By ALEXANDRA M. GROSS, J.D.
Legal Editor, Business & Legal Reports
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Download NowAnyone who has been a victim of identity theft knows all too well the emotional
and financial devastation that accompanies such a crime: the fear, anger, and
disillusionment; the damage to credit and the arduous effort to restore a good
reputation. The actual theft is just the beginning of a long and painful recovery
for victims.
Identity theft is the nation's fastest growing crime, according to the FBI.
An estimated 27.3 million Americans have been victims of identity theft in the
past 5 years--10 million in the last year alone. This alarming statistic
has not gone unnoticed by U.S. employers, who have begun adding identity theft
insurance to the roster of offered employee benefits. With the statistics getting
more frightening by the minute, it could be a benefit worth considering.
Theft costs time as well as money
According to a recent survey by the Federal Trade Commission (FTC), a huge number
of Americans fall victim to identity theft every year. Out of the nearly 10
million victims in 2002-2003, almost 3.25 million discovered that their personal
information had been stolen and used to open new credit accounts, take out loans,
or engage in other fraudulent activities. Nearly 7 million people reported misuse
of existing credit card accounts or noncredit accounts (e.g., checking accounts
or telephone accounts). This adds up to an estimated loss to businesses of a
staggering $47.6 billion from identification thefts in 2002-2003.
Although victims are generally not liable for losses incurred because of identity
theft, they do spend a great deal of time and money to resolve the problems
that result from the theft. According to the FTC survey, victims estimated that
they spent about $1,180 and 60 hours to deal with thefts related to new accounts
and other frauds, and approximately $160 and 15 hours to resolve thefts resulting
in misuse of existing accounts.
ID theft and the workplace
Identification theft can have a significant impact on the workplace. For example,
those 15 to 60 hours spent dealing with the aftermath of an identity theft are
often working hours. Victims will likely have to compose and send letters, faxes,
and e-mails and make numerous phone calls in an attempt to clear their names.
There is a good chance these activities will be done at work - many of the institutions
they will need to contact keep normal business hours. Plus, these types of crimes
often result not only in financial woes, but emotional distress as well. Being
the victim of a theft can be traumatic, and picking up the pieces after the
event can be a difficult experience. Victims may feel extra stress or emotional
turmoil that can affect their ability to focus and perform at work.
Identity theft insurance
In response to this growing crisis, insurance companies are beginning to sell
identity theft insurance. For example, Travelers offers protection against the
expenses incurred in resolving the issues created by the theft. The coverage
includes:
- Up to $500 per week for four weeks to cover lost wages as a result of taking
time off from work to address issues caused by the theft
- Notary and certified mailing costs for sending fraud affidavits
- Loan re-application fees
- Phone bills
- Some attorney fees
Employers have started offering this insurance to employees as part of their
workplace benefits packages. While this insurance won't prevent identity theft
from occurring, such an offering can help assuage employees' insecurities and
fears about identity theft, and can help employees better handle the aftermath
of this devastating crime.
Online resources
Federal Trade Commission
U.S. Department of Justice
The three major credit-reporting agencies: