice for individual attendees to protect themselves:
* Take advantage of "opt out" features with organizations you do business with to limit personal information that is shared with other organizations.
* Safeguard your Social Security number and financial account statements.
* Shred all documents that contain vital personal information before discarding.
* Don't leave outgoing letters in your home mailbox for pick up. Mail them from a secure site such as a U.S. Postal Service mailbox.
* Check credit reports frequently. The Fair and Accurate Credit Transaction Act will allow individuals to receive free copies annually.
