We live in an information age. At every turn we are asked to produce the
threads of data that add up to produce a fabric of our identity. Numbers,
numbers, numbers….we yield credit card data, our social security numbers,
our driver licenses at the shopping mall, to rental car agencies, to online
marketers and at the grocery checkout stands.
information is collected from the millions of customers to whom MLM
distributors sell products ... or place drop-ship orders."
The “information monster” is hungry and has not overlooked the millions
of distributors involved in MLM, Direct Sales, Network Marketing and Party
Plan businesses. Social Security identification must be collected by law so
that MLM companies can issue form 1099 reports to the IRS for their
independent contractors. Credit card information is essential to process
online and telephone orders. Individual banking information is required to
establish automatic debit of check accounts for auto ship programs. And of
course, credit card, address, telephone, email and other identifying
information is collected from the millions of customers to whom MLM
distributors sell products or for whom Direct Sales distributors place drop
Too Much Information
Being awash in a sea of information has its consequences. In a computer
driven and highly technological society, such easily retrievable data fuels
conventional commerce as well as e-commerce. In an ideal world of completely
honest souls, no unintended problems would occur. However, welcome to the
real world where small legions of thieves stand ready to steal and
manipulate your information for financial gain. Call it credit card fraud,
banking fraud, or any other type of fraud, the end game has come to be known
as “identity theft.”
Identity theft is a serious crime in which misappropriated personal
information is used to rob you when you are completely unaware. Each year
millions of individuals are affected, often spending months or years to
clean up their credit record. All of life’s activities ranging from loans to
educational opportunities, to housing, car ownership or credit card usage
may be impacted. In some odd instances, individuals may even be arrested
mistakenly for crimes they did not commit.
Ask Your MLM Company
Although your interaction with a MLM, Direct Sales, Network Marketing or
Party Plan company may represent only a fraction of your daily financial
experience, it is reasonable to inquire of mechanisms implemented by the
company to protect your privacy and information. A call or inquiry to
Distributor Relations or Operations should yield some comfort when you are
informed of systems in place to protect your information. You will likely be
informed that all internet and ecommerce transactions are secure and
encrypted. You should also be informed of security and privacy policies
instituted by the MLM company to safeguard information.
One specific area of concern by distributors has been the use of Social
Security numbers as the same number for distributor identification. Although
common practice in the past and in a more honest world, this approach is
being rethought by forward thinking Direct Sales companies that now encrypt
such information or issue distributor identification numbers that do not
reveal Social Security data. For instance, an early leader in this practice,
Florida based National Companies, a leading Direct Sales company that
markets consumer benefits services, was nominated for a prestigious Direct
Selling Association award of excellence after being one of the first network
marketing companies to implement a broad reaching privacy program for
distributors and customers to specifically combat identity theft. The
hallmark of the program was the substitution of coded distributor
identification numbers rather than taxpayer identification numbers.
Enter the FTC
The problem of identity theft obviously impacts the life of the MLM
distributor in ways far broader than their MLM experience. In everyday
affairs, individuals are exposed to this financial scourge. The FTC has
taken a leading role in both education and enforcement on this subject. The
following highly practical information is set forth in the FTC’s own
published advice on the subject of identity theft:
How Identity Theft Occurs
Skilled identity thieves use a variety of methods to gain access
to your personal information. For example:
- They get information from businesses or other institutions by:
- stealing records from their employer,
- bribing an employee who has access to these records, or
- hacking into the organization’s computers.
- They rummage through your trash, or the trash of businesses or
dumps in a practice known as “dumpster diving.”
- They obtain credit reports by abusing their employer’s
authorized access to credit reports or by posing as a landlord,
employer, or someone else who may have a legal right to the
- They steal credit and debit card numbers as your card is
processed by using a special information storage device in a practice
known as “skimming.”
- They steal wallets and purses containing identification and
credit and bank cards.
- They steal mail, including bank and credit card statements,
pre-approved credit offers, new checks, or tax information.
- They complete a “change of address form” to divert your mail to
- They steal personal information from your home.
- They scam information from you by posing as a legitimate
business person or government official.
Once identity thieves have your personal information, they may:
- Go on spending sprees using your credit and debit card account
numbers to buy “big-ticket” items like computers that they can easily
- Open a new credit card account, using your name, date of birth,
and SSN. When they don’t pay the bills, the delinquent account is
reported on your credit report.
- Change the mailing address on your credit card account. The
imposter then runs up charges on the account. Because the bills are
being sent to the new address, it may take some time before you
realize there’s a problem.
- Take out auto loans in your name.
- Establish phone or wireless service in your name.
- Counterfeit checks or debit cards, and drain your bank account.
- Open a bank account in your name and write bad checks on that
- File for bankruptcy under your name to avoid paying debts
they’ve incurred, or to avoid eviction.
- Give your name to the police during an arrest. If they are
released and don’t show up for their court date, an arrest warrant
could be issued in your name.
How Can I Tell if I’m a Victim of Identity Theft?
