While going through our mail on a typical morning, we discovered that my wife was a victim of identity theft. She received a new debit card for a checking account that she never opened from a bank with which we do not do business. Also in the mail was a letter from the same back notifying her that the IRS checks that had been deposited into the account had bounced. As it turns out, someone had used my wife’s personal identifying information (PII) (name, address, date of birth, and Social Security number) to open a checking account in which to deposit fake checks, presumably to quickly withdraw the money before it was discovered.
It was not surprising that one of us was a victim of identity theft. In fact, I had always thought that it was not a question of if, but when.
Two questions immediately came to mind: Just how bad is it, and what should we do? And if you’re a victim of identity theft, you will most likely have the same immediate concerns.
I’m not only a certified financial planner (CFP®), but I am also a certified fraud examiner with experience in identity theft. Below, I’ll outline the steps you can take to protect yourself if you’re a victim of identity theft by telling you what we did. Protecting your finances is just as important as saving, investing, and setting financial goals.
Read your mail
If you’re like us, you probably get a lot of junk mail, such as advertisements and promotional offers, from various financial institutions. And your first reaction might be to just toss it in the trash or recycle bin. Stop! Don’t discard it. What may look like just another piece of junk mail could be a letter, financial statement, or other document from a financial institution regarding an account that was opened in your name. This is how we found out. What seemed like just another advertisement was a real debit card and a letter from a bank where an account had been opened in my wife’s name. If we had just ignored it, we would not have known what had happened.
You should always review your financial statements and account activities regularly to identify any suspicious activities. If you see any, notify the financial institution right away. Under the law, you have protections that limit the amount of loss you are responsible for due to fraud, but it depends on notifying your financial institution promptly of any unauthorized charges or fraudulent activity.
Call the financial institution right away but verify the number first!
The first thing we wanted to do was to immediately call the financial institution where the account was opened; however, before we did this, we verified the telephone number that was on the letter we received. Why? There is a possibility that the letter was not actually from the bank but was instead from a scammer trying to trick us into calling them to provide personal information.
Phishing scams are very common. Phishing is where a scammer sends you an email or text that looks like it is from a well-known company to trick you into providing your private information, such as your bank account number or password, so that they can gain access to your account or open an account in your name. And there’s no reason to think that a phishing scam can’t be carried out by snail mail. So, to be safe, we verified the number before calling by using the banks’ website.
When we called the bank, they informed us that my wife had been a victim of identity theft. The scammer who opened the account had her name, address, date of birth, and Social Security number. The good news was that the checking account was shut down immediately—but perhaps others been opened that we did not know about? Maybe loans or credit cards? It’s likely that more scammers have this information.
Review your credit reports
The next thing we did was to review my wife’s credit reports from the three major credit bureaus: Experian, Transunion, and Equifax. Federal law allows you to get a free copy of your credit report from each credit bureau every 12 months. You can access them through AnnualCreditReport.com.
There were three things we looked for: 1) Loan and credit accounts that had been opened that we did not know about. 2) Credit inquiries that were not initiated by my wife that indicated that someone had applied for credit using her identity. 3) The correctness of my wife’s personal information.
Don’t wait until you are a victim of identity theft to review your credit reports. A good practice is to review them every year. You don’t have to review all three at the same time; it’s a good idea to review one every four months. That way, you can keep an eye on your credit periodically throughout the year.
Place a fraud alert or credit freeze on your credit reports
Good news! My wife found no suspicious accounts or credit inquiries, but that did not mean that she was in the clear. The fraudster or fraudsters could try again, so we needed to take preventive measures.
There are measures you can take to prevent a fraudster from using your identity to open a credit account or take out a loan: request that fraud alerts or credit freezes be put on your credit reports. I’ll discuss these terms below.
A fraud alert is a notification you can add to a credit report that instructs your financial institution to verify your identity before processing an application for credit. Anyone can place a fraud alert on their credit reports. It lasts a year, but you can renew it after it expires, and it’s free.
Extended fraud alert
If you fall victim to identity theft and have filed a Federal Trade Commission (FTC) identity theft report or a police report, you can request that an extended fraud alert be placed on your credit reports. As with a fraud alert, your financial institution must verify your identity before extending credit to you, but an extended fraud alert lasts seven years. Also, after placing this alert, you can get a free credit report twice a year from each of the three credit bureaus.
Another option is to freeze your credit reports, which we chose to do. When you freeze your credit reports, you restrict access to them. This protects you in the event that someone tries to apply for credit using your identity, as your credit reports can’t be pulled up. Anyone can place a credit freeze on their reports—you don’t have to be a victim of identity theft. It lasts until you lift it, and it’s free. To place a freeze on your credit reports, you need to contact each of the three credit bureaus.
So, what happens if you want to apply for credit when there is a freeze on your credit reports? Easy! You can temporarily lift them.
It’s a good thing that my wife put a freeze on her credit reports, as shortly after the incident, she received several letters from another financial institution notifying her that her credit application had been denied because her credit reports had been frozen. The credit freeze worked!
Report the incident
The final thing we did was report the incident to the Federal Trade Commission (FTC) at https://www.identitytheft.gov. We did this so that we have an official record of the fact that my wife was a victim of identity theft. This can be helpful if we discover that someone using my wife’s identity has opened another account and we need to close the fraudulent account or remove bogus charges.
The FTC website contains many valuable resources. They have a guide on what steps to take if you are a victim of identity theft, including when to report an incident to your local police and how to remove erroneous information from your credit report and dispute bogus charges. They will also create a recovery plan for you if you so choose.
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