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FDIC Consumer News - Fall 1997
|Your Wallet: A Loser's Manual
A thief who takes your wallet can steal your identity, too, and use your good name to run up big bills. Here's how to protect your money and your credit record and your sanity if your wallet is lost or stolen.
Consider this: Your wallet is stolen. You immediately call your bank and credit card company to report the problem, close old accounts and open new ones. You feel fairly confident that the incident is behind you.
But a few weeks later you receive a threatening notice to pay a "past-due" bill for some merchandise you know you never purchased. Next, your application for an auto loan gets rejected because of a poor credit history, when you know you never missed a loan payment or bounced a check in your life. Shocked, you immediately call one of the major credit bureaus (also called a credit reporting agency), which informs you that numerous accounts have been opened, using your name and Social Security number, and with thousands of dollars in debts to stores, credit cards, utilities and other companies. The good news: Your actual liability for these unauthorized purchases is limited by law or industry standards. The bad news: You still spend many frustrating hours trying to clear your name and straighten out your credit history.
Sound like fiction? It's not. It could happen to you any time, anywhere. We're talking about "identity theft"- situations where a con artist obtains charge cards or enough personal information to establish new accounts in your name.
"Most of us assume that thieves are interested in cash when they steal a wallet, but in many cases the cash may be the least valuable item," says Pete Hirsch, a fraud examiner with the FDIC's Division of Supervision in Washington. "Your wallet can provide a criminal with ready access to sensitive information that can be used to steal your identity, drain bank accounts and make it difficult for you to obtain credit in the future."
Identity theft is on the rise in the United States and, unfortunately, many consumers don't know how to adequately protect themselves or the contents of their wallets. People too often assume that when a wallet is lost or stolen they simply need to cancel their "plastic" (credit, debit, and ATM cards) and replace lost identification. But there are other steps, including some preventive measures, that you can take to greatly reduce your chances of becoming a victim.
Here's a collection of tips and information from FDIC Consumer News that we think can help you protect against all kinds of financial fraud, even if you never lose your wallet. Remember: A con artist doesn't need to steal your wallet to steal your money and your identity. A sophisticated thief simply needs a little information about you - perhaps one of your credit card numbers or your Social Security number - to make purchases or obtain new accounts in your name. So some of the suggestions in this report can help.
One simple way to protect yourself against identity theft is to limit the amount of confidential information you carry in your wallet. Experts recommend that you not carry around bank account numbers, personal identification numbers (PINs), passports, birth certificates, and most importantly, Social Security cards. (Although many states continue to use Social Security numbers on drivers' licenses, this practice is changing.)
Avoid carrying more blank checks than you really need. Not only can a thief cash checks
or use them for purchases, but a crook also can make use of the sensitive information
often pre-printed on your checks (your address, bank account number, even your telephone
number). Many consumers even print their driver's license number or Social Security number
on their checks. That's a definite no-no, because either number could help a thief apply
for a loan, credit card or bank account in your name.
"Keep these numbers in safekeeping or else they can
If you're going on vacation, Ken Baebel, also from the Division of Compliance and Consumer Affairs, recommends taking along a list of the toll-free telephone numbers for your banking and credit card companies not your card numbers and keeping the list in a safe place other than your wallet. "If you lose your wallet while you're away from home, having those phone numbers will help you quickly report the problem and get replacement cash or cards," he says.
Why not take a list of card numbers with you on your trip? "The card numbers alone can be just as valuable to a thief as the actual cards themselves, if not more valuable," explains Gene Seitz, a fraud investigator in the FDIC's Division of Supervision in Washington. "If someone steals your wallet, you'll probably notice that right away. But if someone steals a list of card numbers from your suitcase, you might not be so quick to realize that, and that just gives the thief more time to run up fraudulent charges."
Consider canceling any credit cards you don't really need or use. Among the reasons: A thief can dust off a "dormant" card and use card numbers and other personal information to make purchases or get a new card. You'll only find out about the problem when the collection notices arrive at your address.
Never give out personal information (such as your Social Security number, credit card numbers or your address) over the telephone unless you initiate the call, and it's to a well-known and trusted outfit. Also try not to provide personal information when using a check or plastic for purchases at a cash register. Many states even prohibit merchants from requiring personal details.
