Identity theft: is the cavalry coming?

More than 9 million Americans are victims of some type of identity fraud each year. With the implementation of new “Red Flag Rules” issued by the federal Trade Commission, consumers are slated to get more protection from identity theft. Under these regulations, banks, credit cards, and other merchants would be required to strengthen measures to detect and prevent identity theft. By enacting these regulations, much of the burden of crime prevention is shifted from the consumer to the merchant.

“In simple terms, this means each business must establish a policy for spotting danger signs — say, if the address on a credit application doesn’t match the one on the credit report for that person — and outline steps to handle them. Steps could range from requiring further documentation to denying the application.”

Implementation delayed until May 1, 2009
These regulations were slated to kick in on November 1, but the start date has recently been deferred until May 1, 2009 to allow financial institutions more time to plan for implementation of the rules and written identify theft prevention programs. While these protections will be welcome, consumers should continue to be vigilant and informed about their risk of identity theft.
Identity Theft Insurance
Check with your local insurance agent – many insurers are offering insurance policies for identity theft but it is important to understand the coverage that such policies encompass. The National Council on Insurance Commissioners (NAIC) says:

“Identity theft insurance cannot protect you from becoming a victim of identity theft and does not cover direct monetary losses incurred as result of identity theft. Instead, identity theft insurance provides coverage for the cost of reclaiming your financial identity, such as the costs of making phone calls, making copies, mailing documents, taking time off from work without pay (lost wages) and hiring an attorney.”

NAIC suggests you check your current homeowners’ insurance policy includes identity theft. If not, your agent may be able to add identity theft insurance to your current policy for a small fee, or help you to purchase a stand-alone policy from another insurer.
More resources:
FTC – Learn more about identity theft
Identity Theft Recovery Steps
Identity Theft Red Flag Rules