You know that sinking feeling when you get a call from your credit card company asking if you’ve spent $437 (or some similarly absurd amount) at a store you never shop at, in a town you’ve never heard of? While fraud is so commonplace that many people have experienced questionable charges, identity theft can take on more serious forms where thieves open financial accounts in your name, take advantage of your medical benefits, or even claim your tax refund.
While keeping your information safe and actively reviewing your financial accounts for suspicious activity can be effective ways to prevent identity theft, here’s what you can do if you become an identify theft victim.
Recognizing identity fraud
Compared to other types of theft, identity theft can float under the radar. Let’s face it — you’re probably not checking your credit card statements on a daily basis for weird charges. Many credit card companies now give you a call if they see suspicious transactions, but there are other less obvious red flags that thieves may have access to your accounts or other personal info:
• You stop receiving your bills.
• You are billed for medical services you didn’t receive.
• Your health insurance company reports you’ve reached your benefits limit.
• The IRS informs you that a tax return has already been filed in your name or that you have income from an employer you don’t work for.
• A company where you have an account or do business with reports it’s had a data security breach and your information may have been compromised.
What to do if your identity is stolen
If it appears your identity or personal information has been stolen, take heart — you have specific rights as a fraud victim, and there are many resources available to clean up the mess and recover from the theft. What you should do next depends on what information was stolen.
If it was your credit or debit card number, for example:
• Call the credit card company or bank to report the theft, cancel your card, and ask for a new card.
• Check to make sure you don’t have fraudulent charges on your account. If you do, report them to your bank’s fraud department to get them removed.
• View your credit reports from all three credit reporting agencies for free at AnnualCreditReport.com. By law, you can get these reports from each of the three credit agencies once per year. You don’t have to request all three at once — spreading out your requests (i.e., ask for one every four months) lets you keep tabs on your credit throughout the year.
Typically, replacing the card in question and staying vigilant for unauthorized transactions may put a stop to the theft. If the suspected theft involved your Social Security number — or if you’re not sure what information was stolen — more protective steps may be necessary.
• Put a fraud alert on your financial accounts. Call one of the three credit reporting agencies and ask them to initiate a 90-day fraud alert. The alert requires that any company seeking your credit report must contact you to verify your identity. You need to call only one of the three credit agencies to get an alert set up. The agency you call will notify the two others.
• In more serious cases, consider putting a freeze on your credit. A freeze prevents creditors from accessing your credit report and opening new accounts. While a freeze is more protective than a fraud alert, you’ll have to notify the credit agencies in the instance you have a legitimate credit check, such as a home or apartment rental or car insurance. A freeze sometimes requires a nominal fee ($5-10 typically) depending on credit agency and your state of residence.
• Check your annual credit reports for accounts you don’t recognize.
• Double check all financial statements for suspicious transactions and to help narrow down which accounts and information thieves may have access to.
• Similarly, check your health insurance statements for services you don’t recognize.
• If you believe your Social Security number was stolen, try to file your taxes early to prevent a thief from beating you to it.
• If you do find fraudulent accounts or charges, file an Identity Theft Report with the Federal Trade Commission. An Identity Theft Report helps create a paper trail of documentation to make it easier for you to recover from a theft.
• Be proactive. By law, you have limited liability for fraudulent charges as long as you report them as quickly as possible.
What’s the difference between a fraud alert and a credit freeze?
What it does
Requires creditors to verify your identity before extending credit.
Prevents creditors from accessing your credit report and thus opening new accounts.
How to set it up
Call one of the three credit agencies:
Free or $5-10 depending on whether you’re an identity theft victim, the credit agency, and your state of residence.
Prevents new accounts from being opened without your explicit authorization.
More strict than a fraud alert, as no new accounts can be opened when your credit is frozen.
Doesn’t prevent misuse of current accounts.
You’ll need to temporarily lift the freeze if you need your credit checked for a job, loan, insurance, housing, etc.
How to prevent identity fraud
While there’s no surefire way to prevent identity fraud, proactive prevention and recovery go a long way toward keeping you safe and restoring your credit health.
If you’ve been the victim of identity theft, the federal government’s Identity Theft website will guide you through a personalized plan to recover, including pre-filled letters and forms to send to the IRS, credit bureaus, and debt collectors.
While an initial fraud alert lasts only 90 days, you can request a seven-year fraud alert for your credit by sending a copy of your Identity Theft Report to each of the three credit reporting agencies.
Cybersecurity expert Marc Goodman estimates that you can avoid 85% of threats by taking these actions:
• Don’t click on suspicious links or attachments in emails. Even if you recognize the sender, there’s a chance the account has been compromised. When in doubt or if you’re asked for personal information, contact the sender by phone or access your account by going to the website directly to make sure the request is legitimate.
• Keep your phone and computer software updated. New updates often mean that security holes in the software have been repaired.
If you’re using a public internet network, make sure you use a VPN (Virtual Private Network), which encrypts information you’re sending and receiving on that network.
Things to Consider:
• Set monthly calendar reminders to review transactions on all of your financial statements.
• Set calendar reminders to change passwords on all accounts at least once a year.
• View your free annual credit reports, either all at once or one at a time throughout the year.