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John Sileo Knows How to Prevent Identity Theft

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HS - Jason Hartman Income Property Investing (2)Narrator: Welcome to the Holistic Survival Show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary to survive and prosper. The Holistic Survival Show is your family’s insurance for a better life. Jason will teach you to think independently, to understand threats, and how to create the ultimate action plan. Sudden change or worst case scenario, you’ll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places, and profits you care about in uncertain times. Ladies and gentlemen, your host Jason Hartman.

Jason Hartman: Welcome to the Holistic Survival Show. This is your host, Jason Hartman, where we talk about protecting the people, places, and profits you care about in these uncertain times. Today we’re going to talk about privacy and identity theft, two big issues in today’s culture. Obviously, identity theft is really the crime of the century. Well, the crime of the century is probably the Federal Reserve. That was the last century and this century. The government is the crime of the century. On a small time basis, those are the big time crimes. But on a small time basis that affects our life very directly, privacy on identity theft very important things. So today we’ll talk with author John Sileo about his book privacy means profit, prevent identity theft, and secure you and your bottom line. So we’ll be back with that in just less than 60 seconds.

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Start of Interview with John Sileo

Jason Hartman: My pleasure to welcome John Sileo to the show. He is the author of privacy means profit. And it’s about preventing identity theft. So this is a very important topic. This is the crime of the modern era. I think we’re all at a lot less risk of being held up with a gun in a dark alley than we are having our identity stolen. So this is a very important topic and it’s a pleasure to welcome John to the show. John, nice to talk with you.

John Sileo: Thanks for having me, Jason.

Jason Hartman: What is going on in the world of identity theft? We keep hearing about it in the media, John, and it is pretty scary the stories I hear. I had some credit card fraud on my American Express bill recently and I guess that’s not really considered a full identity theft, thank God, but this is the second time that’s happened, a bunch of unrecognized charges.

John Sileo: Yeah. At some point or another, it happens to all of us, or at least to a family member and whether it’s the light form like you had which was credit card theft, pretty minor and easy to recover from, or a case like mine where I spent two years with criminal charges spending and lost about $300,000, it really can impact your life and unfortunately it is, as we see over and over in the papers, it is the fastest growing crime in America.

Jason Hartman: You made a pretty big devastating claim there. I’m sure that’s what inspired your career on this topic. How in the heck did you lose $300,000 and have criminal charges pending? That is scary.

John Sileo: It was terrifying. It dominated two years of my life. It was because the first time that I had it happen which was somebody had stolen some mortgage papers, copies of mortgage papers after we signed our home loan that I threw out in the trash without shredding, stole it and a woman used my identity to buy a home in another state. She eventually went bankrupt. Of course, I’m the one who fought that battle because it looked like me with my social security number and my credit profile. I ignored that. I didn’t do anything about it. I thought it’s not gonna happen again. It can’t be that bad. And then my business partner used my identity to steal from our clients, set up a credit card account, spent $20,000 a month for almost two years on that account and embezzled from our clients using my electronic logins to our bank, covered it up with some fancy accounting and I spent two years fighting in criminal court to stay out of jail.

Jason Hartman: Wow. This is not just a hassle factor issue then. This could mean your freedom is what you’re saying, huh?

John Sileo: Yeah. They call it identity theft and all of us kind of think of it in terms of our numbers. You know, it’s our social security number, our phone number, our name. What it really is is your identity. It completely stripped me of who I was. I lost my business. I lost my salary. I lost the $300,00, my job, and more vital than all of that is I lost contact with my family. I was not present for my family or the people who I care about for almost 2 years of my life, and that’s devastating.

Jason Hartman: It sure is. Well, what is going on in the broader world of identity theft? And then let’s talk about some solutions as well. Maybe some stats, I mean people hear about this stuff all the time. What I also found interesting is kind of what you alluded to, John, the different forms of identity theft. People think of it as like your credit cards or your financial information, but it’s also medical, criminal. What else is there? I can’t think of it off hand, but there are several forms of identity theft.

