How Can I Protect Myself from Insurance-Related Identity Theft?

identity theft

Identity theft is a serious problem that can be financially devastating for the person whose identity or personal information has been stolen. Despite ongoing cybersecurity efforts, fraudsters continue to find ways to steal Social Security numbers, credit card information, and other personal information that can be used to make a profit. According to a recent study, nearly 30 percent of Americans have been the victim of insurance-related identity theft. In addition, although one would assume that older, less tech-savvy consumers are more likely to be the victim of identity theft, the study found that millennials are the group most likely to suffer from insurance-related identity theft. Fortunately, there are steps that consumers can take to protect their personal information and prevent insurance-related identity theft.

What Were the Highlights of the Study?

Although data breaches have become disturbingly common in recent years as savvy fraudsters are finding new ways to gain access to people’s personal information, the report found that younger workers were affected by insurance-related identity theft far more than other age groups. In addition, the study found that the fraudster often knew the victim. According to the research director at Aite Group, the company that released the study, despite the fraudster’s identity or his or her connection to the victim, insurers have a responsibility to ensure that their customers can complete digital transactions safely and without the threat of a data breach or identity theft. The report focused on two types of crimes related to identity theft, including application fraud, which occurs when an unauthorized person uses a consumer’s identity to apply for an insurance policy. It also examined account takeovers (ATO), which occurs when an unauthorized person uses an existing insurance account in an unauthorized manner.

Over 8,000 U.S. consumers aged 18 or older responded to a survey. According to the data, 27 percent of consumers were victims of insurance-related identity theft within the past two years. Of the respondents who experienced insurance-related theft, 22 percent experienced fraud through their health insurance or dental plan, 19 percent with their life insurance policy or annuity, and 18 percent with a personal line property and casualty (P&C) policy. Consumers between the ages of 31 and 39 were the largest group impacted by insurance-related identity theft. Interestingly, most of the fraudsters were family members or acquaintances of the victim, rather than international hackers. The study also found that being informed about identity-related scams did not offer much protection against identity theft. Close to 40 percent of the respondents who were victimized by theft reported that they were very knowledgeable about scams, and 32 percent of those who were not subject to theft said that they were very knowledgeable.

What Are Examples of Identity Theft?

Any time someone uses another person’s identity information, including Social Security numbers, credit cards, insurance information, bank account information, and cell phone services, he or she may face identity theft charges. The following are common examples of identity theft:

  • Using a stolen credit card
  • Applying for a credit card or securing a replacement credit card with someone else’s information
  • Stealing another person’s driver’s license
  • Filing false tax returns to collect a refund
  • Hacking into someone’s bank account to steal money
  • Using someone’s identity to collect government benefits, health care, or prescription medication
  • Applying for a mortgage or loan using someone else’s information

How Do Identity Thieves Steal Information?

Identity thieves gain access to personal information in several high- and low-tech ways. The following are examples of how fraudsters steal information:

  • They rummage through people’s trash looking for bills, credit card statements, and other documents that may have important personal information.
  • They steal mail, which often includes bank statements, tax information, checks, and credit card statements.
  • They steal credit card and debit card numbers while the card is processed. This is known as skimming.
  • They pose as landlords or employers to obtain credit reports.
  • They steal wallets and purses, knowing they will likely contain identification, credit cards, and bank cards.
  • They pose as a legitimate businessperson, government official, or law enforcement officer to obtain information that can be used to steal a person’s identity.

What Are the Penalties for Identity Theft?

In Pennsylvania, the legal penalties for identity theft will depend on the value of the property or services obtained by the stolen identity. For example, if the total value is less than $2,000, it is considered a misdemeanor of the first degree. If the total value is $2,000 or more, or if the offense is committed in furtherance of a criminal conspiracy, it is a felony of the third degree. If the offense is a third or subsequent offense, it is a felony of the second degree. The following are examples of possible penalties based on the grading of the crime:

  • Misdemeanors may come with a prison sentence of up to five years and a fine of up to $10,000.
  • Second- or third-degree felonies may involve a prison sentence of up to 10 years and fines of up to $25,000.
  • In extreme cases, the identity thief may be sentenced to up to 30 years in prison and fined millions of dollars.

What Steps Can I Take to Avoid This Type of Fraud?

There are several proactive steps that consumers can take to protect their personal information and avoid being the victim of identity theft, including the following:

  • Consumers should never provide personal information such as Social Security numbers, account numbers, or mother’s maiden name over the phone or via the internet unless he or she can confirm that the information is secure.
  • Keep all personal information in a safe place that is hidden from visitors, including utility workers who are performing a service.
  • Consumers should not keep their Social Security cards or anything with their Social Security number written on it in their wallet. Leave this information at home in a safe and secure place.
  • When discarding bills, receipts, bank statements, and checks, shred these documents before putting them in the garbage. Thieves often go through people’s garbage and find a wide range of personal information that they can use to steal someone’s identity.
  • Consumers should never open an email or an attachment that is from an unfamiliar email address. There are programs available for purchase that can filter out all junk emails.

Consumers who have been the victim of identity theft can request that nationwide consumer reporting agencies place a fraud alert in their file. This will let creditors know that they were the victim of identity theft. An initial fraud alert stays in the consumer’s file for 90 days, and an extended alert remains in his or her file for seven years.

Should I Get Identity Theft Insurance?

Identity theft insurance is meant to reimburse victims for some of the expenses associated with restoring the victim’s identity and repairing his or her credit. In some cases, identity theft may be included in the victim’s homeowner’s or renter’s insurance. If it is not included, it can be added to the policy, or the victim can purchase a standalone policy. The cost of identity theft insurance ranges from $25 to $50 a year. According to the National Association of Insurance Commissioners, most policies have limits that range from $10,000 to $15,000. That means that if the cost of recovering from the identity theft exceeds the policy limit, the customer will be responsible for paying the difference.

It is important for consumers to understand that identity theft insurance only reimburses the expenses that occur after the person’s identity has been stolen. It does not cover the financial losses incurred because of the identity theft. The following are examples of expenses that may be covered by identity theft insurance:

  • Copies of credit reports
  • Lost wages
  • Notary fees
  • Legal fees
  • Mailing documents
  • Childcare costs
  • Credit monitoring services

When considering whether to purchase identity theft insurance, there are several things to consider, including the following:

  • Find out about the policy limits.
  • Ask if there is a deductible, and how much the consumer is responsible for paying.
  • If lost wages are covered by the policy, find out if there are any limits to what is covered.
  • Find out if the policy covers legal fees, and if there are any limits to what is covered. In some cases, legal work must be pre-approved by the insurer, so the consumer should confirm whether this is the case.

When weighing the pros and cons of purchasing identity theft insurance, it is important for consumers to consider the fact that thieves may continue to have access to their personal information and use it to file taxes, apply for a credit card, or seek medical attention in their name. This can have a negative impact on credit scores and make it difficult to get a low rate when applying for a mortgage or a loan.

Philadelphia Consumer Protection Lawyers at Francis Mailman Soumilas, P.C. Fight for Victims of Identity Theft

If you have been the target of identity theft, reach out to the Philadelphia consumer protection lawyers at Francis Mailman Soumilas, P.C. We have a proven record of protecting consumers’ rights and will work tirelessly to restore your identity, your credit, and your reputation. Call us at 215-735-8600 or contact us online today to schedule a free consultation. With offices located in Philadelphia, Chicago, New York, and San Francisco, we serve clients nationwide.