Identity Theft vs. Credit Card Theft
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Anyone who has ever had his credit card stolen knows the sickening feeling that comes with realizing your card has possibly fallen into criminal hands. But that feeling becomes multiplied when you recognize it’s not just your card that’s been taken but your identity has been hijacked too. There’s a common misconception that having your identity stolen and having your credit card stolen are the same thing. In reality, the latter crime represents only a small fraction of identity thefts.
In 2005, approximately 8.3 million adults in the United States discovered they were victims of some form of identity theft. These people fell into one of three categories: existing card only (credit card theft), existing non-credit account, and new accounts and other frauds. Although all three crimes are serious, studies indicate that the time it takes to straighten matters out (and the out of pocket expenses for the victim) increase the more involved the crime becomes.
Existing Card Only
Known as the easiest form of identity theft to execute, and one of the easiest to catch, victims of this form of identity theft have had either their credit card or their credit card number misused by a thief. This type of fraud is fairly easy to detect because unauthorized purchases begin appearing immediately on bills for existing accounts. In 2005, 3.2 million Americans fell victim to this form of identity theft. When this type of crime occurs, victims are instructed to file a police report while also contacting their credit card company and all three credit bureaus. Research shows that it takes victims an average of two hours to straighten out this type of crime. Although amounts vary from thief to thief and crime to crime, for existing card crimes thieves usually rack up about $350 in fraudulent charges before they are stopped. Many times victims are not responsible for paying these charges because of consumer laws that have been put into effect to protect people from these—and similar—crimes. But a crime must be noticed and reported before a victim is freed from any credit responsibility in his or her name. So examine monthly bills closely.
Existing Non-Credit Account
Having someone wrack up credit card charges in your name is one thing, but having a thief make withdrawals from your personal checking or savings accounts can become even more of a headache as it can take days or weeks for your financial institution to replace the money that has been taken from you. In 2005, 3.3 million Americans reported fraudulent activity on their existing non-credit accounts (checking and savings accounts, telephone bills, etc…). With an increase in people swiping their ATM cards in stores and at gas pumps this type of crime is on the rise. Some merchants keep your ATM card number and pin code in their system after you swipe your card in their machine. All a thief has to do is hack into the system to steal the identities of potentially thousands of people.
Other thieves elaborately rig ATM machines with inexpensive contraptions made of x-ray film and glue that will “trap” your card in the ATM machine until you leave the bank frustrated (believing that the machine ate your card) and the thief can return and disable the trap and retrieve your card. Never give your pin code to anyone else—especially not a stranger offering to help you retrieve your card from a malfunctioning ATM machine.
Although studies indicate that in most cases, there are no out of pocket expenses incurred by victims of this type of identity theft, it can take four hours or more of your time to close compromised accounts and open new ones while making sure that any stolen money is credited back to you. Sometimes it can take weeks or months for the issue to be resolved and for stolen money to be returned. Filing a police report (in addition to contacting your financial institution) can speed up the process.
Additional hassles that some victims have experienced include: limited or no access to existing accounts while the crime is being investigated, having utilities temporarily cut off, not being able to use existing credit (or apply for new credit), not qualifying for major loans, and other similar things. Monitoring your monthly bank statements (and utility bills) is imperative.
New Accounts and Other Frauds
The most devastating type of identity theft to date is the opening of new accounts and other frauds done in your name. Although a less common crime since thieves must be more experienced (only 1.8 million people fell victim to this form of identity theft in 2005) this certainly isn’t a rare crime. In this case, thieves steal people’s social security numbers and other pertinent information and create new accounts in a victim’s name without him or her even knowing it. Since the person whose name is being tarnished (and whose credit is being wrecked) usually has no idea this is going on, thieves are able to do much more damage than in other types of identity theft. Faulty charges have been reported for amounts as varied as $1,000 to $30,000 depending on factors like how long a thief can spend freely while going undetected. Chances of victims having to incur out of pocket expenses also increases with this type of identity theft as victims have been known to pay in lost wages (as this issue can take months to resolve), or in miscellaneous fees such as notarization, photo copying, legal fees, or late charges. Most people become aware of their victimization at an inopportune time, like when they are applying for a home or auto loan or are applying for a new job. One way you can protect yourself from becoming a victim of this form of identity theft it is to obtain your free credit reports each year from the three major credit bureaus: Experian (www.experian.com), TransUnion (www.transunion.com) and Equifax (www.equifax.com). You should always check your credit before applying for a major loan or a new job so you can repair any errors before they prevent you from obtaining a loan or a job that should be yours.
Synthetic Identity Theft: The New Face of Fraud
Another (even more common) form of identity theft is synthetic identity theft. This type of identity theft isn't as commonly talked about because it has more potential to hurt creditors than consumers. But anytime your social security number is being misused, you are still at risk. In this type of identity theft, thieves will steal a person's social security number and create an entirely new identity with it. For instance, Tom Smith's social security number is suddenly being used to open an account for a non-existent person (an alias for the thief) named "Jim Tyler". Fraud like this is hard to detect because it's not being done in your name and it won't appear on your credit report. But it can still cause you problems in the future.
Collections agencies can still come after you even if your name isn't associated with a certain account. Many creditors will run searches on social security numbers to find the last known address of any person associated with that number. So Tom Smith could quickly find himself getting numerous phone calls demanding payment from "Jim Tyler's" creditors. If a thief is really experienced he or she can also open an account with your social security number and a name closely associated with your own (for instance Tom Smith suddenly becomes Tom Smyth). When this happens faulty information can become attached to your social security number meaning it won't necessarily appear on your credit report, but it may cause a red flag when you go to apply for a major loan like a mortgage.
One way you can protect yourself from this crime is by contacting Choice Trust (www.choicetrust.com) once a year for your free public records search. This search allows a person to search for all information associated with an address, name or social security number. So if something suspicious is going on you might be able to catch it.
Limiting Your Risk
Unfortunately, there is no way you can completely protect yourself from becoming a victim of identity theft. However, there are several things you can do to significantly reduce your risk. In addition to obtaining your credit report, shredding all important documents that contain account numbers or social security numbers is one of the best things you can do to prevent your information from falling into the wrong hands. And, although it’s not always practical, using cash instead of swiping a card significantly limits your risk of becoming a victim of identity theft. You can also browse to a more detailed list of free things that you can do to protect yourself. Although many credit card companies and vendors have tried to implement new features to help protect you and your identity, it’s still ultimately your responsibility to make sure your good name is never compromised.
