When identity fraud victims know their imposters, it can tear
through both relationships and financial well-being.
"Familiar fraud" occurs when a friend, extended family member or
even a parent uses a close relationship for their own financial
gain. The thief takes advantage of bonds of trust, making the crime
hard to measure -- and emotionally devastating.
Axton Betz-Hamilton battled a case of identity theft for 16
years, working to remove fraudulent credit accounts and collection
agency demands from her record. In February 2013, she finally
learned who the thief was: her mother, who had just passed
Betz-Hamilton and her father discovered that her mother opened
fraudulent accounts in her name, her father's and grandfather's,
racking up debt and unpaid taxes, and draining savings.
"We were unaware of so much because she handled all the family
finances," said Betz-Hamilton, an assistant professor of consumer
studies at Eastern Illinois University. "She had my name and Social
Security number and that's all she needed."
Measuring the problem
Javelin Research and Strategy's 2014 Identity Fraud
, familiar fraud victims made up 0.35 percent of adult consumers in
the U.S. in 2013. If projected across the population, that figure
would mean 847,000 American victims of identity theft knew their
thief. Experts say that projection is likely too low.
"Based on my experience, it's pretty regular and it's pretty
underreported," said Jennifer Peters, a certified credit counselor
with Consumer Credit Counseling Service of West Georgia/East
Alabama. "Very often [victims] know and aren't going to do anything
Knowing your perpetrator often makes it difficult for victims to
seek legal prosecution, said Eva Velasquez, Identity Theft Resource
Center CEO."This is often a crime of opportunity, and the fact is
your information is simply exposed more often to those close to you
rather than to complete strangers," she said.
Many cases of familiar fraud go undetected for years. For
example, when parents use the financial identities of their
children, the fraud often goes undiscovered until the children
attempt to build their own credit. Betz-Hamilton discovered her
mother's thievery in college, when utilities companies red-flagged
her credit, prompting her to check her record. Her 10-page-long
credit report contained fraudulent credit entries and collection
agency notifications dating back to 1993. But it wasn't until
Betz-Hamilton's father sorted through her mother's papers after her
death that they discovered her mother had opened (and defaulted on)
numerous fraudulent credit accounts, including those in
If many familiar fraud cases go unreported or are reported long
after they happened, yearly statistics become unreliable. But
according to Experian's Director of Public Education Rod Griffin,
the effects of familiar fraud are more important than the numbers.
Battling the emotional components
When an identity theft victim discovers he or she knows the
perpetrator, the emotional impact increases dramatically, making
the effects of fraud theft last even longer, according to the
Identity Theft Resource Center
It was the shock of the deception by a trusted family member
that made the deception so difficult for familiar fraud victim and
certified credit counselor Thomas Nitzsche. Nitzsche hired a cousin
to remodel his bathroom in 2007. Just before the job ended,
Nitzsche reviewed the statements of the credit card they used to
purchase project materials and found some unusual
After asking a few questions, Nitzsche learned that in addition
to construction materials, his cousin used the credit card to
purchase gift cards he then sold on the street for extra cash.
He caught the fraud early, but Nitzsche still describes the
situation as an awful ordeal for the whole family. He had
worked with other victims of familiar fraud before, but never
expected to deal with it himself.
"It makes you feel pretty violated," he said. "If he was capable
of that, what else would he have done if I hadn't caught it?"
Identity theft by a trusted close family member or friend
triggers different feelings than theft by a stranger, experts say.
Victims may identify with, or even feel responsible for protecting
In addition to internal emotional turmoil, familiar fraud
victims face concerns about what may happen to their family and
friends, fearing retaliation and damaged relationships, if they
make the situation known.
"A lot of people give me grief for standing up and telling my
story," said Betz-Hamilton. "'What a horrible thing to say about
your mother who died,' and that sort of thing. Something I've found
throughout this whole process is that many people are not going to
support you." As hard as it may be, victims should focus on
repairing the financial damage. It's too easy to get caught up in
the emotions and freeze, according to Peters.
"I just remind people, not to be ugly, but obviously this person
didn't care about you if they did this," she said. "Good credit is
so important and anything negative will stay on your record for
seven years, so you have to be proactive. You have to look out for
Resolving familiar theft crimes comes down to two options: Keep
it personal, or prosecute. Making the right choice will depend on
the victims' evaluation of their financial situations and their
perpetrators. Victims can start by carefully reviewing credit
reports from each of the three major credit bureaus.
