4 Common Identity Theft Scams & How to Avoid Them

Identity theft. It sounds a little like science-fiction, but it’s something that anyone – poor or rich, young or old – could face at any given moment. Identity theft is the fraudulent acquisition and usage of a person’s private identifying information, typically utilized for financial gain. Identity theft is a serious crime and is impacting more and more Canadians as the years go by. In 2022, there were 17.37 incidents of identity theft per 100,000 residents of Canada. It may not seem like a lot, but it’s still something that can happen to you – and, if it does, the impacts can be rather devastating.

Note: your average Ontario home insurance policy may not include identity theft coverage as a standard option. Most identity theft policies are add-on, and offered as an endorsement that you can purchase. Unless specifically included in your policy as an option, you shouldn’t expect your standard, bare bones policy to cover identity theft recovery.

With that said, let’s get into some of the most common identity theft scams, how to identify them, how to avoid them, and how to combat identity theft.

4 common identity theft scams:

If you have ever heard an identity theft story, you may already know how nightmarish it can be. A report from the Royal Canadian Mounted Police (RCMP) showed that Canadians lost over $530 million as a result of fraud and cybercrime in 2022, roughly $150 million more than the previous year.

One of the best ways to prevent identity theft is to first recognize how it happens. Here are five of the most common identity theft scams.

No. 1: Text links

Ever received a text message from an unknown sender containing a link? Or perhaps a message pretending to be a known service provider like Telus, or a delivery company like Amazon? Scammers will use text messages to gain information, and often these links will lead to sites requesting personal information. Avoid this temptation altogether by deleting the text and not clicking the link.

No. 2: Phone scams

We’ve seen an uptick in phone scammers recently. Sometimes, scammers will reach out to you letting you know you’ve won a free-trip or large cash prize, but to claim the reward you must verify your identity by giving personal information over the phone. People may also impersonate credit card companies, government agencies, or banking institutions. They’ll request financial information or account information, such as PIN Numbers or identifying information that can be used to answer security questions (Ex. What is your mother’s maiden name?). Avoid giving out personal information over the phone unless you made the call first and you can confirm that the individual you are speaking to is the actual person/entity.

No. 3: Data breaches

Data breaches are gaining popularity in large, medium, and even small-sized businesses. Many major companies are being breached, causing consumers’ private information to be leaked. By the time it is made known that data was stolen, that information could have been circulating the dark web for some time. Unfortunately, private consumers can’t exactly prevent large data breaches to organizations that they have purchased goods or services from.

No. 4: Phishing scams

Although last on our list, phishing scams are probably the most popular of identity theft scams, and they involve sending fraudulent emails containing malware or malicious attachments. They may also contain links that lead to websites requesting personal information. If you feel as though an email is suspicious or doesn’t seem like the apparent sender, delete it right away. Never click on any links unless you can verify who the sender is.

How to combat identity theft

You should protect yourself from identity theft in public, at home, and when online. You can prevent identity theft at home by following these tips:

• Checking your post office box frequently. Many companies (especially financial institutions like banks or insurance companies) will send you a letter if you make changes to your account, like updating an email address, phone number, or other account info. If you didn’t request the change call the company immediately.
• Regularly read your credit reports to assess for any unfamiliar accounts or charges to your credit card.
• Never give out personal information over the phone unless you made the call first.
• Always review bank statements to assess for unknown charges.
• Shred paper documents containing personal information once used. Never throw them in the trash!

Consider these virtual-specific tips to help prevent identity theft online:

• Never share your personal address, birthday, email address, children’s names, pets names, etc. on social media. This only makes it easier for thieves to steal your identity or answer security questions for your accounts.
• Ensure your passwords are changed regularly and are strong/varied.
• Never use public Wi-Fi for important transactions or online purchases.
• Be skeptical of potential phishing scams from your financial institute.
• Use multi-factor authentication for verifying transactions and loginning into banking accounts/financial accounts.

Smart homes, while a great way to automate processes around your home, can leave you vulnerable to identity theft. Smart homes are a security risk because they open additional avenues to access your private information. Consider implementing all the tips above if you have a smart home.

Identity theft add-on insurance

Is identity theft covered by home insurance? Yes and no. No – if you have just the standard bare bones policy, and yes if you chose to purchase identity theft insurance. Identity theft add-on insurance is an inclusion to an existing home insurance policy that protects you by covering the cost of public record searches, loss of wages, defense costs, notary and certified mailing fees, re-application for government-issued ID, and police monitoring of black-market websites for further information.

Identity theft itself is a nuisance, but the costs to recover your identity and financial information following an event are what will really have an impact. The cost to add the extra insurance is very negligible, and it offers huge protection.

Identity theft add-on insurance can also be used to supplement a renter’s insurance policy, the same way it can be added to a home insurance policy – also for a slightly increased premium.

If you have further questions regarding identity theft insurance and how it can be of help as an added to your renter or home insurance policy, give us a call here at Excalibur Insurance.