March 23, 2014 -- Most people assume identity thieves are super-sophisticated hackers sitting in front of banks of blinking computer screens. The more vigilant among us might be shredding every document in sight, jealously guarding sensitive information from unknown callers or online “frenemies” and installing the most sophisticated firewalls and security software on our mobile devices and computers. But sometimes you really never see it coming and the identity thief who ruined your credit and turned your life upside down is actually your mom or dad.
It’s more common (and under-reported) than you think. Local news outlets highlighted the case of an assistant professor of consumer studies at Eastern Illinois University, Axton Betz-Hamilton, who worked for 16 years to resolve her identity theft – only to learn it was her own mother behind her financial woes. In another story, Credit.com reporter Christine DiGangi wrote about a Redditor who discovered her mom had opened up half a dozen credit cards in her name and racked up charges she couldn’t pay off.
Although it’s not uncommon for young people to discover that their credit has been ruined before they’re even of the age of majority by a parent who already tanked their own, your parents aren’t the only risk factor. A close friend of mine got stuck with a $30,000 bill after her brother racked up debts in her name and her mother begged her not to go to the police.
That, of course, is the terrible choice many victims of familial identity theft face: pay off the debts that your supposedly loving family used your good name to grow, or turn those family members over to law enforcement. So many people choose to stay silent. What few statistics exist about the number of victims are widely considered unreliable because people are loath to rat out family members to the authorities even in the face of potentially devastating financial and emotional consequences.
What Can You Do?
I’d be remiss if I didn’t tell you that your best option is to turn your family member in to law enforcement, regardless of the relational consequences. If you catch someone exploiting your identity to incur debt that they can’t pay off, make no mistake -- they’ve almost certainly stolen your money.
In the absence of a police report, you will be on the hook for whatever debt they incur at whatever interest rate they incur it. No creditor in 2014 is simply going to charge it off or forget about it, and you might not even be able to discharge it in bankruptcy – which alone will make your life much more expensive (and likely a nightmare). Plus, the damage to your credit score means that pretty much everything else in your personal universe is going to get more expensive: interest rates on legitimate accounts you have; the deposits that utility companies could require you to make; and a host of things you don’t consider, like car insurance. Meanwhile, the family member from hell will get to keep whatever tangibles they acquired in your name.
If you really can’t bring your relative to the police, but the thief is willing to take responsibility for the debt and pay restitution, the Identity Theft Resource Center suggests transferring the debts into his or her name and signing an enforceable contract that she or he will pay it off. However, this option requires that your near and dear will admit to the crime – and it is a crime – in writing, that the creditor(s) cooperate and that you do a serious amount of legwork to clean up your credit reports without a criminal filing, which is difficult to do.
But let’s be honest: many of the people who are willing to screw over family members for money aren’t exactly the type of folks who are going to want to admit to that in a legal document, much less pay you the money they forced you to owe. That said, if you feel you can’t report the crime -- and they won’t admit to it -- your remaining option is to simply pay back the debts incurred in your name, as creditors are unlikely to take your word for it and write off the debts.
If you do decide to take on the financial burden of paying off your relative’s debts, keep in mind that it will cost you far more than just the money involved: your credit report will reflect the past delinquencies and liens for seven years. This will definitely impact your own ability to access credit at reasonable rates, open new utility accounts and even, in some circumstances, hinder your ability to get hired for certain positions, and get (or keep) security clearances.
If you think you might have been a victim of identity theft, by a member of your family or anyone else, it’s important to monitor your credit for anything out of the ordinary: primarily accounts and delinquencies you don’t recognize. You can get a copy of each of your three major credit reports for free once a year, and you can use a free tool like Credit.com’s Credit Report Card, which provides users with an overview of their credit standing using letter grades, along with free credit scores that are updated monthly. Detecting the problem is the first and most important step.
It can be hard to accept that the people you're supposed to be closest to -- your family -- can be the ones behind the devastation that identity theft wreaks on your life. But, with the increasing likelihood that all of us will suffer a data breach, which makes us more vulnerable to identity theft, it's important to be vigilant with our accounts, our credit reports and our personally identifying information. If you catch even a family member early enough in an identity theft attempt, the worst case scenario might not ever have to come to pass.
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.