What is Identity Theft?
Identity theft is the crime of using another person's personal information, credit history or other identifying characteristics in order to make purchases or borrow money without that person's permission.
How Identity Theft Happens
Let's say John Doe is at work and happens to see some paperwork on a co-worker's desk. The paperwork is a stack of applications for credit from customers. The applications list each person's name, birth date, social security number and bank information. John Doe photocopies an application for Jane Smith. He then uses Jane's information to apply for a credit card in her name, which he then uses to buy a motorcycle and a beer stein collection.
Jane is a responsible adult and therefore checks her credit every four months (once a year for each of the three credit bureaus). She notices the 'new' credit card and the massive balance for the motorcycle and beer-stein spree. She calls the credit card company to dispute the charges and files a police report. In the meantime, she is unable to qualify for a mortgage because lenders feel she is carrying too much debt (thanks to the thief), and collection agencies are calling her for credit card payments.
Identity Theft Protection
Identity theft often involves stealing electronic data. It is very time-consuming for victims to battle and takes a long time to recover from. Often, the perpetrators are never caught, and the victims' credit scores suffer tremendously. Accordingly, smart consumers check their credit often in order to detect identity theft before it gets out of hand (or statutes of limitation occur), they avoid giving data out unnecessarily, and they are alert to changes in normal financial routines, such as bills that no longer arrive, mysterious bank charges, or communications from the IRS that more than one tax return was filed in your name.
You can report identity theft by filing a report with the Federal Trade Commission (FTC) at IdentityTheft.gov. You can also call the FTC Identity Theft Hotline at 1-877-438-4338 or TTY 1-866-653-4261. Reporting your identity theft to the FTC typically means you don't have to file a report with the police. In addition, you should report any problem promptly to the card issuer and contact one of the three major credit bureaus to place a fraud alert on your credit records.
