What ailment is so devastating that its symptoms can range from an
incorrect medical diagnosis to (virtually) killing you or to hurting
your kids’ chances of getting college financial aid?
That distinctly digital-age malady? Identity theft.
When an impostor uses a victim’s identity to buy something and fails to
pay the bill, the headache can last for years. Unpaid bills leave a big
blemish on your credit report, which can have far-reaching financial
implications. It might prevent you from buying a home, for example.
But the impact of identity theft can spread much further and wider than
money. Today, we’re going to examine the radioactive byproducts of
having your identity stolen.
1. Hurt your job prospects
Many employers now routinely look at credit history when assessing job
candidates (about half, according to a 2012 study by the Society for
Human Resource Management). A report pockmarked by ID theft-related
errors could sink your application.
Employers can’t reject you
because of what they see on your credit report without telling you, but
then, employers can also gin up any old excuse for rejecting you.
Legislation to eliminate the practice has been proposed by U.S. Sen.
Elizabeth Warren, D-Mass., and others, and a few states limit it, but
odds are you live in a place where an impostor can steal your money and
your job prospects.
P.S.: In a related way, posting your resume
online or on job boards can also increase your chances of becoming an
identity theft victim.
2. Cause your auto insurance rates to rise
Virtually all auto insurers use credit scores to set rates, wherever
it’s legal (California and Massachusetts ban the practice). A low score
can hike premiums by 20 to 50 percent.
Insurers can’t outright
reject you because of your credit score without telling you, but they
can use the score to offer you higher rates without giving you an
explanation. ID theft victims who are struggling to clean up their
credit reports are almost certainly paying higher auto insurance rates
as a result and have no way of learning how much the identity theft
victim “tax” is.
3. Get you a surprise tax bill
Identity
theft isn’t just for stealing money. One form of ID theft known as
SSN-only ID theft involves using a victim’s Social Security number in
job applications, generally to fulfill government residency status
requirements. These impostors can work for years without discovery,
paying their bills and their taxes, using their own name (or a separate
victim’s name) and the victim’s SSN.
But if the impostor
ultimately fails to pay taxes, the Internal Revenue Service will try to
collect from the rightful holder of the SSN. Then, it’s up to the victim
to prove he or she didn’t actually earn the money.
4. Impact your Social Security income credits
In a similar way, SSN-only imposters pay into the Social Security
system and build up earnings credits that can theoretically be used to
draw out Social Security payments later in the life. Rarely are SSN-only
imposters able to pull off that caper, but earnings erroneously
credited to an SSN can cause chaos when the rightful SSN holder tries to
apply for benefits.
5. Slow down your tax refund
Tax
return ID theft has skyrocketed in recent years, according to the
Internal Revenue Service. The Treasury Department’s inspector general
says 1.6 million taxpayers were impacted by identity theft in the first
six months of 2013.
This can affect you even if your identity
wasn’t stolen. The IRS has massively stepped up its anti-ID theft
efforts and turned up its fraud filters, which means it has slowed
returns for many legitimate taxpayers.
6. Leave you with a criminal record/get you arrested
Criminal identity theft, perhaps the most dangerous form of identity
theft, doesn’t even have to involve theft of money or credit. If a
criminal is arrested and uses your name or your stolen driver’s license
during booking, you could end up with a criminal record.
Innocent people have been arrested during routine traffic stops and in
front of their children, and some have been thrown in jail on murder
allegations. The problem became so serious at one point that several
states created a special document called an “identity theft passport” to
be carried by victims to prevent an erroneous arrest.
7. Kill you (virtually)
July Rivers of Alabama went to a bank with a simple request: She wanted
to open an account. The bank refused, with this odd explanation:
According to its information, she was dead. Soon, she found she was
unable to get credit anywhere for the same reason: “The system” had
“offed” her.
Perhaps it’s a surprise to you, perhaps not, that a
living, breathing human being could not convince financial institutions
that she was alive. They trusted their databases instead. Rivers lived
through a digital murder mystery, trying to understand who “killed” her.
Eventually, she learned an ID thief was using her information and
apparently decided that registering himself/herself as dead was the best
way to run away from creditors. Rivers had to spend years cleaning up
the mess.
The Social Security Administration wrongly declares about 14,000 people dead every year.
8. Get you the wrong treatment at a hospital
Medical ID theft takes many forms, and the most common is what you’d
expect — a criminal trying to steal money. Doctors can create fake
patients and file fake claims, for example. One such victim discovered
falsified claims for psychiatric sessions when he applied for a job,
according to the World Privacy Forum.
The crime is growing.
Last year, the Ponemon Institute said that medical ID theft impacts an
estimated 1.84 million people. But the most frightening side effect of
medical identity theft would be creation of a medical record by the
impostor that impacts the victim’s future treatment.
Ponemon
surveyed victims, who said the impacts were real. They told survey
takers they’d experienced a misdiagnosis (15 percent), mistreatment (13
percent), delay in treatment (14 percent), or were prescribed the wrong
drugs (11 percent).
9. Keep your kids from getting college financial aid
Child ID theft is tragic on many levels, but perhaps the worst part of
the crime is that it often goes undetected for years. There’s a simple
reason for this: 10-year-old kids have no reason to check their credit.
The crime is usually discovered when would-be college students fill out
their first financial aid forms. Almost always, those forms are filled
out under extreme time pressure and there is no time to clean up a
pockmarked credit history. Even worse, fraudulent earnings that end up
attached to an underaged child can have a direct impact on that
student’s eligibility for financial aid and, in extreme circumstances,
delay enrollment in college.
This is why it can be helpful to
contact the three major credit reporting agencies – Equifax, Experian
and TransUnion – and request your child’s credit reports far in advance
(if your child has a credit file). If your child is younger than 18, he
or she typically should not have a credit file; if they do, it may be
because someone used their identity to open accounts.
You can
avoid – or lessen the impact of – at least some of these issues if you
regularly check your credit reports (here’s how to get them for free).
By checking them at least once a year (more often if you’ve had identity
theft problems in the past), you can spot errors or signs of fraud,
like fraudulent accounts or bills in collections that aren’t yours. It
can take time to clean up the mess, but being aware of the problem is an
important first step.
If you monitor your credit scores, and
you notice a big, unexpected drop, that’s a sign to check your credit
reports for problems.
This post comes from Bob Sullivan at Credit.com
(Remember, MNH Credit Solutions offers LifeLock Identity Protection for $99/yr or $9/mth; check out more information under our 'Additional Services' tab.)
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