John Sileo: Yeah, the financial, we all are interested so much in our wallet and our money that it gets a lot of the attention, but as you see in my case, somebody used my persona, my identity to commit crimes and had we not had some pretty craft technicians and lawyers, it would have been hard to prove that I hadn’t committed those crimes. So criminal identity theft is one. Medical, where somebody takes your…Maybe they use your medical benefits to have a surgery of some sort and they use your insurance and they drain out your benefits in order to pay for it, and then you have a medical problem and there’s nothing left. Extremely difficult to prove. In the worst cases, medical identity theft, somebody goes in and they change the blood type on your medical profile, and this has been documented before, you go in and it’s a different blood type and the person has blood shock or toxic shock from receiving the wrong blood. I mean it’s far greater than just the little credit card cases that we see ourselves.

Jason Hartman: How big is the problem now?

John Sileo: Last year there were a million confirmed cases of identity theft and that’s a little misleading. It sounds like a lot, but there were actually more than 220 million records breached, meaning that businesses along lost your and my identity about 1 for 1. Every adult had their identity lost at least once. And when you get one of those breach letters in the mail saying I’m sorry, Countrywide or Heartland Payment Systems or TJ Maxx or the Veteran’s Administration has lost your data, that means that it is out there for identity theft to happen, but most of us haven’t’ detected it. Most people don’t even know for 8 months to 2 years after it’s been stolen that it’s actually been fraudulently used, meaning yes 11 million reported it, but how many are out there who haven’t even detected it yet?

Jason Hartman: And how does someone not detect it? Are they slowly siphoning money from one’s bank account or people aren’t looking at their credit card statements or it might be another form of identity theft, non-financial?

John Sileo: Yeah, exactly. On the financial side, it’s just us not paying attention. Unfortunately, the average consumer doesn’t check their credit card statement very closely. There might be an $8 or $10 purchase or even a 4 or 5 hundred dollar one and the thieves test it out and they work it up and they see if you’re detecting it or not and then they just make bigger and bigger purchases. In the harder cases, it’s actually your credit profile that’s being hurt like mine in the case where my business partner used a credit card that did show in my credit profile, but how many of us actually check our credit profile to see what’s happening? And he was paying the bills. Now he was stealing from our clients to launder that money and pay the bills, but it still looked like I had good credit. Had I done the simple step of monitoring my credit profile with Experian, Equifax and Transunion, I would have caught it immediately.

Jason Hartman: So how often should you monitor it, though? I mean I’ve heard like once a year, but that’s probably not enough, right?

John Sileo: There’s two ways to think about it. One is if you want to do this in a totally free manner and not pay anybody else any money, you can monitor it 3 times per year for free because you get one report from each bureau, Equifax, Experian, and TransUnion every year, meaning you could go on today and get one and take a look at it, make sure that nothing’s wrong. You could go back in 3 or 4 months and get your second and 3 or 4 months after that and get your third and start repeating again. Here’s the problem. We are generally people of convenience. We don’t want to go in and take the time to do that. We might do it the first time, maybe the second time, but doing it the third time is a push. So that’s where these identity theft monitoring services come in. Most of them are a waste of your money. But there’s a few of them out there that are really worthwhile. And what they do is anytime there’s a change to your credit profile or your debit profile or there’s a criminal report on you or the government puts information out on the internet about you or cyber thieves are trafficking your information in Eastern Europe, it emails you and lets you know, hey, something’s up, you need to check into this. And that’s a much more convenient way to catch it.

Jason Hartman: So it monitors the different forms of identity theft then it sounds like.

John Sileo: Precisely.

Jason Hartman: What else can people do to protect themselves? I mean monitoring service, check your credit report, look at your statements…But, again, I’ve heard stories about people being arrested when they didn’t commit a crime because of an identity theft. I mean like your situation, similar to it, where someone committed a crime in your name…

John Sileo: Right. So the hard part of this whole crime is it can be overwhelming the amount you have to do. That’s why essentially I had to write privacy means profit because you can’t narrow it down to you just do this one thing. What it actually is is you put together kind of a quilt-work of safety prevention techniques. And pretty soon your risk goes down. It’s kind of like if you take a couple of houses on a block and one of them has regular locks and the lights are off and the one next to it has deadbolts and an alarm and the lights are on and it’s got a dog, well the thief goes to the easy target. And it’s the same with your identity as you start layering on things. You monitor your identity, you freeze your credit, you shred your documents, you protect your wireless connection. As you take those steps one by one you become a less attractive target. But, unfortunately, it’s not as simple as you just have this silver bullet and it solves the whole problem.

