Education >> Financial Basics

Someone Has Stolen Your Identity - Now What: A Detailed List of Steps to Take

June 2012

If someone has forged a check on your account, laws in most states hold banks responsible for any loss. However, you must notify financial institutions about the problem in a timely manner. If someone illegally uses your credit card, your maximum liability for each account is $50 if you report it within 50 days. Debit cards are another matter: Your liability is $50, but only for the first two days after the card is lost or stolen. Your liability increases to $500 for the next 58 days, and after 60 days, your liability is unlimited. Thus, if you have a line of credit attached to your checking or savings account, you could lose thousands of dollars.

Obviously, as soon as you discover or suspect a problem, notify the institution that handles the account. Do the following:

1. Phone the institution. Each maintains a fraud division, so make sure you're talking to people able to take action. Maintain a log showing the telephone number, date, time of the call, and name and title of the person with whom you spoke. Add notes describing what was discussed and actions agreed to.
2. Send a certified letter, return receipt requested, to the person you spoke with, confirming the call and summarizing the conversation. If you send an e-mail instead, require that they confirm receipt.
3. Keep your original logs, notes, and documents. Upon request, send copies; never give originals to anyone.
4. Keep all records for at least seven years after you have resolved the last problem.
5. Close all affected credit card, investment, and bank accounts. Open new ones. This is a major hassle, but the alternative might be to lose all the money in those accounts. Put your request in writing and ask each institution to place on each account the statement, "Account closed at customer's request."
   
   

   Be careful when applying for a mortgage online. The basic rule when applying for a mortgage: Know with whom you are dealing. Traditionally, home buyers obtained mortgages at their local banks. But during the last 20 years, partly thanks to the Internet, mortgage lenders located thousands of miles away can now compete with local lenders. The good news is that mortgage financing has become very competitive. This translates to a greater variety of loan programs, lower interest rates, smaller fees, and better service for consumers. To get a sense of how much competition is out there, just type "mortgage loans" into an Internet search engine: You'll get a list of thousands of websites. So …should you apply for a mortgage online? The answer is yes with one caveat: If you're going to use an Internet mortgage firm, make sure the firm is legitimate. I say that because of many recent reports of online fraud. Here's how the most common scam works: You search the web for the lowest mortgage rates you can find. You find what appears to be a low rate, offered by a firm whose name you've never heard. To apply for the loan, you complete a form online, providing all the information requested by every mortgage lender: your Social Security Number, name and account numbers of bank and investment accounts, credit card information, date of birth, employment and tax information, and so forth. You enter all the data and hit "send" — and off goes the information. Within an hour, you get an email telling you that your loan is approved. But when you check on your loan at a later date, you discover that the website no longer exists. Guess what? No website — no loan. In addition to delaying or losing the chance to refinance, or buy the new home, you've also lost whatever money you paid to the mortgage lender. But if you think those upfront fees are the point of the scam, you're mistaken. You realize this when you next use your credit card, only to discover that it and all your other cards have been maxed out. When you contact the credit reporting agencies, you learn that dozens of new credit cards have been issued in your name. You also discover that your brokerage and bank account balances have been transferred to untraceable offshore accounts. You are the victim of identity theft. Indeed, the crooks are not after a few thousand bucks in fake loan fees. They want YOU — your name, your assets, and your identity. With that data, they can seize tens of thousands of dollars, even hundreds of thousands, before being detected. And you made it easy for them by sending to them every piece of personal financial data about you. It's as though you walked into an alley at 2 a.m., approached a scruffy-looking guy, and said, "Quick, reach into my back pocket and grab my wallet! I won't notice for at least an hour!" Fortunately, fraud remains uncommon, but it is increasing, and law enforcement efforts to curtail it — or obtain restitution for victims — are proving difficult. That's because the Internet is anonymous, and many crooks are operating overseas, outside U.S. jurisdiction. This is not to suggest that you should not use the Internet for obtaining a mortgage, or any other product or service, for that matter. We offer online services ourselves, so obviously, the Internet is not the problem. No, the problem is in doing business with people you don't know. There are many fine mortgage and financial service firms operating on the Internet, so there is no reason for you to work with a firm you've never heard of — whether they are a click away or around the corner.

   
   
6. Issue "stop payment" requests on all missing or outstanding checks. Ask each bank and credit card company for a copy of its "fraud dispute form." Fill it out promptly and return by certified mail, return receipt requested.
7. Notify the following check verification companies that your checks have been stolen:
   
   TeleCheck: 1-800-710-9898
   Certegy Inc.: 1-800-437-5120
   
8. If a financial institution is not supporting your efforts, find out your bank's regulator by visiting the Federal Financial Institution Examination Council online at www.ffiec.gov. Contact the regulator, carefully explain your problem, and include a description of the financial institution that is not assisting you.
9. Place a 90-day fraud alert on your file by contacting any of the three credit reporting agencies (Transunion: 800-680-7289; Equifax: 888-766-0008; Experian: 888-397-3742). When there is a fraud alert on your report, creditors are supposed to contact you to verify you want to open a new account. An extended seven-year fraud alert is available to victims of identity theft who file an identity theft report filed with law enforcement.
10. File a police report immediately in the jurisdiction where your problem occurred (for example, in the city where your wallet was stolen); many banks, credit card companies, and credit reporting agencies will request a copy. Keep in mind that this type of crime, unless it occurred just minutes ago ("Hey! He just stole my wallet!"), is often a low priority for law enforcement. The more evidence and information you can provide the police, the more cooperative and helpful they'll be. Still, expect few results — and be downright astonished if they catch the culprit.
11. If there is any chance that the thief might use your Social Security Number, contact Social Security at: http://www.socialsecurity.gov/pubs/10064.html.
12. If you think the thief might be using your driver's license, contact your state's department of motor vehicles and ask to have a fraud report attached to your record.
13. Report your problems to the Federal Trade Commission at https://www.ftccomplaintassistant.gov. The FTC will investigate only if there is a pattern of identity theft in your area.
14. Never pay for any forged check, credit card purchase, or other fraudulent transaction for which a merchant may try to hold you liable. If presented with an invoice or demand for payment, explain the situation with the vendor. Be polite, friendly, professional, and communicative, but do not pay a debt that is not yours. If you pay a false bill in error, it is highly unlikely you will get your money back.

For more information on identity theft, go to the Federal Trade Commission's website at: www.ftc.gov/idtheft.

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