You probably already shred sensitive financial documents and keep your Social Security card locked in a safe place. But have you made sure your mother isn't digging in your trash for discarded credit card solicitations?
A 2012 identity fraud report by Javelin Strategy & Research says that cases of identity theft increased by 13 percent in 2011, with more than 11.6 million U.S. adults becoming victims. But that study doesn't reveal an even scarier reality about identity theft -- how many thieves are actually related to their victims.
Freudian Financial Bonds
According to a 2011 study by ID Analytics, approximately 500,000 children under the age of 18 have had their identity stolen by their parents, and about 2 million elderly parents have been victimized by their adult children.
Cynthia Hampton, a certified credit counselor with ClearPoint Credit Counseling Solutions in Memphis, has seen several cases of family-instigated identity theft. But there's one in particular that stands out.
"A woman came to me several years ago and asked to be put on a debt repayment plan for five credit card accounts that she could no longer handle," says Hampton. "She had been making the minimum payments on them all so there weren't any late fees yet, but she was laid off and her unemployment compensation wouldn't cover the bills."
When Hampton pulled up the accounts, she discovered all five of them were in the woman's adult son's name. She had used his Social Security number, signed applications in his name, and maxed out the credit limits on all five accounts, charging approximately $13,000 worth of purchases.
"The mother wanted to do the right thing and pay off these credit card bills, but unfortunately I couldn't help her because none of the cards were in her name," says Hampton. "She was trying to pay them off before he found out what she had done."
Payoff Vs. Prosecution
When the son found out, he was furious, but unless he wanted to press charges against his mother, he was responsible for the debt. It took three years on a debt management plan to eliminate the the debt and repair his credit score, starting with a monthly payment of $272 that he eventually increased to $499 per month.
"It's sad, but I actually hear stories like this all the time about family members opening accounts in relatives' names," Hampton explains. In some cases -- like that of the mother of a 19-year-old who'd been putting credit cards, utility bills and cellphone contracts in her daughter's name since the girl was 12 years old -- the parent is committing out and out fraud.
"Nine times out of 10, if the family members have a good relationship, the person who committed identity theft will at least help pay for some of the debt," says Hampton. "But some people will deny to the end what they did, even if it's obvious."
Protect Yourself From Loved Ones (and Strangers)
Straightening out identity theft can be even more difficult when a family member is involved, because their relatives often refuse to file a police report.
Hampton says everyone should take the following steps to protect themselves:
Safeguard your Social Security number, even from your family. "Ninety-nine percent of the time, Social Security won't issue a new number, so you'll need to fix the damage to your credit regardless of who's responsible," says Hampton.
Don't just tear up your mail, shred it. "You'd be surprised how many people are willing to tape together a piece of mail to get your information," she says.
Check your credit report every year carefully to make sure everything on it belongs to you.
Beware of anyone you think might use your information and be even more vigilant around them about your mail, your online accounts and your ID numbers.
None of those steps would have helped the 19-year-old escape her mother's actions, but she may have found out about her situation a little earlier if she had checked her credit report as soon as she turned 18.
Michele Lerner is a contributing writer to The Motley Fool.