...Financial Matters: With Gerald Loftin


Your credit card is suddenly "maxxed out". Your mortgage application gets rejected. Your savings disappear. In extreme cases straight out of an "Orwellian" nightmare, you could be accused of a crime you didn't commit. You have become a victim of identity theft; the crime whereby someone else fraudulently uses your personal and financial information for their gain. Perpetrators can be any one from computer hackers to international criminal gangs to your garden-variety pickpocket.

A costly concern

The Privacy Rights Clearinghouse estimates damages due to identity theft are upwards of $4 billion a year, victimizing between 500,000 and 700,000 individuals. But it's hard to quantify the true extent of this growing crime-because financial institutions don't want to admit how widespread the problem may be. They fear stricter government-imposed guidelines for issuing credit to consumers, and that would be bad for their bottom lines. For them, it's merely a cost of doing business, much like postage or payroll.

If you think identity theft only affects the individual whose credit line has been wrecked, you're wrong. It's a crime for which we all pay via increased interest rates, APRs, and exorbitant late fees. Credit card companies raise their fees to merchants, who, in turn, increase their prices to keep up, so consumers are affected on another front.

Steps to protect yourself

While there's no guaranteed way to prevent yourself from becoming a victim of identity theft, there are precautions you can take to make it more difficult for someone to steal your good name.

1.Safeguard your trash. It sounds far-fetched, but many criminals go dumpster diving for discarded paperwork. Put your trash out for collection as late as possible. Better yet, spend $30 on a paper shredder. Shred bills, statements, and even those annoying credit card offers you don't respond to.

2.Be skeptical when asked for personal information. You are well within your rights to ask why your cell phone provider needs your mother's maiden name. Find out why they need it and how it's used.

3.Limit your credit. It sounds almost anti-American to preach austerity, but don't open a lot of credit accounts. Reduce your exposure (and your APR) by closing your department or specialty store cards; most chain stores also accept Visa, MasterCard, and American Express. Be sure you get a letter from the issuer declaring your account closed.

4.Secure your social security number. Never carry it in your wallet. Very few places that ask for it really need it. For example, many states use your social security number as your identifier on driver's licenses. Ask to be assigned another number.

5.Monitor your mailbox. If your bills stop appearing, someone might have redirected them by filing a change of address form with the post office. Be sure you recognize every purchase or phone number on your bills and report the ones you don't.

6.Travel light. Don't keep credit cards in your wallet if you don't use them. If you go on vacation, remove the cards-credit, phone, library, or otherwise-you know you won't be using. Always sign the cards the moment you get them. Don't keep PINs with them.

7.Get your credit report annually. Equifax, Experian, and TransUnion are the major credit bureaus. In some states, you are entitled to a free copy of your credit report; in others, you may pay up to $9-but it's a small investment when it comes to your peace of mind and security. Report anything that doesn't match your records. The credit bureau will then send you a copy of the updated report.

8.Check out "disposable" credit cards. American Express and Visa have developed credit card numbers for their members that can be used only once for Internet shopping. The charge shows up on your regular statement.

What if you become a victim

In 1998, Congress made identity theft a federal offense. Numerous government organizations have established programs to help. Call your financial institutions and report the theft as soon as possible to limit your exposure. Contact your local office of the Postal Inspection Service if you think someone has submitted a change of address form with the post office to allow them to receive your mail, or has posed as you to commit fraud through the mail. The Social Security Administration's Inspector General's office has a special hotline (800-269-0271) to report instances of identity theft. The Federal Trade Commission (FTC) also has a special Identity Theft Hotline (1-877-ID-THEFT). Your information goes into a secure database and may be shared with law enforcement agencies and private companies. The FTC also offers the ID Theft Affidavit, which you can use to alert companies where a new account was opened in your name. Not every company accepts the affidavit; the FTC's Identity Theft Web site, offers a list of those that do. Depending on how widespread the identity theft was, you might also need to retain an attorney. While, ultimately, the financial institution will usually absorb the costs of unauthorized charges, you may spend years trying to regain your credit standing to simply write a check at the grocery store. A lawyer can best advise you of your course of action.

Be proactive

On average, it takes 14 months for you to discover you are a victim of identity theft. By then, the perpetrator has burned countless others. But the damage has been done, and the long arduous battle to restore your creditworthiness and identity has just begun. Being aware of the ways in which criminals can steal your identity-and taking steps to safeguard yourself-will help you prevent years of heartache.


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