Chapter 11: Stolen Credit Cards & Identity Theft

Many Americans have a wallet, purse or personal information stolen during their lifetime. Since a quick response to such an occurrence is important, knowing what to do before something of yours is stolen is a good idea. Anyone may use a stolen or lost card until you notify the bank that it is missing. A thief can use the card until it is cancelled. If the card isn’t reported quickly as stolen or lost, a thief may charge thousands of dollars of merchandise before the fraud is detected. If issuers notice unusual activity in your account, they will notify you. Federal law limits cardholder’s liability to $50 if your credit card or credit card number has been stolen.

What to do if your wallet or personal information is stolen:

  1. File a police report, then immediately contact all three credit reporting agencies (Equifax, Experian, and TransUnion) to place a fraud alert on your account. This forces companies issuing new credit accounts in your name to first call you to obtain permission. The alert is good for only 90 days. If you’ve been a victim of identity theft and can provide a police report, you can extend the alert to seven years.
    • Equifax 1-800-525-6285
    • Experian 1-888-397-3742
    • TransUnion 1-800-680-7289
  2. Close any accounts, such as credit, debit, and ATM, which may have been compromised by the loss or theft. Get new accounts with new numbers. Ask each agency and your bank to put a fraud alert on your account.
  3. Start monitoring your credit report. Since you can get a free credit report each year from the credit agencies, use them. The three nationwide consumer reporting companies have a central Web site, a toll-free telephone number, and a mailing address through which you can order your free annual report.To order, visit Annual Credit Report, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from http://www.ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They provide the free annual credit reports only through Annual Credit Report.
  4. Report your stolen license to your state’s department of motor vehicles.

How to protect yourself from identity theft

According to the FTC, almost 10 million Americans are victims of identity theft each year. The average per victim is $4,800. Identity theft complaints to the FTC increased 18% from 215,177 in 2003 to 255,565 in 2005. Consumers can no longer assume that identity theft or fraud is unlikely to happen to them. It is very important to be aware of the dangers and take every precaution to protect yourself.

Tips for protecting your identity:

  1. Every month, monitor your credit card band bank statements. If anything is incorrect, report it immediately.
  2. Get a copy of your credit report. Each year, you can receive a free report from each of the three reporting agencies (Annual Credit Report). Stagger these reports and get one every four months to stay current with what is going on with your accounts. According to TransUnion, 65% of consumers say they have never taken advantage of receiving a free credit report; an additional 16% check their credit reports less frequently than once a year.
  3. Limit what you carry in your wallet to just the credit cards and identification that you must have. Clean the receipts out of your wallet and car several times a week.
  4. Shred the following items you get in the mail: receipts, copies of credit applications, insurance forms, physician statements, bank checks and statements, expired charge cards, convenience checks, and credit offers.
  5. Do not give out personal data for loyalty programs.
  6. Mail anything with personal information or payment at the post office, not from your mailbox.
  7. Don’t publicly post anything you may use as a password: your birth date, pet’s name, mother’s maiden name, or your school. Identity thieves can use the information you post to guess your password.
  8. If you use a wireless router, enable the encryption to scramble the data you send online.
  9. Contact all three credit bureaus to put a freeze on your credit report to prevent your accounts from being opened without your knowledge. This may cost about $10 each.

Surprisingly, restaurants provide one of the greatest opportunities for credit card theft. Visa recently announced that 40% of all credit card theft occurs at dining locations. This is the one time that the card is taken away from you for processing. Restaurants are starting to take precautions because it is becoming a problem for their business. Even though credit card issuers lost over $994 million to credit card fraud last year, they write this off as the cost of doing business and will probably not put in stronger security measures as long as the cost remains manageable. Therefore, consumers must protect themselves.

Tips for keeping your credit cards safe:

  • Review your statement immediately upon receiving it and report any concerns to the credit card company.
  • Review your purchases online on a weekly basis.
  • Do not give your credit card to anyone else.
  • Do not make purchases over the telephone or on the Internet unless you are initiating the transaction.
  • Question anything that is unusual and report suspicious findings to your financial institution.

Tips for keeping your debit cards safe:

  • Change your password on a regular basis.
  • Select an unusual password that is difficult to guess. Do not use anything with anyone’s date of birth or phone number.
  • Do not write down the password. If you forget your password, you can go to your bank and get a new one if you bring proper identification and password security.
  • Do not tell anyone else your password. This breaches your debit card contract and leaves you open to fraud and theft.
  • Review your bank statement each month and immediately report any concerns to your branch.
  • If possible, review your account online on a weekly basis.
  • Cover the PIN pad when entering your personal identification number.
  • Do not give your debit card to anyone else.
  • Immediately report missing, lost, or stolen debit cards to your financial institution.
  • Report anything unusual to your financial institution, the restaurant or store that you are using, or contact your local police.

Your credit rights under the Fair Credit Reporting Act

Congress passed the Fair Debt Collection Practices Act to eliminate abusive debt collection practices by debt collectors and to promote consistent State action to protect consumers against abuse related to debt collection.

If you have debt that has gone to collection agencies, it is a good idea to look through this Act and understand your rights and the rules that debt collectors have to follow.

The full act is at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm.