Identity theft by a family member or friend, or “familiar fraud,” is unfortunately common. Around 550,000 people had their personal information compromised by someone they knew in 2014, according to Javelin Strategy & Research data reported by CNBC.com.
If you know how to prevent identity theft, you can protect yourself and important personal information from being misused, even by people you love and trust. Learn how to prevent familiar theft, and find out what to do if it’s already happened.
How familiar fraud happens
In about a third of identity theft cases, the victim and perpetrator are family members.
What’s more, identity thieves who commit familiar fraud are more likely to use stolen information to create new accounts, according to a University of Louisville study. In comparison, other identity thieves usually attempt to use personal information to illegally access already existing accounts.
Familiar identity theft is complicated because these crimes are perpetrated by a person the victim trusts. “The information necessary to perform identity theft, such as credit cards, mail, checkbooks, etc., are easy for thieves to get from a family member,” says Paul Bischoff, a writer for Comparitech.
These are the people routinely invited into a victim’s home and trusted to be around valuables and personal identification documents. They might even have been provided this information by the victim for legitimate reasons, and then misuse it to open a new account or take out fraudulent loans.
“Familiar fraud is believed to be under-reported, likely because victims fear they won’t be believed by authorities or they fear straining family bonds,” says identity theft expert Robert Siciliano. “In other cases, it can go undetected; who’d ever suspect a family member could do such a thing?”
How to prevent identity theft by a family member
Your biggest defense against familiar fraud is to guard personal information and closely monitor financial accounts and credit reports.
“Review your credit reports and your child’s credit reports at least once or twice a year,” Siciliano recommends. Make sure all accounts are legitimate and there are no credits or loans you don’t recognize.
Do the same for your children, as minors are often the target of identity theft. “When a parent seeks out a child’s credit report and there isn’t one, that’s a good thing,” he adds.
You can even take it a step further. “If you have children, consider placing a credit freeze (sometimes called a credit lock) on their accounts until they’re older and need a credit card or loan,” Bischoff suggests.
Closely guard your personal and financial information. Keep documents with your identifying information, like tax returns or a Social Security card, in a container that requires a key or code to access.
“Never give your credit or debit card out to relatives or friends,” Siciliano suggests. Give them cash instead to contribute to a night out or help them out in a pinch.
Lastly, closely check your monthly bank account statements and report even tiny, unfamiliar charges. Watch out for mail or emails about accounts you’re not aware of. “If you get a bill for something you don’t recognize, don’t just throw it out,” Bischoff says. “Contact the company and inquire how it got to you.”
How to resolve familial identity theft
When you’re the victim of identity theft, things can get complicated much faster if you’ve been targeted by a familiar member.
“The fallout of familiar fraud is much deeper than stranger fraud,” Siciliano says. “Imagine the emotional damage when you learn your estranged father is your identity thief.” It can complicate family relationships that might already be strained.
“To further complicate things, once the victim learns that the thief is a close friend or family member, they often feel tempted to protect this criminal,” Siciliano points out. “They may also want to protect the thief to preserve family relationships or avoid backlash from other family members.”
First and foremost, put a credit freeze on yourself. This means telling the three major credit bureaus that you are not seeking new credit accounts, and they should deny any request tied to opening a new account. This might also be the time to invest in an identity theft protection service.
Reporting a family member for identity theft
Next, you’ll need to decide what to do. “It may be tough weighing the pros and cons of handling the situation without involving the authorities,” Siciliano says. If the extent of the damage is small, it’s possible to resolve the issue without involving the police.
“If you don’t wish to report a family member, you can contact the credit issuer to try and get the account moved to the impostor’s Social Security number,” says Bischoff. This might be more likely if you have the thief’s cooperation and they want to do what it takes to make things right.
If you aren’t willing to let things slide but you’re unsure about police involvement, “Consider legal mediation in which a law firm will help you set up a legally binding plan for the imposter to pay off their debt over time,” Bischoff recommends.
Filing a police report for familiar fraud
If the damage is extensive or your thief is unwilling or unable to take responsibility for fraudulent debts, a formal police report might be your only option to avoid liability for the fraudulent accounts.
If you decide to do this, Siciliano recommends a three-step course of action: “Place a 90-day fraud alert on your credit, file a police report, and dispute all fraudulent charges and accounts,” he explains.
“Whether because of hardships, mental health issues, or simple greed, familiar fraud and family identity theft is probably the worst of all,” Siciliano says. That’s because, “in order to be forgiven of the debt, the victim may be required to press charges against a loved one.” It’s not an easy choice to make.
That makes it all the more important to be aware of this threat and learn how to prevent identity theft. Taking simple steps, like reviewing monthly account statements and annual credit reports, can help you catch familiar fraud early on. And with early intervention, you’ll have more choices about how to handle the fraud and the family relationship.
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