March 12, 2013
Steps to Guard Against Identity Fraud
The Investment View from Prescott, Arizona
If you get a letter notifying you that your personal data was involved in a corporate data breach, you should pay close attention, a new report says.
Nearly a quarter of the people who receive such letters become victims of identity fraud, as stated in the Javelin Strategy & Research report.
The annual report found that the incidence of identity theft overall was about 5.3 percent of consumers, compared with 4.9 percent the year before.
Much of the increase was driven by so-called “new account” fraud, involving the unauthorized opening of general use or store brand credit cards, as well as “account takeover” fraud, in which the identity thieves may change consumers’ contact information — like their mailing addresses — to gain illegal access to their accounts, the report said.
Data breaches involving Social Security numbers are the most damaging, the report found, because they can be used to open new accounts and authenticate existing ones. Consumers who had their Social Security number compromised in a data breach were five times more likely to be the victim of fraud than consumers on average.
So, what should you do if you get a breach letter?
First, contact the company to make sure the letter is legitimate, Javelin advises. Then, don’t take the letter as some sort of reassurance. If you get one, you need to be more vigilant — not less — about checking your account statements and your credit report for suspicious activity, like new accounts you don’t remember opening or charges you didn’t make.
“We have a national problem, which is getting people to take these notifications seriously,” said Jim Van Dyke, Javelin’s chief executive.
If the company reporting the breach offers free monitoring of your credit report, you should use it, Mr. Van Dyke advised. “A surprising proportion of people don’t even take advantage of an offer of free service,” he said. At a minimum, you can check your credit reports without charge at AnnualCreditReport.com or the individual credit bureaus.
Putting a security freeze on your credit report stops the fraudulent opening of new accounts without your knowledge. There may, however, be an “inconvenience” factor involved in lifting the freeze, in case you do want to apply for credit, Mr. Van Dyke said.
Putting a fraud alert on your credit report is a less sweeping step that lets lenders know to do extra checking before issuing new credit in your name, and is usually a good idea if your Social Security number is compromised.
A security freeze or fraud alert won’t help if the data exposed in the breach was, say, the account number of a credit card you already had open. In that case, you need to check your account regularly — either online, or by checking your paper statement — for suspicious charges. Or, as the Identity Theft Resource Center suggests, you can request a new card with a new account number, if the card company doesn’t offer you one voluntarily.
What other steps can you take? In general, Javelin advises, never reveal your full nine-digit Social Security number unless it’s necessary. If you’re asked for it to establish your identity, ask if you can provide another form of identification instead. Also, ask service providers like cable companies and utilities to replace the last four digits of your Social Security number with a different four-digit security code to validate your identity when you call for service.
Even if you don’t get a breach letter, Javelin advises monitoring your bank and credit card accounts electronically at least once a week. Use whatever method is easiest for you — checking online, via a mobile app, or touch-tone banking. And take advantage of any automatic account alerts your bank offers.
This article includes excerpts from an article by Ann Carrns, a freelance writer based in Fayetteville, AR.
A Slice of Life
Everyone who deals with Hepburn Capital knows the wonderful voice of Sheri Congdon, who began running our front office about 12 years ago.
What you may not know is that Sheri’s son, Brian, is developmentally disabled and he has lived in a group home run by Salem Christian Homes, Inc., (SCH) a non-profit organization in Chino, CA, that serves individuals with autism, mental retardation, Down syndrome as well as other disabilities.
SCH has been Brian’s home for more than 30 years, but the stability of Brian’s environment continues to be threatened by the budget cutbacks in California.
An April 30th “5k Run, Walk and Roll” fundraiser will help bridge a $130,000 gap in SCH’s finances. Brian will participate, and Sheri is looking for sponsors willing to donate on Brian’s behalf.
Please consider a tax deductable donation of $25, $50, $100 or more to this very worthwhile cause, and help support Sheri, her family, and the many who need our help now more than ever.
You may get details and register online at http://www.salemchristianhomes.org/Sponsorship_Form.pdf. If it will be easier for you, just drop a check off at the office made out to Salem Christian Homes, Inc., or call the office (928- 778-4000) with your credit card information and we can register you on the phone.
Your support is appreciated beyond words.
Q: Take away my first letter, and I still sound the same. Take away my last letter, I still sound the same. Even take away my letter in the middle, I will still sound the same. I am a five letter word. What am I?
How’s the Market Doing?
The stock market headlines last week focused upon new highs in the Dow Jones Industrial Average**. Other indexes are still below their old highs so signals are still mixed. In fact, the tech heavy Nasdaq** index is still only a little past half way in its recovery from the fall in 2000. And, that is after 13 years of trying. Yikes! And the Dow** contains only 30 stocks, so it is far from representing the entire stock market, so take the headlines with a grain of salt.
