Servicemember Identity Theft & Red Flags

When it comes to dealing with members of the U.S. Armed Forces, it seems that there are often special considerations, and the world of identity theft is no exception, due to the increased risk for those individuals. Servicemembers along with veterans and their family members are significantly more likely to be victims of identity theft, with nearly 50,000 instances of identity theft happening each year to these groups. Common servicemember activities, such as frequent relocation, searches for places to live, spousal employment searches, and utility connections may increase the risk of identity theft for servicemembers and their families.

Identity theft can result in fraudulent extensions of credit and delinquencies showing up on a servicemember’s credit report, which has the possibility of affecting the servicemember’s security clearance. Many enlisted servicemembers and all officers are subjected to a review of their credit history and ability to meet their financial obligations in order to obtain and maintain a required security clearance. Even after this initial review of a servicemember’s credit history, the financial status of servicemembers’ security clearances is continuously evaluated. Identity theft can, not only negatively impact a servicemember’s career, making it difficult to obtain or maintain a security clearance, it also fundamentally undermines the readiness of our military and threatens national security.

According to the FTC, servicemembers are 22% more likely than non-servicemembers to report that a new extension of credit, such as a credit card, was opened by a fraudster/identity thief using the servicemember’s stolen information. Likewise, servicemembers are 76% more likely to report that the misuse of their existing account was due to some form of identity theft. Servicemembers are also three times more likely to report that money was taken directly from their accounts, due to identity theft.

Financial institutions are on the front lines, so to speak, and have a part to play in preventing identity theft. Banks are required to have procedures in place to identify Red Flags, or suspicious activities that may suggest fraud or identity theft. These procedures will vary based on a myriad of factors such as an institution’s size, but they should be able to identify signs of potential identity theft in an institution’s day-to-day operations. The Red Flags Program should be able to detect identity theft when it occurs and specify a plan of action for when these Red Flags are detected. In addition, the Red Flags Program should be regularly monitored to make sure the institution is staying current on newer threats. Financial institutions are also required to have programs that ensure customer information remains confidential and prevents unauthorized access to customer information. Further, banks who collect information from consumers that establish eligibility for credit, insurance, employment, or other purposes, must properly dispose of the information.

Compliance Alliance can help improve an institution‚Äôs Red Flags Program, both with ¬†webinar training on Red Flags, and a Red Flags Toolkit that contains nearly 20 Red Flags related tools. Our toolkit contains such tools as checklists, risk assessments, and a sample policy (identified as ‚ÄúRed Flags Identity Theft Prevention Program‚ÄĚ), and we‚Äôre also available on the hotline to answer any identity theft related questions you may have.