While being a parent in 2020, you work and overwork, constantly trying to make life work for you. Your phone rings and you pick up. It’s your bank calling about a transaction that needs to be verified. They ask you for your name, social security number, date of birth, address, and then just bang down on you. What? Your mind starts racing…. Was I just scammed?!? Oh my! That was not my bank? What will happen next? I can’t believe it! A thief just walked off with all my personal information… Will he now drain my bank accounts? Take out a mortgage in my name? What can I do now? How can I protect myself?
What Is Identity Theft?
The story above is one of many such stories that happen each year to millions of people.
In a world where everybody likes to work remotely, thieves like to do work remotely as well (they already did this before the coronavirus hit us). In 2020, a thief can steal from you thousands of dollars, plus cause you months of headache, without ever stepping over your doorstep or even visiting your country. In 2018 the out of pocket loss due to identity theft reached over $14.7 billion. This is a staggering number!
How To Protect Yourself
Your first reaction may be, “Let me call the social security administration office to change my social security number.” Unfortunately, it’s not possible to change a social security number, unless you’re a victim of domestic violence. There isn’t even any way of checking a report of all activity conducted on your SSN. This is very frustrating, as you feel like you’re groping in the dark. But that shouldn’t stop you from being proactive.
In this post we will discuss the next steps you should take to bulletproof your finances and personal information after being the victim of an identity scam. We will go through a list of the most common ways your identity might be used by thieves and how to lock it so that your identity becomes worth zero to them.
Do The Paperwork
If your identity was compromised, the first thing you should do is file a police report or fraud affidavit. This will be a piece of paper that you can use as proof that you’re a victim of identity theft. This will make your job much easier to dispute false accounts on your credit report or get transactions refunded by your bank, etc. You can file a fraud affidavit online on the FTC website found here (choose “get started”). Just be careful to fill in all information as accurately as possible.
The most famous thing that thieves might want to do with your identity is steal your credit. A thief who gets a hold of your personal information will apply for credit cards or other loans in your name, steal the money and leave you with hefty balances and damaged credit.
Under most state laws, you are not responsible for any debt incurred on fraudulent new accounts opened in your name without your permission. The Fair Credit Report Act (FCRA) instructs the credit bureaus to remove any accounts which were opened in your name without your permission. Therefore, there’s no monetary loss if your identity is compromised and used to open fraudulent accounts; but you will still want to protect yourself so as not to have to go through months of aggravation until everything is resolved.
How to Protect yourself
There are three ways you can protect your credit reports from thieves:
- Credit freeze
In order for hackers or thieves to open credit cards or any other tradeline under your name, the lender will need to be able to pull one or all of your credit reports. When your credit report is frozen then no one can pull your credit. Freezing your credit report basically locks out any thief from applying for any trade lines under your name. The FCRA gives you the right to freeze your credit report at any time for free. Read more details on how to freeze your credit report here.
- Credit monitoring
A credit monitoring service will send you an alert every time there’s a change to your credit report or credit score. Having a credit motoring service will help you be in the know if anybody misused your credit report and give you a heads up to be able to take action before the damage is done. For example, if you see a new inquiry coming from Chase that you don’t recognize you can contact Chase right away and notify them not to extend credit as you never submitted the application. Chase will immediately withdraw the application and cancel the credit card even before it gets into the wrong hands.
There is no need to pay for a credit motoring service. There are many companies (for example: Credit Karma) that offer credit monitoring for free and work just as good or even better than the paid service. Here is a list of the best free credit monitoring websites.
- Fraud alert
A fraud alert puts a warning sign on your credit reports telling lenders to take extra steps to verify your identity before approving a loan. I usually do not recommend placing a fraud alert as this may give you major complications when you yourself try to apply for a loan. Placing a fraud alert on your credit report may lock you out from using your own credit when needed. But if you suspect that a credit freeze plus credit monitoring is not sufficient then place a fraud alert as well. Read all the details about fraud alerts and how to place it here.
Tax Identity Theft
Another very common way thieves or hackers steal money through identity theft is through tax fraud. The thief will file a false tax return in your name and later steal your tax refund or tax credit.
