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All About Identity Theft And Its Implications

Identity theft is a real crisis that many Americans face on a regular basis. Essentially, this occurs when someone steals your personal information or impersonate you to engage in financial  transactions or other fraudulent activity. Reversing the impact of identity theft is not easy. The damage lasts long on your record and it can vary from damaging credit to defrauding you of thousands of dollars. The bottom line is identity theft can have a serious negative implication on your finances and can take you on a very stressful emotional rollercoaster.

You could get into debt because of identity theft.

You could get into debt because of identity theft.

However, the important thing to know is that there are organizations and tactics that can help you protect yourself from becoming a victim. These methods can also help you minimize the damage it can potentially cause you. In addition to protecting yourself from becoming a victim of this crime, it is important that you know what to do in case you are faced with this situation.

 

 

 

What Is Identity Theft?

As a consumer, you have certain personal identification information that is unique to you. Your social security number, your credit card information, and even your name can be the source of your identity theft.  If someone uses this personal information without your permission to commit financial fraud or other crimes then you are a victim of this crime. While it takes only a fraction of the time for someone to misuse your personal information it takes years of strenuous work to clear up the good name and credit. Therefore it is crucial that you safeguard your personal information at all times.

How Do Thieves Steal An Identity?

Skilled identity thieves may use a variety of methods to get hold of your information, including:

  1. Dumpster Diving. Rummaging through trash looking for bills or other documents with your personal information.
  2. Skimming. Stealing credit/debit card numbers by using a special storage device when processing your card.
  3. Phishing. Pretending to be financial institutions or companies and sending spam/pop-up messages to trick you into revealing your personal information.
  4. Changing Your Address. Diverting your billing statements to another location by completing a change of address form.
  5. Old-Fashioned Stealing. Stealing wallets and purses; mail, including bank and credit card statements; pre-approved credit offers; and new checks or tax information.
  6. Pretexting. Using false pretenses to obtain your personal information from financial institutions, telephone companies, and other sources.

What Do Thieves Do With a Stolen Identity?

Identity thieves can misuse your information in numerous ways. Here are some briefly explained:

Credit Card Fraud: This is very common among the many fraudulent activities.

  • Opening new credit card accounts in your name. Once they open the new accounts they will rack up huge amounts of debts and will not pay the bills. Delinquent accounts will appear on your credit report impacting negatively on the health of your credit.
  • Some may even change the billing address. This way you may be completely unaware of the due payments under your name unless you keep a constant check on your credit report. Because your bills are now sent to a different address, it may be some time before you realize there’s a problem.

Phone or Utility Fraud:

  • Thieves may open a new phone or wireless account in your name, or run up charges on your existing account. Keeping a close eye on your detailed bills is, therefore, crucial to avoid these situations.
  • They may also use your name to get utility services like electricity, heating, or cable TV. Utility bills are considered evidence to prove residency in most cases. If you are a victim of such fraud this may even lead to bigger fraudulent cases.

Bank/Finance Fraud:

  • Identity theft can occur by creating counterfeit checks using your name or account number. These can be used in expenses that may be illegal. Even if they are not illegal, you can still have serious financial damage.
  • They may open a bank account in your name and write bad checks.
  • Thieves may clone your ATM or debit card and make electronic withdrawals in your name, draining your accounts.
  • They may take out a loan in your name without any intentions of repayment.

All of the above actions can instantly make a dent in your financials. Depending on how the fraudulent accounts are used, you may be subjected to criminal charges and/or have serious implications on your overall financial record.

Government Documents Fraud:

  • Thieves may get a driver’s license or official ID card issued in the victim’s name using their own photo.
  • They may use your name and Social Security number to get government benefits.
  • Thieves may file a fraudulent tax return using your information.

Other Fraud:

  • Thieves might get a job using your Social Security number.
  • They may rent a property or get medical services using your name.
  • Thieves might also give your personal information to the police during an arrest. Their failure to show up for their court date then results in a warrant for your arrest.

if you fall victim to any of the above situations the consequences that it has on your overall quality of finances and your life is significant. Therefore, it is important that you understand what to do  in case there is any suspicious activity regarding your identity. Managing your financials is stressful as it is. You do not need any more consumer credit problems tagged along.

