Identity Theft In A Downturn Economy
There’s no denying it – times are tough. Every week seems to bring news of another bank collapse, or a huge decline in the S&P. Home foreclosures continue to rise, and the lax lending market of 2004 - 2005 has given way to a severe tightening of credit. If this is not a “recession”, than it’s certainly difficult to imagine what it will take for economists to officially declare that we are, in fact, in one.
So what does this mean for the average identity thief? Some argue that a recession may make it harder to steal identities. They say that credit is so tight that even thieves may be having trouble opening new accounts.
I tend to believe that a credit crunch will have exactly the opposite effect - and there are many early indications that seem to suggest that, in fact, a downturn economy is economic high time for identity thieves.
MessageLabs recently reported a 103 percent increase in phishing attacks in September, as cyber thieves targeted banks, credit unions and online retail stores. PandaLabs further found that malicious code has been spiking with falls in the stock market.
With more and more Americans facing economic turmoil, the unfortunate reality is that many may find it increasingly difficult to make ends meet. Desperate times call for desperate measures, and it stands to reason that the months and years to follow will witness a spike in attempts at steal identities.
In today’s downturn economic environment, the same prudence that we achieve when investing in car or homeowner insurance must also be undertaken by investing in identity theft protection.
Today’s tighter credit world means your credit score is more important than ever. Yet a study conducted by the Public Information Research Group found that 79 percent of credit reports had mistakes. Twenty-five percent of credit reports had mistakes that were important enough to cause someone applying for credit to be denied.
There is simply no easy solution to clean up your credit history, regardless of whether the information contained on them is correct or not. As a recent article in the Arizona Republic points out, when it comes to removing false information from credit reports, the burden of proof is on the consumer, and proving that information on your credit report is false will require a considerable amount of time and effort. In fact, a recent 2008 Javelin study indicates that the average fraud incident requires 26 hours to rectify.
We appear to be entering the “Perfect Storm” as it relates to identity theft, which includes:
- Increased sophistication and technical savvy on the part of the criminal
- Increased economic turmoil
- Pressure on corporations to reduce IT related spending, which could result in decreased security related spending
- Pressure on individuals to reduce discretionary spending
- A tightening financial market in which only those with exemplary credit will be able to receive financing
As we enter this perfect storm, now more than ever, it is essential that consumers take a proactive approach towards protecting their most important asset, their own identity!
