The Real Cost Of “Free” Money – Your Identity

With companies like Uber now valued over $60 billion USD and Airbnb at over $25 billion USD (yes, with a “B” as Dr Evil learnt the hard way) it’s clear that the sharing economy is not going to go away any time soon. As with any new and emerging area that has not yet been fully tested, there can be some pitfalls. Being a financial blog I would like to touch on just one of them that I have now had some direct experience with (thankfully not as a victim).

Theft – What Are Your Valuables?

It is one thing to open up your car to a passenger for a short period of time with Uber, but a very different thing to invite someone into your home, often without supervision, using Airbnb (or any similar company). Stating that sounds obvious, but I want you to start thinking about why.

After reading that point, most people would start to think about being robbed (or having their possessions/property damaged), which is great, because that is exactly what I am talking about. However the theft I am focusing on is probably not quite what you are thinking. It would be hard to get a TV or fridge out of a house without being noticed when the owner returns. Even smaller items of any real value will probably get noticed before too long. They are also probably listed on an insurance policy (after checking the policy covers Airbnb guests – many do not apply to people you invite into your home). So after a small premium you will get compensated. Airbnb also has their million dollar Host Guarantee for additional piece of mind (after reading the fine print).

So what if I was to tell you that one of your most valuable assets could be stolen from your home without the possibility of you noticing? Or that it could be stolen with minimal risk of getting caught, and sold with even less risk. If you are still wondering, I am talking about your identity. The Australian Federal Police (AFP), MoneySmart (ASIC), and ScamWatch (ACCC) all have some good general information on what identify theft is to set the scene.

What Is An Identity

Before I go into more details, I want you to think about what an identity is. Is it your name? Date of birth? Drivers licence? Passport? Tax file number/social security? Or is it more subtle things, like the name of your first pet, or the last few transactions on your bank account?

The truth is that an identity can be all, some or none, depending on who you ask. Just about every company has their own “proof” they require before accepting that you are you. For simple things this can often be just a username and password. Companies like Facebook have no need for your real first and last name, so they let you put almost anything you want. On the other end of the spectrum are Banks and the Australian Government who can require lots of proof before opening your account or giving you an identification document.

Looking at the high-end, banks typically require what they call 100 points of ID to open an account in your name. One method to achieve those 100 points is with a birth certificate and a utility bill. Now stop for a second and think about what you leave at your house when you are out shopping or traveling. You may take a passport and drivers licence, but how many of you leave your birth certificate and utility bills safely filed somewhere at home?

Using An Identity

Lets have a look at another example of an identity. You have just opened a new online savings account. After saving hard for a while you just hit $10,000 in your online savings account or term deposit. Just after reaching this milestone your favourite child’s car dies while you are on holiday. You want to transfer some money to them, but don’t have access to online banking. Thankfully your bank wants to provide excellent service to you and offers you a myriad of methods for transferring your money. One of those methods is telephone banking – which is great because on this holiday you forgot your multiple smart phones and grabbed an old Nokia mobile! You call the bank and transfer the money… or did you?

Have you ever wondered how the bank employee on the other end of the phone knows if you’re really you? What sort of questions do they ask you? Especially since they have never met you before.

Typically when you call a bank they will have a process for confirming your identity. Many banks will select a few questions or pieces of information from a list and ask you about them. For the examples below, think about how many of these could be answered if you had access to a person’s home:

• Full Name
• Date Of Birth
• Address
• Account Number
• Credit Card Limit
• Most Recent Banking Transaction
• Verbal Password

There are other questions a bank can ask, but how much of the information they could use to identify you is just sitting around your house. What’s worse (for your identity) is that the people on the other end of the phone call are often customer service representatives. These people are trained to put customer experience first and to be as helpful as they can. Unfortunately this can sometimes mean helping the customer, even when they are unable to answer some of the questions. After all, the customer is always right.