Monitor the balances of your financial accounts. Look for
unexplained charges or withdrawals. Other indications of identity theft
- failing to receive bills or other mail signaling an address
change by the identity thief;
- receiving credit cards for which you did not apply;
- denial of credit for no apparent reason; or
- receiving calls from debt collectors or companies about
merchandise or services you didn’t buy.
Are There Any Other Steps I Can Take?
If an identity thief is opening new credit accounts in your name,
these accounts are likely to show up on your credit report. You can find
out by ordering a copy of your credit report from any of three major
credit bureaus. If you find inaccurate information, check your reports
from the other two credit bureaus. Of course, some inaccuracies on your
credit reports may be because of computer, clerical, or other errors and
may not be a result of identity theft.
Note: If your personal information has been lost or stolen, you
may want to check all of your reports more frequently for the first
year. Federal law allows credit bureaus to charge you up to $9 for a
copy of your credit report. Some states may allow a free report or
Managing Your Personal Information
So how can a responsible consumer minimize the risk of identity
theft, as well as the potential for damage? When it involves your
personal information, exercise caution and prudence.
Do It Now
Place passwords on your credit card, bank and phone accounts.
Avoid using easily available information like your mother’s maiden name,
your birth date, the last four digits of your SSN or your phone number,
or a series of consecutive numbers. When you’re asked for your mother’s
maiden name on an application for a new account, try using a password
Secure personal information in your home, especially if you have
roommates, employ outside help, or are having service work done in your
Ask about information security procedures in your workplace. Find
out who has access to your personal information and verify that your
records are kept in a secure location. Ask about the disposal procedures
for those records as well.
Don’t give out personal information on the phone, through the
mail, or over the Internet unless you’ve initiated the contact or are
sure you know who you’re dealing with. Identity thieves can be skilled
liars, and may pose as representatives of banks, Internet service
providers (ISPs), or even government agencies to get you to reveal
identifying information. Before you divulge any personal information,
confirm that you’re dealing with a legitimate representative of a
legitimate organization. Double check by calling customer service
number on your account statement or in the telephone book.
Guard your mail and trash from theft. Deposit outgoing mail in
post office collection boxes or at your local post office instead of an
unsecured mailbox. Remove mail from your mailbox promptly. If you’re
planning to be away from home and can’t pick up your mail, call the U.S.
Postal Service at 1-800-275-8777 to ask for a vacation hold. To thwart a
thief who may pick through your trash or recycling bins, tear or shred
your charge receipts, copies of credit applications or offers, insurance
forms, physician statements, checks and bank statements, and expired
Before revealing any identifying information (for example, on an
application), ask how it will be used and secured, and whether it will
be shared with others. Find out if you have a say about the use of your
information. For example, can you choose to have it kept confidential?
Keep your Social Security card in a secure place and give your SSN
only when absolutely necessary. Ask to use other types of identifiers
when possible. If your state uses your SSN as your driver’s license
number, ask to substitute another number.
Limit the identification information and the number of credit and
debit cards that you carry to what you’ll actually need.
Keep your purse or wallet in a safe place at work.
Consider Your Computer
Your computer can be a goldmine of personal information to an
identity thief. Here’s how you can safeguard your computer and the
personal information it stores:
- Update your virus protection software regularly. Computer
viruses can have damaging effects, including introducing program code
that causes your computer to send out files or other stored
information. Look for security repairs and patches you can download
from your operating system’s Web site.
- Don’t download files from strangers or click on hyperlinks from
people you don’t know. Opening a file could expose your system to a
computer virus or a program that could hijack your modem.
- Use a firewall, especially if you have a high-speed or “always
on” connection to the Internet. The firewall allows you to limit
uninvited access to your computer. Without a firewall, hackers can
take over your computer and access sensitive information.
- Use a secure browser — software that encrypts or scrambles
information you send over the Internet — to guard the safety of your
online transactions. When you’re submitting information, look for the
“lock” icon on the status bar. It’s a symbol that your information is
secure during transmission.
- Try not to store financial information on your laptop unless
absolutely necessary. If you do, use a “strong” password — that is, a
combination of letters (upper and lower case), numbers, and symbols.
- Avoid using an automatic log-in feature that saves your user
name and password; and always log off when you’re finished. If your
laptop gets stolen, the thief will have a hard time accessing
- Delete any personal information stored on your computer before
you dispose of it. Use a “wipe” utility program, which overwrites the
entire hard drive and makes the files unrecoverable.
- Read Web site privacy policies. They should answer questions
about the access to and accuracy, security, and control of personal
information the site collects, as well as how sensitive information
will be used, and whether it will be provided to third parties.
A Special Word About Social Security Numbers
Very likely, your employer and financial institution will need
your SSN for wage and tax reporting purposes. Other private businesses
may ask you for your SSN to do a credit check, such as when you apply
for a car loan. Sometimes, however, they simply want your SSN for
general record keeping. If someone asks for your SSN, ask the following
- Why do you need it?
- How will it be used?
- How do you protect it from being stolen?
- What will happen if I don’t give it to you?
