Tax Season Leads to Increased Risk for Identity Theft
Tips for Storing and Destroying Sensitive Documents ITASCA, Ill., Feb. 21 /PRNewswire/ -- Each year consumers spend many hours preparing taxes hoping they don't owe the government money. But what many fail to realize is that the government isn't the only one who may collect their hard earned cash -- so may identity thieves.
In a time where one man's trash is another man's treasure, it's important to ensure that tax-related documents used to prepare taxes are appropriately stored or destroyed. In 2006, consumers lost more than $1.1 billion to criminals who stole their identities. Although this statisticis alarming, there are ways to protect yourself from the crime, especially during tax season.
While it may appear easier to file everything, paper trails are still an identity thief's dream. Recent research conducted by Fellowes, Inc., the leading shredder manufacturer, shows nearly 40 percent of Americans believe identity theft is most likely to occur through online exchanges. In reality, online exchanges represent only 9 percent of the crime. The majority of identity theft crimes occur through paper documents and stolen information, making it crucial to properly store or destroy the sensitive documents used during tax season.
"Tax season can leave consumers with mountains of paperwork, which makes them more vulnerable to identity theft," says Kristen Gehrig, director, global marketing for Fellowes, Inc. "Although shredding is one of the easiest ways to ensure your information doesn't end up in the wrong hands, consumers also need to be conscious about what documents are important to keep."
Simply knowing what needs to be filed or shred will quickly alleviate potential problems.
-- Tax returns: The IRS has three years to challenge information in your return and six years to conduct an audit based on unreported income. Keep tax returns and supporting records, like W-2s and 1099s for at least seven years.
-- Investment statements for taxable accounts: Most brokerage firms and mutual fund companies send annual statements summarizing the year's transactions. Once you have these, you should shred your monthly and/or quarterly statements.
-- Bank statements: Keep statements that back up information on your tax returns for up to seven years. Other bank statements can be shredded after reviewing for errors.
-- Credit card statements: Keep statements for big purchases, like jewelry or large appliances. You might need them for warranties. If you put charitable contributions on your credit card, keep the statement for your tax records. Other monthly statements can be shredded once you've reviewed them for errors or unauthorized purchases.
-- Pay stubs: While many people say to save these, it's a huge mistake. They contain everything an identity thief needs to open an account. Keep three months of history only if you are applying for a mortgage.
-- ATM receipts: Shred all receipts after you balance your bank statement.
-- Canceled checks: With no significance for tax or other purposes, these should be destroyed after one year.
-- Retirement plan contributions: Keep records of contributions to non-deductible individual retirement accounts, such as a Roth IRA, indefinitely. Without them, you may find yourself paying taxes again when the money is withdrawn. Some financial institutions keep records of IRA contributions, but it's best not to count on it.
-- Insurance policies, wills and other legal documents: These documents should be kept indefinitely.
For documents you need to keep, consider storing them in a safe and accessible place, such as a fireproof box that is well hidden in your home. When destroying records, it's best to use a confetti-cut shredder that can slice credit cards and CDs and has confetti-cut capabilities, such as the Fellowes PS-77Cs, which ensures that private information is reduced to small, unidentifiable pieces.
As shredders become a necessary household product, it's important to choose a shredder that not only protects your family's identity, but also its safety. The Fellowes PS-77Cs alleviates shredder safety concerns with its Safe Sense technology, which shuts down the shredder when it senses that hands are too close to the paper opening.
For additional identity theft prevention tips and information on how long to keep financial records, visit http://www.IDconfidence.org or check with your tax professional.
Thursday, March 26, 2009
Monday, March 2, 2009
10 Million Americans Hit by Identity Theft
AOL
While everything else is slipping, identity theft is on the rise, jumping to a record 9.9 million victims in 2008, which is up 22% from 2007. Approximately one in 23 U.S. adults became victims, according to Javelin Strategy & Research, who released their fifth annual study today. Total loses increased after three straight years of decline, but the loss per victim fell by 12% to $4,849 from $5,488. The most positive trend is that individuals spent 31% less (an average of $496) to clean up the mess. More than half of victims didn't have to spend anything to clean up after a fraud.
James Van Dyke, president of Javelin told CNN, "Identity fraud has been dropping until last year, boom, there was a turn-up. The only thing we can logically attribute that to is the economy. If people need to make money, and decide to do so illicitly, identity fraud is the logical opportunity."
Improper use of checkbooks and credit or debit cards after a wallet or pocketbook is lost or stolen remains the most common means of identity theft -- 43% of all incidents can be traced to this cause. About 25% of victims had their PINs compromised on ATM cards. Online fraud was the reason for 11% of cases.
So who's most likely to be a victim? People with incomes over $75,000 were more likely to be hit than those with lower earnings. By age, the highest fraud rate is among people between 35 and 44. Ethnically Hispanics were hit the most followed by African-Americans, Caucasians and Asians.
While it wasn't mentioned in CNN's story, I suspect identity fraud is rising because of job scams, where people get an email promising a job; in most cases the person receiving the email never applied for a position. These emails ask for one's key personal information, such as Social Security number and date of birth, and then the fraudster has all he needs to open a new account in your name or make changes to existing accounts.
