ID Thieves are Working Overtime During COVID
Here’s how to protect yourself
The economy may have been shut down for periods in 2020, but identity thieves were busier than ever.
The Federal Trade Commission (FTC) tallied 4.7 million fraud reports filed in 2020, a 45% increase from a year earlier.
Fraud is so rampant, the FTC’s database now has 29 different categories to keep track of things. Last year, as is true every year, identity theft was the single biggest area of complaints; the 1.4 million ID theft complaints was nearly double the complaints filed in 2019, and accounted for nearly 30% of all consumer fraud complaints.
If you haven’t been hit, consider yourself lucky.
The race for government benefits
Typically, the bulk of ID theft complaints involve credit card fraud: Someone gets ahold of enough personal data to steal someone’s identity and use it to open credit cards in that person’s name.
Yet in 2020 the biggest source of ID theft complaints was people claiming their identity was stolen and used to file for government benefits — more than 406,000 complaints about government benefits fraud in 2020, compared to around 23,200 in 2019.
The identity thieves were pouncing on the surge in unemployment benefit claims. State-run unemployment offices were overwhelmed, and thus less able to spot thieves submitting claims.
Credit card ID theft fraud rose 44% in 2020 to more than 393,000 ID theft claims.
Some easy — and free — ways to increase your ID theft vigilance
Credit bureaus, of course, see identity theft as a business opportunity and are busy trying to sell us all protection. Before you go that route, consider some free ways to do your own monitoring:
—Check your credit report at annualcreditreport.com. It’s free at this website. Never share credit card info for a credit report. Typically you can get one free report each year from the three main credit bureaus: Equifax, Experian and TransUnion. But given the explosion in fraud issues during Covid, you can check your reports weekly through April 2021. When you check your credit report, look to see if there are any new accounts in your name that you didn’t initiate.
And also look for “hard inquiries.” A hard inquiry is when a business asks for details about you, which only happens when you apply for credit/loans. If you see hard inquiries and you haven't been shopping around for money, that’s a warning signal an identity thief may be lurking.
And it’s not just fraud you need to check. You also want to make sure there are no mistakes on your reports.
During the pandemic, the federal government is allowing borrowers with federal student loans or federally backed mortgages to skip payments without interest (they will be added back to the balance when repayment resumes). If you have taken a break from either type of loan repayment, the rule is that those loans should still be posted as “current” on your credit report. If they have been marked as late, that will hurt your credit score.
When you view your credit report online you will likely see an upsell to check your credit scores. Don’t click on it, as it will likely end up costing you money. (They ask for your credit card info, and start billing after a trial period. You know the routine.) You can likely get your FICO score for free. More on this in a sec.
—Make it harder for thieves to take out credit in your name. All three credit bureaus allow you to place a fraud alert on your account, which requires businesses to go an extra step to confirm it’s actually you when there is a request for credit or a loan. Another option is a credit freeze. This is a bigger step as it prevents anyone from accessing your credit reports. If you want to legitimately apply for credit or a loan and your credit file is under a freeze, you will need to contact the credit bureau and ask for the freeze to be lifted so a lender can access your credit report. Granted, that’s a bit of a pain (it can be done online), but it delivers plenty of peace of mind. The FTC has a good explainer on how fraud alerts and credit freezes work:
—Check your credit score, for free. Your credit score is a three digit number that ranges from 300 (not good) to 850 (fabulous) and is based on all the data in your credit report. Many banks and credit card issuers now offer a monthly free peek at one of your credit scores. Log in to your account and you will likely find a link to check your score. Do it. This is such a simple way to stay on the lookout for any signals something is amiss. If your score falls, there might be a legit explanation for why. Perhaps your unpaid balances grew. But it could also signal that someone else got access to your account and opened a credit card or got a loan.