Ripoff Alert #4 – Identity Theft Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

ID Theft

According to the FTC, “identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes.” There are a number of things criminals can do once they have this information, but I want to focus on financial fraud.

Financial fraud happens when criminals use your information to open up new credit cards, take out loans, open a utility account, create counterfeit checks, or apply for a job using your Social Security number.

As many as 9 million Americans have their identities stolen each year, with young adults ages 18-29 being the group most targeted by criminals. Young people rarely have bankruptcies or other negative items on their credit reports, so that makes them an easy target. In addition, college students tend to put all their financial papers in the trash without shredding them. This creates a gold mine for criminals looking for sensitive information.

Often, people have no clue that their identity has been stolen until years later when they’re applying for a mortgage or car loan. By then, the damage will be great and it may be extremely difficult to remove the negative items from your credit report.

The best defense against identity theft is to be proactive. Shredding all financial documents or anything with your Social Security number, bank account numbers, address and birth date is one of the best things you can do to prevent ID theft. Monitor your bank statements monthly and check your credit report at least once a year at AnnualCreditReport.com. Don’t carry a checkbook or Social Security card in your purse or wallet.

If you want to check your credit health more often, Credit Karma offers a free credit monitoring service and access to your credit score as often as once a day. They’ll alert you by email to any changes on your credit report including new addresses and new accounts or loans.

Perhaps the best way to prevent identity theft is to freeze your credit files. This locks your files at each of the three credit bureaus and prevents anyone from opening accounts as if they’re you. You’ll get a secret code from each of the three bureaus which you’ll use to thaw your files if you need to apply for any credit. The cost to freeze your credit varies by state from nothing to $10 per bureau.

If you’re a victim of ID theft, there are 5 steps you need to take immediately:

  1. Contact your banks and credit card companies to report the fraud. Close the accounts you believe have been opened fraudulently and have new cards issued.
  2. Put a fraud alert on your 3 credit reports, and check them for any accounts you don’t recognize.
  3. File a police report in the community where the ID theft took place. Get a copy, and keep a log of all conversations you have with authorities.
  4. File a complaint with the Federal Trade Commission at (877) FTC-HELP.
  5. Do not pay any bills which result from ID theft.

13 thoughts on “Ripoff Alert #4 – Identity Theft Edition

  1. I had this happen to me with one of my credit cards around Christmas. I have no idea how they got my number. Thankfully, Chase Freedom called me right away to validate the incident and I was not held liable.

    • I’m glad to hear that your credit card company was proactive and called as soon as it happened. I always wonder how they’re able to detect fraudulent uses of your credit card, especially when you’re traveling to a different state or province. How do they know it’s you instead of a criminal?

  2. Great advice. Young people in particular definitely need to be more aware of identity theft. I know I was a little careless about just throwing away documents with important information about me. With all the random people digging through the dumpsters, I’m sure some are on the lookout for that kind of stuff. I didn’t realize you could put a freeze on your credit like that. I’m too cheap to pay that fee, but it might be worth considering as my credit builds up more and my finances become more of a priority.

    • Thanks, MM! A good way to think about the credit freeze fee is that it’s cheap insurance against ID theft. You could pay up to $30 now and take about 15 minutes to freeze your credit, or potentially go through hassles and greater expenses later if your ID is stolen.

  3. As a victim of ID theft – it’s no fun – and so these are great tips to heed. Especially like the option to freeze accounts! Thanks.

  4. Great Post! I had a friend who was a victim of identity theft, it was horrible. It turned out to be a friend of her friend too! The woman who stole her identity went to different cell phone carriers and opened up numerous lines on different carriers. Of course since most of these bills don’t appear for a month or so (and the phones are included in the first bill), the thief had lots of time to open accounts. My poor coworker would have to request days off work to help police with the investigation and spend her lunch hour calling her credit cards and different carriers trying to find out if any new accounts had been opened.

    • Thanks! It sounds like your friend went through a lot to get these false charges reversed. You’re right – victims often don’t know their identity has been stolen until weeks or months later. This gives criminals plenty of time to do their dirty work.

      I heard that the majority of ID theft happens when one family member steals the identity of another family member. If you think about it, it’s much easier because you often know more information about people in your family than strangers. Plus, people have easier access to family members’ mail and sensitive documents laying around the house. It makes you wonder who you can really trust.

  5. My dad had his debit card number stolen and someone racked up $3,000 on it. I often fail to monitor my accounts consistently but it is something that I should definitely be doing.

    • Hi Katie, I’m sorry to hear that happened to your dad. Debit card fraud is more harmful because debit cards don’t offer the same protections as credit cards. With debit cards, it’s your money that’s gone, and it’s your responsibility to get it back from your bank. By law though, the bank is required to give you at least a provisional credit within 10 business days after you alert them of fraud.

      As for you, keep an eye on those accounts! 🙂 If you’re not, how would you know if you were a victim?

  6. Pingback: Rental Credit Report Money Your Questions | Tenant Background Check Companies

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