Identity Theft

Identity theft strikes at the core of who you are. Someone steals your good name and enriches themselves at your expense. ID thieves don't care what you have to pay to clear your name, or how long it takes you.

ID theft is surprisingly common. Every day there are nearly 20,000 ID thefts or about 799 per hour. About 4%-6% of the U.S. population is affected each year, some 10 million people.

Here are some tips to protect your credit report and lower your chance of being violated.

The Crime

Identity theft is a crime where one person impersonates another using the victim's personal information. Generally, large bills are charged to the innocent person. ID theft happens in the real world when someone steals your wallet and goes on a shopping spree. It also happens in cyberspace.

Victims can be impersonated for reasons beyond financial gain. Social security numbers may be stolen for use as IDs for illegal immigrants or for those involved with terrorism and other criminal enterprises. Back To Top

Watch your mail

ID thieves have a vested interest in keeping you in the dark about what's happening for as long as possible. Until you blow the whistle, they can keep stealing. They begin by diverting your mail.

Tactics:

  • ID thieves open up new credit accounts in your name and divert the bills to a new address - so you never know you're being victimized.
  • ID thieves may put in a change of address form at the post office so all your mail goes to another address. They may also call your existing credit accounts and change the mailing address to one they control. Back To Top

Top ID theft methods

  • Stealing your wallet or checkbook
  • Using computer programs to search out account and personal information through unencrypted channels such as email or by scanning your unprotected computer (no firewall) through the Internet
  • Data swiping, using a handheld device that captures information from scanned cards
  • Going through your trash looking for credit statements or other personal information
  • Watching you enter your PIN number
  • Posing as an official or employer to gain access to your credit report with all your personal information
  • Hacking into large databases that may contain your personal information
  • Copying your credit card number during routine transactions
  • Using criminal chat rooms to buy and sell credit card information Back To Top

Identity theft signs

  • You don't receive expected mail
  • Signs of bad credit appear in your credit report such as missing payments
  • You are contacted by a collections agency
  • Stores inquire about goods delivered or sent that you did not order
  • Your credit cards are denied while shopping because a creditor has detected fraud and shut your account down
  • You are turned down for new credit
  • You receive credit cards you didn't request
  • You receive IRS filings that are unfamiliar to you
  • Notices of eviction or court actions appear Back To Top

Types of attacks

Identity thieves set up new accounts in your name, but their brazen behavior can go much further.

ID thieves may:

  • Open cell phone accounts, utilities and incredibly, mortgages in their victim's name
  • File for bankruptcy in the victim's name to avoid their own eviction
  • Buy big ticket items like cars or boats
  • Have their own pictures added to credit cards and driver's licenses, further confusing identity
  • Give police the victim's name if arrested
  • Close the true account holder's accounts and open new ones
  • File false tax returns in the victim's name Back To Top

How to protect yourself

View your credit report

The only sure way to guard against identity theft is to view your free credit report frequently. You are legally entitled to see your free credit report from the big three credit reporting agencies once a year. To receive your free credit reports, visit www.annualcreditreport.com. You can also find free credit reports and credit scores online as part of various offers for credit monitoring.

Be smart about passwords

Create an alphanumeric password using words and numbers. Don't use the obvious like 1,2,3 or the last 4 digits of your social security number. Don't use birthdates, names of loved ones or pet names. Change passwords frequently.

Shred identifying information

Destroy all pre-approved credit applications, old financial records, expired credit cards, old check books, and anything with your name, address or account numbers on it.

TIP: Reuse the shredded paper as packing material. It works great.

Mail security

Never leave mail unattended for long. If you're going to be away for any length of time have the post office hold your mail or ask a neighbor. Consider buying a secure mailbox with lock and key. Don't ever leave outgoing mail for the postal worker. Take it to the post office instead.

Carrying information

There's no need to carry important paperwork on a daily basis. Leave your social security card, passport, extra checkbooks and credit cards at home. Don't print your social security or driver's license numbers on your checks.

Secure your belongings

No offense to co-workers, but lock up your purse or wallet or carry it with you at all times. If you shop from work, be aware that your credit card information may be cached in your computer. Log off when you're away from your desk. If you employ others in your home, protect financial information. Never throw away or give away an old personal computer without first clearing the hard drive information.

Request new ID questions

Many credit card offers still ask for your mother's maiden name. You have the right to request another identifier.

