Identity theft has been a problem for years, and has become the fastest growing crime in America. And, contrary to popular belief, most stolen data is not accessed through the Internet but rather through traditional channels, such as stolen wallets, checkbooks, and credit cards, according to a 2006 Identity Fraud Survey Report released by the Council of Better Business Bureau and Javelin Research. Nearly half of all identity theft is committed by a close friend, relative, colleague, neighbor or in-house employee.

Identity theft victims face the daily stress of creditor calls, bounced checks, and compromised credit ratings. While consoled by banks and credit card companies that often bear the direct financial burden of loss, these individuals are plagued, nonetheless, with hours of distractions, out-of-pocket expenses for travel, long distance calls, lost time, and legal fees -- expenses that must be incurred if one is to restore their credit and reputation.

In 2003, these out-of-pocket expenses neared $5 billion for consumers, while businesses faced over $48 billion in losses. The 2006 Identity Fraud Survey Report revealed that while the number of theft victims has decreased since 2003, from 10.1 million to 8.9 million, the average fraud amount has increased from $5,249 to $6,383. In addition, victims are spending reportedly more time trying to resolve identity fraud problems, from 33 hours in 2003 to 40 hours in 2006.

Although identify theft is a pervasive consumer problem, the Report provides some hope, revealing actions that sharply curtail risk and put control back in the hands of the consumer. In fact, the Report shows that 63 percent of potential identity fraud is under the consumer’s control.

“This new research offers a very different but accurate and helpful perspective about identity fraud and it shows how we can stay on top of this problem,” says Steven J. Cole, president and CEO of the Council of Better Business Bureau. “Consumers can do a lot to make sure they cut down the risk associated with this fraudulent activity.”

The first step in protecting against identity fraud is to secure personal information and limit access to it. A consumer should:

• guard their Social Security number, and never release it unless it is absolutely necessary. Many people will ask for it, but consumers should always ask if they can give an alternate number instead;
• create passwords that are not common, and change them frequently;
• lock away all sensitive documents, checkbooks and credit cards in a secure location;
• shred personal and financial documents. In the world of identity fraud one man’s trash is literally another man’s treasure;
• retrieve paper mail promptly and never leave outgoing bills or checks in mailboxes that are easily accessible;
• move toward paperless bills, statements and checks. Online transactions are actually less dangerous in terms of identity fraud because they allow for quick detection, which often translates into fewer losses;
• never give out confidential information over the phone or in emails to people claiming to be a financial institution or creditor.

“There is a new breed of criminals taking advantage of this phenomenon,” said Janet Domenitz, executive director at the Massachusetts Public Interest Research Group. “Don’t leave a paper trail. Don’t carry it around with you. Don’t leave yourself literally open to other people seeing your information.”

Next, consumers are urged to try to detect unauthorized activities. Too often, a bank or credit card statement is received in the mail, paid, and then either disposed of or stored away. Consumers need to:

• review all bank and credit card statements for accuracy. Report any inaccurate charges, however small they may be. A small charge may, in fact, indicate a large problem
• contact their credit card or financial provider if they fail to receive monthly statements on time
• review credit information regularly. Identity theft has become such an issue in recent years, that an amendment to the Fair Credit Reporting Act requires each major consumer reporting agency to provide consumers with one free credit report every 12 months. Consumers are urged to take advantage of this.

Once fraud is detected, the consumer has the following responsibilities:

• notify their financial providers of the fraud and cancel all credit cards, freeze all financial accounts, and change passwords/pins.
• place an alert on all their accounts. This alert will raise a red flag when credit is applied for and the victim will be contacted.
• notify local law enforcement of the crime. A police report should be filed both in the consumer’s local town/city and in the town/city where the stolen identity was used.
• report the crime to the FTC. The report will be placed in the national tracking database.
• monitor their accounts more frequently to ensure that the fraudulent activity does not persist.

Identify Fraud Insurance Protection, one of the newest product lines available from traditional insurers, offers additional protections to consumers. Whether purchased as a part of a homeowners upgrade, or through an employer-paid, employer-sponsored program, this low cost solution generally covers the following:

• lost wages as a result of time taken off from work to deal with identity fraud issues;
• attorney’s fees acquired in fighting collection agencies, wrongful criminal or civil judgments, or challenging information in a credit report;
• notary and certified mail charges for completing and delivering necessary paperwork;
• re-application fees for loans that are denied due to incorrect credit information;
• telephone charges incurred from calling merchants, law enforcement agencies or creditors.

Credit reporting and monitoring services, as well as firewall and antivirus software, are additional tools available to combat identify theft fraud. Often, these tools are paired with case management/credit restoration services that walk identity theft victims through the recovery process, step-by-step.

One in every 23 consumers will fall victim to identity theft, but armed with the information presented, victims can be prepared for and manage its aftermath.