About Identity Theft
Identity theft occurs when somebody uses your credentials and identification
to obtain credit cards and loans. Identity thieves spend millions each year by using
the names and personal information of others.
While you can eventually fix the damage, the process of credit repair after identity
theft can cause you to feel more like a victim than the theft itself. The damage
to your credit report as a result of becoming a victim of this crime can last for
years.
The situation has improved somewhat with the passage of the Fair and Accurate
Credit Transactions Act (FACTA). If you have been a victim of identity theft, the
bureaus are now required to remove the contested information from your report while
it's being sorted out. Previously, it was left on your report pending investigation.
The best cure for identity theft is prevention. Here are a few suggestions to
help you from becoming a victim of this crime.
- Don't carry all your credit cards with you all the time. This limits your
exposure if you lose your wallet or purse.
- Sign your credit cards immediately when you get them in the mail. Better
yet, write "ask for signature" on the signature line. This requires clerks to
check another form of ID for your signature, and doesn't place your signature
in the hands of an unscrupulous individual in the event you lose your card.
- Don't carry your social security card—memorize the number.
- Never keep your personal identification number (PIN) or any passwords in
your wallet or purse.
- Buy a document shredder and use it! You can also buy shredders for compact
disks to destroy private computer files.
- Always get your receipt; it often contains your entire credit card number.
When you sign a credit slip that has carbons remove the carbons and rip them
up.
- Don't write your credit card number on checks, only the last 4 digits are
necessary to ensure proper processing of your payments. If a clerk asks for
a credit card for additional identification when you write a check that's fine,
however, it's illegal for them to write your credit card number on your check.
- Buy a lockable mailbox or use a post office box for your incoming mail.
Place outgoing mail in US post box, not in your box at the curb.
- Never give out personal information over the phone unless you've called
them.
- Place fraud alerts with your credit bureaus. Not only do you get a free
credit report, the bureaus will call you whenever there is a credit inquiry
before the inquiring company can get any information about you. Warning: the
downside of this is that you can say goodbye to being instantly approved for
credit. Instant approvals are based on an electronic request for your credit
score. The lender won't get that score until you manually verify the request
when the bureau calls you.
- Have your checks mailed directly to the bank, if you aren't using a post
office box
- Don't get copies of your checks or statements. Wherever possible get electronic
ones that can't be intercepted in the mail. Check washing is a popular form
of theft. Individuals will wash the payee name off of the check leaving your
signature intact, then rewrite your check to "Cash" or another payee of their
choosing.
- Use a firewall program as well as spyware program for your computer. There
are a number of good and free ones on the market. Ask a trusted computer professional
for recommendations.
- Change your online passwords often, and choose passwords that are a combination
of letters in both cases and numbers. Avoid things like your name, birthday,
pet's names, and other choices that are easy to guess if an individual knows
you.
- Have your photo placed on your credit cards. Many credit card companies
offer this service for free. The presence of your photo will stop individuals
from using your card in stores to make purchases. However, this will do little
to stop Internet and phone based transactions.
- When your credit cards are lost or stolen, report them immediately.
- When you report the card immediately and up to two days, you are not liable for
any transactions that occur on the card. If you report the card within 3-30 days
of it coming up missing, you can be held liable for only up to $50.
Keep tabs on your credit accounts by checking them once a month mid-cycle for
unusual activity.
If identity fraud is the fastest growing crime in America, then misleading the
public is probably the number one offense a credit card company commits daily. They tout
credit protection insurance that protects you in the event of identity theft. Paying
for credit protection insurance is one of the poorest financial decisions you can
make. The charge is generally $2-3 a month. For one year, you pay $24-36 for credit
protection, when your potential liability is only $50.
Some credit protection insurance makes your payments for you in the event of
disability or injury. Your own personal disability insurance is a less expensive
alternative and gives you greater coverage. Buying any insurance offered by a credit
card company is likely a bad financial decision.
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