Resolution option No. 1: Keep it personal
Settling the situation without going to the police or lawyers may
work if you caught it early and not much was taken. This option
would involve working with the creditors of any fraudulent accounts
and the thief to determine an effective repayment plan.
A keep-it-personal settlement requires two key ingredients: the
cooperation and trust of all parties. In an already delicate
situation that might not be easy or work for everyone, according to
"I wouldn't hand over the bill and say, 'Take care of this,'
because it likely won't be taken care of. You have to have a close
relationship to feel comfortable bending over backward like this,"
If a family wants to independently handle the matter, or a
victim has decided that he doesn't want his relationship with the
thief complicated any more, this resolution option may be very
appealing, but it won't necessarily be as effective. Betz-Hamilton
started clearing her credit history without the help of a police
report around 2001, but doesn't think that method would work
"No one really knew what ID theft was back then," she said. "It
wasn't nearly as pervasive as it is now. Now you need proof for
Resolution option No. 2: Go to the authorities
Experts advise victims of familiar fraud to approach their
situation just as they would if they didn't know their perpetrator
by placing a 90-day
on their credit, filing a police report and disputing all
fraudulent accounts and charges.
Victims "need to file a police report for us to be able to
proactively remove information" from a credit report," said
Experian's Griffin. "The same thing will likely happen with
lenders. We need to somehow verify that it is in fact fraud,
especially if it is a case within a family. The police report does
Filing a police report also gives victims easy access to
additional long-term fraud protection. "If you are willing to file
a police report, you can also file for an extended fraud statement
that will last for seven years from each of the bureaus," Griffin
said. "And if your situation is extreme, you would also have the
option of requesting a credit freeze from each of the credit
bureaus at no cost if you have a police report."
The police report may play key role in clearing up a victim's
credit, but the decision whether to file a police report is often a
difficult one, according to Velasquez."They might fear retaliation
because the relationship is a toxic one; other times it could be
that the individual thought they had a good relationship with the
thief and are so devastated when this turns out to be untrue, they
simply cannot admit that identity theft is actually occurring," she
said. Victims will look for any reason for this to be a mistake.
"By filing a police report, they are admitting that it's real, and
that they have been betrayed."
Nitzsche confronted his cousin about using his credit card
illegally, then decided to take the case to authorities because he
couldn't rely on his cousin to help resolve the situation another
"If it's not taken care of, you have to be willing to press
charges," Nitzsche explained. "I did and it resulted in my cousin
actually going to jail for a period of time. You don't want to be
accountable for their irresponsible actions."
Regardless of the path to resolution, a victim should not give
up. "Part of this process involves digging your heels in,"
Betz-Hamilton said. "I never let it go. If you want to know the
answers, keep digging. If you need to, find a different angle to
get the results you are looking for. The truth shall prevail."
A long road to recovery
Recovering after identity theft can be a slow process, and
especially so when dealing with a case of familiar fraud.
In Betz-Hamilton's case, the damage is much more extensive than
they could have imagined. "My credit report didn't clear of
fraudulent entries until 2009," she said. "My credit report was
damaged for 16 years and as a result of that, my first credit card
interest was set at 29.8 percent. I've had to pay higher auto
insurance rates and made pre-deposits for electric accounts and
such, too. It's affected everything."
Her mother's deception also took a toll on her father. "My dad
is nearing retirement and the financial security that he thought he
had is not there," she said. "He thought things were taken care of
and they aren't. So for him, he has to sit down and think and kind
of re-plan his golden years because it's not going to be the vision
In addition to making annual credit report checks, pay close
attention to account statements to routinely check for
irregularities, regardless of your fraud history. "A lot people
come to us and don't want to see the amount that they owe, so they
don't even open it," Nitzsche said. "If you aren't even opening
your bills, you aren't going to catch on to fraud until it's a
serious issue. If I wouldn't have taken a closer look at my credit
card statement, I wouldn't have caught on to what my cousin was
doing right away. "
Because familiar fraud is often a crime of opportunity, the more
securely individuals can hold onto their personal information, the
better. For example, if you need to lend money to a friend or
family member, give them cash instead of letting them borrow your
"You can't trust anybody," Nitzsche said. "Not even your own
cousin. That's unfortunately the lesson I've learned from all of
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Stolen: True tales of identity theft