Fight Identity Theft

How to Guard Against Identity Theft

Identity theft occurs when a stranger manages to get hold of enough of your personal information to be able to impersonate you within the financial system.

Often a social security number and address are sufficient. But the more information the thieves can gather, the happier they are.

How Identity Theft Occurs

There are many ways that thieves can steal your personal identification.

It can be as simple as going through your trash and pulling out discarded credit card or bank statements. They usually have your account number on them, reveal your balance or credit line and, since the garbage cans generally in your driveway, the thieves will know your address (if it’s not already printed out for them) and can look up your phone number.

Before credit card companies started doing away with carbons in the receipts you had to sign, the thieves would just steal the carbons. Now thieves carry handy devices that read and reproduce the magnetic strips on the back of the card.

When you give your card to a waiter in a restaurant, he can run it through one of these readers. A new magnetic strip is then prepared and stuck on a blank card.

These cards will be accepted by certain establishments to run up false charges. Or the information can be used to place orders with reputable merchants for goods, often high priced electronics.

Another identity theft trick is to create a false reader along with a built-in camera for an ATM machine. This all fits nicely in front of the genuine machine and is very hard to detect. The reader collects the information from the magnetic strip and the camera records your pass code as you type it in.

You will get a message that the machine is out of order or you might actually get your money, depending on how the device is set up. (For more on theft through debit cards and ATM fraud, read this recent MSNBC report.)

Identity thieves have moved to the internet using so-called “phishing” e-mails. These are the official looking messages you get from banks, brokerage houses, PayPal or eBay.

They carry all the official logos and may even look like they come from the genuine website.

The message usually says that there is a problem with your account and you have to update your personal information or your account will be closed or suspended. If you click on the link, you will be asked your name, address, phone number, social security number, account number, mother’s maiden name, your password and more.

In other words, you give the thieves all they need to open new accounts in your name.

Although there has been more than adequate publicity given to this technique of identity theft, people still give out all this information without question all to often.

What Happens After Your Identity is Stolen?

If the thief gets reads the information on your credit card, he will either attach it to a blank card, which has street value depending on the credit line. There are places set up with merchant credit card accounts that will either drain the credit line through cash advances or phony purchases.

Or the thief will go online and use the information to order goods, like digital cameras, from legitimate merchants. Identity theft is why most mail order sellers of electronics will only ship to the address of record on the credit card. But there are ways around this.

The thief already usually has enough information to go to call the credit card company and change your address. This can aid in their schemes. Whether they go to this bother probably depends on how high your credit line is.

If the thieves got your ATM magnetic strip information and password, they’ll use it to drain as much money out of the account as they can before they are blocked.

The thieves hit the real jackpot when they have enough information to set up new accounts using your name and credit rating, but with a different the address so that you don’t get any statements. They then charge as much as they can before the bank catches on and closes the account.

This is what is considered true identity theft since the thieves can also get birth certificates, drivers licenses and more sent to them at the phony address.

The Aftermath of Identity Theft

Eventually someone will notice that something is amiss. You try to withdraw money from your ATM and find out your balance is zero, not the $5000 you thought you had.

Or you get your credit card statement and find thousands of dollars in charges at jewelry stores, for airline tickets, for HDTV’s, etc.

Some banks are watching charge activity more closely, so your first notice might be a call or email from your bank asking about potential fraudulent activity. If you get such as message call the number on your credit card or credit card statement or go the credit card company’s website directly – don’t click a link in the message – to confirm you’re being robbed.

The worst situation is when new accounts are set up using a different address and phone number. It might take months or even years before you find out that you are an identity theft victim. The first inkling might be getting turned down for credit, while you always thought your credit was excellent.

Or you might be contacted by a bill collector looking for payment of thousands of dollars run up in your name.

You will thus enter the nightmare of identity theft.

Your Response to Identity Theft

First call the police, the FBI, the banks or lenders involved and possibly your lawyer.

Also call your homeowners or renters insurance company. Your policy might provide you with some protection.

Cancel all effected credit cards and have new ones with different numbers issued. Change your mailing address if possible. Send your mail to a post office box or to your office. Change you phone number. Change your email address. Have all your account numbers changed if you bank account was attacked.

You want all the information the thieves have to be out-of-date and unusable.

You have to have police reports prepared spelling out in as much detail as possible the facts surrounding the identity theft.

If you know nothing else than that you are an identity theft victim, still get the police report.

Send a letter, certified, return-receipt requested, for each account where there was fraudulent activity with a copy of the police report attached. Ask that your money be returned or fraudulent charges be reversed.

Depending on how long it took you to notice and report the loss, banks and credit card companies may refund stolen cash or reverse fraudulent charges immediately.

If a lot of time has passed, lenders become more suspicious of identity theft claims, in spite of plenty of evidence that you were the victim of a fraud. So those that suffer the worse are those whose name and social security number were used but whose statements were redirected.

If you are harassed by bill collectors or the credit card companies refuse to accept your claim, it’s time to fight back. Go to your local district attorney and/or your state’s attorney general and seek their help.

Or hire an attorney and have him go to bat for you. If you have enough proof of identity theft on your side you will eventually prevail.

The problem is that you might be out thousands of dollars for years, your credit score will be ruined and your life will be hell until you get the mess straightened out.

Make sure you notify the credit bureaus of the identity theft and fraudulent charges run up. Ask them to put a hold on any new inquiries for new credit.

It’s getting harder and harder to protect against identity theft. Some call it the fastest growing crime in the US.

Some common sense helps. Shred anything paper that contains account information when you are ready to dispose of it. This includes your old tax returns.

Keep an eye on your credit card. In theory you shouldn’t let it out of your sight when you’re shopping. Many restaurants now have portable charge machines, so they can run your card at the table, rather than having the waiter disappear with it.

While there are plenty of problems in the states, be more vigilant when you’re abroad.

As far as the phony ATM machines go, you would have to be an expert to notice the difference. This is a hard thing to combat.

Probably the best defense is using machines within the bank building. Thieves are less likely to be able to tinker with a machine that’s in full view of bank employees and surveillance cameras all the time.

Be very suspicious of emails that are supposedly from your credit card company. If you have any doubts about its authenticity, call the number printed on your card or statement or type in directly the website address of the credit card company – don’t hit a link in the email.

You are entitled to a free credit report from each of the three major bureaus once a year. Order one from a different bureau every four months. This should alert you to problems quickly. Read Your Credit Report for information on how to get your free reports.

If you suspect identity theft activity, you can ask the credit bureaus to notify you any time someone makes an inquiry about your credit report.

Check the policies of your credit card and ATM issuers. See how long you have to report fraudulent activity - this can be a suprisingly short period - and what proof you are required to provide. Also determine if they will make you whole if you are an identity theft victim or if there are limits or deductibles.

Ask your insurance agent if you homeowners policy already provides identity theft coverage or if such coverage can be added. You will probably be able to get more coverage for a cheaper price that way.

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