Jason Hartman: It’s just a constant battle. It’s a constant monitoring issue. What happens when someone locks down their credit file? Maybe you want to address some of the different services out there. LifeLock of course has been pretty famous lately. And as we talked before, you’re not a big fan of LifeLock it sounds like. I’ve never used them myself, but the guy gives out a social security number on the radio commercial and so forth and I guess what they do and what they were in a lawsuit over is they just put fraud alerts on people’s credit reports with the credit bureaus.

John Sileo: And they can no longer even do that. They have been banned from doing because you have to be an individual to do that, not a corporation. And it’s not that I don’t like LifeLock’s product. It’s just that there are better products out there in my opinion.

Jason Hartman: Before we get off of that, though…

John Sileo: The one that I use personally is called CS Identity. And the reason I use it is because technically it does a better job of monitoring it. It provides more service than something like LifeLock does. LifeLock can help out, but to me you’re looking for somebody who is out there on all of the databases and all of the government forums and the rogue websites that are looking for the buying and selling of your data. And that’s to me what CS Identity does better than anything else on the market.

Jason Hartman: I just want to ask you, though, about the LifeLock thing for a moment, because they can’t do that anymore. I guess they lost that litigation over that. What is it that people do when they lock down their credit report? I know that’s a common thing that an individual can do and some recommend that they stop getting the credit card offers in the mail. What does that mean when you lock down your report?

John Sileo: Okay. So a couple of points of distinction: First of all, you can opt of getting junk mail all on your own by going to optoutprescreen.com and that’s all they do. That’s all LifeLock does for you is they go to optoutprescreen.com and they get rid of all of that financial junk mail. LifeLock is not the one who frees your credit. Their name suggests that that’s what they do, but it actually does nothing to lock your credit. You can, by yourself, freeze your own credit by contacting the three credit reporting bureaus. Now, that doesn’t mean you’re shutting down your ability to use your credit card or your bank or even to apply for new ones. What it means is nobody can establish a new account in your name without having a password to get into that account. So it’s the equivalent of putting a password on your computer. It’s putting a password on your credit profile. Then when you go to take out a loan, to set up a new bank account, to get a new credit card, you have to unfreeze or thaw that security freeze for a day or a week so that you can get into the credit so that the person who is extending you the credit can get in there. And then it freezes back up. And what that does is it keeps unauthorized people from getting into that credit profile which is the worst form of financial identity theft.

Jason Hartman: Now, when someone freezes their credit profile, can the creditors that you still have accounts with report to your credit profile? Can they still put stuff on there and change the…

John Sileo: They sure can. Existing accounts are not affected. So they can still update if you were late paying or early paying or you’re in good standing, that still all flows through. It’s only new account establishment that is affected.

Jason Hartman: And what about people getting access to your credit report? A new creditor can’t pull the report without you opening it, right?

John Sileo: Correct. If you don’t thaw it or unfreeze it, they absolutely can’t get into it. And that’s where it stops the crime. In my case, it would have stopped, the woman who used my identity to buy a home, it would have stopped her from getting that credit off of essentially my social security number or my credit profile. And it would have stopped my business partner from setting up a credit card account in my name because you can’t do anything with your credit profile if it’s frozen until you allow it to be unfrozen.

Jason Hartman: Let me take a brief pause. We’ll be back in just a minute.

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Jason Hartman: One of the things I really like, one of the metaphors you use in the book, which is the mindset of a spy. You tell people protect their net worth and their bottom line by using the 7 mindsets of a spy. And we’ve all seen, and most of them just like James Bond movies, all these other sort of intrigue spy movies. What does a spy do that a regular, every day individual should do?

John Sileo: Well, the primary thing is simply thinking about information, whether it’s lying around on your desk or in filing cabinets or while you’re surfing in an unprotected environment like at Starbucks or in the airport. If you simply think, okay, what would my worst enemy, what would a spy, somebody who’s trying to get my information, how would they get that out of me? And when you think through that, in that method, and as you’ve mentioned, in Privacy Means Profit there are 7 specific mindsets. So one of the, for example, is eliminate the source. The spy is trained on how to eliminate the information before it becomes a problem. A good example is the one we just talked about. Opting out of that financial junk mail means that it never comes to your mail in the first place and never exists. So you don’t need to shred it, you don’t need to worry about locking your mailbox, you don’t need to worry about all of the other ways it’s stolen because it doesn’t exist in the first place. That’s kind of how thinking like a spy works.

