Identity Theft

by Rob Reed, CFP®, Ph.D

www.ReedPlanning.com

"He who steals my purse steals nothing. He who steals my name steals everything."

- William Shakespeare

Never was Shakespeare more true than today. We are relieved if thieves only take the cash from our wallets. If they take our name, the stealing can go on for years. With your name, address, social security or credit card number, thieves can charge tens of thousands of dollars on your credit cards. They can get loans, new credit cards, and cell phone accounts in your name. They can buy cars and almost anything over the internet. They can change your PIN numbers and empty your bank accounts. The list is endless.

According to the latest estimates it takes victims between eighteen months and two years to clean up the financial mess made when their identity is stolen. That is almost two years of daily phone calls explaining to strangers that the charges billed to you don’t belong to you. It means letters to dozens of department stores, retail outlets, and restaurants explaining that you did not use their services and you are not liable for their expenses. And just when you think you have contacted everyone, the thieves sell your identity to someone a thousand miles away and the stealing begins all over again in a different city.

Preventing Identity Theft

There are several things you can do to make life harder for identity thieves.

• Take your social security number off your checks and your driver’s license.
• Don’t routinely use your social security number for identification. NEVER do this over the phone unless you have placed the call. A bank, mutual fund company, or department store will never call you and ask for your social security number over the phone.
• Don’t carry your social security card in your wallet.
• Carefully read all the statements from your bank and credit card companies. Are there charges that you don’t recognize? Check them out.
• Check your credit card receipts from stores, restaurants, etc. Old machines print receipts with your name, credit card number, and expiration date; everything a thief needs. The new machines blank out part of the number. If there is an old machine receipt, point it out to the manager and express your displeasure. You might also want to point out there might be liability issues involved if a thief gets your information from his store because of his negligence.

The good news is that you are not responsible for most identity theft charges. You are liable for the first $50 charged to your credit card, but most credit providers waive this, especially if you contact them promptly. If you contact your bank about your debit or ATM cards within two days of losing them, you are only liable for $50 (which again is often waived). If you wait longer (up to 60 days), you are liable for up to $500 and the bank is less willing to forgive. Over 60 days you are liable for everything.

Responding to Identity Theft

Do all of this immediately, at least within two days. 

Cancel your credit cards, your ATM and debit cards

Keep a list of all these card numbers apart from your wallet. This list should be easily accessible. It is a good idea to keep a copy with you when you travel (not in your wallet!). List each card, its number, and the phone number to call in case it is stolen (this is found on the back of your card).

File a police report in the jurisdiction where your cards were stolen

This proves to credit providers that you are diligent and is the first step toward an investigation. Keep a copy of the report. If you cannot get a copy, at least get the report number. It is also a good idea to inform the Federal Trade Commission. Since identity theft is often an interstate crime, informing the FTC helps to track the thieves. To file a complaint, visit www.comsumer.gov/idtheft or call 1-877-438-4388

Close your bank accounts

This should be done promptly. Ask that a password be assigned to your new account and do not use your social security number or your mother’s maiden name as an identifier (these are too easily available from public records). Ask your bank to also inform the appropriate check verification service. There is no federal limit on your losses from forged checks, but state law may help you IF you take reasonable care of your account and inform the bank of problems in a ‘timely manner.’

Contact the national credit reporting agencies

Call and write each agency and place a fraud alert on your name and social security number. This alert means any company that checks your credit knows your information was stolen and they must contact you by phone to authorize new credit. Send your letter by certified mail, return receipt requested so you can prove you informed them.

• Equifax 1-800-525-6285. PO Box 740241, Atlanta, GA 30374-0241
• Experian 1-800-301-7195. PO Box 9532, Allen, TX 75013
• Trans Union 1-800-680-7289. PO Box 6791, Fullerton, CA 92834-6790

Contact the Social Security Administration’s fraud line

The number is 1-800-269-0271. Don’t ask for a new social security number but inform the SSA of the problem and they will keep an eye on your records.