Identity Theft 101

Unbiased financial information provided by Financial Finesse

  Identity theft is a crime that involves someone else using your name, Social Security number and/or other personal information to steal. The theft can involve the use of your existing credit cards to purchase expensive items, opening new credit accounts in your name, making purchases or cash advances, or draining your financial accounts. Identity theft can even allow someone to use your name when arrested for criminal acts!

  With identity theft, you often are unaware of the crime for weeks or months...When a thief steals your wallet, you can take immediate action to protect yourself - call the police, notify your bank and credit union, and cancel credit card accounts. But with identity theft, you often are unaware of the crime for weeks or months, which gives the thief plenty of opportunities to do a lot of damage.

There are two types of identity theft: application fraud and account takeover.

  "Application fraud" is also known as "true name fraud." The identity thief uses your Social Security number or other personal information to open new accounts in your name. You may not become aware of this type of theft for months, because credit card account statements are mailed to the thief's address, not yours. However, victims of the other type of ID theft, called "account takeover," may learn of the crime as soon as they receive their next monthly account statement.

  "Account takeover" is the act of someone using your existing credit account information to purchase items using your actual card, or possibly just the account number and expiration date.

How could your identity be stolen? In addition to outright theft of your wallet or purse, these are the most common ways thieves could get access to your information:

  Obtaining your name, address, credit card or other account numbers by going through your mail or trash. Finding preapproved credit card offers is an easy way for the thief to cash in on your identity.
Buying your credit information from an unscrupulous employee of a business you deal with. Most popular are auto dealerships and retail stores.

• Posing as a potential employer or landlord to order a copy of your credit report.
• Filing a change of address form to redirect your mail to a new address.
• Once this information is in the hands of an identity thief, they can start stealing from you almost immediately.

The theft can occur in one or more of these ways:

• Transferring money out of your financial accounts.
  Using your existing credit card to buy luxury items.
  Opening new credit accounts in your name.
  Renting an apartment and setting up utilities in your name.
  Setting up cell phone service in your name.
  Opening new checking or money market accounts in your name and writing bad checks.
  Changing the address on existing cards so you won't see the charges being made.

  More than seven million people were victims of identity theft last year.Identity theft is a serious and growing phenomenon - it is the number one concern of people contacting the Federal Trade Commission. In a recent survey conducted by the Better Business Bureau, 8.9 million people were victims of identity theft in 2006 and the average amount of fraud per victim rose to $6,383.

  Once discovered, it can take months to correct the damage done. In addition to notifying each financial account impacted, you must make sure that your credit report is updated. Otherwise, you could be denied for credit next time you want to buy a home or a car.

  The good news is that consumers are becoming more aware of the threat identity theft poses. The Better Business Bureau report indicated that consumers detect almost half of identity fraud cases.

  Stay alert to illegal use of your personal information. Checking your credit report each year is a smart step to take in the on-going battle to protect your identity.