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How Identity Theft Can Kill a Small BusinessIdentity theft is on the rise again, hitting a 3-year high and producing one new victim every three seconds in 2012, according to a study released Wednesday by Javelin Strategy & Research. Data breaches are responsible for much of the stolen personal information. One in four people who received a breach notification letter fell victim to identity theft, the study found, compared with one in five people in 2011.

Fallout from the upswing in identity theft is hurting small businesses. Fraud victims are more selective of where they shop after an incident, the study said. About 15 percent of all fraud victims actively changed their shopping behavior, avoiding smaller online merchants in favor of larger retail sites.

More than 12.6 million Americans were victims of identity theft in 2012, up by 1 million from 2011. All told, criminals rang up $21 billion in stolen funds, goods and damages in 2012.

A large portion of the rise, accounting for more than $10 billion, is new account fraud, where criminals use a victim’s personal information to open new credit card and loan accounts.

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“The Javelin Report is yet another confirmation of the inevitability of victimization,” said Adam Levin, chairman and founder of IDentity Theft 911. “Human error, misplaced trust and countless breaches impacting all segments of the business community and all levels of government have contributed to the depressing reality that it is literally impossible to prevent identity theft. Consumers must do everything they can to minimize their risk of exposure, develop a culture that includes self-monitoring as well as enroll in programs that detect anomalies in their credit files or public records as quickly as possible.”

Levin encouraged consumers to have in place a damage-control strategy that considers these steps:

Free Credit Check ToolContact creditors. Immediately call the account you think has been jeopardized, whether it’s your credit card, bank or an online merchant. Alerting the business that’s been scammed first will result in a frozen account, preventing further damage. If it’s an account you didn’t open, but found out about through a mailer or credit report, the same rule applies. Calling the business directly is the surest and fastest way to stop further damages.

File a police report. Local police will document your identity theft case, which is essential. Most credit card companies, banks and lenders will require a police report. Filing one early will be invaluable if your case goes into litigation.

Review your credit report. AnnualCreditReport.com is the only truly free credit report service out there and you can go to this site and pull one report from each of the major bureaus once annually. This report will tell you whether other accounts were jeopardized or opened without your knowledge. Make sure to check address information, too, as crooks will often reroute statements to keep you in the dark. Lastly, once you’ve verified your credit reports, contact one of the three reporting agencies—Experian, Equifax or TransUnion—and ask for a fraud alert to be put on your account. They’ll pass the information along to the other two agencies and this will ensure your made aware to any new credit activity. A good way to continue monitoring any major changes to your credit report is to get your free Credit Report Card, which gives you an estimate of your credit score and any major changes.

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Call the Federal Trade Commission. The FTC tracks identity theft cases. Alerting the FTC may lead to law enforcement action and support further down the road. Like the police report, it’s smart to have it on file and demonstrates due diligence. See this list of contact numbers to file a complaint.

Get organized. Start a folder with copies of the police report, credit reports, and logs of when you called your credit card companies, the providers of the affected accounts and the FTC. If you received a data breach letter, save that, too. Resolving identity theft can be a long drawn out process, but the more organized you are, the easier it will be.

This post originally appeared on IdentityTheft911-s blog.

Image: Zoonar

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