When a Criminal's Cover Is Your Identity
ID theft puts an ugly face on your good name. A con artist who knows your Social Security number, bank account information or other personal details can temporarily become you in order to commit fraud. Fixing the damage could take years. Here's how to reduce your risk.
Your good name and reputation are among your most valuable assets. Unfortunately, criminals know the value of a good name and reputation, too. That's why increasing numbers of con artists are "stealing" identities. These robbers typically start by using theft or deception to learn a person's Social Security number, date of birth or other personal information. Armed with those details, the perpetrators can open credit card accounts, make purchases, take out loans, or make counterfeit checks and ATM cards in your name. In effect, the crook becomes you in order to commit fraud or theft.
Federal and state laws plus banking industry practices may limit your losses from ID theft. For example, under the Truth in Lending Act, if a crook opened a credit card account in your name and ran up thousands of dollars in charges, the most you'd owe is $50 - and many creditors will agree to excuse you of all liability. Still, innocent victims are likely to face long hours (and sometimes years) closing tarnished accounts and opening new ones, fixing credit records, and otherwise cleaning up the damage. They also may find themselves being denied loans, jobs and other opportunities because an identity theft ruined their reputation and credit rating.
Consider these examples cited by the Federal Trade Commission (FTC) in congressional testimony:
- A NASA engineer was refused a loan by his bank of 11 years and had to use his retirement funds to finance his son's education.
- A consumer spent three years trying to repair her damaged credit rating and was deprived of the chance to buy what she described as her dream home.
- A department store clerk whose identity had been assumed by a shoplifter spent years unsuccessfully seeking employment in the retail industry.
"The problem with identity theft is that it can happen to you before you know it, and it can take a long time to correct," adds John Kotsiras, an FDIC consumer affairs specialist in Washington.
FDIC Consumer News has warned readers about identity theft before. We are highlighting ID theft again because the problem appears to be getting more common - largely because the Internet and other forms of electronic commerce have made it easier for sophisticated crooks to access Social Security numbers and other personal information. "Like any other crime or risk, identity theft is not totally preventable," says FDIC Washington-based fraud investigator Vincent Filippini. "But, there are some things a consumer can do to help prevent ID theft or make it difficult to happen."
A Checklist for Prevention
Here are seven things you can do to minimize your risk of becoming a victim of ID theft:
Protect your Social Security number, credit card numbers, account passwords and other personal information.
Never divulge this kind of information unless you initiate the contact with a person or company you know and trust. A con artist can use these details and a few more, such as your mother's maiden name, to withdraw money from your bank account or order new credit cards or new checks in your name.
Use common sense, and be suspicious when things don't seem right. If you get an unsolicited offer that sounds too good to be true and asks for bank account numbers and other personal information before you receive anything in return, this is likely to be a scam. Likewise, if a caller claims to represent your financial institution, the police department or some similar organization and asks you to "verify" (reveal) confidential information, hang up fast and consider reporting the incident (see Who to Call to Report a Possible ID Theft). Real bankers and government investigators don't make these kinds of calls. Example: Your credit card company is unlikely to call you to ask for your credit card number because it already has that information.
Social Security numbers (SSNs) are especially hot items for identity thieves because they often are the key to getting new credit cards, applying for federal benefit payments, or opening other doors to money. The Social Security Administration says that consumer complaints about the alleged misuse of SSNs are rising dramatically, from about 8,000 in 1997 to more than 30,000 in 1999.
So, be very careful with your Social security number. Your employer will probably need it to report your income to the IRS, while your bank or stockbroker may need it to report dividends or interest income. But, beyond that, such as when a business asks for your SSN in connection with a purchase, the decision is up to you... and it's a decision you should not take lightly.
"Giving your number is voluntary, even when you are asked for the number directly," says the Social Security Administration. "If requested, you should ask why your number is needed, how your number will be used, what law requires you to give your number and what the consequences are if you refuse."
Perhaps the worst that can happen if you say "no" to a merchant or service provider that wants to see your SSN is that you'll have to take your business elsewhere. Also be aware that some states that use Social Security numbers on their driver's licenses now also allow people to apply for a different number. "Getting an alternate number adds some protection from prying eyes, particularly because many merchants want to record driver's license information when accepting checks," says Gene Seitz, an FDIC fraud investigator in Washington.
Real People, Real Problems from ID Theft
These complaints were sent to the Federal Trade Commission:
"Someone used my Social Security number to get credit in my name... I have been turned down for jobs, credit, and refinancing offers. This is stressful and embarrassing. I want to open my own business, but it may be impossible with this unresolved problem hanging over my head."
"My elderly parents are victims of credit fraud. We don't know what to do. Someone applied for credit cards in their name and charged nearly $20,000. Two of the card companies have cleared my parents' name, but the third has turned the account over to a collection agency. The agency doesn't believe Mom and Dad didn't authorize the account. What can we do to stop the debt collector?"
"Someone is using my name and Social Security number to open credit card accounts. All the accounts are in collections. I had no idea this was happening until I applied for a mortgage. Because these 'bad' accounts showed up on my credit report, I didn't get the mortgage."
Minimize the damage in case your wallet gets lost or stolen.
