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Leave ID theft in the cold: State consumers able to freeze accounts

Mercer Island is known for its minimal crime rates and safe neighborhoods, but residents here are no safer than other Americans when it comes to identity theft.

As personal information becomes increasingly available in the digital world and scams grow more abundant, new measures are being implemented to help Islanders and other Washington residents protect their identities — and their assets.

The state government enacted new laws this year to help citizens avoid identity theft, and private insurance companies have started offering coverage to re-establish a victim’s identity.

“The new credit freeze law is an important step,” said Dave Bennett, the director of public relations for the Washington Credit Union League. “It’s a great first step that provides a great security measure.”

Governor Christine Gregoire signed the bill into law last week, allowing state residents to freeze their lines of credit to prevent identity thieves from opening new accounts. The freeze is free for identity theft victims and senior citizens. Others have to pay $10 per credit bureau, or $30 total. The law takes effect Sept. 1, 2008.

“Too many Washington consumers have experienced financial devastation and frustration that comes with being an identity theft victim, as well as the cumbersome task of cleaning up the damage,” State Attorney General Rob McKenna said of the legislation. “Legislators did the right thing this session when they united in their support of a preventative credit security freeze law and gave consumers a crucial defense tool. “Everyone benefits when fewer consumers are at risk of becoming identity theft victims,” McKenna continued. “Law enforcement benefits by less complex cases. Businesses will benefit by taking fewer losses, and the creation of an instant thaw means they won’t lose customers. Consumers will be able to quickly and conveniently provide access to their credit reports when they want to buy a car, obtain a mortgage or apply for a new credit card.”

A credit freeze associated with a name and Social Security number prevents anyone from opening a new line of credit under that identity. If the person chooses, he or she may use a private pin number to implement a temporary “thaw” in order to open a new credit account.

According to Cmdr. Leslie Burns, Mercer Island had 52 identity theft reports in 2006, and the Insurance Information Institute states the Federal Trade Commission reported more than 160,000 cases of identity fraud in 2002.

While banks and credit card companies usually cover the illegal or fraudulent charges related to identity thefts, they do not pay for the cost of re-establishing a name or clearing a bankruptcy. Insurance experts say victims spend an average of 600 hours and $1,400 recovering from identity theft.

To help offset the costs of recovering a personal identity, many insurance companies are now offering identity theft insurance.

Safeco Insurance, based in Seattle, offers identity theft insurance as an add-on to a homeowners, renters or condo policy for an extra $12 per year. Safeco also offers customers the chance to sign over power of attorney to a caseworker who then does all the “footwork” to re-establish or clear an identity.

“Anybody with a Social Security number is vulnerable to ID theft,” said Lee Sommerstein, a spokesman for Safeco. “Anybody in ‘Cyberville’ or anyone who makes purchases on the Internet is a potential target.”

Sommerstein also said Safeco is the only, if not one of the few, companies that offer such a caseworker, who can take a large burden off the policy holder’s shoulders.

Farmer’s Insurance, Mercer Islands largest private employer, implemented identity theft insurance into its new homeowner insurance policies, called Next Generation. For customers with older plans, identity theft coverage can be added onto a homeowners plan for an additional fee similar to Safeco, Farmer’s spokesman Jerry Davies said.

On average, the Insurance Institute estimates that policies cost between $25 and $50 per year for $15,000 to $25,000 worth of coverage. Identity theft insurance provides reimbursement for expenses such as phone bills, lost wages, notary and certified mailing costs and sometimes attorney fees with the prior consent of the insurer.

In addition to taking social security numbers of documents in stolen mail, Internet and phone scammers often catch Islanders with their guard down. Last week, an e-mail was sent to subscribers on the state attorney general’s listserve with a link to a fraudulent bank, asking the recipients to insert their account numbers and names. Another scam in a 2006 Mercer Island Police report involved an impersonator claiming to be from Puget Sound Energy, who threatened an Island resident he would shut off their service without an immediate credit card payment.

Many experts urge preventative steps over reliance on an insurance plan. But as criminals find new ways to steal identities, people need to protect themselves as much as possible.

Bennett recommended periodic checks of personal credit reports, protecting mail and calling police if an attempted fraud is suspected.

Nevertheless, identity thieves are able to obtain personal information from multiple sources. The key is to limit the possibilities to reduce the chances of it happening, Bennett said.

“Preventing identity theft is very, very difficult,” Bennett said. “It is not possible to completely prevent, but there are ways to limit the effects by managing your personal information carefully.”

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