Signs of Identity Theft

Vigilance is the foundation for identity theft protection, so be on the lookout for the tell-tale signs. Check your credit report, and pay close attention to the inquiries section. If there are inquiries from companies that you did not contact, someone may be trying to open credit in your name. You should watch your mail carefully. If a particular bill or bills doesn't come on time, that may mean an identity thief has hijacked your account and changed the billing address to prevent you from finding out about fraudulent charges. Also, if you are denied credit, are offered sub-prime credit terms, or begin receiving calls from debt collectors you may be the victim of identity theft.

Ways to Minimize Your Risk of Identity Theft

The best thing you can do to minimize your risk of identity theft is ensure that your personal information is secure. While security breaches at identification and credential verification centers make headline news, it is very often small acts of criminal mischief that result in years of hardship for individual consumers. Fortunately, applying common sense can provide a measure of identity theft protection. For starters, don't leave your financial paperwork lying around your house. People you hire to provide services such as cleaning, child care, or home maintenance and repair have the opportunity to steal your information and use it for fraudulent purposes. If your home is broken into, you can bet the thieves will be looking for checkbooks and bank or credit card statements. The best thing to do is store paperwork with personally identifying information in a filing cabinet that is secured with a tamper-proof lock.

Credit Cards and Identity Theft

Credit card companies recognize the threat that identity theft poses to consumers and do take steps to protect their customers. For example, many credit card companies monitor usage patterns by consumers. If unusual charges appear on the account, the company may temporarily freeze the account and contact the cardholder to see if the charges are legitimate. Examples of unusual charges include charges at vendors outside the geographic region in which you normally use the card or a big-ticket purchase when you normally use the card for smaller purchases. Most companies also offer other credit card fraud protection services, such as issuing virtual numbers for online purchases. Your credit card company's Web site should include a full description of the identity theft protection services it offers.

About Pretexting

Identity thieves need to get your personal information in order to open or hijack accounts in your name. Very often, this information is obtained through pretexting. Pretexting is the act of gathering personal information from consumers under the guise—or pretext—of an official inquiry from a bank or other financial institution. For example, you may receive a call from someone posing as an employee for a survey company. Some of the questions may ask for personal information. A pretexter may contact one of your creditors pretending to be you in an attempt to get account numbers or your Social Security number. E-mail and telephone “phishing” is another popular ploy with pretexters. They may actually pretend to be from your financial institution, claim that someone has tried to access your account, and ask you to confirm your personal information so that they can review the transaction with you. A good rule of thumb is to never reveal any personal information to anyone who has called or e-mailed you. Instead, if it is a call, ask them to send their request to you in writing through the mail. If it is a legitimate inquiry, there should be no problem. If it is an e-mail, contact your financial institution to verify its authenticity.

Protecting Your Credit

There are two things to consider when you talk about protecting your credit. The Federal Reserve Board has published the Consumer Handbook to Credit Protection, an online brochure that discusses the Consumer Credit Protection Act of 1968 and the rights it grants to consumers. It talks about credit inquiries, maintaining a good credit payment history, and disputing inaccuracies in your credit report. You can view it at the Federal Reserve Board's Web site under the consumer information section. The other side of the credit protection coin is identity theft. To learn more about what identity theft is, identity theft protection, and steps you should take if your identity is stolen, visit the Federal Trade Commission's FirstGov Web site.

About credit monitoring services

There are many credit monitoring services available today that can help you manage and protect your credit. These services often include daily reviews of your credit data, email alerts when something changes on your credit reports, analysis tools, identity theft insurance and other perks. Prices for credit monitoring programs can vary widely: some are included for free with other services and others can cost you more than $160 a year. Compare services offered by the credit bureaus (Equifax, Experian and TransUnion) with programs available through your bank or credit card issuer. Signing up for credit monitoring is a great way to track your credit improvement and stop identity theft.

About the Consumer Credit Protection Act of 1968

The Consumer Credit Protection Act (CPCA) was enacted in 1968. Its primary goal was to ensure consumers were informed by lenders of the true cost of the credit for which they were applying. Known as Truth in Lending, lenders are legally obligated to disclose all fees associated with credit applications so consumers can shop around for the best deal. Since 1968, the CPCA has sparked a series of other legal protections for consumers relating to credit records and dispute resolution. For more information, visit the Federal Reserve Board's Web site under the consumer information section and read Consumer Handbook to Credit Protection Laws.

Paperwork and Identity Theft

Even though the computer was supposed to eradicate the overflow of paperwork that people deal with everyday at home and at work, there is still a steady stream of papers that include personally identifying information. Paystubs often include your Social Security number. Bank statements include account numbers. And even seemingly innocuous junk mail may be an invitation to identity theft. That's why shredding paperwork that contains personal information is always a good idea. While shredding can't guarantee credit card fraud protection, it is a step in the right direction to shred credit card solicitations that you receive in the mail. You can get a basic shredder from an office supply or department store for as little as $10 in some cases. To the extent that shredding helps prevent identity theft, it's money well spent. You can also shred your paperwork by hand, although this is generally not as effective as using a shredder.

About Identity Theft

Identity theft is when an unauthorized person—either a stranger or someone you know—uses your personal information or an existing account to commit fraud. The fraud usually involves making purchases of goods and/or services under an assumed identity—which could be yours. Most people assume identity theft occurs when criminals hack into databases and steal information. While that definitely does happen, many identity thieves obtain the information they need to steal your identity through very low-tech means—sifting through your garbage for example. It is important to shred anything that includes personally identifying information on it before throwing it away. This includes anything with your Social Security number, credit card or bank account numbers, and your date of birth on it. To learn more about what identity theft is and identity theft protection, visit FirstGov for Consumers at www.consumer.gov, and look for the identity theft link on the homepage.

Steps to Take When Personal Information Is Lost or Stolen

If you believe your personal information has been lost or stolen, don't panic. There are concrete things you can do to thwart identity theft. Drop what you are doing, and take care of the following three key items.
1) Immediately check your accounts for signs of identity theft. You may want to contact your creditors to let them know that you suspect fraud. Don't rush to close accounts that haven't been used illegally. Closing accounts can have a negative impact on your credit scores. Only request closure for accounts that you know have been taken over by an identity thief.
2) Notify Equifax, Experian, and TransUnion (the big three credit reporting agencies) that your personal information has been lost or stolen and request that each places a fraud alert on your account. Fraud alerts let creditors know that you may have been a victim of identity theft and that they should use extra care when opening new accounts in your name.
3) Notify other agencies that have issued you identification (a driver's license, for example) of the situation, and follow the agency's steps for reporting and requesting a replacement card. Finally, you should monitor your credit report and accounts for signs of fraudulent activity on an ongoing basis.