There’s a lot to love about living in a digital age. We all have supercomputers in our pockets to access real-time updates on traffic and weather, communicate with far-away loved ones, and buy everything from electronics to airplane tickets with the swipe of a finger.
But digital convenience comes with a big trade-off. Because all that information on your location, your identity, and your bank account are in high demand from fraudsters and criminals.
A recent study by Javelin Strategy & Research estimated $16 billion was stolen from 15.4 million consumers across America last year via identity theft – and that over the last six years, total damages from identity theft have topped $100 billion. Late last year, a Bankrate survey estimated that 41 million Americans – nearly 2 in 5 adults in this country – have had their identity stolen at some point.
And that, of course, was before the fallout of the recent data breach at Equifax where the personal information of 143 million American consumers was compromised. If you’ve never been a target of fraudsters, it seems like only a matter of time until you’re next.
And if you have had the unfortunate experience of having your identity stolen, it can be intimidating to know what to do.
To help you get your life back in order when identity theft strikes, here’s what you should do in seven simple steps:
Step 1 – Contact Affected Banks and Lenders
Most folks find out about identity theft when the bills come due from purchases they never made. The first step, then, is to immediately flag the transactions as fraudulent with the financial institution that was affected.
Time is of the essence, too. Legislation known as the Electronic Funds Transfer Act protects you with a cap of $50 in maximum cost to you for any transactions disputed within two business days. After day two, that rises to a maximum loss of $500 within the first two months after the incident – which is no small sum. Worst of all, there’s no legal protection preventing you from being stuck with the full bill if you don’t report the fraud until more than 60 days after it occurs.
And not only this the first reporting step important to keep your liability in check, it will also allow your bank or lender to work with you to prevent future fraudulent charges from demanding your attention.
Step 2 – Issue a Fraud Alert
The sad reality is that if your identity is compromised on one of your credit cards, all of your existing accounts are at risk — and thieves may even open new ones to boot.
To ensure the problems don’t spread further, you should alert one of the three credit reporting bureaus – Transunion, Experian or Equifax. The bureaus share information with each other and with all financial institutions, so this is a one-stop way to get the word out. It will also remove your eligibility for things like preapproved credit cards, so it’s much harder for thieves to open up new accounts in your name.
You can either place a fraud alert online through a portal like this one from Transunion, or you can call any one of the bureaus and place an alert by telephone. Check their websites for details.
Step 3 – Contact the Authorities
Reporting fraud to The Federal Trade Commission isn’t necessary in most cases, but can be a very helpful step that expedites the rest of the process.
After you contact the FTC at 1 (877) 438-4338 or report the incident online at IdentityTheft.gov, you’ll be given resources to help you get back in control. The most important of these is a unique identifier for your official fraud report, which will help explain your situation to financial institutions, and access to standard forms that may be required by a lender or bank to dispute a transaction. This can really save you time and ensure you’re doing things by the book.
Similarly, a police report isn’t necessary in many cases. But if the fraud is large enough or your lender insists on one, you may want to also file a complaint with your local police. The FTC has instructions and even pre-filled forms to make the process easier on you at the local level, too.
You may think the Federal Trade Commission only cares about the biggest fraudsters. But remember that most identity thieves aren’t stealing $100 million from one person but $100 from 1 million people. Reporting your incident, no matter how small, may help create a pattern that brings some very big criminals to justice.
Step 4 – Check Your Other Statements and Credit Report Carefully
By now, you likely have protected yourself from the fraudsters running up additional expenses in your name. But now it’s time to make sure you have a full scope of the damage.
Thanks to your fraud alert with the credit bureaus, you’ll be issued a free and up-to-date credit report that allows you to see if any new accounts have been opened without your consent. You’ll also want to carefully review every transaction in the last few weeks to make sure no fake charges slipped through.
After you have a full list, then it’s time to dispute any additional fraudulent charges with each respective lender and ask the bureaus to remove fake accounts from your credit report.
Running each item down will take time, but the fraud alert you already filed will expedite the process; you will get information with your FTC report and your fraud alert that will make it easier for providers to verify who you are and what your problem is.
Step 5 – Change Your Passwords and Account Info
Just because you’ve had a new credit card number issued doesn’t mean you’re entirely safe. Identity thieves who have high-level access to your account itself can simply learn the new number and keep on spending.
That means you need to prevent them from gaining access to the account by changing your passwords and other login information. And in case it goes without saying, all those passwords need to be substantively different.
Yes, it’s a pain to erase all your passwords and try to remember all the new ones. But a recent report revealed that 81 percent of Americans reuse passwords across accounts – meaning fraudsters won’t have to work very hard to hit you again even if you have a new credit card issued.
Step 6 – Don’t Forget About Non-Financial Fraud
In some cases, finding out a credit card has been opened in your name is only the tip of the iceberg.
Identity thieves with your Social Security number could collect medical treatment in your name, or collect benefits in your name. They could also use personal information to open up a telephone or utility account and run up bills with no intention of ever paying. They could may even have found a way to use your driver’s license and leave you liable for any traffic violations!
Depending on the severity and circumstances of your identity theft, you may also want to consider contacting Social Security’s Office of the Inspector General, your local utility or your state department of motor vehicles to ensure you’ve covered all your bases.
Step 7 – Consider a Credit Freeze
If you’ve tracked down all the fake transactions and reported your identity theft, you should be safe. But to be 100% secure, you can also enact what’s known as a credit freeze or security freeze on your account. This restricts all inquiries into your credit history, and is a fool-proof way to prevent fraudulent accounts from popping up.
The drawback is that this freeze adds an extra layer of red tape to financial transactions like opening up a new credit card. And credit reports are also used by apartment buildings or employers to help with screening candidates.
If you’re planning on any of these things in the near future, that’s worth considering. To be clear, a credit freeze will in no way prohibit you from getting a loan or renting a new apartment if you’re qualified, but it may add extra hassle to the process.
Also keep in mind that a credit freeze is permanent in most states. So if you deploy this tactic, don’t forget to mark your calendar a year or two down the road with a reminder to lift it after the dust is settled.