Now what if the attacker decided to combine the information from your house and the “helpfulness” of the customer service rep with other sources. They may look for additional information in your computer files, your online social media, or even calling some of your friends or colleagues. You can build up a profile to answer most identity related questions quite quickly. They could even call you pretending to be your bank.

The first minute and a half of the (amusing) video below shows just how easy it can be to get people to give up information about themselves when they are in a “helping” mindset.

Securing An Identity

Fortunately there are a number of simple steps you can take to help secure your home from the guests you invite in. The following are very simple to do, and will potentially save you from becoming a statistic that gets reported to ScamWatch.

• Make sure your phone, tablet and computer have passwords
  • The number of files and bits of information that you store on your devices is massive. Even a simple password will help prevent guests from having an opportunistic look into your digital personal life. Try and make sure it is not one they will guess.
• Get and use a lockable filing cabinet (or room)
  • Locking your documents up in a filing cabinet or dedicated room is a simple way to prevent access to those hard copy documents that may otherwise be lying around.
• Have a look around when you leave
  • Before you open your house, have a quick look around all the surfaces and cupboards for any information you would not want a stranger to be able to access. If you find anything, lock it in the filing cabinet.
• Lock your mailbox
  • Many mailboxes have the capability to be locked. A simple padlock will help deter would-be identify thieves from having access to any newly delivered information (or newly delivered credit cards).
• Use a shredder
  • While not required if you lock up your files, a shredder will help to prevent documents being found/used by both house guests and other criminals when being disposed of.
• Credit checks and bank statements
  • Consider getting a credit check or setting up a credit alert (these typically range from free up to $100 or so a year depending on what you get). This will help notify you if things change – this can be especially telling if you did not make any changes.
  • Also make sure you check your bank statements for any unexpected changes, new charges or anything else that looks strange.
• Be aware of what information you tell/give people and also who you give it to
  • If someone calls you, don’t be afraid to say you will call them back. Just make sure to use a number from the official company website and ask to be put through to them rather than using a number they give you! As the video above shows, you can’t trust the other end of a phone.
• Keep personal details used for identification away from public social media accounts
  • Try to avoid putting information on social media websites that may be used to identify you. Have a look on Pipl, PeekYou, or Intelius to see how easy it can be to find information about people online.
  • The YouTube clip below is well worth a watch to see what I mean about putting too much information online:

The Good News

If you are after some good news, I have three things to pick up the mood of this post.

1 – Protecting yourself

Firstly, if you follow the steps above when renting out your house (or even just in general) you will be setting the bar much higher. Just as it takes only a few mistakes for your personal information to be accessible and used against you, it only takes a few precautions to make that job a lot harder. Those few precautions should make it hard enough for a would-be thief that they will move on to the next person or not give it a go at all.

2 – Responding to problems

Secondly, the crime of identity theft is becoming more well-known. Previously many people would not know what you were talking about. You could go to the police and they would look at you quizzically. Thankfully these days the police, the government, the banks and even the public now know about identity theft. You see stories on TV about identity scams from time to time. Banks have entire divisions dedicated to identity theft and fraud. The government/law enforcement have even setup the Australian Cybercrime Online Reporting Network.

3 – Recovering from identity theft

Thirdly and lastly, you should get your money back. Now, I am sure there are cases that will be contradictory to what I say, there always are, however at least in the banking world if a customer is not involved in the fraud/theft then the bank will compensate the individual. I know identity theft is not just about banks, but it is the part I tend to see most (I work in a bank after all). This part is governed by the “ePayments Code” published by the Australian Securities and Investments Commission. It is a 42 page document that will probably put you to sleep, but section 10.3 (page 15) is the interesting bit:

“A holder is not liable for loss arising from an unauthorised transaction where it is clear that a user has not contributed to the loss.“

That basically says that if you are not part of causing the loss, the bank will cover the loss. That should come as good news should you even wake up to find $6,000 (or more) missing from your account shortly after your Airbnb guest leaves.