If you don’t provide your SSN, some businesses may not provide you
with the service or benefit you want. Getting satisfactory answers to
your questions will help you to decide whether you want to share your
SSN with the business.
If Your Identity’s Been Stolen
Even if you’ve been very careful about keeping your personal
information to yourself, an identity thief can strike. If you suspect
that your personal information has been used to commit fraud or theft,
take the following four steps right away. Remember to follow up all
calls in writing; send your letter by certified mail, return receipt
requested, so you can document what the company received and when; and
keep copies for your files.
- Place a fraud alert on your credit reports and review your
Call the toll-free fraud number of anyone of the three major credit
bureaus to place a fraud alert on your credit report. This can help
prevent an identity thief from opening additional accounts in your
name. As soon as the credit bureau confirms your fraud alert, the
other two credit bureaus will automatically be notified to place fraud
alerts on your credit report, and all three reports will be sent to
you free of charge.
- Equifax - To report fraud, call: 1-800-525-6285, and
write: P.O. Box 740241, Atlanta, GA 30374-0241
- Experian - To report fraud, call:1-888-EXPERIAN
(397-3742), and write: P.O. Box 9532, Allen, TX 75013
- TransUnion - To report fraud, call:1-800-680-7289, and
write: Fraud Victim Assistance Division, P.O. Box 6790, Fullerton,
Once you receive your reports, review them carefully. Look for
inquiries you didn’t initiate, accounts you didn’t open, and
unexplained debts on your true accounts. You also should check that
information such as your SSN, address(es), name or initial, and
employers are correct. Inaccuracies in this information also may be
due to typographical errors. Nevertheless, whether the inaccuracies
are due to fraud or error, you should notify the credit bureau as soon
as possible by telephone and in writing. You should continue to check
your reports periodically, especially in the first year after you’ve
discovered the theft, to make sure no new fraudulent activity has
occurred. The automated “one-call” fraud alert process only works for
the initial placement of your fraud alert. Orders for additional
credit reports or renewals of your fraud alerts must be made
separately at each of the three major credit bureaus.
- Close any accounts that have been tampered with or opened
Credit Accounts Credit accounts include all accounts with banks,
credit card companies and other lenders, and phone companies,
utilities, ISPs, and other service providers.
If you’re closing existing accounts and opening new ones, use
new Personal Identification Numbers (PINs) and passwords.
If there are fraudulent charges or debits, ask the company about
the following forms for disputing those transactions:
- For new unauthorized accounts, ask if the company accepts the
ID Theft Affidavit. If they
don’t, ask the representative to send you the company’s fraud
- For your existing accounts, ask the representative to send
you the company’s fraud dispute forms.
- If your ATM card has been lost, stolen or otherwise
compromised, cancel the card as soon as you can. Get a new card with
a new PIN.
If your checks have been stolen or misused, close the account
and ask your bank to notify the appropriate check verification
service. While no federal law limits your losses if someone steals
your checks and forges your signature, state laws may protect you.
Most states hold the bank responsible for losses from a forged check,
but they also require you to take reasonable care of your account. For
example, you may be held responsible for the forgery if you fail to
notify the bank in a timely way that a check was lost or stolen.
Contact your state banking or consumer protection agency for more
You also should contact these major check verification
companies. Ask that retailers who use their databases not accept your
- TeleCheck - 1-800-710-9898 or 927-0188
- Certegy, Inc. - 1-800-437-5120
- International Check Services - 1-800-631-9656
Call SCAN (1-800-262-7771) to find out if the identity thief has
been passing bad checks in your name.
- File a report with your local police or the police in the
community where the identity theft took place.
Keep a copy of the report. You may need it to validate your claims to
creditors. If you can’t get a copy, at least get the report number.
- File a complaint with the FTC.
By sharing your identity theft complaint with the FTC, you will
provide important information that can help law enforcement officials
track down identity thieves and stop them. The FTC also can refer
victim complaints to other appropriate government agencies and
companies for further action. The FTC enters the information you
provide into our secure database.
To file a complaint or to learn more about the FTC’s Privacy
www.consumer.gov/idtheft. If you don’t have access to the
Internet, you can call the FTC’s Identity Theft Hotline: toll-free
1-877-IDTHEFT (438-4338); TDD: 202-326-2502; or write: Identity Theft
Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW,
Washington, DC 20580.
The FTC works for the consumer to prevent fraudulent, deceptive
and unfair business practices in the marketplace and to provide
information to help consumers spot, stop, and avoid them. To file a
complaint or to get free information on consumer issues, visit
www.ftc.gov or call toll-free,
1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters
Internet, telemarketing, identity theft, and other fraud-related
complaints into Consumer Sentinel, a secure, online database available
to hundreds of Il and criminal law enforcement agencies in the U.S.
Bottom-line: Be Careful
Obviously, there is no fool proof way to prevent identity theft. However,
MLM distributors and their companies can engage in prudent and careful
behavior to minimize this tremendous abuse of individuals and our economic
system. In the end, the watch words must be “Be Careful, be cautious and ask