Don't just toss away those credit card applications you receive in the mail and don't intend to apply for. Shred them as best you can. Crooks can easily use these applications to establish accounts in your name and then change the mailing address so you're unaware of the fraud until it's too late. Also, if you don't want to receive unsolicited credit card applications in the mail, by law you can demand that your name be removed from the marketing lists that credit bureaus sell to credit grantors looking for new customers. To "opt out" of these mailings, call any one of the following credit bureaus at these toll-free numbers specifically established for this purpose: Equifax at (800) 556-4711, Experian at (800) 353-0809, or Trans Union at either (800) 241-2858 or (800) 680-7293.
Review your credit card bills and your checking account statements as soon as they arrive, to ensure that no fraudulent activity is taking place. Also make sure you get a statement from your creditors every month. If no statement arrives, that could be a sign that someone has changed your billing address for fraudulent purposes. And, finally, periodically request a copy of your credit report and check for signs that someone has opened accounts in your name. The three major credit bureaus and their toll-free numbers for requesting copies of your credit report are: Equifax at (800) 685-1111, Experian at (800) 682-7654, and Trans Union at (800) 888-4213. If you've been denied credit, you may be entitled to a free copy of your report. If you haven't been denied credit, the most you can be charged is $8.
While it may seem obvious, it can't hurt to mention a few basic words about protecting your wallet: Don't take out your wallet until you actually need it, and don't forget your wallet before leaving a restaurant, store or any public place. And never put your wallet down alongside a cash register, in a phone booth or even on top of your car. A good rule of thumb, as we've noted previously in FDIC Consumer News, is this: Never set down your wallet unless your hand is attached to it.
If You've Already Been Victimized
If your wallet disappears, there are limits to how much you will have to pay for the charges made by a thief (see the article Know Your (Liability) Limits). In some cases you may owe nothing. But you can help limit your liability and reduce potential losses for merchants and banks (which often get passed on to consumers in the form of higher costs for goods and services) by doing the following.
First, immediately call your credit and charge card companies on their toll-free numbers and explain the situation. You may not have to pay for fraudulent charges if you notify the card issuer quickly (usually within two business days of discovering the loss or theft).
Instruct your card companies to close your accounts. Why close them instead of just asking for fraudulent charges to be removed? For one thing, it'll be difficult for the card issuer to identify and prevent all fraudulent purchases. Also, it's good to have your credit reports show that an account was "closed at customer's request" instead of "lost or stolen." The latter could indicate that you somehow were at fault. And follow up your phone conversations with letters to the card companies - to ensure an adequate "paper trail." It may help to keep a detailed log of phone calls and letters to avoid confusion and to prove that you made the required notifications.
After you've closed your credit card accounts, open new ones with new account numbers and PINs. Replace your old ATM card with a new one, and change your existing PIN to one that cannot be easily guessed by a thief. Your birth date and portions of your Social Security number, telephone number or street address usually are poor choices for PINs.
Canceling your credit card may not be enough to stop crooks from applying for new accounts. That's why you also should contact the three big credit bureaus and have them "flag" your file as one belonging to a possible fraud victim. (See the guide on the previous page.) This warning will caution credit grantors to check with you before approving new loans or cards in your name. Experts say you should take the time to call all three credit bureaus, and perhaps even follow up in writing.
Immediately notify local police where the wallet was lost or stolen. Hugh Eagleton of the FDIC's Division of Compliance and Consumer Affairs recommends that you fill out a police report and ask about signing a written affidavit verifying that unauthorized transactions in your name are fraudulent. "These documents will help you when dealing with your bank or credit card company or removing clouds from your credit record," he says. "They give you more credibility when you say that you had no part in any fraud."
Also worth calling: the Social Security Administration (for replacement of Social Security and Medicaid cards), the Department of Motor Vehicles (to get a new driver's license), and your telephone and utility companies (to prevent a con artist from using a utility bill as proof of residence when applying for new credit cards).
There's no doubt about it: Our recommendations are time-consuming. But victims of lost wallets and identity theft can tell you that the extra efforts we've described would be far preferable to the many hours you would spend trying to erase a criminal's fingerprints from your credit record. Remember: Your name and good credit history are among your most valuable assets. Protect them.
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