Don't carry around more checks, credit cards or other bank items than you really expect to need. Limit the number of credit cards you carry by canceling the ones you don't use. Don't carry your Social Security number in your wallet or have it pre-printed on your checks. Pick passwords and "PINs" (Personal Identification Numbers) that will be tough for someone else to figure out - don't use your birth date or home address, for example. Don't keep this information on or near your checkbook, ATM card or debit card. Also, don't leave your wallet unattended in a store, restaurant, office or other public place - not even for a few minutes.
Protect your incoming and outgoing mail.
Those envelopes may contain checks, credit card applications and any number of other items that can be very valuable to a fraud artist. How can you keep mail out of the wrong hands? Among the simplest solutions: Promptly remove mail from your mailbox after it has been delivered. If you're going to be away on vacation or some other travel, have your mail held at your local post office or ask someone you know and trust to collect your mail. Deposit outgoing mail, especially something containing personal financial information or checks, in the Postal Service's blue collection boxes, hand it to a mail carrier or take it to a local post office instead of leaving it in your doorway or home mailbox.
Keep thieves from turning your trash into their cash.
Thieves known as "dumpster divers" pick through garbage looking for credit card applications and receipts, canceled checks, bank statements, expired charge cards and other documents or information they can use to counterfeit or order new checks or credit cards.
So, before putting these items in the garbage bin, tear them up as best you can. "I recommend that people buy and use a shredder," says the FDIC's Filippini. "Any paper you don't need to keep that contains private information should be shredded."
Practice home security.
Safely store extra checks and credit cards, documents that list your Social Security number, and similar valuable items. Be extra careful if you have housemates or if you let workers into your home. Don't advertise to burglars that you're away from home. Put lights on timers, temporarily stop delivery of your newspaper, and ask a neighbor to pick up any items that may arrive unexpectedly at your home.
Pay attention to your bank account statements and credit card bills.
Contact your financial institution immediately if there's a discrepancy in your records or if you notice something suspicious, such as a missing payment or an unauthorized withdrawal. While federal and state laws may limit your losses if you're victimized by a bank fraud or theft, sometimes your protections are stronger if you report the problem quickly and in writing.
Also, contact your institution if a bank statement or credit card bill doesn't arrive on time because that could be a sign someone has stolen account information and changed your mailing address in order to run up big bills in your name from another location.
Review your credit report approximately once a year.
Your credit report (prepared by a credit bureau) will include identifying information (such as your name, address, Social Security Number, and date of birth) as well as details about credit cards and loans in your name and how bills are being paid. You should make sure the report is accurate, and that includes monitoring it for unauthorized bank accounts, credit cards and purchases.
Also look for anything suspicious in the section of your credit report that lists who has received a copy of your credit history. There are at least two reasons why:
First, identity thieves sometimes will fraudulently obtain credit reports - and valuable details that can be used in a financial scam - by posing as a landlord, employer or someone else who has a legal right to the information. "Remember, we're dealing with people who are masters of the con game and who see consumer protection rules as simply obstacles to overcome," notes the FDIC's Filippini.
Second, crooks sometimes apply for loans or apartments in someone else's name as a way to test that person's vulnerability. "An inquiry to a credit bureau about a loan or a lease you didn't apply for could be a sign that a thief is 'casing' your credit history to see if you have the right background to be a potential target," Filippini explains.
To order your report, call the three major credit bureaus at these toll-free numbers: Equifax at (800) 685-1111, Experian at (888) 397-3742, or Trans Union at (800) 888-4213. By law, the most you can be charged for a copy of your report is $8.50. To be safe, consider getting a copy from each of the three companies. If after reviewing your report you spot signs of a possible fraud, contact these organizations.
- Federal Regulators of Depository Institutions. To get assistance from the FDIC, Federal Reserve Board, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau or the National Credit Union Administration, Past issues of FDIC Consumer News also have stories on some of the best ways to protect yourself from a variety of financial scams and thefts. Check them out at www.fdic.gov/consumers/consumer/news/index.html on the FDIC's Web site.
- The Federal Trade Commission. The FTC is a central U.S. clearinghouse for information on preventing and reporting identity theft, with a new Web site on www.consumer.gov/idtheft and a specially staffed toll-free hotline at 877-IDTHEFT (438-4338). The FTC also has several excellent publications about avoiding frauds, but start with the new booklet "Taking Charge: What to do if Your Identity is Stolen." It's available online from the Web site, by calling the ID theft hotline, or by writing the FTC's Consumer Response Center, 600 Pennsylvania Avenue, NW, Washington, DC 20580. The FTC Web site also provides links to the Internet offerings of other government and private organizations that help combat identity theft.
- The U.S. Department of Justice and the FBI. The Justice Department, which prosecutes federal fraud cases, and its Federal Bureau of Investigation, which investigates suspected ID thefts, have posted useful information on the Internet at www.usdoj.gov/criminal/fraud/idtheft.html. To speak with someone at a local field office of the FBI, check the government listings in your local telephone book.
- The Social Security Administration. Under certain circumstances, the SSA will assign new Social Security numbers to victims of ID theft. To get more information about Social Security numbers and identity theft, call the SSA's toll-free fraud hotline-800-269-0271 or visit its www.ssa.gov Web site.
For More Information About Stopping ID Theft
These are among the federal and state government agencies that have publications, Web sites, staff and other resources that help answer your questions on ID theft and other financial fraud:
Cases of stolen identity don't occur just in the movies or mystery novels. They happen to real people, and ever more frequently. We've tried to give you some of the best, easiest ways to protect your good name. Don't let ID theft take on a life of its own - yours.
Reprinted from FDIC Consumer News.