How can you avoid identify theft?
* Don't give your Social Security number to anyone who calls you unless you do know the caller and were expecting the call. If the caller says they are calling from a company you do business with or from a company where you are applying for a job, ask for a call back number and verify that number is from the company the caller says he or she represents.
* Don't give out any personal identifying information on social networking websites and in chat room discussions. Always be sure to verify the identity of the person asking for the information.
* Keep your sensitive documents secure. A safe deposit box at your bank is your best bet.
* Shred any documents you want to throw out that have your account numbers or other identifying information on them. Shredders today are pretty cheap and a lot cheaper than cleaning up an identity fraud mess.
*Choose hard to guess passwords and pin numbers. Most people use a part of their name or a pet's name. Be more creative. Also, change up your passwords and pin numbers so you don't use the same one with several accounts.
If you do become a victim of identity theft, immediately notify your financial institutions and the three credit bureaus -- Equifax, Experian and TransUnion. The credit bureaus will put a fraud alert on your account. If your checkbook was used or stolen, your bank will recommend you close your account. While I know this could result in a lot of work, especially if you use online bill pay, I strongly suggest you follow their advice. I've been the victim of identity fraud two times in my life, one involving fraudulent checks (police suspected a check ring using checks from a donation I made) and the second involving the loss of my financial records when I mailed them in to a bank while working on a refinance (UPS lost the package). In both cases I had a new bank account the same day I discovered the problem. When I loan package was lost, I changed account numbers for every bank account, investment account and credit card.
The faster you act when you see signs of identity theft, the less work you'll ultimately need to do to clean it up and the less money you'll lose. Since experiencing the check fraud incident I check my bank and credit accounts online everyday for signs of identity theft.
Lita Epstein has written more than 25 books including the "Complete Idiot's Guide to Improving Your Credit Score" and "Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together."
AOL
While everything else is slipping, identity theft is on the rise, jumping to a record 9.9 million victims in 2008, which is up 22% from 2007. Approximately one in 23 U.S. adults became victims, according to Javelin Strategy & Research, who released their fifth annual study today. Total loses increased after three straight years of decline, but the loss per victim fell by 12% to $4,849 from $5,488. The most positive trend is that individuals spent 31% less (an average of $496) to clean up the mess. More than half of victims didn't have to spend anything to clean up after a fraud.
James Van Dyke, president of Javelin told CNN, "Identity fraud has been dropping until last year, boom, there was a turn-up. The only thing we can logically attribute that to is the economy. If people need to make money, and decide to do so illicitly, identity fraud is the logical opportunity."
Improper use of checkbooks and credit or debit cards after a wallet or pocketbook is lost or stolen remains the most common means of identity theft -- 43% of all incidents can be traced to this cause. About 25% of victims had their PINs compromised on ATM cards. Online fraud was the reason for 11% of cases.
So who's most likely to be a victim? People with incomes over $75,000 were more likely to be hit than those with lower earnings. By age, the highest fraud rate is among people between 35 and 44. Ethnically Hispanics were hit the most followed by African-Americans, Caucasians and Asians.
While it wasn't mentioned in CNN's story, I suspect identity fraud is rising because of job scams, where people get an email promising a job; in most cases the person receiving the email never applied for a position. These emails ask for one's key personal information, such as Social Security number and date of birth, and then the fraudster has all he needs to open a new account in your name or make changes to existing accounts.
How can you avoid identify theft?
* Don't give your Social Security number to anyone who calls you unless you do know the caller and were expecting the call. If the caller says they are calling from a company you do business with or from a company where you are applying for a job, ask for a call back number and verify that number is from the company the caller says he or she represents.
* Don't give out any personal identifying information on social networking websites and in chat room discussions. Always be sure to verify the identity of the person asking for the information.
* Keep your sensitive documents secure. A safe deposit box at your bank is your best bet.
* Shred any documents you want to throw out that have your account numbers or other identifying information on them. Shredders today are pretty cheap and a lot cheaper than cleaning up an identity fraud mess.
*Choose hard to guess passwords and pin numbers. Most people use a part of their name or a pet's name. Be more creative. Also, change up your passwords and pin numbers so you don't use the same one with several accounts.
If you do become a victim of identity theft, immediately notify your financial institutions and the three credit bureaus -- Equifax, Experian and TransUnion. The credit bureaus will put a fraud alert on your account. If your checkbook was used or stolen, your bank will recommend you close your account. While I know this could result in a lot of work, especially if you use online bill pay, I strongly suggest you follow their advice. I've been the victim of identity fraud two times in my life, one involving fraudulent checks (police suspected a check ring using checks from a donation I made) and the second involving the loss of my financial records when I mailed them in to a bank while working on a refinance (UPS lost the package). In both cases I had a new bank account the same day I discovered the problem. When I loan package was lost, I changed account numbers for every bank account, investment account and credit card.
The faster you act when you see signs of identity theft, the less work you'll ultimately need to do to clean it up and the less money you'll lose. Since experiencing the check fraud incident I check my bank and credit accounts online everyday for signs of identity theft.
Lita Epstein has written more than 25 books including the "Complete Idiot's Guide to Improving Your Credit Score" and "Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together."
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