Identity Theft and HR/Personnel Depts

HR and ID Theft: The Best solution

One of today's hottest topics is identity theft. It's alleged to be the fastest-growing white-collar crime in the U.S., affecting as many as 10 million Americans and costing businesses $50 billion each year. ID Theft is up 22% in 2008 alone according to Federal Trade Commission, the Gov't agency responsible.

How does it work? Thieves gain access to the numbers on someone's key documents--Social Security, checking account, credit cards, Medical Benefits, insurance policies--and conduct high-priced transactions by using those documents as if they were their own. How do they get the numbers? One way is a process that's been dubbed "phishing." According to the U.S. Treasury Department, phishing commonly starts with an e-mail message sent to a big list of consumers. It directs recipients to a fraudulent website designed to resemble those of government agencies, big-name financial services firms, Internet auction sites, or electronic payment services. The website then asks consumers to "update" sensitive personal information--such as credit card numbers, Social Security number, e-mail address, and so on. When a consumer fills in the requested information, bingo--the thieves can begin using the numbers immediately. One survey found that 1,125 instances of phishing were reported in April 2004, an increase of 180 percent from March 2004.

What's identity theft got to do with HR?

Quite a lot, as it turns out. First, many thieves don't use the relatively sophisticated phishing method to obtain the numbers they need. Instead, they gain access to paper records from business sources. Any provider or vendor that collects lots of information from its users will do, but here are several particularly good sources: doctors' offices, insurance agencies, and--you guessed it--employers. That's where HR comes in, because payroll records and employment applications are goldmines of information. One way for thieves to get the information is "dumpster diving" outside buildings whose tenants don't shred records containing personal information. In fact, a class action lawsuit was filed against a company, which failed to shred customer records containing such information as names, addresses, dates of birth, and credit card numbers. The largest theft so far was (NYSE:TJX) - TJ MAXX which had 43 million credit card records stolen electronically, in Dec 2006, and didn't report it until Jan 2007.

Besides scrounging through paper records that weren't shredded, thieves can gain access to payroll records or employment applications by getting hired as summer interns, temps, or part timers in HR departments. So besides shredding records, the next way that HR can help fight identity theft is to conduct thorough background checks on anyone who will be given access to employee records.

A third way that HR and identity theft can intersect

Some companies, including Prepaid Legal (NYSE: PPD) have begun advertising to employers the availability of group rates on Identity Theft/ Legal plans for employees. According to them, here are the advantages:

· Employers that offer these plans expand their benefits packages at no cost to themselves. Attracting and keeping good employees, thru expanded benefits that show you care.

· Employees can purchase such coverage at lower group rates than they could buy it individually, covering personal issues, while exempting employer-related issues.

· Employees who have coverage will need to spend far less time straightening out a case of identity theft than employees not on the plan. This saves time on the job, saves vacation and sick days and other time off.

Employees have legal problems with Identity Theft and other personal legal issues, which can take time away from the job and on the job, distracting them from work. Identity Theft/ Legal plans keep them on the job and let professionals take care of the problems.

Employees of all business sizes need to be trained according to FTC Requirements in Identity Theft Prevention, Red flag Rules and

It takes an individual consumer up to 600 hours to track down all the ways in which a case of identity theft needs to be rectified--and those hours may be spent at work, because that's when all the organizations who deal with ID Theft are open, too. This also lowers productivity for the employer. Plans costs between $25 and $60 a month, depending on benefits desired, and covers specialized attorney's activities, fees and some court costs and Identity Theft monitoring, notification and recovery.

Monitoring services from credit card companies or credit reporting agencies are often expensive, as they only cover their own accounts, and they don't kick in until theft has already occurred. The biggest problems with ID Theft can be damage to the individual's credit rating or even a criminal record. This can hurt the employer, too. The Federal Trade Commission reports that 16 percent of theft victims rack up a criminal record, and correcting credit ratings is a time-consuming, process. A business benefit? Offer group rates on plans, but remain neutral on its value.

Solve this Employee Problem Today

[Ed.] Prepaid Legal [NYSE:PPD] offers an Identity Theft/ Legal Plans coverage plan of legal, monitoring and recovery services to victims of Identity Theft.
Dan Cassin is a Certified Identity Theft Risk Management Consultant and can provide certified Identity Theft training to satisfy FTC requirements for your company. Call Dan at 502-554-2397 today or e-mail dan@dancassin.com.