I wanted to take a few minutes to talk about identity thieves themselves. This may not be as important as knowing the 8 types of identity theft, or how to protect yourself from identity theft, but for those who have been a victim having an idea who commits identity theft will generally give you an idea of the work ahead.
Identity thieves generally fall into three different categories. Each category has specific characteristics or signs, and you must guard against them differently. Since each category affects different types of victims, the number of victims a specific identity thief will harm varies.
Professional Identity Theft
For our purposes, the term professional identity theft means your identifying information has been misused by the trusted adviser. This may be an insurance agent, doctor, financial adviser, real estate agent, teacher, or anyone else who has a legitimate reason to collect your personal information. These identity thieves often commit medical identity theft, social security identity theft, or financial identity theft. Individuals and small operations often steal dozens of identities at a time, so it is not unusual for their victims to number in the thousands or even tens of thousands.
H & R Block has made headlines for three years running because one of their employees steals the identifying information of previous clients and submits tax returns in their name. Despite the various controls that have been put in place, tax time is particularly hazardous when it comes to identity theft. This most likely happens at all tax preparation services, but H & R Block gets a lot of press because they are so well known.
From the medical identity theft side, doctors, nurses, and other health practitioners (and people who have access to their offices) sometimes submit false insurance claims for payment, citing services that were never provided, or illnesses you don’t have. This is particularly dangerous for the victim, because it often results in false medical information showing up in your Medical Information File. The World Privacy Forum published a paper on this titled Medical Identity Theft: The Information Crime that Can Kill You (PDF) . Simply put, having someone else’s medical information in your file can cause you to get the wrong treatment in a hospital or other medical situation. For example, a doctor might give a patient insulin because their medical record says they are diabetic when they aren’t, order the wrong blood type for a surgery, or treat other illnesses that the patient does not actually have.
When you are a victim of one of professional identity theft, chances are good there will be financial consequences as well. For example, if your medical information bureau file start showing treatments for cancer, your insurance company will probably find out about it. If you get your insurance through work, your human resources department may find out about these bogus treatments when the insurance rates go up for the entire company. Soon afterwards, you are fired from your job for some silly reason like using your cell phone in the wrong part of a building. This entire chain of events is illegal, but it happens frequently and is almost impossible to prove. The bottom line is, now you are looking for a job, nobody wants to hire you because they think you have a terminal illness, but no one can tell you this without revealing that they are getting information through back channels.
Since these identity thieves are supposed to protect this information, they are in the perfect place to hide the identity theft. This means it may take a long time to discover you are a victim. More often than not you will find out when you read about a sting operation that includes one of your trusted advisers.
These sorts of identity thieves tend to get caught and prosecuted more frequently, because insurance agencies and the IRS are very interested in shutting down these scams. What’s in their best interest may also be in your best interest, even though it is only a secondary consideration. You may even get the satisfaction of seeing the identity thief go to jail for their crimes, but this does not generally help you clean up the records.
You they also catch professional identity theft by looking at your Explanation of Benefits (EOB) from your insurance agency, or by being denied a refund from the IRS because they say you have already filed for the year.
Cleaning up the mess will be far trickier if you are a victim of professional identity theft. This is largely due to the fact that the information that affects you is in databases you do not normally have access to, like the medical information bureau. Having a lawyer is virtually a foregone conclusion, and you should expect to spend a lot of time dealing with courts, government officials, and customer service reps at insurance companies. The red tape in these organizations is astounding.
The bad news about protecting yourself from professional identity theft is, you can’t make anyone do the right thing. Professional identity thieves have taken politicians, movie stars, and Medicare patients indiscriminately. And since we all need to use the services these industries provide, the risk is about the same, no matter who you are.