Identity Theft Through a Lifetime

Identity thieves discriminate to some degree. Anyone -- young or old, rich or poor -- can be a victim, but fraudsters generally prefer the easiest targets.

While most Americans are doing more to protect themselves from identity theft, others allow themselves to be more vulnerable. The greatest risk is to the 25- to 34-year-old age group. The good news is that as we get older, we're less likely to become a victim.

"What we're finding is that once somebody gets past the age of 44, the numbers start going down," says Keith Anderson, a spokesman for the Federal Trade Commission.

Still, 8.1 million adult Americans last year discovered that ID thieves had breached their personal data and committed one or more crimes against them, according to a February report by Pleasanton, Calif.-based Javelin Strategy & Research.

ID theft risks at various ages

Children
Teens and young adults
Young families
Middle years
50-plus

Children

In February, the FTC reported about 5 percent of all identity theft complaints involved victims under 18.

The true number is suspected to be higher when children are involved, but there is just not enough reliable data concerning that age group, the FTC's Keith Anderson says.

Victims' rights advocates say that these cases frequently don't result in prosecution when children are victims because the perpetrators are often the children's parents or caregivers.

"In one case, we saw a young man about 10 or 11 years old who discovered his father had stolen his identity and had run up a $5,000 debt," says Jay Foley, executive director of the Identity Theft Resource Center in San Diego.

It never occurred to the young victim that his father had committed a crime. Instead of reporting it to the police, the boy selflessly tried to help his father right a wrong.

"This kid's idea of trying to do the right thing was going out to mow lawns to pay back the creditor," Foley says. "He's charging $5 to $10 per lawn -- well you can figure out the rest."

The California case highlights an unfortunate trend when it comes to victims of identity theft. About half of all victims take no legal action whatsoever, according to the Javelin report. The number is likely higher when the victim is a child, although the FTC does not keep records on whether the victim and perpetrator are related.

The highest rate of child identity theft in California comes from children placed in the foster care system, according to Foley. Statistics indicate that a significant percentage of foster children who leave the system at age 18 are victims of identity theft, he says.

The crime can be insidious at this stage of life because oftentimes ID thieves have years to ruin a child's reputation before any damage is discovered.

"One of the cases we dealt with is a young lady who discovered on her 18th birthday that her mom had been stealing her identity for the past eight years," he says. "Here she is, 18 years old, and she's saddled with this horrendous credit history."

Foley says there is a direct correlation between parental drug abuse and identity theft. The problem in the foster care system became so acute that the state of California recently passed a law mandating a credit report check for any child in foster care as soon as they turn 16.

"Somebody who is such a poor parent, where the state has to intercede, probably doesn't care about the child or the child's identity," he says.

Foley advises parents to take action if their child receives unsolicited offers of credit or if they are contacted by debt collectors regarding an account placed in their child's name.

"If a parent believes his or her child has been a victim of identity theft, the parent or court-appointed guardian should request credit reports from Equifax, Experian and TransUnion," says Sandi Copes, spokeswoman for the Florida Attorney General's Office.

"This should be done in writing and the parent should request that a fraud alert be placed on the child's credit report in addition to contacting law enforcement," she adds.

Teens and Young Adults

Most of the time, parents don't even think to check their child's credit report. But by the time the child graduates from high school, it could be too late.

Here's a scenario: "You just graduated from high school, you've turned 18 years of age, and you have plans to go to college. You can't because somebody has already put you $70,000 into debt," says Jay Foley, executive director of the Identity Theft Resource Center in San Diego.

Foley says the process to clear up the fraud could take up to two years and make it hard for a young person to get credit, rent an apartment or find a job.

"Remember, you're badly in debt and most of the stuff will probably already be in a collection, which means that most employers are going to look at you as a bad potential employee," he says.

"Right off the bat, you're behind the eight ball."

To complicate matters, teens and young adults are among the least likely to take steps to prevent identity theft.

"I think what you have is the stereotype about young people taking more risks," says James Van Dyke, president of Javelin Strategy & Research. "We've found that they take two times the average risk as other demographic groups."

