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Identity Theft: Three Sources of Consumer Risk Exposure

This article reports findings from a study of practices used by consumers to reduce the incidence of identity theft. Identity theft is stealing a victim's personal information to commit a crime such as making fraudulent charges on a credit card. Identity theft often goes undetected for months, allowing fraudsters the luxury of time to commit their crimes.

In 2003, Rutgers Cooperative Extension introduced an online Identity Theft Risk Assessment Quiz, which is available at www.rce.rutgers.edu/money/identitytheft. The quiz includes 20 questions, each weighted at from 1 to 5 points apiece, so that total scores can range from 20 to 100. The higher the total score, the more frequently a respondent is practicing identity theft risk reduction strategies. The following scale was used for responses to each of 20 questions about specific identity theft risk reduction strategies: 1. "I never do this," 2. "I rarely (every once in a while) do this," 3. "I do this about 50 percent of the time," 4. "I usually (almost always) so this," and 5. "I always do this."

In an initial analysis of 105 responses to the Identity Theft Risk Assessment Quiz, three items had average scores below 3.0, indicating practices that were performed by respondents less than 50% of the time. These items and their scores are as follows:

 

Quiz Item                                      Score 

 

1. I check my credit report from each of the  

three major credit bureaus (Equifax, Experian,  

Trans Union) annually to look for errors and  

evidence of identity theft.                       2.2   

 

8. I have a post office box or a locked  

mailbox for incoming mail (especially checks  

and bills).                                       2.6  

 

13. I avoid carrying my Social Security card in  

my wallet as well as any type of identification  

card with my Social Security number (or my  

spouse's Social Security number) on it.  This  

includes college ID cards, military ID cards,  

employee ID cards, and health insurance/ 

prescription drug ID cards.                       2.6  

One of the major methods of uncovering identity theft, checking a credit report, was the least frequently performed identity theft risk reduction strategy in this study. For some reason, perhaps cost or the time or know-how that it takes to make a credit file request, many people are not taking advantage of a valuable resource for limiting the amount of damage that an identity thief can cause.

An analysis was conducted to test for differences between respondents residing in states that mandate free credit reports upon request and others. No difference was found between these two groups of consumers, indicating that cost may not be a primary barrier.

Another risk reduction practice that is performed infrequently is using a post office box or locked mailbox for incoming mail. Not securing incoming mail is probably a matter of convenience (i.e., not having to drive to a post office box to retrieve mail) or an inability to purchase or use locked mailboxes where one lives (e.g., at certain housing complexes) or on a rural route address.

A third area of weakness indicated by quiz respondents was carrying around a Social Security card and/or some type of identification card (e.g., employee ID or health insurance/Medicare card) with a Social Security number imprinted on it. Many people apparently feel that carrying around these cards is essential and are not heading warnings to "travel light" without ID that contains sensitive data.

There is a viable alternative, however: carrying around an original card only when it is absolutely necessary (e.g., a health insurance card on days that you are visiting a health care provider) and otherwise carrying around a photocopy of the card with the Social Security number deleted. If an original ID card must be worn (e.g., an employee ID), care should be taken to shield the Social Security number from public view.

This study is limited in generalizability because the sample was small, convenient, and non-random. Nevertheless, the findings are instructive to consumers. This study identified three areas of weakness that should be addressed to reduce the risk of becoming an identity theft victim. Readers are encouraged to take the quiz to learn more about their individual risk factors for identity theft.