The scale of identity theft is enormous. Millions of Americans are victims of some type of identity theft or fraud each year. Find out what you should do so you are not one of them.
Unfortunately, identity theft (ID theft) can be difficult to discover. You may not find out until you review your credit card statement—or until you're contacted by a debt collector. Furthermore, ID thieves are creative. Their methods evolve constantly. So what's the best way to protect yourself? Become well informed about credit and ID scams and how to detect and prevent them.
What Are Identity Theft and Credit Card Fraud?
Identity theft. Identity theft is any use of your personal information by someone else that you did not authorize. Identity thieves gather information such as your name, social security number, birth date, passwords, or credit card numbers in order to commit crimes.
Credit card fraud. Credit card fraud is a form of identity theft that occurs when someone gains access to your credit card account number and uses it to buy things, take out cash advances, open new credit accounts, and conduct other illegal schemes.
Damage from Identity Theft and Credit Card Fraud
Fraudulent transactions can affect your credit rating and finances if they are not identified and handled immediately. While some victims can resolve their problems quickly, others spend hundreds of dollars and many weeks repairing damage to their good name and credit record.
Victims of identity theft, in particular, may be denied jobs and loans for education, housing, or cars because of negative information on their credit reports. In rare cases, they may even be arrested for crimes they did not commit.
Here are some examples of the damaging actions ID and credit card thieves can take:
- Open new bank or charge accounts or take out a loan in your name.
- Rent an apartment and sign up for utility services in your name.
- Change your credit card billing address so you don't see fraudulent charges on your statement.
- Get a driver's license or ID card with your name and address and their photograph.
Recognizing Typical ID Theft and Credit Scams
"Phishing." Phishing (pronounced "fishing") is an attempt to collect personal information by posing as a trusted source. For example, an e-mail or phone call may appear to be from your bank, a website you have an account with such as eBay, or even a potential employer. They may have partial information, such as your user name or account number, and ask you to "confirm" your expiration date, billing address, or password. Links in e-mails may send you to fake but convincing websites that collect information that allows someone else to access your accounts. Clicking on links in e-mails or opening attachments can also install malicious software on your computer that can collect your personal information or send e-mail spam in your name.
Dumpster diving. Some identity thieves go through trash or recycling bins looking for receipts and paperwork with your personal information.
Stealing your belongings. Credit cards, checks, and even personal account information are commonly carried in purses, wallets, backpacks, and laptops—all of which can be easily stolen.
How to Protect Yourself
The best way to handle potential ID theft and credit card fraud is to learn how to identify it when you see it. Here are some tips to help you prevent the most common types:
Be wary of giving out your personal information. An unsolicited e-mail or phone call that asks you to divulge any personal information is suspicious. The safest approach is not to respond: don't open the e-mail or provide personal information over the phone. If you do open an unsolicited e-mail, don't click on any embedded links or open any attachments. To confirm that a communication is legitimate, call the organization's customer service number or log into your account. If the attempt is fraudulent, report it to the organization's fraud department.
Check your financial records vigilantly. Promptly review your statements and bills, such as credit card, checking account, and other financial statements, and telephone and other utility bills. Keep your receipts to compare them to charges shown on statements. Report any discrepancies to the creditor immediately. Contact the creditor if a statement does not arrive on time.
Check your credit reports for unauthorized activity. The three national credit bureaus are required to provide you a free copy of your credit report once every 12 months at your request. To order your copies, visit www.annualcreditreport.com or call toll-free (877) 322-8228. If you spot something irregular, like an account you never opened or an address change that is incorrect, let the credit bureau know right away.
Safeguard your information. Tear or shred any document containing personal information before you toss it in the trash. Cut up expired credit cards before throwing them out. Make sure your outgoing and incoming mail is safe from thieves. Keep tabs on backpacks, purses, wallets, and other items you may carry with you such as cell phones, PDAs, or laptop computers. If you keep written records of your account information, store it in a locked box or file drawer. Do the same with items like your passport and social security card.
Keep your online transactions secure. Avoid using readily learned information in your passwords, such as your birth date or digits from your phone number or address. Use up-to-date virus and security protection on your computer. Don't store personal information, passwords, or account numbers on your computer.
Keep your cards and ID secure. Keep an eye on your ID and credit or debit card during transactions and be sure they are returned to you right away. Avoid convenience store ATMs—they may not be as secure as bank ATM machines. Consider using a credit card for online shopping, rather than a debit card. Sign cards as soon as they arrive—and don't write your PIN on the back.
What to Do If ID Theft or Fraud Occurs
Reporting ID theft. If you are a victim of identity theft, you can take action immediately.
Step 1: Put a fraud alert on your credit report. Notify one of the three credit agencies: Experian, TransUnion, or Equifax. That agency will in turn notify the other two. All three companies will send you your credit reports, which you should review carefully for any accounts or transactions you did not initiate. Report anything suspicious to the agency. A fraud alert can help prevent an identity thief from opening more accounts in your name.
Step 2: Close any affected accounts. Shut down any accounts you think have been tampered with or opened fraudulently. Ask for instructions about how to dispute fraudulent accounts and activity.
Step 3: File a police report. It can help you deal with creditors who need proof of the crime. Be sure to get a copy.
Step 4: File a complaint with the FTC. You will provide important information that can help officials track down identity thieves and stop them. They may be able to provide further assistance to you as well. Call the FTC toll-free at (877) 438-4338.
Step 5: Stay vigilant. After you cancel the fraudulent accounts, further damage may occur. For example, a thief may use your social security number to get a driver's license or apply for a job. Monitor your financial records for suspicious activities for several months and your credit reports for two years. Stay alert for signs of identity theft.
Reporting credit card fraud. If your credit card is lost or stolen or you suspect fraudulent use, call the credit card provider immediately. Follow up your call with a written report. The company can stop the thief by cancelling the card and issuing you a new account and card. If you contact the credit card provider promptly, you will not be liable for any unauthorized charges over $50.
If your creditor calls you. Banks and credit card providers constantly monitor transactions for fraud. If they suspect your account is at risk, they may put a temporary freeze on the account and call you immediately. These steps are taken for your protection. Be patient and work with the representative to resolve questionable account activities. That said, be sure the person who called you does in fact represent your credit provider. They should request only limited personal information, such as the last four digits of your social security number or the answer to a security question that you set up (for example, your mother's maiden name). If you are suspicious, hang up and call the creditor's customer service number and ask to speak with the fraud department.
Identity Theft and Credit Card Fraud Are Not Going Away
Sound precautions and vigilance will go a long way toward protecting your valuable personal information. Of course, all the caution in the world won't completely eliminate the possibility that fraud may impact you. In case it does, be ready to take the immediate steps that will minimize any long-term damage.
Information in this article is of a general nature. It is provided by COLLEGEdata for educational purposes only and may not apply to you or your situation. Please consult a financial or legal advisor before acting on such information. COLLEGEdata is a service of 1st Financial Bank USA, a provider of financial services.