Van Dyke says part of the problem is that young adults simply conduct more transactions using credit cards and are more likely to use online banking, often with an unprotected computer.

In addition, teens are increasingly using social networking sites such as MySpace and Facebook to create blogs and post photos, videos and music. A 2007 report by the Pew Internet & American Life Project concluded that 55 percent of all online teens had a profile on a social networking site.

When teens put too much personal information out in the virtual world, they give real-world con artists the opportunity to steal their identities.

File-sharing software, which allows users to download music and videos, is particularly risky, experts say.

"The biggest identity theft threat posed by peer-to-peer software such as LimeWire, etc., is that people who use it don't often realize that they have documents with sensitive information in the same folders as the files that they are sharing with the world," says Paul Ferguson, network architect with Trend Micro, an Internet security solutions provider.

"Unfortunately, these sensitive documents often end up in the wrong hands," he says.

The cell phone is another conduit for identity theft when conversation is between a young person and his or her bank or credit card company -- particularly when it is within earshot of a fraudster.

"Hanging around at airports, riding trains or anywhere in public, you'll find people calling their banks and credit card companies on cell phones and talking loudly just to be heard," says Jamz Yaneza, research project manager at Trend Micro.

Yaneza says he's heard young people openly dictating their credit card numbers and Social Security numbers over a cell phone in public. He says it's safer to go online or wait until you can make the phone call in privacy.

There's also a higher risk to young adults due to their transient nature. The college lifestyle, with frequent moves to new dorms and proximity to new roommates, can take its toll on the blithely unconcerned college student.

Van Dyke says college students are notorious for leaving doors unlocked, computers unsecured and credit card bills in plain sight of potential thieves -- behaviors that invite trouble.

"If you have roommates, you should always keep paper statements under lock and key," he advises. "Paper is a risky financial document. Six percent of all ID fraud comes from paper documents."

Young Families

Newlyweds just starting out generally have positive outlooks, believing that the best days are ahead of them. But if their credit card or bank account information were filched somehow, they may face tough times ahead instead.

More than 77 percent of those in the 25- to 34-year-old age group are concerned about having their identities stolen, and the area of most concern is the safety of their personal information on the Internet. Nearly 56 percent in this age group expressed concern about online security, according to Bankrate's recent poll.

Often young families are living paycheck to paycheck and don't have much money saved. If they think they can clear their good names with a simple call to their creditors and bank, they're often mistaken.

If an ID thief gets a person's checks or debit card and drains his bank account, he generally has 48 hours to report the fraud. After that brief window, the person's on the hook for $500. If he doesn't report fraud within 60 days, his liability is unlimited.

Most banks will credit your money back within a few business days after confirming the fraud through an investigation. Bank of America and Wachovia representatives say their customers have up to 60 days to report fraud, but it's always wise to check a bank's specific policy.

Although many banks won't hold customers liable for monetary damages, some victims still wind up paying several hundred dollars in legal fees and expenses to clear their names.

The Javelin report indicates a strong correlation between detection time and consumer costs in all cases of fraud. Generally, the longer the fraud goes undetected, the more the victim pays out of pocket.

A 2006 FTC report concluded that more than 50 percent of identity theft victims incurred no out-of-pocket expenses, but the top 10 percent incurred expenses of at least $3,000 and the top 5 percent reported expenses of $5,000 or more.

If an identity thief has enough time to damage your credit report, your insurance rates could go up and your credit limits could go down -- two things that could put a dent in a family's household budget.

"When I was 25 and starting to raise a family, I didn't have a lot of spare time and I didn't have a lot of spare cash," Foley says. "To have someone come in and put me behind the eight ball with identity theft would have been devastating."

Identity theft may force a family to make lifestyle changes, such as cutting down on dining out and buying household goods, while they are clearing their name.

If thieves get a hold of your driver's license and get one or more unpaid tickets in your name, your license could be suspended, unbeknownst to you.

Things could get a lot worse if an identity thief commits a crime and gives the police your identification.

"If there are failures to appear (in court) or warrants for a victim's arrest, they can be detained until proof of the identity theft case is provided to authorities," says Sandi Copes, spokeswoman for the Florida Attorney General's Office.

