According to the Federal Trade Commission (FTC), approximately nine million identities are stolen every year. Although this crime is usually repairable, it can cost you thousands in extraneous fees to reestablish your name and credit. Additionally, you’ll have to go through the headache of not being able to use your credit cards, not being able to obtain a new loan and, in some cases, criminal investigation. The holiday season is stressful enough, so it is important to watch out for holiday fraud and identity theft to ensure your holidays, especially on e-commerce sites. With millions of individuals shopping online for the holidays, consumers are vulnerable to cyber thieves more than ever before.
Luckily, some employers offer identity theft insurance as a voluntary benefit that can help protect you in case you fall victim to identity theft.
Identity Theft Coverage
What Is Identity Theft Insurance?
Identity theft insurance is a type of insurance designed to relieve you or your employees of the financial burden of repairing damages after your identity has been stolen. It’s important to note that this insurance does not reimburse you for theft such as stolen credit card numbers or forged bank checks, but rather prevents further loss once you have already become a victim of identity theft. Also, identity theft insurance does not work to prevent identity theft itself. However, it does help with expenses as you navigate the daunting recovery process, which can be helpful whether or not you actually lost money to an identity thief.
As stated earlier, identity theft insurance covers the costs victims will incur while they are building their identity. The coverage may include:
- Any legal fees
- Phone call and photocopying charges
- Postage fees for mailing documents
- Loss of salary due to uncompensated time away from work while repairing one’s identity
- Access to a fraud specialist who can assist in restoring good credit and protecting one’s identity again
- Help with preparing documents, filing police reports, and creating a fraud victim affidavit — if necessary
Since victims usually spend a substantial amount of time recovering from identity theft, these provided services can help make the situation a little less stressful both on the mind and the wallet.
How Does Identity Theft Insurance Work?
As a voluntary benefit offered by your employer, your premium for identity theft will most likely be paid through a payroll deferral. You will also likely receive a group discount as the insurance is offered through your employer. In terms of the actual process, after making a claim, you will be reimbursed for expenses that are specified in your plan. Some plans may have a deductible, which is the amount you would have to pay before the insurance starts to pay anything. Furthermore, there is usually a coverage limit between $10,000 and $1 million. Your insurance may have a limit for each occurrence, a limit per policy period, or both.
How Identity Thieves Obtain Information
According to American Banker, approximately one quarter of e-commerce transactions during Cyber Monday in 2020 were believed to be fraudulent. This is prevalent now more than ever in the COVID-19 pandemic where digital sales have become a primary source of reliance for many e-commerce businesses. According to Payments Dive, e-commerce fraud has had an 18% jump over the last year, and it is expected to surpass $20 billion in 2021. Coupled with the pandemic, online shopping during the season has increased exponentially due to limited store hours, lack of available options for in-person shopping, and concerns over health exposures. According to the TransUnion 2020 Holiday Retail Report, about 50% of consumers were worried about fraud during the holiday season.
Therefore, it’s vital to understand how identity thieves steal information and what to look out for. Identity thieves have several ways to gather your personal information, including:
- Stealing personal items such as wallets, purses, laptops, and mail
- Searching through garbage for discarded credit card statements, bank statements, and pre-approved credit card offers
- Hacking into computer systems
- Posing as someone from a bank or credit card company to obtain information
- Conducting telephone and email scams
These are all common examples of how identity thieves steal information in today’s day and age. Knowing what to look out for can help prevent the crime from ever happening and save you significant time that would’ve been wasted recovering your credit.
Always Stay One Step Ahead
The Federal Bureau of Investigation (FBI) has recommended precautionary measures one can take to minimize the risk of identity theft. According to Neon One, 31% of all donations Americans make are done during the month of December, usually towards charities for the holiday season. Thus, one key element that identity thieves often use during the holiday seasons are charity scams. The FBI advises that consumers take extra steps to avoid charitable cause scams by researching the charity itself before donating, and utilizing resources from the Federal Trade Commission to examine the accuracy and track record of a charity. This will help to ensure that any donations being made to these charities are not stolen by fraudsters.
Another recommendation is to only carry what you need in your wallet or purse, and leave your Social Security card at home in a safe place. Lastly, you should always pay attention to your billing cycles as identity thieves may change your billing address on your credit cards, so late bills may be a red flag. You can also opt-out of receiving credit card solicitations in your mailbox as this can raise the risk of stolen information. To do so, call the National Credit Reporting Agency at 888-567-8688.
According to American Banker, a significant tool that can be utilized to prevent and stop fraud is mobile device identification. With consumers increasingly using their smartphones to shop, device identification can accurately identify an individual’s mobile device that has been used in previous transactions or purchases to further prevent fraudulent activity.
Report Identity Theft Instantly
When it comes to identity theft, acting as quickly as possible can help you save time, money, and headaches. If your wallet or valuable personal information has been stolen:
- Determine what has been stolen and call all creditors immediately to freeze your accounts.
- File a police report. This will help provide proof of immediate action to your credit card providers.
- Call the three national credit reporting bureaus and the Social Security Administration so that a fraud alert can be placed on your name and Social Security number.
By acting fast and following these steps, you can ensure that your credit will be rightfully restored.
Social Security Employee Benefits For The Holiday Season
As the holiday season approaches, taking the initiative to protect your credit and that of your employees is of the utmost importance. Whether you’re doing holiday shopping at home, at work, or out in public, every individual is unfortunately susceptible to identity theft and seeking assistance after the crime is just not enough. With Alltrust Insurance, employers sponsoring an identity theft insurance plan in the Tampa Bay region can purchase this coverage for their employees or offer it as an employee funded option on their regular benefits package. Contact us today to learn more or get started.