I recently became one of the 9 million people to become victim to identity theft this year in the United States. Much of what I have learned in the last few weeks I share to spark outrage at what is becoming more and more common and also to share what you can and should be doing to protect yourself.
As for me, I did everything I was supposed to do. I never give any personal information unsolicited and am wary of the tons of phishing e-mails I receive every day. I drop my mail in a locked box and tend to receive all of my statements electronically (avoiding personal info being sent through the mail). I shred anything I own or receive with personal information and I check my banking and credit accounts, on average, every single day. We also have extensive security measures on our home computer.
So naturally I was extremely frustrated to find out someone had opened 7 credit cards in my name over the course of a few days in July. Of course, as I was calling to close all these cards and as I discussed the incident with colleagues and friends, the inevitable question came up over and over and over. Where did the ID thieves get my information? Well, that is a wonderful question. Knowing all I had done to safeguard my information, I started racking my brain; who does have my address, social security number, and birth date? My college, all of my former employers, all of my investment account brokerages, all of the financial institutions that I use, the IRS, the state of California, etc. The list is a mile long. I will probably never know where my information was stolen from.
My annoyance at how little we can really do to protect ourselves was magnified by the credit card companies that issued $25,000 of credit to someone using my name in another state, in the course of a week. Oh yes, they were very nice about closing all the accounts and removing the info from my credit report because of the terribly obvious fraud, but just left me even more frustrated. Why would a Department Store hand $7500 to someone in a state across the country with my California address? Did they look at my credit report? Did they see the 7 inquiries (extremely out of character considering I owned no Department store accounts prior)? Only one Department Store credit issuer of 7 noticed anything suspicious. Ironically it was the smallest of the companies, the one that had the most to lose. They issued the card but did not allow the thieves to charge even $1 because the red flags went off for them. The charges were suspicious, and one simple credit checked showed some obvious fraud (multiple inquiries at 7 stores). None of the other companies had checked my credit report after the initial credit issuance. Some saw the other inquiries and thought little of it. Other issuers had handed out $5,000 here and $7,500 there and had no clue anything shady was going on. They simply didn’t care; for them, a cost of doing business. I leave from this experience with the feeling that the big credit companies could care less about the problem as they rather risk the loss and allow instant credit, than use a little more caution and care in issuing credit. My excellent credit score was my absolute downfall in this case. I was amazed at some of the credit limits issued (and most were maxed out within the day with little question).
I was frustrated to learn that a call to one or all 3 of the Credit Bureaus (a simple quick call to an automated service) would place fraud alerts on my credit report, but that credit issuers can choose to ignore them. Also, that this will do little to stop the identity thieves from opening utility accounts in my name or committing crimes in my name. As for me I have no idea what the extent of the damage to my name will be and may not know for many years.
I was lucky though. I get the feeling the thieves in this case weren’t terribly savvy as I found out within days with phone calls from one astute fraud department, and as credit cards starting to arrive in the mail. Identity thieves prefer to mask the theft from you so that you do not find out for weeks, months or even years.
One thing you can do to protect yourself is to check your credit reports often. Annual Credit Report allows you to check your credit report online for free. You can check with each of the three credit Bureaus once every year, which means basically you can check your credit report for free three times every year.
It wasn’t until my identity was stolen that I realized how incredibly useless this is as a whole. When it comes to tracking identity theft, each bureau report looks very different and for me I had to look at all three reports at the same time to track down all the identity theft. Over time the three credit bureaus share all of the data with each other and your reports should eventually all read the same, but there are stark differences in all three of my reports, even pre-identity theft. As for me the only way I can check my report for new activity without paying staggering fees was to sign up for credit monitoring. In this case I pay $12/month and receive e-mails whenever anything new hits any of my 3 reports. I can also check my credit report with the Bureau I bought the service through, daily if I like. Sure, checking your free report is a start but in the months you spend between free checks someone can absolutely obliterate your credit. In this case it only took 5 days (though plenty of damage was done on Day 1).
In addition, I also learned about credit freezes. Knowing what I know now, I gladly would have put a credit freeze on my account. In most states, you can freeze your credit files so that no one can access them without your permission (except your current creditors and those you currently do business with). If someone told me to freeze my credit a year ago I am not sure if I would have bothered, it would have cost me $30, but now it is definitely something I plan to do.
With a credit freeze, most creditors will not issue credit in your name without being able to check your credit first, so this is a wonderful way to protect yourself from this kind of fraud. If you rarely use credit, why not? However, a credit freeze will not protect you from others opening utility or bank accounts in your name, as these can often be opened without a credit check. It will also not protect you from identity thieves who use your existing accounts.
The downside to a credit freeze is that you will have to lift the freeze whenever you apply for new credit, or when applying for insurance, jobs, etc. However, in some states, potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a credit freeze in place. You would definitely want to check your state rules. In California, for example, insurance companies can not raise your insurance rates just because your credit is frozen, but you would have to lift the freeze if you were shopping around with new insurance companies or applying for a job.
In order to freeze your credit you generally write to each of the 3 Bureaus and request a credit freeze. The rules vary from state to state but in most states this request is free once you are the victim of identity theft. Most states allow the Bureaus to charge you a $10 fee per credit Bureau ($30 total for all three) to place a credit freeze and also allow them to charge about the same to lift a credit freeze. You can lift the freeze for a period of time (for example if you are on a job search) or for specific creditors or employers, etc. if you want to allow one entity to look at your credit record. You are given a pin number to life the freeze as well (to prevent just anyone from being able to lift the freeze).
I find the credit freeze ideal for our situation since we don’t intend to open any new credit accounts (nor mortgage or car loan) anytime in the near future and we also don’t intend to be job hunting or insurance hunting any time in the near future either. I think being a little older and more established it can make sense, but for younger people vying for a mortgage, jobs, insurance, credit, and car loans, it may make little sense. Just know that the option is there. You have to do a cost benefit analysis of sorts to decide if it was really worth it. For me the ID theft has thus far caused me little money, but much time. However, knowing how little I need to access my credit, with hindsight I would have preferred just to have had my credit frozen. I just wasn’t really aware the option was there before.
Also realize if both you and your spouse decide to freeze your credit, the expense is twofold since you will have to freeze both of your credit records.
Here is a good link from the FTC on credit freezes and here is a state by state listing of credit freeze laws and fees. For the states not listed (many) credit freezes are unfortunately not an option to consumers.
One final thing this has reiterated to me is to guard your social security number and your birth date with extreme caution. I generally do not give my social security number to just any organization who asks, but I do know there was a security breach with a professional organization I belong to, that did lose my social security number. Today as I rack my brain as to why they would have possibly needed my social security number, I can’t really come up with an answer. I also now see the importance of guarding my birth date. I have decided to come up with a dummy birth date (probably same year and month) for organizations that do not need my birth date but ask for it. Better yet when you fill out a form with requests for social security numbers and birth dates, just leave them blank. The government, your employers, and financial institutions DO need this information for tax reporting and there is not much you can do about it. However, I do advise to be extra discriminating when handing this information over to other organizations that you do business with.
It is extra interesting for me as I work in an office where we are entrusted with all of this personal information. Frankly all it would take is one rogue employee to skim the data from a few of our clients and who knows if we would ever know. It is just eye opening to me how easy this is and how any sense of security I have ever felt about my identity was rather false.
If you have never checked your free credit report, all I have to say is, what are you waiting for? If you haven’t checked in the last week, it wouldn’t really be too soon. Signing up for credit monitoring and credit freezes may be more extreme measures, but with reports of rising identity theft it seems to be more necessary to take bigger measures to protect yourself.
Image courtesy of ambergris