The IRS swallows the monetary loss of tax fraud. But you may be left with more paperwork, headaches, and a delayed refund.
How to protect yourself
If you’re a victim of identity theft then you can get an IP PIN from the IRS which is a six digit pin that only you will know. This pin is used in order to file a tax return in your name. You can check out more details on how to receive one here.
It may also be recommended to file taxes early so that your tax return reaches the IRS before any fraudulent one does. First come first served…..
Bank Account Identity Fraud
As scary as this may sound, if a thief got a hold of your checking number, debit card number, or online login, then they can initiate false transactions or transfer funds to their accounts, in effect draining your accounts from your hard-earned money!
Federal banking regulations provide protection to victims of identity theft. But the level of protection largely depends on how fast you report the fraudulent transactions. If you report the fraudulent transactions within two days of receiving your statements, then you will be protected with your liability capped at $50, if you wait a third day before you report the theft then your liability jumps all the way up to $500. And if you neglect to report the suspicious transactions passed 60 days you will not receive any refund. (You won’t receive a refund for transactions that happen after 60 days. The transactions that incurred within the first 60 days are still covered with a liability of $500).
How to protect yourself
Most banks allow you to set up alerts to monitor fraudulent activity. You can set it up to be alerted if transactions exceed a preset amount, your address is changed, money is transferred, etc. Sign up to these alerts to help you get an early warning if your bank account is being misused. Always make sure to use strong passwords and if available opt into two-step verification so it makes it harder for thieves to hack your online account. Always review your bank statements for transactions you don’t recognize.
If you review your statement and find any suspicious activity, make sure to contact the bank right away. Never delay, as this may result in your liability to increase significantly.
Investment Account Identity Fraud
The accounts which you should be the most concerned about are your investment accounts. If a thief is able to hack your investment account, then they can possibly walk away with your funds.
Unlike bank accounts, There are no laws in place which protect your investment accounts from identity theft. There are many brokerages that do offer limited protections in a case that a thief manages to drain your investments without your authorization.
How to protect yourself
With so many data breaches happening every year I would advise any savvy consumer to make sure to only keep money with an investment brokerage that offers protection against identity theft. Upon my limited research, I found that Fidelity and Charles Schwab offer great coverage as long as you keep your login information private and notify them immediately of any suspicious activity.
You can review some of the major brokerage firms policy’s here
Medical Identity Fraud
Medical insurance identity fraud is when a thief uses your information in order to get medical coverage in your name
You may have someone else’s medical treatments recorded in your name which may confuse doctors about your medical history. You may also find on your credit report, medical collections not belonging to you which may affect your credit score. And even worse, you may get denied for medical insurance due to the fraudulent medical conditions showing on your medical records
How to protect yourself
There is nothing really you can do to prevent this from happening. But if you know you’re a victim of identity theft then always notify doctors about your concern so they know to double check facts about your medical history before making any medical decisions. If you find any medical collections on your credit report which you believe are not yours, then under the FCRA you have the right to dispute it and have them removed. Contact any medical provider that is reporting false medical history about you and ask them to remove these errors from your medical records. You can learn more on how to correct medical record errors here.
Criminal Identity Fraud
If a thief commits various fraudulent activities while including your information, or provides your information to an arresting officer during an arrest, then you can mistakenly be linked to criminal investigations and may even be picked up by authorities.
Anguish and maybe some high legal fees to clean up the mess. You may also suffer being denied for a job due to a false criminal record.
How to protect yourself
Criminal Identity theft is the least common use of stolen identities, but it’s also the hardest one to protect yourself from. If you suspect that you may be a victim of criminal identity theft or if you’re denied a job due to criminal records not belonging to you, then obtain legal counsel from an attorney immediately.
Being the victim of identity theft can add a lot of stress to your life. But you do have options you can do to still stay in control and significantly minimize the damage. Act fast. Follow the steps explained in this post. Always stay alert. Protect your credit and protect your finances.
We will not allow the thief to profit a single penny by stealing your information. You may be fooled once, but not twice!