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.
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:
- 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.
- Put a fraud alert on your 3 credit reports, and check them for any accounts you don’t recognize.
- 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.
- File a complaint with the Federal Trade Commission at (877) FTC-HELP.
- Do not pay any bills which result from ID theft.