What to do If You Are a Victim of Identity Theft?

The moment you become aware of the fact that you are a victim there are a few things you can do to prevent further damage. Also, you must ensure that you keep good records of the entire situation, with the details of your conversations and copies of all correspondence with the relevant organizations.

1. Place a Fraud Alert on Your Credit Reports, and Review Your Credit Reports.

This first step is crucial to avoid any further damage to your financials. Placing a fraud alert helps prevent the identity thieves from opening any more accounts in your name. You can contact the toll-free fraud number of any of the three consumer reporting companies below to place a fraud alert on your credit report.

Equifax: 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241

Experian: 1-888-EXPERIAN (397-3742) P.O. Box 9532, Allen, TX 75013

TransUnion: 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790

Once you have informed the credit reporting agencies you are entitled to get one free copy of your credit report from each of the three consumer reporting companies. This is where you really need to dive deep and look for any and every discrepancy. Look for inaccuracies in your personal information as well as your financial information. If anything seems suspicious report immediately.

2. Close the Accounts That You Know, or Believe, Have Been Tampered With or Opened Fraudulently.

Reach out to all of the organizations. Speak with the personnel handling the fraudulent activities and work closely with them to alter the situation. Provide any supporting documents they request and make sure you maintain a record of your correspondence at all times. Make sure everything is documented and accounted for. Banks and credit card companies will specially request your requests in writing. Keep copies of any documentation for your reference. Use certified mail services with return receipts requested.

Once you have this step in order you are now ready to open up your new financial accounts. However make sure you use all new passwords, PIN numbers, etc so that you leave no room for error.

If the identity thief has made charges or debits on your accounts or has fraudulently opened accounts, ask the company for the forms to dispute those transactions:

  • For charges and debits on existing accounts, ask the representative to send you the company’s fraud dispute forms.
  • For new unauthorized accounts, you can either file a dispute directly with the company or file a report with the police and provide a copy, called an “Identity Theft Report,” to the company.
    • If you want to file a dispute directly with the company, and do not want to file a report with the police, ask if the company accepts the FTC’s ID Theft Affidavit (PDF, 56 KB). If it does not, ask the representative to send you the company’s fraud dispute forms.
    • Filing a report with the police and then providing the company with an Identity Theft Report will give you greater protection.

Minimize Your Risk Of Identity Theft

Unfortunately, nothing can guarantee that you won’t become a victim of identity theft. Therefore, your objective should be to make it difficult for anyone looking to steal your identity. Your  personal information must always be protected.  ACCC details the following actions as ways to minimize your risk of Identity theft.

Protect Your Social Security Number

Change your Social Security number on your driver’s license to a State Identification Number. Also, remove your Social Security card from your purse or wallet and do not write or print your social security number on your checks. If you have to provide your number for anything, offer only the last 4 digits and request that your number be taken off any loan applications.

Protect Your Credit Cards

Carry your credit cards separately from your wallet and void any incorrect receipts. Report any questionable charges in writing and send them by registered mail to the credit card companies. Keep a secured copy of all account numbers and sign any new cards you receive. Never leave your credit cards unattended and protect all accounts with a password. Destroy account numbers on discarded cards and cut through account numbers.

Protect Your ATM/Debit Card

Review all monthly statements for accuracy and report any discrepancies you may find. Check account activity regularly and do not carry your pin number on your person. Be alert for “peering eyes” when making a purchase and do not leave ATM receipts behind.

Protect Your Financial Documents

Shred all personal information in a shredder whenever possible and do not carry extra cards or identifying documents.

If you are struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today! 

ABOUT AUTHOR / Dilini

Dilini is a Marketing Communications & Programs Associate at ACCC. To anyone, managing finances can be a real challenge! Any tips and tricks to help get through this are great! Dilini will share her experiences, tips, and tricks along the way through the Talking Cents blog. Stay tuned!

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