Credit Card Theft & Your Identity

Criminals know the way to steal your identity, and the worst part is that it’s not all that difficult.  You know all those credit card applications you get in the mail?  If you don’t shred them, they can use that to steal your identity. 

It’s not above them to sift through garbage just to obtain a social security number or a driver’s license number.  Once they have these vital bits of information, it’s easy for them to steal your identity.

What they will do is scary.  They will apply for credit cards in your name and max them out within days.  They will obtain loans in your name and never make a payment.  Then the loan company comes after you for the money.  It’s something that affects millions and millions of people each year and it can be a real mess when it comes to your credit report.

As many as 85 percent of all identity theft victims find out about the crime only when they are denied credit or employment, contacted by the police, or have to deal with collection agencies, credit cards, and bills.

A study on the aftermath of an identity theft by the non-profit Identity Theft Resource Center found that victims spend 600 hours recovering from the crime because they must contact and work with credit cards, banks, credit bureaus, and law enforcement. The time can add up to as much as $16,000 in lost wages or income.

The number of reported cases of identity theft is increasing steadily. There is no one reason for this, but rather this is due to several ways in which our lives have changed in recent years, all of which make it easier for people to obtain our personal information.

In the United States, Social Security numbers are used more commonly as a means of identification. The Internet has made the transmission of personal information easy and, at times, less secure. Online retailers store our credit card information and contact information in databases we assume to be secured.

Marketing databases not only contain personal information, but they aggregate information on our spending habits as well as contact information. But potentially nefarious employees of these companies could have access to that information. They can then sell it online in chat rooms where criminals meet to swap information.

Even in the days of e-mail and instant messaging, the postal mail can also play a surprising role in identity theft. Checks can be stolen from the outgoing mail. Credit card companies bombard their customers and potential customers with pre-approved offers that need very little personal information to complete.

Credit card issuers also send what they call "courtesy checks" to customers who can use them to make charges on a card. Many experts consider them an invitation to identity theft.

One of the increasingly common ways that criminals try to obtain personal information is by using what is called a "phishing attack." If you have e-mail, the chances are good someone has tried to get you to bite.

Phishing combines a criminal attempt at obtaining personal information with another plague of the Internet age — spam. Potential victims receive an e-mail from what appears to a bank, an online payment company like PayPal, or a retailer like eBay or Amazon.com. The message is usually sent using HTML e-mail and, when opened, uses company logos and symbols to make it appear to be legitimate.

The e-mail asks the receiver for user names, passwords, account numbers, or some other type of personal information by saying they are updating records or something related to their account requires their attention. The e-mail usually links to a site that also appears to be legitimate using logos and other symbols of a real company, where visitors are asked to supply the information.

The first step to avoid becoming the victim of a phishing attack is to know what companies do business with you by e-mail and familiarizing yourself with the types information they request and how they request it.

What you will likely learn quickly is that, while online retailers you frequent and financial services firms you use online often send you e-mail to make you aware of new products or services, or even to alert you when your online bill is ready to be viewed, they rarely if ever ask for any information from you.

Banks and financial services firms will never ask you for any personal information via e-mail because e-mail can be notoriously insecure. So any e-mail asking you for personal or account information, such as passwords, Social Security numbers, PINs, credit or check card numbers, or other confidential information should be deemed suspicious.

Often the sender of a phishing e-mail may appear to be legitimate, but e-mail addresses are easily spoofed.  Just look at the amount of spam you probably get that appears to be from friends, co-workers, or even yourself.

If a phishing e-mail directs you to a link using an HTML e-mail, the text of the link may appear to be legitimate, but following that link often brings you to a Web site where the URL (in your Web browser's location bar) is often an IP address (basically numbers separated by periods, like 128.0.0) or a site other than the institution you think sent you the e-mail.

Often a sense of urgency is conveyed in the e-mail, such as an alert saying your account will be closed if you don't provide information. Take a moment and don’t fall for this. 

