What is Identity Theft?
Identity theft can occur through unauthorized use or attempted use of an existing account, such as if your personal credit card was stolen and used by the thief to make a purchase.
It can also occur when personally identifiable information is used without permission to open a new account or service.
Finally, identity theft is also the misuse of PII for fraudulent purposes. For example, if someone uses someone else’s social security number to file taxes, or if someone provides another person’s name and driver’s license during a traffic stop.
Step 1: Fraud Alert
A fraud alert is a notice that a consumer can request to appear on their personal credit report. This notice is designed to alert a creditor that the consumer’s whose credit report is being reviewed may be at risk for identity theft or fraud. The notice should prompt the business to take extra steps to verify the identity of an applicant before issuing credit.
A consumer only needs to contact one of the three major credit reporting agencies to place a fraud alert. The CRA that is contacted will notify the other two companies to also place a fraud alert on the consumer’s credit file.
Step 2: Reporting Identity Theft
The Federal Trade Commission (FTC) has created a one-stop dedicated website (available in English and Spanish) IdentityTheft.gov through which you can submit a complaint and generate an official Identity Theft Report. You will also receive:
- Personal Recovery Plan: A checklist of action items for the consumer to do in order to resolve any issues resulting from the identity theft and to protect themselves from future harm. This service is available in English and Spanish.
- Pre-Filled Letters: You will be provided with pre-filled letters complete with all of the necessary details needed to inform businesses and others of the identity theft.
- Identity Theft Report: This is your official statement about the crime. In addition, you can also access an Identity Theft Affidavit, an IRS form which may be needed for tax purposes.
Step 3: File a Police Report
Whereas previously an identity theft report required a police report to be filed, according to the FTC, this is not longer the case. Nevertheless, filing an identity theft report with the FTC still legally obligates you to tell the truth. The crime gets reported to the Federal Trade Commission, or the FTC, a federal law enforcement agency. Filing ID theft to get derogatory information removed from a report is considered a crime. If a complaint is filed with false information, the individual can be subject to criminal penalties.
There may be certain situations when a police report should still be filed. For example:
- You know the identity thief, or have other information that could help a police investigation
- An identity thief used your name in a traffic stop or any encounter with police, or
- A creditor, debt collector, or someone else affected by the identity theft insists that you produce a police report.
- Again, if any of the above vaguely apply, it’s better to file the police report in addition to the identity theft report, covering all bases.
Step 4: Credit Freeze
Placing a credit freeze is probably the most effective way of preventing an identity thief from opening up new credit accounts in your name. That said, credit freezes are really intended for use when there is a real threat of identity theft, theft of personal information has already occurred, or potentially in cases in which a consumer will be unable to keep up with monitoring their credit report for an extended period of time, for example because of extended travel or incarceration.
In light of recent data breaches, some experts do recommend that consumers place a credit freeze on their credit file as a preventative measure if their personal information has been exposed.
Some consumers may prefer not to place a credit freeze, especially if they plan on seeking credit in the near future.
Additional Steps for Identity Protection
- Check the credit report regularly (at least 3 times per year through www.annualcreditreport.com)
- Review all financial/bank statements closely
- Practice security with electronic and physical information
- Opt out of pre-screened offers for credit and insurance www.optoutprescreen.com
- Do not share personal information with others
- Watch out for scams https://www.consumer.ftc.gov/features/scam-alerts
- File taxes as early as possible
Avoid Fee-Based Services
Consumers who are looking to protect their identity will find no shortage of companies who are interested in selling services to do so. This include credit monitoring, a service which provides alerts when there are changes to the credit report or personal information is used to attempt to open account. Credit lock services are marketed as a more convenient version of the credit freeze, and recovery services provides protection coverage in the case that a consumer’s identity is stolen resulting in a financial loss.
These services are worth noting because they are so prevalent in the marketplace, and while they might offer people an extra layer of security and convenience, many of the features that theses services offer are things that consumers can do on their own, for free.
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