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Wednesday, July 27, 2005

The Next Big Corporate Benefit: Identity Theft Protection

As times change so do risks, and companies have historically provided benefits to address risks common to all employees.  One of the fastest growing today is the risk of identity theft, according to the Federal Reserve Bank of Boston, as it’s projected to impact one in three people by the end of the decade.  Costing billions in damages, and weeks in lost productivity, identity theft has quickly moved beyond the scope of being just an individual problem.

Like any other critical enterprise risk, identity theft has reached a point where it makes sense for companies to provide a corporate benefit to protect employees and the company itself.  As anyone who has had his or her identity stolen can relate, the experience is both memorable and rehabilitating.  It has become so pronounced that volunteer programs in some states, like California, have set up centers whose full-time role is to help people get back on their feet.  One of these organizations, the ID Theft Resource Center, recently identified a new and vicious type of theft: identity theft of children.

It is a growing concern as an underage child is typically not in the market for credit lines, and so the problem could go undiscovered until the child applies for that first car loan or school loan.  Their credit could be permanently damaged, creating serious problems for them much later on in life.  For adults identity theft can mean weeks and months of time spent closing bogus accounts, contacting creditors, and correcting credit reports.  During this time, the adult, who is typically also someone’s employee, is clearly not focused on his or her job or much of anything else.  Remember, until the ID issue is cleared up, their home may be at risk, their cars could be repossessed, and they may be unable to effectively pay bills.  There will be no higher priority for them and, from the viewpoint of their company, they are just as unavailable, perhaps even more so, then if their home was lost or they had critically ill family member.

It is part of a corporation’s responsibility is to ensure the continued productivity of its workforce and healthcare benefits certainly speaks to that.  In 2003, the Identity Theft Resource Center published a detailed report noting the impact of identity theft.  The organizations that the victim must turn to often seem to treat that victim very poorly.

Financial Identity Theft: This is where a victim’s social security number is stolen and used to open a series of fraudulent accounts ranging from loans (particularly lines of credit and credit cards), leases (cars and apartments), checking accounts, and telephone services.

Criminal Identity Theft: This is where the identity is stolen and used by a criminal in place of their own so the crime tracks back to the victim not the criminal.

Identity Cloning: In this scenario, the identity thief actually uses the victim’s identity to get paperwork, credit lines and pay rent.  The thieves are often used illegal immigrants, felons, people avoiding judgments (like child support), and anyone hoping to leave their ‘old life’ behind.

Posted on 07/27