Consumer Sourcebook

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Identity Theft

 

Having one's credit identity stolen is not a new crime. However, identity theft has been increasing rapidly over the past few years, to the tune of 500,000 new victims every year. Identity theft is more than just having your credit card stolen – it is having your entire credit identity taken over by another person. A victim typically finds out that his or her identity has been stolen when he or she receives a call from a collection agency about a past due loan about which the victim knows nothing.

How does this happen? The thief steals something from the victim that helps him or her begin to re-establish the victim's credit identity as the thief's. The thief might take a credit card solicitation out of the trash, or out of the mail box; or might steal credit card receipts that have been discarded or left behind; or simply might steal the victim's wallet or purse. In the worse case, the thief manages to get a hold of the victim's Social Security number. Our Social Security numbers are often used as identifiers: by colleges, the military, and by some states as drivers license numbers (fortunately, New Hampshire does NOT do this). Social Security numbers are also needed for a variety of investment and other types of commercial transactions, and may appear on quarterly statements. When the statements are discarded, the thief can get the statements, and information, out of the trash. Social Security numbers can even be purchased on the Internet!

The thief uses the stolen information to set up new credit in the victim's name, changing the victim's address to a new one. The thief charges up a storm, may even take out a loan in the victim's name, but, of course, never pays the credit card bills or never makes any loan payments. The victim usually finds out about the theft when a debt collection agency or credit card company demands payment of the past-due debts. There are some laws that can help the victim of identity theft. But it will take the victim a lot of time and energy to remedy the damage done to his or her credit identity by the thief.

The Law

In 1998, congress passed the Identity Theft and Assumption Deterrence Act (Identity Theft Act). The purpose of this federal law is to help deter identity theft by making it a felony. Furthermore, identity theft investigations are done by the US Secret Service, the FBI, the US Postal Inspection Service, and are prosecuted by the US Department of Justice. The Identity Theft Act also required the Federal Trade Commission (FTC) to set up an identity theft unit to assist victims in clearing up their credit reports, and to improve law enforcement by tracking cases on a national scale.

Several other laws can also be helpful to the victim of identity theft. The Fair Credit Reporting Act (refer to the section on Credit Reporting) provides the victim with a procedure for correcting, and removing, the adverse information from his or her credit report. The Fair Credit Billing Act (for more information, refer to the section on Credit Cards) provides a process for resolving unauthorized charges on credit cards bills. The Electronic Funds Transfer Act limits liability when unauthorized withdrawals are made using a debit or ATM card (refer to Extra Note: Debit (ATM) Cards for more information). And lastly, when the debt collectors are knocking on the victim's door and calling on the phone, the Fair Debt Collection Practices Act can protect the victim from over-enthusiastic debt collectors (see the section on Debt Collection for more information).

What An Identity Thief Does

According to the FTC, here are some of the ways that identity thieves work:

• An identity thief will open a new credit card account in the victim's name, date of birth, and Social Security number (if the thief got a pre-approved credit card solicitation out of the trash, all he or she has to do is change the address). He or she uses the card, but doesn't pay the bill. The delinquent account information shows up on the victim credit report.
• The thief will call the victim's credit card issuer, pretending to be the victim, and change the mailing address on an existing credit card account. The thief then runs up charges on the account. Because the address has been changed, the victim is not getting the bills, so may not realize there is a problem for a couple of months.
• The identity thief establishes cellular phone service in the victim's name.
• The thief opens a checking account in the victim's name and writes bad checks on the account.

Example: Tom Dearheart receives a pre-approved credit card application in the mail. He absently mindedly tosses it out, un-opened, into his uncovered outside trash bin which is sitting at the end of his driveway because it trash-pick-up day. Don Devious walks by and snatches the application out of the trash, fills it out (changing the address to his own), signs Tom's name and mails it off. Don receives "Tom's" credit card several weeks later and goes on a shopping spree, charging over $25,000 to the card. Of course, Don does not pay the bill when he gets it.

Tom learns of the theft of his credit identity when he gets a copy of his credit report while e is in the process of applying for a mortgage to buy a new home. Tome immediately calls the credit bureau and the credit card company about the problems, and calls the local police, too.

The Privacy Rights Clearinghouse Web site has a lot of information about identity theft, how thieves operate, and how to protect yourself.

What To Do If You Discover That You Are A Victim Of Identity Theft

According the FTC, a victim of identity theft should do three things immediately:

1. Contact the fraud department of each of the three major credit bureaus to report that your identity has been stolen. Ask that a "fraud alert" be placed on your file and that no new credit be granted in your name without your specific approval. Request a FREE copy of your credit report to check whether any accounts were opened without your consent. Finally, request that the agencies remove inquiries and/or fraudulent accounts stemming from the theft. The toll-free, fraud hot-line numbers and Web sites are listed below:
   
