Take Steps to Guard Against Identity Theft

EDITOR'S NOTE: This article was originally published in the January 2008 issue of Kiplinger's Retirement Report. To subscribe, click here.

In 1994, George Handiboe, a nurse's aide, began caring for an elderly man in Steelton, Pa. After the man died four years later, Handiboe, who lived in nearby Harrisburg, Pa., remained close with the widow. He took her to doctor's appointments, to dinner and to run errands. But it turned out he wasn't a friend -- he was quietly assuming her identity.

Handiboe opened credit-card accounts in the woman's name, according to the Pennsylvania attorney general's office. He also opened joint accounts, posing as the woman's son, law enforcement officials say. The family became suspicious after the woman moved into an assisted-living facility and her real son began receiving calls from creditors and collection agencies.

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During a search of Handiboe's home, agents seized a handstamp bearing the woman's signature. Handiboe, then 45, was charged with identity theft and other crimes in this case, and he was charged with similar crimes against a man for whom he had provided home care. In May 2007, he was sentenced to three to six years in state prison, prosecutors say.

Unfortunately, identity-theft crimes directed at seniors are far from rare. "Senior citizens are targeted in frauds and schemes," says Nils Frederiksen, spokesman for the Pennsylvania attorney general's office. "We know that thieves are looking to take advantage of them."

Thieves often go after the elderly because many have more cash reserves than younger people, and the elderly may be more trusting when telemarketers call for information. Some of the oldest seniors may not closely monitor their accounts. And many are not savvy about Internet scams. For instance, thieves assume seniors may respond to e-mails, perhaps purporting to be from the Social Security Administration, seeking personal information.

As with the Handiboe case, home-care aides, as well as retirement-home staff, may have easy access to a senior's records. Some retirees carry their Medicare card, which displays their Social Security number. One of the most important pieces of information to identity thieves is your Social Security number. "It's the holy grail," says Linda Foley, founder of Identity Theft Resource Center, a San Diego–based nonprofit organization.

Consider these examples of identity theft targeted toward seniors:

-- In December, a North Carolina woman was sentenced to 18 years in prison after being convicted of identity theft involving two elderly women living in a retirement community in Illinois. She was accused of stealing a total of $116,000 from the women's bank accounts. The thief obtained their information through repeated calls to the two women, according to the prosecutor. The prosecutor says the con artist pretended to be from various companies, such as AT&T and Walgreens, and from the state and federal governments.

-- In October 2006, four people in Michigan were sentenced to prison terms in connection with identity-theft charges involving a woman who lived in an adult-care facility that they owned in East Lansing. The four admitted to stealing as much as $200,000 from the woman, who had dementia, before she died in February 2005, according to the U.S. attorney's office.

-- A Georgia woman was accused in 2004 of being the mastermind of a multistate identity-theft ring. Prosecutors say the woman first scanned obituaries for names and addresses. Then she bought Social Security numbers and credit histories of the dead persons from Internet companies that do background searches, and she resold the information to people with bad credit. The thieves used the information to buy cars and open bank accounts under the names of the deceased.

Identity thieves obtain personal information through a variety of methods: digging through trash, stealing wallets or purses, taking mail from mailboxes, looking over people's shoulders at ATMs, and sending e-mails or letters pretending to be from the government or a company.

In some cases, thieves steal health-insurance and prescription-drug cards in order to obtain medical services or goods. When a thief uses the information to receive medical services, medical identity theft presents another danger for ID-theft victims. The victims may end up receiving the wrong treatment based on information put into a medical record by a provider who gave care to the ID thief.

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"The ID thieves like to prey on folks who are unsuspecting and careless with their information," says Matt Frendewey, spokesman for the Michigan attorney general's office.

In a survey by the Federal Trade Commission, 84% of victims didn't know the thief personally. The other 16% identified the crook as a family member, co-worker, friend, neighbor or in-home employee. More than half of all victims didn't know how their personal information was stolen, according to the FTC.

Protect Yourself From ID Thieves

More than 80% of older consumers are concerned about becoming victims of identity theft, according to a recent AARP study. There are numerous ways to fend off thieves. Most of the actions are simple. "It's a matter of being aware of your environment, being aware of your belongings," says Foley, of the Identity Theft Resource Center.

Guard your Social Security number. Treat your Social Security number like a precious possession. Never carry your Social Security card in your wallet, and don't give the number to companies. "Businesses rely on it far too much," says Jeannine Kenney, senior policy analyst for the nonprofit Consumers Union. "You should always ask if they absolutely need it. Many times they don't."

Keep your Medicare card at home. Remember, the card displays your Social Security number. "You don't have to carry your Medicare card around with you," says Sally Hurme, senior project manager with AARP's financial security unit. "Take it with you when you're going to the doctor."

Be wary of e-mails. Don't trust e-mails that claim to be from the Social Security Administration, the IRS or other government agencies. The same goes for e-mails that look like they're from your bank, telephone company or credit-card company. Only phony e-mails and phony letters will ask for your account number or Social Security number. "Banks don't do business that way," Foley says. "When in doubt, check it out."

Check out caregivers. If you're hiring a caregiver for a parent or spouse, make sure the agency conducts a background check. "The family should be watching what the caregivers are doing," Foley says. Also, consider having bills sent to a family member. Whether your loved ones live at home or in a senior center, encourage them to lock up insurance papers, their Social Security cards and other documents. And make sure to guard the key.

Take caution with obituaries. Don't use the exact birth date of the deceased. If the deceased is a woman, don't mention her maiden name, which many financial institutions use as a security password. When a loved one dies, notify the Social Security Administration immediately. Also alert the department of motor vehicles, because a driver's license is a key piece of identification that can be misused in the wrong hands.

Don't accept unsolicited visitors. Turn away anyone who visits you and says he or she is from the government, a Medicare prescription-drug company, an insurance company, charity or business. Do not provide any personal information to these visitors or to unsolicited callers.

Destroy the paper trail. Buy a cross-cut shredder, which makes documents harder to piece back together. Shred receipts, statements, preapproved credit offers, and any documents with birth dates, account numbers or Social Security information. Don't leave outgoing mail in your mailbox. Consider buying a locked mailbox to deter thieves.

Watch your credit. Check your credit report at AnnualCreditReport.com or call 877-322-8228. You can receive one free report a year from each of the three credit agencies, so consider ordering one every four months to stagger the reports. You may also want to set up a fraud alert with each reporting agency. That way, the credit issuer will notify you, or attempt to verify the information presented, if someone applies for credit in your name.

The three agencies are Equifax (www.equifax.com; 800-685-1111), Experian (www.experian.com; 888-397-3742) and TransUnion (www.transunion.com; 877-322-8228).

You can also establish a credit freeze, or security freeze. Unlike a fraud alert, a freeze blocks access to your credit information. "The creditor is less likely to issue a credit card to someone whose information they can't access," Hurme says.

With a freeze in place, no one, including you, can open new lines of credit in your name. Also, insurance companies and employers cannot review your credit information. However, you can lift the freeze with a personal-identification number.

If you think your identity's been stolen, first gather evidence, such as a notice from a collection agency or a credit-card statement. Set up a fraud alert, file a police report, and establish a security freeze.

For more tips on preventing identity theft or responding to it, visit the Web sites of these organizations: Federal Trade Commission (www.ftc.gov/bcp/edu/microsites/idtheft), Identity Theft Resource Center (www.idtheftcenter.org) and AARP (www.aarp.org/learntech/personal_finance, click "Preventing Identity Theft").