One reason the Dow** is looking so good is that it is dominated by multi-national corporations that make extra profits when the value of the dollar rises, and the dollar has risen sharply over the past 6 weeks driving the Dow** higher with it. If the uptrend of the dollar falters, I would expect the Dow** to give back some of its gains.
The bond market is also beginning to show signs of strain as interest rates creep up pushing bond resale values down. Over the past 4-5 months, Treasury and high quality corporate bond values have been dropping faster than interest has been earned, causing losses in both of these categories of investment.
Even conservative investor Warren Buffett warned in a recent letter to his investors that “They [Treasury bonds] are now among the most dangerous of assets. Current yield rates do not come close to offsetting the risk of capital loss that investors are taking. . . Right now bonds should come with a warning label.”
Fortunately for you, our bond strategy, Flexible Income*, is designed to just rotate away from weak investment categories into stronger ones, so we continue to have a good year going as I explain elsewhere in this newsletter.
Gold’s slide, that I have discussed in several recent newsletters, shows no sign of ending. Gold’s correction from its news-making uptrend has been going on for over 18 months now, which raises concern that perhaps the bull market for gold may be over.
Just recently there have been some signs that the bottom for gold may be at hand, but the major cycle for gold, 13.5 months, is not due to bottom out until May. These cycles are not terribly precise, so we could be at the bottom now, but I would still not recommend buying gold until the uptrend reestablishes itself.
What We Were Saying Back Then
Want a Discount on Our Fees?
Would you like to save hundreds of dollars every year? Simply refer family and friends to Hepburn Capital.
We give a “volume discount” based on the total amount of money we work with for a family or other grouping of clients, including friends. The higher the amount of assets being managed for the group, the lower the fee percentage becomes for everyone in that group.
Besides being one of the nicest things you can do for us (and them), mentioning Hepburn Capital to your friends can save you real money.
The easiest way to introduce someone to our work is to forward our newsletter to them. Here is a link that will allow you to forward it with a just click: hepburncapital.com/newsletter/
Thank you for your help and support.
What’s Going On In Your Portfolio?
Since my last newsletter, the US sock markets experienced a sharp downward correction that lasted only 5 days before resuming its uptrend.
Our growth portfolio* had a number of investments hit their protective sell prices and were removed from the portfolio, including our home construction and energy stocks. They have been replaced with banking, healthcare and an Australian stock fund. We continue to hold our high-dividend real estate investment trusts along with a couple of diversified growth funds.
Flexible Income* portfolios just keep going along making money slowly. As of this writing on March 10th, Flexible Income* portfolios are up over 3% this year, after deduction of all fees and expenses. Considering that the stated objective of this strategy is to exceed the returns of CDs without taking a lot of risk, we are accomplishing the objective.
Municipal funds* which have been our leaders for the past year and a half have flattened out as rising rates present them with a headwind. Because the tax environment is favorable for tax free municipals, I am in no hurry to move out of this group of holdings, but I will continue to monitor them closely.
An Open House Celebration
One year ago next week, I opened The Interest Rate Store on the first floor of my office building in Prescott. The Interest Rate Store is a boutique investment house specializing in annuities of all sorts, something we don’t do at Hepburn Capital.
Annuity specialist, Judy Southstone is the account manager at TIRS. Having these ultra conservative investments available nicely rounds out what we can to for friends and neighbors who are not comfortable with market oriented investments.
Our one year anniversary is an occasion to celebrate, so that is exactly what we intend to do at an Open House on Thursday, March 21st, from 4:00pm to 6:00pm.
Please plan on dropping by to see the digs, meet Judy, win prizes and help us celebrate.
I’ll look forward to seeing you there.
Scottsdale Office Date
Please call 928-778-4000 to set up an appointment with Will either in Scottsdale or Prescott.
Our Spotlight Strategy
With our Flexible Income Stategy we strive to provide high total return consistent with Capital Preservation.
Your money will be invested in bond or currency funds, including precious metals that may be used as currencies and equity-income investments whose price trend is up. If the price cycles down, holdings are replaced with new investments that are going up. Repeat as needed. Growth stocks are not used. [Flexible Income]
If you would like a current copy of our SEC Form ADV, Part 2, it is on our website at hepburncapital.com/form-adv.html
* The model accounts mentioned in this article are hypothetical examples of how the strategy may work as designed. Activity in client accounts may be different from that in the model in amount of each investment, specific timing of trades, and actual security used, which may vary from account to account. Not all trades are profitable. It should not be assumed that current or future holdings will be profitable. A list of all trades in these accounts for the past 12 months will be provided upon written request.
** The S&P 500 and Nasdaq Indexes are unmanaged lists of stocks considered representative of the broad stock market. Investors cannot invest directly in the S&P 500 Index.
This newsletter may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Information in this newsletter may be derived from sources deemed to be reliable, however we cannot guarantee its accuracy. Please discuss any legal or tax matters with your advisors in those areas. Neither the information presented nor any opinions expressed herein constitute a solicitation for the purchase or sale of any security.