The United States Federal Trade Commission estimates that up to nine million Americans have their identities stolen each year. Similarly, the US Justice Department estimates that up to 3.6 million households are affected by identity theft annually.

“The South African Fraud Prevention Services reports that South African businesses lost R276-million to identity theft-related fraud in the first three months of 2008 alone, a substantial increase on the 2007 figures,” says Gari Dombo, Managing Director of Alexander Forbes Insurance.

In South Africa credit cards make up the bulk of crimes classified as identity theft — as opposed to the more serious crime of having your identity stolen.

“So, while actually having your identity stolen is less likely than having your credit card nicked, the one tends to lead to the other,” says Dombo.

The identity theft fraud chain usually begins with the theft of documents like your credit card, driver’s license, passport or ID book. In time victims fail to receive letters that they are expecting from their banks. Or, when applying for state benefits, they are told that they have already claimed them. Similarly, they often find their loan or credit card applications turned down despite having a good credit history.

"And, certainly, the results of criminals opening accounts in your name, or getting false identities for themselves or other criminals using your personal details can be devastating,” says Dombo.

Once criminals have your information, they can register new credit or bank cards and run up debt in your name. They can take out loans or apply for new passports or identity documents, using your identity for criminal activity. They can rent an apartment and open a telephone account using your details. Fraudsters could even give your name to the police if they are arrested. If released on bail, any future arrest warrants would also be in your name.

“Usually by the time you discover you have become a victim of identity theft your identity might have been used by someone else for some time and the situation could be much worse than it first seemed,” says Dombo.

If you ever suspect that your identity has been stolen, it is critical that you contact your bank immediately. Financial institutions should be able to help you alert credit bureaus and direct you to the appropriate resources.

“This is, however, only the beginning of an often long and expensive process of reclaiming your identity, clearing your name and restoring you credit worthiness.”

The costs of restoring your identity include the following:

  • Lost wages due to the months and sometimes years that it takes to clear your name and regain your fraud-free legal status.

  • Administrative expenses such as phone bills, certified mailing, notary costs, etc.

  • Legal fees to defend actions against creditor or collection agencies for debts incurred without your permission.

  • Liability cover, allowing you to pay creditors where liability is incurred without your permission.

Dombo says that there is no sure way of preventing identity fraud, but there are steps you can take to minimise the chances of it happening to you. These include:

  • Not carrying extra credit cards.

  • Cancelling any accounts you don’t use.

  • Regularly checking credit reports for unauthorised activity.

  • Check your credit card and bank statements every month.

  • Shred or destroy papers containing sensitive financial information or identifiers. Don’t simply throw them into the bin.

  • Guard your identity and account numbers. Only provide information necessary to facilitate a transaction you initiate or when you apply for credit.

While these precautions and immediate responses are important you cannot negate the risk of having your identity stolen completely. “Since we part with details of our identity on an almost daily basis it is impossible to ensure that that you never become a victim of identity fraud.

“Identity theft is not something most people think about at all. Until it happens, people are unaware of just how much it can cost in time, money and expertise to restore your identity and repair the damage to your personal financial information, legal status and reputation.”