Identity theft is one of the scary realities of our world these days. It can destroy your financial life: Your bank account can be drained, your credit cards can be used, new accounts can be opened — all without your consent.
Whether you’ve personally experienced identity theft or you just want to know how to prevent it from happening to you, this guide has the steps you need to know.
Table of Contents:
What Is Identity Theft?
Identity theft is when someone uses your personal information, without your permission, to commit a crime — usually fraud. It is a serious crime that could ruin your financial life.
Here’s the kind of information ID thieves look for to steal your identity:
Date of birth
Social Security number
Driver’s license number
Credit card and/or bank account numbers
Medical insurance account numbers
So how do they get hold of this information? There are several ways. Some of them are high-tech. And some are extremely low tech, such as going through your garbage or your mailbox.
Crooks can also swipe your information from a job application, your email, or even from what you post on social media.
There’s a technique called “shoulder surfing”: A potential thief watches you enter your credit card number or other personal information into a keypad, according to the U.S. Justice Department.
“Skimming” is another ID theft technique related to your use of keypads (usually at ATMs). Crooks attach their own card readers over the real card reader and then take the information off every card that gets swiped.
And, of course, your computer or phone can get hacked — especially if you don’t have any security software installed.
How To Prevent Identity Theft
There are many things you can do to help protect yourself from identity theft.
“A credit freeze is the best way to protect yourself from identity thieves,” Clark says.
He says it’s crucial to freeze your credit with the three major credit bureaus: Experian, Equifax and TransUnion. And it doesn’t cost anything to get your credit frozen.
Once your credit is frozen, no one can open a new financial account in your name. You have to contact each credit bureau and confirm your identity to “thaw” or unfreeze your credit before you open any new accounts.
Here are a few more ways to prevent identity theft:
How To Report Identity Theft
If your ID does get stolen, you can report it several different places.
You’ll typically need to inform the Social Security Administration, the credit bureaus, your local police department, your bank and all creditors with whom you have accounts that have been affected.
Some companies and agencies have pages on their websites where you can make a report. Other times, you’ll need to call.
In each case you may be asked to describe the incident to the best of your knowledge. Remember to stay calm and try to give full descriptions of charges and discrepancies in your account(s) that you’ve noticed.
It’s helpful to have a pen and pad (or a computer) nearby to take notes.
Here are details on how to make some of those contacts:
You may also choose to contact your local police department. If you do so in writing, make sure to mail it via Certified Mail.
If you choose to file a report in person, you should take the following items with you:
A photo ID
Proof of address
Evidence of ID theft (bills, account balances, marks on your credit report, etc.)
A police report that has details about the case can serve as an official “Identity Theft Report,” according to the FTC, and that’s a document that will help you when you start to try to repair the damage the ID thieves have done.
Contact Your Creditors
You need to reach out to all the affected creditors so that they can close your account(s).
Once you explain the situation and provide them a copy of the Identity Theft Report, here’s where you can begin the process of contesting any charges.
“Don’t pay any bill or part of a bill resulting from identity theft,” Clark says.
How To Repair Your Finances After Identity Theft
Clark does not suggest hiring a credit repair service. These companies usually promise astronomical surges in your credit score, but some of their techniques may not be ethical.
Creditors: Change your passwords, PINs and other security information associated with your accounts.
Clark also says to make sure that, as you get new cards and deactivate old accounts, you get a memo from each company stating that the account has been closed at the customer’s request. Ask for written confirmation.
Authorities: If the case is big enough, and if the authorities find the crook, you may be asked if you want to press charges. While that is a personal decision, restitution from the offender is one potential way to get compensation for your losses.
Rectifying an incident of identity theft is not a quick process, so it pays to a) be patient and b) keep comprehensive notes on everything.
One Team Clark member who had her identity stolen says this: “Hopefully, you will never experience the feelings of violation and vulnerability that go hand-in-hand with identity theft. But if you do, know that it is going to be a very time-consuming, frustrating and emotional journey. However, the sooner you act, the less complicated that it’s going to be.”
Once you’ve made the necessary reports and provided any requested documentation, remember to:
Review your bank account often
Check your credit report weekly
Freeze your credit
Before you freeze your credit, Clark recommends that you set up an account with Credit Karma or Credit Sesame to get free credit monitoring and notifications of suspicious activity.
Remember, you can help protect your identity and your finances by taking preventive steps and following safe security measures.