Don’t let identity theft catch you off guard

You may not realize it has happened until you try to buy a new car or refinance your home — and are denied. By then, identity thieves may have maxed out your credit cards, opened new accounts in your name and destroyed your credit rating.

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Identity theft is on the rise, thanks largely to the increasing prevalence of online transactions. If you aren't taking precautionary steps, you could become one of the nine million Americans who the Federal Trade Commission (FTC) estimates fall victim every year.

Prevention first

You can't always control access to your financial records. Thieves have hacked major bank, credit card and government databases and stolen millions of consumer files. But a little effort can reduce your risk.

It's important to shred financial documents and physically safeguard your Social Security card, driver's license and credit cards. However, your greatest risk is likely to come from the Internet, so be especially careful when paying bills, making purchases or even answering e-mail. In particular:

  • Choose difficult passwords made up of a combination of letters, numbers and special characters, and change them periodically.
  • Only give out credit card information on sites with secure servers.


  • Don't respond to e-mails purporting to be from the IRS or that ask you to "confirm" an account number or other sensitive information.
  • Keep virus and spam protection software up to date and download new operating system security upgrades as soon as they become available.

Of course, the Web also provides opportunities to protect your identity. Regularly checking online banking and credit card statements for unauthorized charges enables you to address a small problem before it becomes a big one.

Recovery efforts

If, despite taking precautions, your identity is stolen, don't panic. Immediately contact your bank, credit card companies and investment service providers to close compromised accounts.

Next, call the three major credit rating bureaus: Transunion: 800-680-7289; Equifax: 888-766-0008; and Experian: 888-397-3742. Credit bureaus will note the theft in your file, which will help you rehabilitate your credit rating. These bureaus can also "freeze" your account, preventing anyone from initiating new credit in your name.

Then report the theft to your local police department. This provides you with supporting documentation of the crime and entitles you to certain legal rights with creditors. And although you're not required to do so, consider filing a complaint with the FTC (877-438-4338) to help federal authorities track fraudulent activity and trends.

Fighting back

It takes time to dispute false charges, open new accounts and remove negative items from your credit record — how long depends on the nature and extent of the theft. But it's important to respond immediately to creditors' claims and any new evidence that criminals are still stealing from you. •

Do you need credit protection?

Identity theft has given rise to a credit protection industry, including credit card fraud insurance. Most credit card holders, however, don't need such coverage, since federal law limits liability to $50 per card — even before you report the card as stolen.

A credit monitoring service, on the other hand, might be worth considering. Such services track credit activity and creditor inquiries made on your credit report and may also monitor public records and websites for signs that someone is using your identity.


Other articles in the June 2012 Edition of Business Matters: