Preventing and Stopping Identity Theft

Identity Theft - Thumbprint with Lock on it.Identity theft is a serious crime, one that has become increasingly prevalent in our modern, technologically advanced society. Identity theft has evolved considerably since it first dawned; it is not simply an unauthorized charge on a credit card. Identity thieves can use your information to apply for loans, start businesses, and even traffic illegal drugs, all under your own name. As we use and store more information online, the threat of identity theft increases as cyber criminals have more ways to access your private information. Fortunately, there are active steps you can take to safeguard your information, detect suspicious activity, and defend against identity theft.

Identity Theft Basics

According to the Federal Trade Commission (FTC), identity theft “occurs when your personal information is stolen and used without your knowledge to commit fraud or other crimes.” Once a thief has information like your Social Security number and a good copy of your signature, they can obtain credit, file false medical claims, apply for mortgages, and even commit crimes under your own name and reputation.

The FTC estimates as many as 9 million American have their identities stolen each year. Some people notice identity theft as soon as they see suspicious or unfamiliar charges on their credit account while others may realize they’ve been victim to identity theft when they’re contacted by a debt collector or the police.

The Effects of Identity Theft

Javelin Strategy and Research, of the 8.1 million victims of identity theft reported in America in 2010 (a light year in terms of identity theft), overall losses due to fraud amounted to $37 billion (from $56 billion in 2009). While consumers are not held liable for fraudulent debt, the average out-of-pocket expense for victims rose to $631 in 2010 due to legal fees.

Sometimes it takes years before individuals realize they are victims of identity theft, leading to months or even years of the victim’s time and effort being spent towards adjusting their debt and rehabilitating their credit worthiness. During this time, the victims will have difficulty obtaining loans, getting a job, renting an apartment, or even writing checks. In the rarest cases, some victims of identity theft are even arrested for crimes they did not commit.

How Identity Theft Occurs

Identity theft begins when a criminal gets their hands on your personally identifying information such as your Social Security number, driver’s license number, ATM card numbers, credit card numbers, or any other financial account information. Identity thieves can use a variety of methods to access your information, including:

  • Stealing your mail – Thieves steal mail from collection boxes, postal trucks, neighborhood delivery and collection box units, and co-op mailing racks. They are looking for your checks, your credit card applications, and your bank statements. You can report mail theft online.
  • Stealing your wallet or purse – This will get thieves your credit card numbers, address, driver’s license number, and perhaps even your checkbook.
  • Bribing employees with access to personal information – Identity thieves know that even a hefty bribe is a small price to pay for a group of people’s personal information, and often times they will seek out employees that would likely have access to this information.
  • Dumpster diving – Some identity thieves will look rummage through trash, looking for bills and other documents with your personal information.
  • Phishing – Particularly online, thieves will pose as a financial institution or utility company and send spam or pop-up messages asking for your personal information while often threatening to suspend your account. Their imitations of legitimate companies can look very convincing. Phishing not only occurs through email, but also through physical mail.
  • Skimming – Thieves can steal your credit/debit card numbers by using a high-tech storage device when processing your card. This most commonly occurs at ATMs not affiliated with any bank that are located outside. Thieves will rig the ATM so that it will wire them your card number, and usually a hidden camera will record your pin number.
  • Pretexting – This is a very similar process to phishing. Except rather than pretending to be your bank, the thief (after stealing some of your information) pretends to be you and contacts your bank in an effort to get more information.

Thieves then misuse this information to spend and borrow as much of your money as they can. There are a variety of fraud methods an identity thief can use, including:

  • Credit card fraud – Perhaps the most common form of identity theft, credit card fraud represents 40 percent of fraud complaints by method of consumer payment, according to the FTC sentinel annual report of 2009. Thieves will open new credit card accounts in your name and not pay the bills, giving you delinquent accounts on your credit report. Sometimes they will enact charges on your own card and change your billing address so that you are unaware of their activity for a good amount of time.
  • Phone or utilities fraud – Thieves will open a new wireless account or service like electricity or cable TV in your name. They may also rack up charges on your existing account.
  • Bank/finance fraud – This is where identity thieves can really wreak havoc, creating counterfeit checks, opening new accounts and writing bad checks, cloning your ATM card to make withdraws from your account, or even taking out a loan in your name.
  • Government documents fraud – Identity thieves can get a driver’s license in your name with their picture or use your name and Social Security number to get government benefits. They can also file a fraudulent tax return using your information.
  • Other forms of fraud – Identity thieves can do a range of other fraudulent activity in your name, such as getting a job using your Social Security number, renting a house or getting medical services in your name, and even giving your personal information to police during an arrest (especially if they have your name on a driver’s license with their photograph)

