Personal Finance

How Your Insurance or Credit Card Can Help With Identity Theft

Identity theft is at a record high. Fortunately, your credit card or homeowners/renters insurance may help you prevent or resolve ID fraud. Here's how.

Thanks in part to the massive Equifax data breach last year, identity theft is at a record high. The number of fraud victims increased 8% to 16.7 million last year, according to a report released this month from Javelin Strategy & Research.

That marks the highest level since the firm began the annual study in 2003. Almost a third of Americans said they were notified about a breach in 2017, which is up significantly from only 12 percent in 2016. Those who had their accounts taken over by a criminal paid $290 on average in out-of-pocket costs and spent 16 hours trying to resolve the situation.

Fortunately, you may have a helping hand and some protection from identity theft already. Just look at the fine print for your credit card account or homeowners/renters insurance policy.

ID Theft Prevention

Social Security Number Scouring: Discover offers its cardholders a free service that tracks risky websites known to illicitly sell and trade personal data. If any of your personal data, such as your Social Security number, pops up on one of these sites, the issuer will contact you. Discover also will alert you if a new credit card, mortgage, auto loan or other credit account appears on your Experian credit report. You must activate the service online on your account.

MasterCard has a similar service, also at no cost, called ID Theft Alerts. You will be alerted if your Social Security number, driver’s license number, credit or debit card, or other sensitive data is detected, bought or sold online. MasterCard also requires registration online.

Online Shopping Protection: Keep your credit card number safe when shopping online. Fraud is 81% more likely to occur online than at a physical store, the largest gap recorded per Javelin, as chip cards thwart fraud at the register.

Wells Fargo’s Visa cardholders can create a secret password that is then required to complete an online purchase. Bank of America and Citi will issue a temporary credit card number linked to your account to be used while shopping online or by catalog. Your actual account number stays private and safeguarded, even if the store is hacked. You typically can set spending limits and expiration dates on these temp numbers. This does add an extra step to your online purchases, but it comes with greater peace of mind.

ID Theft Response

Recovery Services:Citi and MasterCard both provide free services to help you recover from identity fraud. For instance, Citi will help you submit a police report. It will also put you in touch with credit agency TransUnion, so you can review your credit report and place an extended fraud alert on all your credit reports. Citi will also monitor your credit report for any odd activity on other accounts until your case is closed. MasterCard also offers a similar hand-holding service for fraud victims through its ID Theft Alerts program.

Loss Protection

Loss liability: Fortunately, the federal government has your back when it comes to losses from stolen card numbers. Under the Fair Credit Billing Act, you aren’t liable for any unauthorized use if your credit card number is stolen. If a fraudster makes purchases with your debit card number, you aren’t liable for those transactions provided you report them within 60 days of the statement showing the unauthorized transaction, according to the Electronic Fund Transfer Act.

Reimbursement: Check your homeowners or renters insurance policy for ID theft insurance. It may be included in the standard coverage, typically up to $500—and the coverage doesn’t generally count against your deductible. If you lack that coverage, your insurer may allow you to add a rider or sell a standalone policy, costing between $25 and $50 a year, according to the Insurance Information Institute. (Given the limited coverage it provides, such a rider may not be worth buying.)

This coverage provides reimbursement for the expenses to restore your identity and repair credit reports. Costs such as phone bills, lost wages, notary fees, certified mailing costs, and sometimes attorney fees may be covered. To be reimbursed, file a claim with your insurance company. You should include a police report of the fraud, any evidence of fraud, and an itemized list of damages. Your insurer may also want to know the steps you’ve taken to mitigate the fraud, such as canceling credit or debit cards or placing fraud alerts on your credit reports.

Janna Herron

Janna is a Senior Writer at ValuePenguin covering banking, credit cards and credit scores. She has spent more than a decade writing and reporting on personal finance, real estate and business, and has received three journalism awards for her work.