   Equifax
   • To order a credit report, call: 1-800-685-1111 (toll-free) or write: PO Box 740241, Atlanta, GA 30374-0241
   • To report fraud, call: 1-800-525-6285 (toll free) and write: PO Box 740241, Atlanta, GA 30374-0241
   • Hearing impaired call 1-800-255-0056 (toll free) and ask the operator to call the Auto Disclosure Line at 1-800-685-1111 (toll free) to request a copy of your report.
   Experian
   • To order your report, call: 1-888-EXPERIAN (397-3742) (toll free) or write: PO Box 2002, Allen TX 75013
   • To report fraud, call: 1-888-EXPERIAN (397-3742) (toll free) and write: PO Box 9530, Allen TX 75013 TDD: 1-800-972-0322
   TransUnion
   • To order your report, call: 1-800-888-4213 (toll free) or write: PO Box 1000, Chester, PA 19022
   • To report fraud, call: 1-800-680-7289 (toll free) and write: Fraud Victim Assistance Division, PO Box 6790, Fullerton, CA 92634 TDD: 1-877-553-7803
2. Contact any credit card company, banks and/or lenders where credit has been fraudulently opened or used in your name. Ask to speak with someone in the security or fraud department. Close the fraudulent accounts, and the legitimate accounts that have been fraudulently used. Put a password on any new account that you open (don't use anything that a thief could easily determine, like your birth date or mother's maiden name). Follow up each telephone conversation with a letter, outlining the extent of the fraudulent activity, and reiterating your closure of the account.
   Ask that you be sent a copy of the fraudulent contracts or applications. This is key to proving that the person who signed the form is not you. You may need persistence to find the right person to talk to about getting this - ask for the supervisor.
3. File a police report. You can file with your local police, or with the police where the fraudulent activity took place. For example, you live in Derry, but the address given by the thief is Manchester, so you could file a report in Manchester or Derry. Get a copy of the police report just in case a bank or credit card company needs proof of the crime at a later date. This can also help you in dealing with debt collectors.

You should also file a complaint with the FTC. The FTC is the federal clearinghouse for complaints by victims of identity theft. The FTC can offer information to you on dealing with the aftermath of having your identity stolen:

Online Complaint Form
1-877-IDTHEFT or 1-877-438-4338 (toll-free)
TDD: 1-202-326-2502

The FTC has a publication that may help you dealing with the aftermath of having your credit identity stolen: "Take Charge: Fighting Back Against Identity Theft." This is available online or you can request a copy be mailed to you by calling the FTC (toll free number given above).

Additionally, if the thief has stolen your mail to get access to a credit card solicitation, or mailed a fraudulent credit card application, or given a false change of address, then the thief has committed mail fraud. So you should also file a report with your local postal inspector.

You may also want to contact your bank if you have reason to suspect that the thief might have access to your bank account. Close any accounts that have been illegally accessed immediately. Stop payment on any checks that have been stolen or misused. Have password protection on any new accounts. Get a new PIN number for your new debit/ATM card.

If the thief has your Social Security number, get in touch with the Social Security Administration. You will want to make sure that your earnings are being accurately credited to you. The Social Security Administration may issue you a new Social Security number if you continue to have problems stemming from your identity being stolen, but this is a last resort:

Social Security Administration – Personal Earnings and Benefit Estimate
1-800-772-1213 (toll-free)

If the thief has used your Social Security number, you might also want to check with the NH Department of Motor Vehicles to see if the thief used your identity to get a driver's license. Fortunately, in New Hampshire, we use another number for our license ID rather than our Social Security number.

The Privacy Rights Clearinghouse can provide you with information on dealing with identity theft, including on how to network with other victims:

1-619-289-3396

Finally, the US Secret Service has jurisdiction over cases involving financial fraud. Practically speaking, the Secret Service only investigates cases where the dollar loss is substantial. However, your information may assist the Secret Service in proving a pattern of fraud against a particular thief. Contact the local field office in Manchester at 626-5631.

Points To Remember

• Never reveal personal identifying information to anyone without knowing why it is needed, how it will be used, and if it will be shared with others. Ask to have the this information kept confidential.
• Never carry your Social Security card in your wallet. Never have your social security number printed on your checks or anywhere else.
• Never give your Social Security number to anyone unless absolutely necessary: guard Your Social Security number closely. Give it out only when you know how it will be used to businesses that you know and trust. Ask that some other type of identifier be used when possible.
• Never carry your passport or birth certificate in your wallet or purse.
• Do not post personal information on the Internet, such as at genealogical sites, or class reunion sites.
• Pay attention to the billing cycles for your credit card accounts. If bills do not arrive when expected, give the creditor a call.
• Carry only the credit cards that you absolutely need. Keep the amount of other identification you carry to a minimum.
• Get a copy of your credit report every year to make sure that the information in the report is accurate and includes only the credit activities that you have authorized. Remember, you will probably want to contact each of the three credit reporting agencies to ensure that you have checked your entire credit history. The current rate for a credit report is about $8.00 or $9.00 when one has not been turned down for credit.
• Tear up or shred all unwanted credit card solicitations. Get off mailing lists for pre-approved credit cards by calling the OptOut Request Line at 1-888-567-8688.
• Shred all old credit card receipts, insurance forms, bank checks and statements, and investment statements before you throw them out. Cut up any expired credit cards into as many pieces as you can manage!
• Check all bank and credit card statements carefully every month to make sure that there is nothing that you cannot identify.
• Contact the credit reporting agencies at their special toll free line (1-888-567-8688) to request that your credit header not be sold.
• If your wallet or purse is stolen, notify all your creditors by phone immediately, call the three credit reporting agencies to ask that a "fraud alert" be placed on your file, and file a report with your local police.

Where To Go If You Have A Problem

Contact the three credit reporting agencies to put a fraud alert on your file:

Equifax: 1-800-525-6285 (toll-free)
Experian: 1-888-EXPERIAN or 1-888-397-3742 (toll-free)
TransUnion: 1-800-680-7289 (toll-free)