Prevent Identity Theft

Prevention is the first and easiest step to battling identity theft. By taking extra measures to protect your personal information, you are saving yourself from a lot of potential hassle. Some great preventative measures to protecting your identity include the following:

  • Shred financial documents and other important documents with your personal information. This includes business records, bank statements, bills, and anything with your name and address on it.
  • Sign your credit cards immediately after you activate them. While clerks and cashiers rarely compare signatures on receipts to signatures on cards, it will be helpful in the event that you are disproving fraudulent charges.
  • Don’t carry your Social Security number on you, especially if you are also carrying credit or debit cards. Also don’t write your pin number down unless you intend to shred it. Do not give your Social Security number to anyone except for trusted employers, your bank, or a government agency.
  • Don’t offer your personal information on the phone, through the mail, or over the Internet unless you know you are dealing with a secure party. Even then, be suspicious of impersonators. Also, don’t disclose personal financial information when using public wireless connections (such as at an internet café or coffee bar).
  • Be wary of links in unsolicited emails. Try Google searching for the link first. Even if the email looks like it is from your bank, check the sender’s address and read the message carefully, looking for typos or anything out of the ordinary. Protect your computer with updated firewalls, anti-spyware, and anti-virus software. Visit OnGuardOnline for more information about internet security.
  • Use a variety of secure passwords. Avoid obvious ones like your date of birth, mother’s maiden name, or the last four digits of your Social Security number. If you use one password for multiple accounts, be sure that your bank account and email account have their own unique passwords.
  • Protect your personal information by keeping it secure and at home. Particularly if you have roommates, employ outside help, or are having work done on your house, keep these documents hidden and preferably locked.
  • Report theft or loss of key identification material such as a passport, driver’s license, or Social Security card to the issuing agency.

Detect Identity Theft

Even using the preventative measure listed above, you should take further steps to detect identity theft so that you can stop it before too much damage occurs. To detect identity theft you should monitor the following information routinely:

  • Bank and credit card statements – While it can be tedious to balance your checkbook, it is the best proven way to find out whether you are the only person making transactions on your account or not.
  • Financial aid and loans – Know the type of aid or loan you are applying for and the amount of money you are being rewarded. Make sure that amount is promptly credited to the appropriate account.
  • Review your credit report annually – The Fair Credit Reporting Act grants you a free copy of your credit report every 12 months, at your request. To order a free annual report, visit  or call toll-free 877-322-8228. You can also receive a free credit report within 60 days of a company taking adverse action against you, like denying your application for credit, insurance or employment. Otherwise a consumer reporting company (such as Equifax, Experian, or TransUnion) may charge around $10 for any copies of your report.

In addition to monitoring the information listed above, you should be alert for the following red flags:

  • Bills that don’t arrive when expected
  • Unexpected account statements
  • Denials of credit for no apparent reason
  • Notices and letters about purchases you did not make
  • Charges on financial statements that you do not recognize
  • Unfamiliar accounts or address listed on your credit report

Stop Identity Theft

Once you suspect you are the victim of identity theft, you must defend your credit and reputation immediately by doing the following:

  • File a “Fraud Alert” on your credit reports, and review your reports carefully. The alert will tell creditors to raise their security measures by following certain procedures before they open new accounts in your name or make changes to existing ones. Placing a fraud alert also entitles you to a free copy of your credit reports; look for accounts you didn’t open, inquires from companies you haven’t contacted, and debts on your  accounts that you can’t explain. The three consumer reporting companies have toll-free numbers for placing the fraud alert; you only need to call one of them:
    • Experian: 1-888-EXPERIAN (397-3742)
    • TransUnion: 1-800-680-7289
    • Equifax: 1-800-525-6285
    • Request that consumer reporting companies block fraudulent information from appearing on your credit report. Use the FTC’s “tools for victims” to get a sample letter.
    • Contact the fraud or security departmentsof any company where an account was opened or charged without your consent.
      • Write to them, sending copies of supporting documents. The FTC has a sample letter you can use as a template.
      • Use the identity theft affidavit to support your written statement.
      • Ask for verification that the account has been resolved and fraudulent debts discharged.
      • File a police report. This will help with creditors who want proof of the crime before they discharge your debt or close the fraudulent account.
      • Report to the FTC. This report will help law enforcement officials with their investigations. You can report on their website, by phone (1-887-ID-THEFT), or by mail to Identity Theft Clearinghouse, Federal Trade Commission, Washington, DC 20580.

The FTC even offers a chart your course of action PDF that you can print out to remind you who you need to call or write and what their response was. With all of these tools, you can manage and reduce the damage that identity thieves might deal to your credit and reputation.