Got Money? You're a Prime Target for Identity Thieves
It may be a sign of the grim economic times, but crooks, cyber and otherwise, are zeroing in on affluent individuals.
The phenomenon even has a name, Affluent Identity Theft, said Neal O'Farrell, executive director of the Identity Theft Council in Walnut Creek, Calif., and a consumer-security expert.
People with more money aren't at greater risk of identity theft just because they have more to lose then the average consumer, O'Farrell said. They're often more vulnerable as well.
"In the last 18 months to two years, I've seen, through the Identity Theft Council and separately, a constant pick-up in cases of identity thieves targeting high-net-worth individuals," O'Farrell said.
"A lot of inquiries [to the Identity Theft Council] were coming from their lawyers and financial advisers — almost rising to a panic in some cases," he said. "There were a couple of organizations I dealt with that had multiple victims of identity theft who were all higher-net-worth and all deliberately targeted."
In most cases, the identity thieves who targeted these affluent individuals were pretty well-organized, O'Farrell recounted. They seemed to have researched their targets thoroughly.
"The research was a combination of what was available publicly, as well as what we call 'gentle attacks,'" O'Farrell said. "Going through their mail, trying to hack into their accounts. Not necessarily global organized crime, but I would call it more local organized street crime."
So what makes these high-net-worth people (defined as those with at least $1 million or more of net worth, excluding the family residence) more appealing — aside from all their money — and more accessible than the average consumers?
O'Farrell said there are three main reasons these people are being targeted.
They have a lot of credit, and they're not good at protecting it.
"It's a mixture of they're too busy and a little bit of arrogance," O'Farrell said. "They think, 'No one would dare target me. Don't they know who I am?' or 'I have lawyers to deal with it.'"
They often have a large number of accounts with high amounts on deposit, so it's that much harder for them to protect themselves.
"The average consumer might have just one or two bank accounts (a checking and savings); a higher-net-worth target could have as many as 15 to 20 different accounts," O'Farrell said.
"They could have business accounts, brokerage accounts, investment accounts, and even trust funds for the kids and grandkids," he said. "Multiply that by a factor of 10 — the number of accounts that need protecting, the number of passwords that need protecting. And rather than take on that task, they just tended to ignore it.
They have too many points of access and vulnerability.
"High-net-worth individuals tend to have too many people around them," O'Farrell said. "They have secretaries, direct employees, admin staff, personal financial advisers, legal advisers. And each one of those represents a point of vulnerability. They're people who can be exploited."
Additionally, O'Farrell said, if these people become victims of identity theft, they're very hesitant to go to the authorities because of the publicity that might result. They just want to make it go away as soon as possible and write it off as a bad experience — something the bad guys are aware of.
O'Farrell said there are a few things high-net-worth individuals can do to protect themselves and their money.
Take the security of their identities more seriously and more personally.
"They shouldn't make the mistake of assuming it won't happen to them or, if it does, a lawyer will fix it, because there's no lawyer who can fix it," he said. "These people [the identity thieves] disappear into thin air, and police won't investigate them and prosecutors won't prosecute."
Be very careful about their bank accounts.
"They need to have almost a routine for updating the security of those accounts," O'Farrell said.
Ensure everyone around them is aware of identity security.
"All the people around them have to be very wary of every call they get," he said. "They have to think security first. That means they have to be very suspicious about any emails that they get, especially ones with attachments. They have to double-check everything."
Take the same precautions as the average consumer.
"Checking their credit reports, freezing their credit reports, shredding their personal information, being careful with their mail," O'Farrell said.
"Rich people are like us, except they have a lot of money. And when it comes to security, it's the same security as the rest of us, plus an extra layer."