June 2006
What if your identity is stolen from you?
Here's the good news about identity theft: The number of incidents is dropping. In 2005 about 8.9 million people had personal information stolen and fraudulently used to open credit accounts, make big-ticket purchases, borrow thousands of dollars from banks, or commit other types of identity crimes, according to a survey by the Better Business Bureau and Javelin Strategy & Research in Pleasanton, Calif. That number is slightly lower than the 9.3 million cases that were reported in 2004.
Even so, at the current rate, 1 in 25 U.S. adults will have to put their financial lives on hold this year while they deal with delinquent accounts and loans illegally obtained in their names. That process can be long and aggravating. On average, it took victims 40 hours, usually spread over many months, to resolve a case of identity theft in 2005, the survey found.
If significant time passes before you discover a theft, restoring your financial good name can take even longer. A common scenario: You don't know that you've been victimized until you are turned down for credit, a job, a mortgage, or an apartment.
In a majority of cases, identity theft could have been avoided or, at least, its impact minimized with a few basic precautions. Here's what you can do to keep your identity your own.
1. Protect yourself
Identity thieves often get personal information by lifting bills, bank statements, credit offers, and tax information from mailboxes, garbage cans, and Dumpsters. They also steal wallets and impersonate businesses to offer you oh-so-attractive deals in exchange for, say, your name, address, birth date, and Social Security number on a signed application. Here's how to foil them.
• Deposit outgoing letters in a post-office collection box rather than your own mailbox.
• Before discarding, shred charge receipts, bank statements, and other financial documents. They may give identity thieves clues about where you have accounts. On a pretext, thieves could call the retailers and obtain personal information.
• Remove your name from preapproved offers for credit or insurance by going to www.optoutprescreen.com or calling 888-5-OPT-OUT. And if you're willing to deny yourself unsolicited catalogs and junk mail, opt out at the Direct Marketing Association site (www.the-dma.org/cgi/offmailinglist).
• Never give out financial information via phone, mail, or the Internet unless you're certain that the company is genuine.
• Provide your Social Security number only when absolutely necessary, such as when applying for government programs. Otherwise, ask to use another ID.
2. Monitor your credit reports
The government requires each of the three major credit bureaus-Equifax, Experian, and TransUnion-to provide consumers a free copy of their credit report every 12 months upon request. At www.annualcreditreport.com, you can obtain reports from all three. By spacing your three requests at four-month intervals, you can monitor your credit picture throughout the year.
Examine your credit files for any information that appears suspicious. Is your Social Security number correct? Are there names, addresses, or creditors you don't recognize? Have there been a lot of inquiries for new credit cards or loans that you did not initiate? "Usually, identity thieves will make many attempts to get cards in your name and to get as many cards as possible," says Beth Givens, director of Privacy Rights Clearinghouse, a consumer advocacy group in San Diego, Calif.
Ask the credit bureaus in writing, with copies of any backup material, to explain and fix data that you find questionable. They must investigate the claim within 30 days. When the investigation is complete, the company that provided inaccurate information must notify all three credit bureaus so their reports can be corrected. Then you're entitled to another free report.
Keep a log of all your credit and loan accounts, including lender names, account numbers, contact information, credit-card expiration dates, and the date that statements typically arrive. When a bill or a replacement credit card is late, it may have been stolen or diverted to another address. Contact the creditor immediately to determine whether there is a problem.
If you're very concerned about identity theft, you can subscribe to a credit-monitoring plan, such as Citi Credit Monitoring Service or Identity Guard, which provides ongoing credit tracking and sends out e-mail or phone alerts when, for instance, new accounts, changes of address, or inquiries are found. But at $10 a month or more, that's an expensive form of insurance.
3. Report fraudulent activity
Many people learn they are victims of identity theft when they spot strange entries in credit files or unexplained charges on account statements, or when they receive a call from a creditor who has noticed unusual use of a credit card. If that happens, promptly file a complaint with the local police and keep a copy of the report (or at least its number). You can use the Federal Trade Commission's model ID-theft affidavit (www.consumer.gov/idtheft/pdf/affidavit.pdf) to notify companies holding fraudulent accounts in your name.
By acting quickly, you will be responsible for at most $50 of unauthorized debts, but "virtually no credit-card company will charge you the $50," says Beth Givens of Privacy Rights Clearinghouse. However, debit cards can be more of a problem, she adds. While banks will usually reimburse you for fraudulent debit charges, they may take days or even weeks to do so.
4. Prevent further damage
To limit additional damage, place a fraud alert on your credit report by contacting one of the three major credit bureaus, which will then automatically inform the other two. Once this warning has been filed, creditors must verify your identity and may call you directly before opening any new accounts or making changes to your existing accounts. An initial alert will stay on your credit report for at least 90 days.
Victims of full-scale identity theft should have an extended alert put on their credit reports. An extended alert will remain on file for seven years. It will remove your name from marketing lists for prescreened credit offers for five years or until you cancel that feature.
Consumers are entitled to one free credit report from each of the credit bureaus when they file an initial alert. Under the extended alert, consumers receive two free credit reports from each bureau within 12 months.
5. Take data breaches seriously
When personal information is stolen from companies-or mislaid by them-identity crimes can follow within days or sometimes months later In Spring 2006, 24 states had laws that require companies to notify consumers if the security of their confidential, computerized files has been accidentally or maliciously breached and if the information has been acquired by an unauthorized person.
If you receive a lost-data notice, track your credit accounts more closely than usual during the ensuing months for any information you don't recognize. If possible, "freeze" your credit files so that companies contacted by identity thieves who are trying to open accounts in your name will not be able to access your records. Sixteen states have such laws, but you may have to pay a small fee to freeze or unfreeze your account. Some states limit account freezes to ID-theft victims.
