Credit reports cannot protect from all kinds of identity theft

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When I saw a headline today claiming credit reports can protect you from identity theft, I immediately knew I wasn't going to agree with that article. No surprise -I didn't. I just know that some well-meaning consumer is going to read that headline; "Credit Reports Can Protect You From Identity Theft" and believe that as long as they review their credit reports all is well when it comes to protecting their identity.

Two of the biggest misconceptions today center around understanding the difference between credit card fraud and the many other types of identity theft--and how those differences affect making choices between simply obtaining credit monitoring services or opting for identity theft protection services that today include credit monitoring services as well as more in-depth services for detection and restoration services. In reality, many of the most harmful types of identity theft have nothing to do with your credit report and cannot be detected just by calling Experian.
Scanned image of author's US Social Security card.

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Most people seem to think it's all about credit, but that belief can lead to a false sense of security.  They believe that by obtaining credit monitoring services they're safe from identity theft of any kind. They believe identity theft will never happen to them, and if it did it would be no big deal to handle the aftermath. Most people think that--until it happens to them.

Identity theft comes in many shapes and forms, and each one can throw your life into chaos.  Just ask Ms. Wilson in Arizona.  Her own sister allegedly used her insurance and personal information to obtain a medical procedure, which the sister was then expected to pay.  Medical identity theft happens to as many as 500,000 Americans each year, according to the World Privacy Forum.  Do you believe that checking your credit report is going to reveal this kind of identity theft?  I don't think so.
Or try talking to Mike Calcutt of Minnesota.  He had his home equity line of credit hacked into by identity thieves who faxed in Calcutt's signature and proceeded to transfer out his money.  He owes the bank a whopping $88,000 because a HELOC is not protected in the same way a credit card account would be.  Do you think you should tell Mr. Calcutt that he should have just checked his credit report?
Identity thieves are finding new ways to phish, smish, skim, sniff and hack your personal data.  The fact that credit card fraud and theft of "credit" can be so easily checked is one reason that type of fraud is actually on the decline!  Other forms of identity theft--the medical and HELOC frauds I mention above, plus tax return fraud, money wiring fraud, Social Security number theft and employment fraud--cause considerably more damage and are harder to recover from.  Having your SSN stolen--as it was in the case the Forbes article references--is a much more serious problem than just a fraudulent credit card account in your name.  Once your SSN is out there, it can pop up again and again in--among other places--someone else's tax return or application for financial aid.  You can't unring that bell.  You can never again feel secure that your identity is your own.
Yes, you can spot one type of identity theft by scanning your credit report.  I recommend that everyone check their credit report regularly, for a variety of reasons: not only can you spot whether identity thieves have opened false credit card accounts, you can spot potential problems with how your mortgage or other payments are being applied to your accounts.  But the kind of ID theft that shows up on a credit report is just the tip of the iceberg.  Identity theft is a much more pervasive crime than just opening a credit card account in someone else's name.  And the idea that you can "protect" yourself from identity theft simply by checking your credit report is misleading--and dangerous. Just take the example of these police and fire department employees who had their identities stolen right along with their tax refunds.
The crime of identity theft has increased steadily over the past few years and it shows no signs of slowing. The thing is, identity thieves are more technology-savvy than the average population, and they actively make use of the technology put in place to foil them. There are now ways we can tap into that same technology -but few are talking about it. And that's a disservice to the public as well.

Those who think that identity theft protection is an unnecessary concern probably haven't had to clean up after one themselves -yet.

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Very good point! The effects of credit card or identity theft can be devastating. Also the punishments for committing the crime are quite severe themselves... A criminal defense attorney should be consulted if you are facing such charges.

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