After months and months of using one of her credit cards solely for a business tape subscription, Ann Wylie got a surprise. “That bill was coming in at between $30 and $60 a month,” says Wylie, owner of a communication firm. “Then one month, I get a bill for $11,493.66. The credit card company tells me that the charge was for barrels of Indonesian wooden baubles. Apparently, I was paying to stock someone’s new store with inventory.” Though Wylie’s battle with identity theft was a relatively minor one, it still took months — and hours and hours spent communicating with the credit card company — to resolve it.
Identity theft — stealing someone’s personal identifying information, then fraudulently using it to establish credit or to take over existing accounts — is a growing crime.
MasterCard® and Visa® losses due to identity theft approach $1 billion a year, according to the General Accounting Office. Some 250,000 to 750,000 Americans are victims of identity theft each year. That makes identity theft the No. 1 white-collar crime in America, according to the FBI, with Chicago residents being the second-largest target. (New York residents have the dubious distinction of coming in first.) Click here to view you credit report.
For victims of identity theft, it can take months or even years to regain their credit status. Here are seven ways to reduce the risk of identity theft and the pain of cleaning up afterwards:
- Watch your accounts.
To spot early warning signs of fraud, closely monitor your credit records. Contact the three major reporting agencies:
- Equifax, 888/532-0179
- Experian, 888/397-3742
- Trans Union Corp., 800/888-4213
Then, each year, mail these agencies a request for a copy of your credit report. (Don’t submit your request online. You’ll be asked for your Social Security number, and supplying that over the Internet is always a bad idea.)
- Flag your records.
Next, write to each of those reporting agencies asking them to place a fraud alert on your credit reports. That will mean the agencies cannot give out your personal information to a financial institution without calling you for your permission. (Note that there is a downside in that it may delay a legitimate request as well.)
That makes it harder — though not impossible — for a scam artist to start a new account using your identifying information.
- Get instant information.
By the time identity theft is discovered — an average of 14 months after the crime, according to Equifax — a thief can wreak havoc on your credit standing.
Monitoring your credit report annually is a good start, but it gives scam artists months between your reviews to open new accounts. So choose an online credit - monitoring service (www.privista.com is one) to notify you instantly when someone tries to open an account in your name or when one of your credit cards gets hit with a surprisingly large purchase.
Choose a service that monitors all three credit-reporting agencies and that alerts you in real time — not quarterly or monthly.
- Empty your wallet.
Despite the focus on Internet-based theft, many thieves still steal identifying information the old-fashioned way: by hand.
Anne Marie Greene’s identity theft nightmare began on the subway line in Chicago, when somebody snatched her wallet out of her purse. “Of course, I immediately cancelled my credit cards,” says Greene, a financial services marketing manager. “But I didn’t think about my checking account, my phone bill, my utilities.” Before her battle with identity fraud was over, Greene had seen $17,000 disappear from her banking accounts and received dozens of bounced-check notices. She also had begun collecting quarters for the pay phone after her telephone was turned off three times - due to an unpaid bill on a phone that was set up using her identity. “The bank ended up covering my losses, so there was no financial cost,” Greene says. “But I can’t quantify the cost in time, frustration and embarrassment.” Now, Greene doesn’t carry a wallet. She leaves her checkbook at home. When she goes shopping, she takes only her cash, a debit card and a picture ID.
- Care for your cards.
Sign your new credit card immediately, counsels Equifax. Don’t attach your pin numbers to your bank cards. And never carry your Social Security card. Instead, store it in a safe place at home.
- Shred your documents.
Another source of identifying information: your garbage can.
How much information can be found in your trash? Experian, the credit-reporting agency, went Dumpster diving in 400 household garbage bins and found that:
- 72 percent contained an individual’s full name and address.
- 40 percent contained a full credit- or debit-card number.
- 32 percent also included the card’s expiration date.
- 20 percent contained bank-account numbers and sort codes.
One trash can even included a signed blank check. The solution: Get a high-end shredder that cuts crosswise, not just horizontally. And use it.
- Lock your mailbox.
You don’t have to throw away that credit-card solicitation before a scam artist can get hold of it. Get a mailbox with a lock. Better yet, call 888/567-8688 to opt out of credit-card solicitations altogether.
In the meantime, alert your credit card issuer if you don’t receive your statement. Someone else may have it.
Victims of identity theft spend an average of 175 hours recovering their losses and reclaiming their good names, according to the Privacy Rights Clearinghouse. The time you take now to avoid becoming a victim could pay huge dividends in time — not to mention frustration and embarrassment — later.
Sources: The Wall Street Journal, Equifax.com, American Banker
To Thine Own Self Be True If you become a victim of identity theft:
- Contact the fraud division of the three credit reporting agencies. Ask them to place a fraud alert on your file. That will warn lenders to take special care to authenticate the identity of anyone claiming to be you.
- File a report with your local police department. Get a copy.
- Instruct financial institutions that opened fraudulent accounts to close them immediately.
- Call the Identity Theft Toll-Free Hotline (877/438-4338) to report the crime to the federal government.
- Document your contacts in writing. Send all correspondence return-receipt requested.
Click here to view you credit report.
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