Jason Hartman: That’s good. So eliminate, destroy, secure, lock, evaluate, interrogate, and monitor, those are the 7 steps, right?

John Sileo: That’s correct.

Jason Hartman: John, you’ve written two books on this subject. The newest one, it’s coming out soon, is Privacy Means Profit. What’s the title of your prior book?

John Sileo: The first book is Stolen Lives: Identity Theft Prevention Made Simple. Both books look at the individual side of identity theft. Privacy means profit then take sit to the business level and shows people how to apply these same tools for protecting ourselves and our family to protecting the data inside of their businesses.

Jason Hartman: Oh. So you mean if someone has a small business, protect the data in general from competitors or for the benefit of customers or both? Or what do you mean there?

John Sileo: Yeah, exactly. Of course your competitors, if they’re smart, they’re going through your dumpster which is public property, and the minute it goes out of your building in the dumpster, they’re going through to see who your best customers are, what your profit margins are, what your upcoming marketing strategy is. So, yes, corporate espionage is big. Also, the liability, if you’re in most industries, if you take credit, meaning people don’t pay you necessarily in cash, then you are liable for their information. If you lose that information, even so much as a customer record with a credit card number on it, you pay to recover that. You pay legal cost, you pay damages to the customer, and right now the average for a business is just over $210 per record lost. So you can imagine, even a small business, losing 1000 customer records, that gets very costly very quickly. The average cost of a small business data breach is $6.7 million in recovery.

Jason Hartman: So do businesses have insurance for this kind of thing if it happens?

John Sileo: They certainly can have insurance. The average business note doesn’t even have it on their radar screen at this point.

Jason Hartman: Wow, that’s really scary. That’s something probably a lot of people aren’t thinking about. You do a lot of speaking and your speaking engagements are to the large corporate world whether it be the Federal Trade Commission, the FDIC, sort of pseudo-governmental agency there, but a lot of other private companies. What is it you’re telling these large entities?

John Sileo: It’s large entities. It’s organizations of small entities that are part of associations. And, as you said, a lot of government work, department of defense. And what I’m mostly there to do is motivate the people in the audience, whether it’s their employees, their workers, their association members, to care about the topic, to go out and see how badly it can damage your bottom line, how much it can cost your family, your net worth. In my case, I essentially lost everything before I started paying attention. So I’m up there as the example of what not to do and then I give the skills of how to detect Fraud, how to see if you’re being conned or socially engineered, and how to stop it before it starts. Because obviously prevention, just like having a heart attack, it’s easier to exercise than it is to have the heart attack and recover. Well, it’s the same with data theft. It’s easier to take a couple of simple steps than it is to spend years recovering like I have.

Jason Hartman: I love that term you just used, to see if you’re being socially engineered. What does that mean?

John Sileo: Social engineering is where people manipulate you for your information by pushing your buttons. So a form of social engineering that’s common is the phishing e-mail. So that’s social engineering applied to technology or the Nigerian scam where somebody says, listen, I’m gonna give you something. I’m gonna give you a large sum of money if you will simply pre-pay the shipping cost for this package or some other scam. And how that’s engineering us is we all want something for nothing. We want the free deal. We want to be wealthy. And the con artists or social engineers know these things about us. There are human behavioral patterns. And they push those buttons in such a way that they get us to click on the link and update our account information when we know good and well it’s probably not our bank. Or we give information out about our business that allows somebody access into the computer systems or into the building without a second thought, and it’s because they’re playing on our biases, our emotional biases of fear or authority or obligation or they’re rushing us. Those are the type of skills that I go in and I train on constantly.

Jason Hartman: I gotta say, John, it’s really hard for me to believe that anybody is really falling for phishing scams anymore or Nigerian. Come on.

John Sileo: 6% of phishing scams are currently successful. That means that if you sent out 1000 spam mails, that 60 of them, 60 people give their information right now. So it’s very easy to send out. To buy a list of 100 emails you might send out 20 or 30 bucks. And yet you’re getting identities on the other end that could be worth up to 300,000 if it’s handled by a good thief. So, yes, it’s just a statistical gain, but the statistics are still phenomenally high.

Jason Hartman: That’s mindboggling that really happens, people really fall for that stuff. But it does, it’s unfortunate. Tell us, first of all, what was the final thing? What happened to your business partner for embezzling? And then I want to ask you about the future of this, where this is going.

