Protect Yourself from the Perils of Identity Theft

Physician's Money Digest, May 2006, Volume 13, Issue 5

Many successful physicianshave found themselves thevictims of identity theft. It is an ever-growing problem thatcan affect not only your personal finances but your medicalpractice as well. There are some who take objection to theterm "identity theft" because they maintain that identityisn't something that can be stolen, since victims don't stopbeing who they are. According to Wikipedia.com, JavelinStrategy & Research founder James Van Dyke says thereshould be separate and distinct definitions for the terms"identity theft" and "identity fraud." He explains that"identity theft" applies to unauthorized access to your personalrecords, while "identity fraud" is the unlawful use ofpersonal records. Identity fraud can be committed withoutany actual identity theft being perpetrated. For example, acriminal who generates random credit card numbers for usein fraud won't necessarily know the name of the victimthey've robbed. Likewise, identity theft doesn't always bringabout fraud if the victim acts to prevent it.

Methods of Theft

These days many people associate identity theft with stealinginformation over the Internet and overlook the reality thatcrafty thieves can rob them of their identity in numerous, moretraditional ways. While high-tech thieving techniques such asphishing (ie, when hackers send e-mails posing as legitimatebusinesses to unsuspecting consumers and ask for personalinformation to be updated, collecting the consumers' passwordsand account numbers) and pharming (ie, where virusesare attached to e-mails and Web sites that monitor a victim'scomputer and steals their passwords when they visit financialsites) have taken center stage, there are several other scamswith which you should be concerned.

In fact, according to the Office of Inspector General, identitythieves can obtain your personal information in myriadways, including the following:

  • Snatch your wallet,
  • Take your mail right out of your mailbox, giving themaccess to your bank and credit card statements,
  • "Dumpster dive" into your garbage to obtain documentscontaining your personal data that you may have carelesslythrown out unshredded,
  • Break into your home to uncover personal information,
  • Pilfer files and documents from your workplace, or evenbribe your employees to give them information,
  • Steal your credit card report bysaying they're your landlord or employer,or
  • Obtain a copy of your birth certificatefrom the government.

Identify a Scam

Recognizing a scam is easier thanyou'd think, applying the old adage, "Ifsomething seems too good to be true, itprobably is." Always check the legitimacyof any kind of offer or informationupdate before you do anything else.According to the Identity Theft ResourceCenter (www.idtheftcenter.org),there are four main forms of identitytheft that you need to be aware of:

•Financial identity theft. Thismost common form of theft involves thestealing of your name and Social Securitynumber, which the thief uses toapply for things such as credit cards,loans, phone services, leasing cars orapartments, or buying merchandise.

•Criminal identity theft. Criminaltheft happens when the thief providessomeone else's information instead oftheir own when they're stopped by lawenforcement officials. Ultimately, anarrest warrant is issued for the innocentvictim because it's their name on thecitation, not the real criminal's.

•Identity cloning. With cloning, athief uses someone else's personal informationto set up a whole new life,where they work and live under theassumed identity of the victim. Someperpetrators of this crime include illegalaliens, criminals on the run, or someonehiding from an abusive situation.

•Business or commercial identitytheft. Similar to personal financialidentity theft, this type of theft involvesthieves obtaining credit cards or checkingaccounts in the name of a business—which could happen to yourpractice. Usually, the business becomesaware of the theft only after their supplierssend them collection notices ortheir business rating score slides.

Because of the widespread belief thatphysicians are rolling in money, MDsand DOs are an attractive target foridentity thieves. Whether that's a fairassumption or not in your case, you stillneed to be aware of the methods ofidentity thieves so you're able to takeevery precaution to prevent this crime,should it occur.

Insure Against Theft

If you already take the appropriatepreventive measures against identitytheft—such as checking your creditreport, shredding all your documents,and protecting your passwords—andyou still feel that you are exposed toidentity thieves, you can take out anidentity theft insurance policy. Accordingto Bankrate.com, identity theftcoverage can be added on to yourexisting homeowner's or renter's policy,which would cost around $25 to$50 per year.

Identity theft insurance covers a widearray of different fees that you mayincur as a result of having your identitystolen, including the costs of mailingcredit statements, acquiring credit reports,reapplying for loans that you'dbeen denied because of the theft, and, insome policies, equitable attorney fees.There are also policies that will reimburseyou for wages lost as a result oftaking time off from your job to restoreyour credit. However, some consumeradvocates say that rather than clingingto an identity theft insurance policyyou should spend your time andmoney on taking pre-emptive actionsto diminish your chances of becominga victim.