Most consumers have become identity theft victims and are not even aware of it until a great deal of damage has been perpetrated. So if you think you have good credit, take another look. You may be in for a real surprise. With department store hacks and credit card fraud, the odds of being victimized by Identity theft are very high.
An example is the Target hack during last year’s Black Friday shopping weekend. That was just one in a wave of data breaches that have exposed more than 100 million customer records at U.S. retailers, banks and Internet companies. The latest high-profile hack, at Sony Pictures Entertainment, resulted in Social Security numbers and other personal details of nearly 50,000 current and former Sony employees and film actors being stolen and posted online for anyone to see.
Estimates are that one in three Americans affected by a data breach ultimately became the victim of fraud last year. That has increased since 2010 when I was about one in nine. So the potential to become a victim is quite likely and warrants prudence and diligence overseeing your credit profile.
One of our clients assured us that her credit was fine with the exception of two late pays that she wanted assistance with. When we pulled her credit she was surprised and dismayed to find that, in addition to the late pays, there were two negative accounts listed on her report that she had no knowledge of. One was an unpaid utility bill in another state and another was a series of small bank debits for music downloads.
Another person didn’t get off quit so easily. His credit report indicated someone opened accounts in his name at Macy’s and Kohl’s department stores, where they racked up several thousand dollars in charges. “My heart basically sank,” he said. Over the next seven months the New York City resident spent hours on the phone, most of a day in a police station filing a report, and countless time sending documents to banks and credit reporting agencies to clear his credit history.
Although the banks usually absorb the cost of fraudulent charges, victims are left on their own to clean up their credit histories and recover stolen funds. And the high price is not just counted in terms of money; there is also a cost for lost time, emotional strain, and if one was looking for a loan or credit when the identity theft was discovered, there might also be the expense of higher than normal interest rate or not qualifying for the loan or credit due to the resulting poor credit rating.
It’s interesting to note too that the victims face the frustration of rarely seeing anyone pay for the crimes since identity theft cases are rarely prosecuted. Local police have limited resources, and criminals are often overseas, so unless it’s part of a bigger pattern, they’re not going to spend much time pursuing it.
Our client with the unpaid utility bill learned that the person who victimized her was identified, but there was no further police investigation or arrests made.
So since you will receive little empathy or assistance, it’s obvious due-diligence is called for and it would be a huge mistake to assume everything is okay with your credit profile. If you haven’t done so already, sign up for a credit monitoring service. These can alert you to unauthorized activity and will also display accounts on your report that may be foreign to you.
If nothing suspicious shows up, congratulations, you are one of the few that have escaped unscathed but keep checking regularly. But what can you do if you find out you are a victim of identity theft?
Here are a few steps you may want to follow:
- Contact your bank and credit card companies that have been affected.
- Put a fraud alert onto your report.
- Have a police report filed, get a copy.
- Have a freeze put onto your credit profile. It will cost $10 per bureau to put the freeze in place. Or it is without cost if you provide a copy of the police report from step three.
The fraud alert will help validate your attempts at removing the erroneous entries. The freeze will stop all further attempts to open accounts in your name. (With a freeze in place, you will personally have to authorize trade lines or loans before they can be opened).
Finally, you’ll be tasked with the removal of those entries that are not yours. This can be very daunting and time consuming but you can ill-afford to leave the derogatory entries on your report. These line items will cause a significant drop in your credit rating and your credit worthiness will only worsen if not addressed.