Protecting Yourself from Identity Theft

You've probably heard the story about someone who opens her credit card bill to find several charges she knows she didn't make. She immediately phones the credit card company, which cancels her card, issues a new one, and then investigates the charges. The amounts charged are relatively small and she isn't required to pay them. Although she's not sure who stole her number, she thinks it might have happened when she used her credit card to pay for a meal in a restaurant. But she's lucky; she found the discrepancies early and, because she contacted the three major credit reporting agencies and filed a fraud alert, she receives copies of her credit reports and she's certain no further damage has been done. Some others aren't as fortunate.

According to Federal Trade Commission (FTC) statistics, identity theft has become one of the fastest growing classes of criminal activity. Some experts estimate that as many as 1.1 million people were victimized last year alone. The most common type of identity theft is credit card fraud, followed by phone or utility fraud, then bank fraud.

Identity theft occurs when someone steals a piece of your personal data — your Social Security number or credit card number — and uses it to impersonate you for financial gain, generally spending as much as possible, as quickly as possible.

Armed with personal information, an identity thief can take out a loan, apply for a new credit card, obtain cell phone service, and even get a job — all using your name. Many people don't find out about this activity until they apply for a loan and are denied because of credit cards and unpaid bills they didn't even know about. When taken to the extreme, victims can be refused loans for homes and cars, may lose job opportunities, and may even get arrested for crimes they didn't commit.

To make matters worse, victims of identity theft can spend months or even years, along with a substantial amount of money, restoring their credit record. On average, a victim of identity theft spends over 175 hours and about $880 to clear his name.

So what can you do? There are steps you can take to cut down on the potential that you'll be a victim of identity theft.

• Don't share your Social Security number. Don't give it out to people who don't need it. In fact, if someone asks for it, ask why they need it. Is there another form of identification that you can give them instead?

• Shred, shred, shred. Many identity thieves get information by digging through garbage cans in hopes of finding pre-approved credit card offers, bank statements, or old tax returns — anything that contains personal information. Before disposing of those kinds of documents, shred them.

• Get a copy of your credit report at least once a year. And look it over well. The sooner you find out about a fraudulent credit card taken out in your name, the less damage can be done.

• Clean out your wallet. Take out those things you don't want a thief to have access to: your Social Security card, your passport, and your credit cards.

• Bank online. Although this may seem to fly in the face of conventional wisdom, in reality most Internet theft involves crooks using already-swiped information — many times stolen from the mail or the trash. Consumers who bank and pay bills online don't mail their bills and tend to check and balance their bank accounts more frequently, which both reduces the paper trial and can lead to early detection of theft.

Even following these precautions, you could still become a victim of identity theft. If you believe that's the case, the FTC recommends you do these things:

• Contact the fraud departments of the three major credit bureaus: Equifax 800-525-6285; Experian 888-397-3742; and Trans Union 800-680-7289, and place fraud alerts on your credit file.

• Close any accounts that you know or believe have been tampered with or opened fraudulently.

• File a police report. In order to prove fraud, creditors may require proof of the crime.

• File a complaint with the FTC. The FTC maintains a database used by law enforcement agencies for investigation.

Identity theft is a growing crime, but becoming more aware of the dangers is the first step in preventing it from happening to you.

For more information about identity theft, the FTC Theft ID Web site is very helpful. Log on at www.consumer.gov/idtheft/ for more information.

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