John Sileo: The end of my business partner story is usually one I don’t tell until the end of my speech. So you have to hire me for a speech.

Jason Hartman: Oh darn.

John Sileo: And what was the second question?

Jason Hartman: Well, I really wanted to ask you, John, what about the future of this? I mean you just talked about phishing for example. And phishing is where you get this phony email and it says this is from Bank of America. Please update your account information. They take you to a fake website. You give them all your info which they already have and then the person uses that. I’ve heard some talk about certified emails or making the internet infrastructure more secure. It was really never designed for consumer use like it’s turned into. And so it’s not really equipped for a lot of this stuff. But the fact that you can just get emails from anybody in the world and I suppose you can get phone calls from anybody too, but what is the future? What is going to be the conclusion? Is this problem of identity theft just going to be something that plagues us for the rest of our lives or is there some solution coming down the pike that maybe we can’t see yet? You’re in the world, so you know about what’s being talked about out there.

John Sileo: It’s a little disheartening as to there being a final solution whether it’s legislation or a piece of technology. Unfortunately, every time we plug a hole, another opens. A good example is the email phishing attacks have gone way down. And what they’ve been replaced with is social networking phishing attacks where somebody friends you on your Facebook page or your linked in or twitter or however they do it, they learn a lot about you because we all post too much information on those sites, and then it’s pretty easy to gain your trust because they know who your friends are, they know when you’re traveling, when you’re gonna be away from your house, what your job is, how you think, what you read, what you watch. And when you know all of that, it’s pretty easy to get further information out of you. I think that the final answer to it is once you get a ground level fundamental training on how to detect all of this stuff, it’s like you said, I can’t believe anybody would still fall for phishing. Well, that’s because you’re educated to a level where you detect it immediately. If we were able to train more people, more companies on simply detecting how these scams work and what the signs are, the red flags, and get people to take a couple of fundamental steps, the steps like I go through in privacy means profit, it would strangle the industry enough of identity theft and the crime rings that it would no longer be as profitable and it would make it much, much less attractive.

Jason Hartman: That’s an important part of it obviously. And what you said about when you plug one hole, there’s always another hole that comes up, it seems as though crooks, thieves and these scumbags are really pretty innovative people. I hate to give them any sort of credit at all, but it really seems like that’s the case. They always figure out ways to beat the system, don’t they?

John Sileo: They do and there’s a huge monetary incentive to do it. And as long as there is that, as with other types of crime, they will continue to go after it, and since there’s no real legislation that makes identity theft illegal on a federal basis, you fight it state by state, and because it’s very virtual and very hard to catch the criminals, until that changes it’s going to be the crime of choice.

Jason Hartman: Unfortunate and scary, but it’s good that you were here with us today to tell us about it. What would you like people to know to just wrap this up? Any other tips they can do to protect themselves? And tell them where they can get the book, too.

John Sileo: You bet. Again, since it’s such a broad topic, it’s very important that you prioritize what you do. And I go through a lot of those details on my website which is where you can also get the book which is ThinkLikeaSpy.com, all one word, ThinkLikeaSpy.com. It also has a link to my blog, which every time there’s a new issue that you need to know about I publish an article on it and tell you how to solve it. And there’s a handful of other resources there as well as materials on if you want to bring me in to speak.

Jason Hartman: Good stuff. Well, John, thank you so much for joining us today. We really appreciate learning about this. It’s scary, as I mentioned, but this is not something you can stick your head in the sand about. Everybody’s gotta really be paying attention to this type of thing, don’t they?

John Sileo: Absolutely. And thank you for leading the charge.

Narrator: Have you listened to the Creating Wealth series? I mean from the beginning. If not, you can go ahead and get book 1, which shows 1 through 20 in digital download. These are advanced strategies for wealth creation. For more information, go to JasonHartman.com.

Narrator: Thank you for joining us today for the Holistic Survival Show, protecting the people, places and profits you care about in uncertain times. Be sure to listen to our Creating Wealth show, which focuses on exploiting the financial and wealth creation opportunities in today’s economy. Learn more at www.JasonHartman.com or search “Jason Hartman” on iTunes. This show is produced by the Hartman Media Company offering very general guidelines and information. Opinions of guests are their own and none of the content should be considered individual advice. If you require personalized advice, please consult an appropriate professional. Information deemed reliable, but not guaranteed.  (Top image: Flickr | B Rosen)

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