A close look at the body of the e-mail itself may reveal typos, misspellings, or horrendously poor grammar. One reason for this is that many phishing attacks are launched from overseas, and many are believed to be related to international organized crime.

Despite all the attention phishing has received of late, there remains precious little enforcement of the widespread problem and there are simply too many attacks to handle. It is an easy buck for online criminals.

We already covered many of the ways you can detect a phishing attack, but there are several simple steps you can take to keep your private information safe that bear discussion. Experts say that educating consumers not to follow links in e-mails is a good way to help them avoid phishing attacks. Rather than following a link in an e-mail, open a browser and go to the site of the retailer or bank in question.

When submitting personal information like credit card numbers, you can ensure you are using a secure connection by looking for "https://" in front of the site's location on your browser rather than "http://."

Speaking of your browser, make sure it is up to date with the latest security patches. If you use Microsoft's Internet Explorer, visit WindowsUpdate.com to see if you need any updates.

Here are some simple software tools you can use to help guard against online identity theft:

• CoreStreet makes a free product called SpoofStick. It's a browser extension for both the Internet Explorer and FireFox Web browsers that helps users avoid spoofed Web sites. If you do follow a link in a suspicious e-mail, SpoofStick can tell you if the Web site you visit really is the Web site you think you are visiting. 

The EarthLink toolbar, which is also free to Internet users, has a feature called ScamBlocker. EarthLink keeps a database of known phishers, and if you visit a page known to be operated by a phisher it will alert you right in your browser.

Unfortunately, correcting your credit report when you have become a victim of identity theft is no easy proposition.  But with some patience and a lot of work, you can recover from identity theft and restore your credit report.

Identity theft can result in damage to your credit rating - damage that could take years to fix.  Generally, victims of credit and banking fraud are liable for no more than the first $50 of the loss. In many cases, the victim will not be required to pay any part of the loss.

To reduce your risk of identity theft, protect personal information and do not carry your Social Security card with you.  Shred items that contain your personal information and account numbers.  Keep your mail safe and store your personal information in a safe place.  Order your credit report at least once a year to make sure no one is using your identity to open accounts.

If you think your identity has been stolen, take the following steps:

• Contact the three major credit bureaus.  Contact the fraud departments of all of the three major credit departments to place a fraud alert on your credit file.  The initial fraud alert is for 90 days.  You can ask for an extended fraud alert if you file a police report. 

• Close accounts.  Close the accounts that you know or believe have been tampered with or opened fraudulently. 

• File a police report.  Get a copy of the report to submit to your creditors and others who require proof of the crime. 

• File your complaint with the Federal Trade Commission (FTC).  The FTC maintains a database of identity theft cases, which is used by law enforcement agencies for investigations.  Filing a complaint also helps us learn more about identity theft and the problems it causes victims. 

• Armed with your police report, FTC affidavit, and sample letters, you must contact your creditors to alert them to the situation. In addition to obvious creditors like your credit card issuers, don't forget utility companies, wireless phone provider, and your ISP. 

Also remember any private label credit cards to department stores, for example. Don't forget about other personal documents. If your passport was stolen, for example, or if you have reason to believe someone is using a passport in your name, contact the State Department.

When you are trying to correct your credit report due to identity theft, you will have to provide information that proves you are you.  That means digging out your birth certificate and making a lot of copies of your driver’s license and social security card.  You’ll also have to try and prove that you didn’t make the purchases that the thief or thieves did. 

When you have become a victim of identity theft through phishing, this becomes a real problem as these purchases can be made anywhere with a few strokes of the keyboard, so proving that the purchases were made by someone other than you can be a real headache. 

Just try to be patient and point out to the company or companies who say you owe them money that you have filed a police report as well as a report with the FTC and that you have been a victim in other places as well.

As we’ve said, it will take time, but it can be done.  Your credit rating and credit score is very important, so taking the time to do will pay off in the long run.  Realize that in the long run, you’ll be able to enjoy good credit again. 

Even if you are denied credit, you can appeal the decision by pointing out that you have been a victim of identity theft and are trying to correct it.