Preventing Identity Theft

By: AARP Education & Outreach | Source: AARP.org | June 14, 2005

You can do many things to protect your identity when you are vigilant to how identity thieves work. In Session One, you learned what your identity actually is, and how thieves can steal it. Sessions Two and Three showed actions steps to prevent someone from stealing your identity.

Just like the victims you met in these sessions, many victims have no clue that their identity has been stolen. Once they find out, it can be a long and frustrating process to sort out their true identity from that of the thief. If the crime is not detected early, you may face months or years cleaning up the damage to your reputation and credit rating. You may lose out on loans, jobs, and other opportunities.

There are several things you can do that may give you an early warning that something bad is happening to your identity. Once you suspect identity theft, your best bet to limit the damage as much as possible is to take action immediately. Consumer experts know that identity thieves may first take a little bite to see if they can get away with using that information before swooping in to take a big chunk of your money. It's like the burglar testing doors to find the one unlocked.

In this session, you will learn three places to check for early warnings and what steps you should take if you notice something suspicious.

Credit Card Statements

One early warning sign may be charges you don't recognize on your credit card statement. It's very important to review your credit card statement every month to look for charges you didn't authorize. Keep your receipts and compare them with your monthly statement.

What to do
If you see a charge you don't recognize, report it to your credit card company. Follow the directions on your statement for how the company wants you to dispute any charge. It must be in writing. Typically you need to send it to a different address than where you send your payment.

It's important to remember that identity theft can be more than someone stealing your credit card and using it to run up charges on your account. Generally, federal and state laws and credit card company practices limit how much you might have to pay in fraudulent charges to $50. But you have to act promptly to avoid any liability. It's much easier to dispute a charge before you have paid the bill than after. If you dispute the charge in the first billing cycle before you pay the bill, you can deduct the disputed charge from your payment. You keep your money until the dispute is resolved, a much better idea than paying the bill and waiting for the credit card company to investigate and refund the charge.

Bank Accounts

Another early warning sign can be deposits or withdrawals from your bank account. Just like reviewing your credit card statement, you need to read your bank statements and balance your check book every month. One alert consumer noticed on his statement that check numbers had cleared that he hadn't yet written. He found out that someone had taken a couple of checks out of the back of his checkbook.

What to do
Contact your bank immediately if you notice something suspicious, such as a missing payment or an unauthorized withdrawal—or even a strange deposit. While federal and state laws can limit how much money you lose if you're a victim of fraud or theft, your protections may be stronger if you report the problem quickly. Like Maria C. in Session One, you'll want to avoid the expense and embarrassment of bounced-check charges. 

Credit Reports

Early warning resource
To check for other warning signs, order your credit report once a year. Your credit report is a summary of your credit activity. It includes information on where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. It also lists the companies that have checked on your credit-worthiness. All of this information is collected by three nationwide consumer reporting companies—Experian, Equifax and TransUnion.

By checking your credit report, you may find that there are credit accounts you don't recognize, delinquent accounts you never opened, or court judgments against you. The thief may have opened accounts in your name and then changed the mailing address so you never got the bill. You can be sure the thief didn't pay the bill. When the bill isn't paid, it shows up as a delinquent account on your credit report. Looking at your credit report may be the first time you learn about that account. The next time may be when the collection agent comes looking for you.

What to do
Since 2005, the law allows each of us to get one free credit report every 12 months from each of the three consumer reporting companies (CRCs). There is only one source for the free reports, but three ways to order.

On-line:	www.annualcreditreport.com
Phone:	1-877-322-8228
Mail:	Annual Credit Report Service P.O. Box 105281 Atlanta, Ga. 30348-5281

You can request reports from one, two, or all three companies at a time. Consider ordering a different report three or four months apart. That's a free way to monitor changes in your credit history.

You'll have to give your name, address, Social Security number, and date of birth to get your reports. You will also have to answer some questions with information that only you would know—such as the amount of your monthly mortgage or car payment. This is to protect the security of your credit information from getting into the wrong hands.

You have to place the order; the consumer reporting companies will not contact you. Do not respond to popup ads or e-mails offering free credit reports. They are likely scams.

Fraud Alerts
If you see something on your credit report that could be identity theft, you can place a fraud alert on your report.

Here's what to do:

• Notify at least one of the CRC's fraud units that you are a victim of identity theft. A call to one will alert the other two. Experian: 1-888-397-3742; Equifax: 1-800-525-6285; or TransUnion: 1-800-680-7289
• Say you want to flag your file with a fraud alert.
• Ask for a free copy of your credit report.
• Put a security freeze on your credit report so no one can access your report without notifying you first.
• Contact the creditors responsible for the new account.
• Fill out the Federal Trade Commission's universal fraud affidavit.
• res a report with your local police.

A fraud alert and a security freeze are two different steps you can take. You can put a freeze on your credit report before you have become a victim; you request a fraud alert after you think you may be a vicitm. A fraud alert is free; you have to pay a fee (in most states) to place a freeze if you are not a already a victim.

Everyone hopes that they do not have their identity stolen. You're now equipped to go further than just hoping because you have learned many ways to guard your identity.

It's time to review what you have learned.