You’ve probably heard numerous stories of people having their identities stolen, or come across movies and books whose focus is identity theft. Contrary to past thinking, identity theft is no longer limited to unauthorized charges on a credit card. These days, identity theft is when someone takes your personal information and, without your permission, uses it to commit fraud or other crimes.
The bad thing about identity theft is that there are several, awfully creative ways in which it can happen. The extent of damage may also depend on what information the perpetrators manage to get a hold of. They might make false medical claims on your Social Security numbers, write bad checks with your checking account, or even apply for mortgages and open credit lines for nonexistent businesses. Still, these are identity theft cases in the extremes, and these are rare. The more common cases involve unauthorized credit charges, and these can be avoided if the theft is immediately reported.
Prevention is essential in mitigating damages brought about by identity theft. Don’t leave important documents lying around, and shred important papers before tossing them into the bin. Go through your monthly statements carefully and check for any inconsistencies. Once you catch an error early, it’s a lot easier to resolve. Balancing your checkbook might be a tedious process, but knowing where your money is going can go a long way in preventing theft. You may even want to consider creating safe online banking accounts where you can easily review your financial schemes from a trustworthy computer.
If however, you discover an error and believe that fraud might have occurred on your accounts, place an initial fraud alert with one of three major credit reporting agencies. The Federal Trade Commission is required by law to report the fraud alert to two other agencies. This alert will stay on your credit report for 90 days, and you are then sent a free copy of your credit report. Look through this carefully for any activities you did not authorize or were unaware had occurred. Also confirm that the report sent you has your correct information—name, address, and Social Security number.
File a complaint form with the FTC and the local police department if you confirm any instances of fraud. Keep other copies of the report, saving the original copies in a safe place. These will serve as important evidence when the credit agencies and financial institutions conduct their investigations.
If the case of identity theft is severe, the FTC recommends launching an extended fraud alert. Unlike the initial fraud alert, the extended variant places an alert on your credit report for up to seven years, and creditors are required to contact you in person before opening a new account in your name.
You can also take advantage of credit freezes, though the rules for them vary from state to state. A freeze on your credit report prevents business entities and creditors from checking your credit history unless you lift the freeze.
Remember that, while techniques have evolved to catch the perpetrators of fraud, the best way to get the upper hand in identity theft is to prevent it in the first place.