Identity TheftUnderstanding ID theft and how to prevent it.
You've probably heard the term "identity theft" or "ID theft" in the media. It's a serious problem that costs victims in the United States billions of dollars per year.
Identity theft occurs when someone uses your personal information without your authorization to get credit cards, loans, cell phones and just about anything that requires detailed personal financial information. This can potentially leave you responsible for someone else's spending spree. It can take months or even years to repair the damage done by identity thieves, during which time you could be denied loans or even jobs as the result of their actions.
Identity theft starts with the misuse of your personal information, such as your name, Social Security number, credit card numbers, or other financial account information. For identity thieves, this information is as good as gold, allowing them to either make charges to your accounts or to open new bank or credit accounts.
Skilled identity thieves may use a variety of methods to get your information, including:
- Dumpster Diving - They rummage through trash looking for bills or other paper with your personal information on it.
- Skimming - They steal credit/debit card numbers by using a special storage device when processing your card.
- Phishing - They pretend to be legitimate financial institutions or companies and send spam or pop-up messages to get you to use a computer to reveal your personal information.
- Changing Your Address - They divert your billing statements to another location by completing a change of address form.
- Old-Fashioned Stealing - They steal wallets or purses, mail, pre-approved credit offers, or tax information. They steal personnel records or bribe employees who have access.
- Pretexting - They use false pretenses to obtain your personal information from financial institutions, telephone companies, and other sources.
Types of Identity Theft
One type of identity theft involves the use of your existing credit card, checking, or debit card accounts to make unauthorized purchases. Credit card fraud typically occurs when a physical card is either lost or stolen. If you don’t realize the card is missing, it may be impossible to know there’s a problem until you review your credit card statement or a charge has been declined. Another type of credit card fraud involves stealing your account number through a device connected to credit card terminals, enabling the thief to make a duplicate of your card. Luckily, credit card holders are rarely responsible for unauthorized charges on credit card accounts when reported within 60 days of the date your credit card company transmitted your account statement reflecting the fraudulent transaction(s).
Debit card fraud can occur when a thief obtains your debit card and uses it to drain your account or make a purchase with a merchant. Generally, , if you notify your bank within two business days of learning of the loss or theft of your card, you may be liable for up to $50 of the stolen money. If you notify your bank between two business days of learning of the loss or theft of your card and 60 days of the date your bank transmitted your account statement reflecting the fraudulent transaction, you could be liable for up to $500. You must report unauthorized transfers within 60 days of the date your bank transfers within 60 days of the date your bank transmitted your statement reflecting the fraudulent transaction(s) to avoid liability for subsequent transactions. However, time and dollar amount limits may vary depending on the specifics of the incident and the state law where you live.
Check fraud is another form of identity theft. A thief may steal your checks, forge your name and drain your account. Or a thief to whom you wrote a check, may alter it to take out more money than you intended to pay. If you report check fraud within 30 days of the date of your bank transmitted your checking account statement listing the fraudulent transaction(s), you are generally not liable for any portion of the money stolen. Nonetheless, depending on the circumstances, your bank can investigate to determine if you are entitled to a reimbursement. It is important to review your bank statements and promptly notify your bank of any discrepancies.
Each form of identity theft we described involves stealing money from an existing account. Another form of identity theft involves a thief using your identity to opening new accounts. This type of identity theft can take longer to discover and may be much more difficult to fix.