Identity theft is not a new concept, it has been around for years, and in these modern times it seems to be becoming more and more prevalent.
Whilst we may think of identity theft as being used for immigration or other purposes, it is also very common for your identity to be stolen for the purposes of obtaining credit, or accessing your finances. I believe this is one of the most terrifying impacts identity theft can have; it has the potential to impact you for the rest of your life.
This leads me to wonder, how many of these victims have ended up having to enter into personal insolvency solutions as a way to get out of the debt incurred by having their identity stolen?
Before we go into this topic, here are just a few recent statistics about identity theft in Australia:
- Identity theft cost Australia approximately $2 billion between 2013-14
- The cost of preventing and responding to identity crime is estimated to be $350 million
- 4% of Australian’s had their identity stolen or used in some form between 2013-14
- The average victim loses up to $1,000, however it is not uncommon to see losses in the hundreds of thousands
How does identity theft happen?
As I am sure we are all aware, there are many ways your identity can be stolen. You may have your identity stolen through:
- Not securing or properly disposing of your bills, statements etc.
- Phishing emails
- Credit card skimming
- Oversharing on Social Media
- Computer viruses
Of course, I am sure there are many other ways to have your identity stolen, but these are some of the most common causes.
What should I do if my identity is stolen?
- Report it to the police
The first thing you should is report it to your local police authorities. Get a copy of the police report as you will need to provide it to your bank and any other financial institutions you deal with. Contact your bank
Tell your bank, credit provider or any other company you are dealing with financially what has happened. Most financial organisations will have teams dedicated to fraud and identity theft so they will be able to assist you.
If any accounts have been opened with your stolen details, ask for them to be closed or cancelled.
- Inform the relevant government agency or business
If any of your government issued information has been stolen, let the relevant agency know as soon as possible. Similarly, if your financial documents or investment reports were taken, alert your stock broker, financial planner or advisor as soon as possible.
- Get a copy of your credit report
You should tell the credit reporting agency, VEDA, that you have been a victim of identity theft so they can note it in your file. Check your credit report to see which companies have checked your credit history recently, and let VEDA know to put a note on your account so no more accounts will be opened in your name.
- Get help from iDcare
iDcare is a free government service which works with you to develop specific response plans to reduce the risk and impact of identity fraud. They will be able to work with you to come up with strategies to protect you from further damage.
If you have been a victim of identity theft you can visit the Australian Government Money Smart website here. This website will provide you with more information on what you can do to protect yourself.
Identity theft is a big issue all around the world, and yes, there are cases where identity theft can lead to personal insolvency. However, in my experience, if you take the right steps early to report this theft to police, generally you will be able to have all of the fraudulent debt wiped off. Whilst you may be spending a lot of time fixing your credit after your identity has been stolen, it is better than having to pay back the money.
My main concern is you will always have to be vigilant of your credit report, because once your details are out being used by criminals, they may continue to use them periodically for years to come. However, I am confident the police and other relevant government authorities would be able to assist you further with this.
I honestly believe we have a strong system here in Australian that if you do have your identity stolen, you shouldn’t have to enter into any personal insolvency solutions. The only time you might have to pay back this debt, is if you are unable to prove your identity was stolen in the first place.
Rasad Merchant CPA
Strategy and Business Development Manager & Secretary of the Personal Insolvency Professionals Association (PIPA)
Rasad brings over 8 years’ experience working in the insolvency sector to Debt Cutter, where he is dedicated to achieving peak business performance. With a background as both a trusted business advisor, and as a business owner, Rasad uses his foresight to strategically manage business growth and opportunities.