"These are all things that young couples starting out, who don't have a lot of money coming in, really can't afford," says Foley.

Middle Years

Fortunately, as consumers ease into their middle years and leave behind the cavalier days of youth, the risk of identity fraud decreases.

It's not by sheer coincidence or luck that 35- to 50-year-old consumers are less likely to become identity fraud victims. Their behavior is less risky.

Nearly two-thirds of middle-aged adults polled by Bankrate last month said they have made changes in their behavior to avoid identity theft.

James Van Dyke, president of Javelin Strategy & Research, says there are two key reasons that this group enjoys reduced risk.

"People 35-50 are not doing major transactions for the first time as are people in the age group just slightly younger," he says. "That's where you get some especially heavy transacting."

Consumers under 35 are often having children for the first time. They're buying first homes and conducting lots of other first-time transactions, which, Van Dyke says, often leads to higher risks of identity fraud.

Another factor is experience. Middle-aged adults tend to be less haphazard with their finances and are more likely to have a protected computer and to shred documents.

"As people get into their middle age years, they are probably most safe based on behavior," he says.

50-Plus

As consumers age, they become more concerned about having their identities stolen. Bankrate's poll found that nearly 87 percent of Americans ages 50 to 64 reported they are very or somewhat concerned about having their identities stolen. And more than 81 percent of Americans age 65 and older are concerned.

Ironically, studies suggest seniors are the least likely demographic to become victims of identity fraud.

That's because seniors are increasingly becoming more vigilant about all types of fraud, from telephone solicitors to phishing scams.

"Seniors may be more cautious," suggests Sally Hurme, senior project manager at AARP. "It's a little hard to know exactly why the numbers are what they are, but we're glad to know that seniors don't appear to be as vulnerable or susceptible to ID theft," she says.

James Van Dyke, president of Javelin Strategy & Research, says federal agencies oftentimes portray seniors as sympathetic victims, thereby creating a false sense they are more likely to be preyed upon. But their actual risk of identity fraud is about half that of younger people.

The reasons: Seniors tend to be more conservative and conduct fewer overall financial transactions, he says.

Those who are online take advantage of newer security tools, such as antivirus software, and they are cutting down on the use of paper checks, Van Dyke says.

In Bankrate's poll, 89 percent of consumers age 50 to 64 said they regularly shred unnecessary documents containing sensitive information. Some 69 percent said they would consider initiating a credit freeze to protect their information. In the 65-plus age category, nearly 79 percent shred documents, and 53 percent would consider initiating a freeze.

AARP recommends credit freezes as a proactive measure so consumers don't have to wait until they "think they've been victimized by an imposter."

Hurme says that the AARP has been very active in advocating credit freezes to state legislatures.

If seniors are becoming savvier when it comes to sniffing out identity fraudsters, they still make attractive targets to phone scammers.

"People trying to earn their trust over the phone is on the increase," Van Dyke says. "But still they are preyed on less than the younger demographic of 25 to 35."

Most scams perpetrated against seniors are usually unsuccessful when the person is able to live independently and has no major health issues, according to the Identity Theft Resource Center's Jay Foley.

But that scenario can change dramatically when seniors enter assisted living facilities or are suffering some sort of dementia-based affliction. Foley says they are often targeted by either workers at the facility or their families, or a combination of both.

"There was a scam last year where a group of people working at a rehabilitation center filed income tax returns using patient identifications," he says. "They got a lot of money back from the government before somebody (from the IRS) found out that none of these patients worked the year before."

Identity thieves who find jobs using pilfered Social Security numbers of seniors inflict tremendous financial strain on their victims, particularly those seniors who are receiving disability benefits.

"If I take your Social Security number and start working, what happens? Well the Internal Revenue Service wants to talk to you, but more importantly, the Social Security Administration says: Wait a minute, you're working, you're not entitled to benefits, so they are going to shut them down," Foley says.

Meanwhile, says Foley, the review process for getting disability benefits turned back on can take anywhere from four to seven months -- an inordinate amount of time for seniors living on a shoestring budget.