Don't give out personal information

Never give out any personal information unless you initiated the contact. If you asked for credit with a new company then it is appropriate to provide your information if they call. Never respond to phone solicitors or email requests for personal information. Back To Top

If you are a victim

Contact the credit bureaus and put a fraud alert on your file.

Notify one credit bureau, and it will notify the others. Fraud alerts are good for varying amounts of time, usually 90 days. Fraud alerts are intended to make creditors contact you personally before awarding credit. Sadly, this doesn't always happen. Some creditors simply ignore the warning.

Contact all your creditors and inform them of the crime.

They should close the account and open a new one for you. Make sure that you can account for all your mail before allowing them to send you any new cards or checks. A thief may be diverting your mail.

File a report with local law enforcement and report the identity theft to the FTC.

Avoid submitting an automated report with local police. Insist on a face-to-face meeting which is easier for credit bureaus to confirm. If they still won't file a report, request a "Miscellaneous Report." You can call the FTC direct at 1-877-ID THEFT and TDD: 202-326-2502. You can also fill out a form online.

Work with the credit bureaus to resolve the damage to your credit report.

Contact TransUnion which has its own fraud victim's assistance department to begin the process of repairing your credit.

Follow up with law enforcement to learn the status of your case.

It's important to track your case and make sure everything is resolved. This can take many hours but it's worth it financially.

Monitor your credit on a regular basis to see that your credit restoration process is proceeding and to guard against any future violation. You can do this on your own by ordering frequent copies of your report or use a service which does it for you. Back To Top

Your legal obligations

Credit cards

In most cases, you are only liable for $50 per credit card in cases of identity theft. If you lost your card and reported it missing before it was used, you will owe nothing on any unauthorized charges. Because of this, there's no need for credit card or ID theft insurance generally.

Debit & ATM cards

If you report these cards missing within 2 business days of recognizing the loss, your obligation is capped at $50. If you report your card missing between 2 - 60 business days, then your liability may rise to $500. Report the card missing after 60 days and you may not be able to recover any of your losses, regardless of what a thief withdraws. Your account could be emptied.

Because identity theft does not always require a physical card, you could be a victim and not even realize. In addition to checking your credit report, you should make a practice of viewing your bank accounts online on a weekly basis. Credit report monitoring is considered one of the best ways to stay on top of identity theft. Back To Top

Credit card contact numbers

VISA - (800) 847-2911
MasterCard - (800) MC-ASSIST
American Express - (800) 554-AMEX
Discover - (1-800-347-2683)

Fraud facts

In 2006, the Council of Better Business Bureaus and Javelin Strategy & Research conducted a landmark study of identity theft. Among the findings:

  • 70% of consumers are now shredding their documents, reducing identity theft from this means to less than 1%
  • 47% of identity fraud was perpetrated by someone the victim knew
  • Lost and stolen wallets and checkbooks comprise the largest portion of identity theft avenues at 30%
  • The average time victims spend to resolve identity theft is 40 hours
  • The average amount of fraud has increased to $6,383 but 68% of victims have no out of pocket expense
  • Consumers themselves detected 47% of fraud cases. Self-detection resulted in smaller fraud amounts and smaller costs to consumers ($347 vs. $538)
  • Internet use did not increase the risk of fraud; it lowered it. Electronic account monitoring was the fastest way to detect fraud and led to lower losses
  • Though fraud decreased to 4% of the population since 2003, the amount of fraud per incident increased Back To Top

Read the full report on ID safety.

In your financial life, few things figure as prominently as your credit report and credit score. Learning the basics of the credit report process, and keeping your credit report free of errors, is essential to good financial health. You should focus on improving your credit score as the highest credit scores receive the best interest rates and loan terms. On a mortgage, a difference of 100 points could be worth hundreds of dollars each month.

Since 2005, all Americans have the legal right to obtain a free annual copy of their credit report from TransUnion, Equifax and Experian credit reporting bureaus. This law is intended to help consumers reduce errors in their credit reports by minimizing the obstacles to viewing credit reports. To receive a free credit report visit the official site run by the bureaus: annualcreditreport.com

Your personal credit score is a number from 350-800 which stands for your credit risk. The higher numbers are considered less likely to default. Credit scores come from mathematical formulas that measure many variables in your credit report such as payment history, public records, and debt to income ratio.

The Fair and Accurate Credit Transaction Act (2003) amendment to the FCRA Fair Credit Reporting Act guaranteed all Americans the right to see their credit report once a year to check it for errors. To learn more about free credit, credit scores and financial terminology, visit our glossary page.