Identity Theft in a Digital Age: Deter – Detect – Defend.

Written by
Daniel Boylan, instructor of finance at Ball State University

Student debt is rising. It is rising at an alarming rate. According to NerdWallet, a typical student will leave college with about $33,000 in debt.

Credit card is rising. It is rising at an alarming rate. According to JumpStart, a typical student will leave college with about $5,000.

Add these two together and there is a recipe for disaster. That disaster is students that have started their degrees either dropping out; losing focus; or not participating in vital university activities like networking, the general campus life, student run clubs that can be important to future job opportunities.

On recent study shows once students hit around $30,000 in loans their focus turns away from their education to work and school so they can pay back loans. This become an even bigger issue when the debt is in the form of credit cards. The reason credit cards are so damaging to education is credit card debt needs to be paid (or at least at a minimal level) back every month where student loans are deferred until a short time after the student has completed their education.

The quicker repayment required of credit cards forces a student to have an available amount of cash. On a credit card with a $3,000 balance the minimum payment is about $80. This cash can come from savings, parents or employment. Most likely the student’s savings was depleted and since approximately 75% of students pay one-third or more of their education tapping parents might not be a likely resource. The easiest way for students to get that cash is by getting a job.

Given the $30,000 threshold for when students lose focus on education and the combined debt load of students at $38,000 ($33,000 in student loans and $5,000 for credit card debt) this means a typical student stops making school their top priority somewhere in their junior year of studies. The junior and senior year are important as that is when students are focused on their major area of study. Another recent student found attitudes about school focus where freshman and sophomores are focused on education where juniors and seniors are focused on work and money reinforces this fact. Given the level of students that need to return to school for a fifth year, it is unlikely that many of them will be focused on their education first.

Is there a solution to this dilemma? The solution may be right next to the student. It is the parents.

Parents can play a vital role in helping a student have a love debt level. When it comes to education, many parents cannot afford to help fund a student’s education but that doesn’t mean they cannot help the student financially. By being an active participant in a student’s funding of education (going over award letters, loans and other funding choices) a parent can help a student be more accountable and as a result student debt is lowered.

It has been found that parents being involved in the funding process of their student can be a key to controlling debt. Parents that are hands-on when teaching students about debt have children that tend to be hands-on when dealing with debt.

Identity theft and identity fraud are terms used to refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain. Every minute of every day about 19 people become victims of identity theft as reported by Transunion. Identity thieves gain access to your personal bank accounts, credit cards, open new bank accounts in your name, open credit cards, obtain different kinds of consumer loans, obtain medical services or commit other crimes by using your personal information including your social security number, date of birth, address, and phone numbers to mention a few.

In addition, Steve Weisman mentions in his book 50 Ways to Protect Your Identity in a Digital Age, do not carry all of your cards and identifications in your wallet or purse, be wary who might be around when you use an ATM, destroy your copy of rental agreements after you rent a car and be sure you do not leave them in the glove compartment, be careful when you store personal information at home. Due to some examples of Identity Theft committed by house guests and babysitters, review your bank and credit cards statements thoroughly as well as check your statement provided by Social Security Administration annually. Furthermore, sign up for the National Do Not Call Registry list.

One should even be cautious when sharing personal information with family members. Olga McAtee, instructor of finance at Ball State University has many examples of identity fraud from her experience in the financial and banking industry. For instance, a father used his son’s personal information when trying to apply for an automobile loan when one sister used her younger sister’s personal information along with some identification documents to withdraw a significant amount of money from a bank account.

There are 3 D’s to identity theft in the digital age. Deter, Detect and Defend.

Deter

First Deter is to make attempts to keep the identity theft form happening. Identity theft can happen many ways and this attempt is trying to prevent the theft in the first place. Daniel Boylan, instructor of finance at Ball State University says, some of these ways include: not responding to emails seeking your finance information (especially your Social Security Number) by phishing for your infromation, using secure passwords that involve both numbers and letters. These letters should include both lower case and capitals. An example of a weak password is: “love” while a more secure password would resemble something like “Paris1923b.” Additionally, one should never give out personal information – especially on social media like Facebook or Twitter. Another method of deterring is to shred all important documents as some thieve will simply take your information right out of your trash or will find it at the local trash dump.

Detect

Second is to Detect when a theft is happening. There can be obvious signs such as a creditor calling in regards to a past due bill that you are unaware of. Lesser obvious signs are the receipt of rejection letters for credit on purchases that were not made, you see withdrawals from your bank account that you cannot explain, and merchants refuse your checks. Once these happen, one should immediately contact each of the 3 credit bureaus by either phone or web:

• Equifax.com at 1.800.525.6285
• Experian.com at 1.888.397.3742
• Trans Union at 1.800.680.3742

When contacting these agencies one should obtain a free copy of their credit report and put a “fraud alert” on their account. This fraud alert will not allow credit to be obtained in your name without first getting permission.

Defend

The last item is to defend your credit. This is an attempt to defend yourself against the harm done by the thief. Placing a “fraud alert” is the first step, contacting each of the companies that credit was obtained and letting them know of the situation is next. Many of the companies will want you to file a police report to ensure you aren’t trying to deceive them and in extreme cases it is wise to contact the Federal trade commission at 1.877.ID.THEFT.

By following these three D’s of identity theft on can minimize the risk to themselves and those that are dependent on them.