2016 reported the most cases of identity theft in the US. Around 15.4 millions of Americans were hit by some kind of identity theft that cost them a whopping $16 billion collectively, and $3,500 on an average. Of them, financial identity theft was the most common form of theft, leaving tax identity theft, medical, employment, and other forms of identity frauds behind.
What Is Financial Identity Theft?
Your financial identity is stolen when someone illicitly gains access to your financial information such as your debit/credit card number and/or pin code, passwords of online banking, etc., and uses it for personal gains while pretending to be you. The information can be used to obtain a loan, or open lines of credit in your name, withdraw funds from your account, or use of your credit cards to make purchases.
The consequences of an identity theft on your finances can turn really bad. Even if the theft is minor, it can significantly affect your life. It can badly affect the following aspects of your finance:
- Your credit score
- Your relationship with the creditors
- Unrecoverable loss of funds
- Losing your tax refund, higher tax bills
- No access to government financial aids
- A criminal history, and many more
Even the minor glitches in your credit report will cost you a lot of time and effort to clean it up, and if the theft results in more serious complications, you could spend years getting everything back on track. Studies suggest that, on an average, a large part of the financial losses is never recovered when a person is hit by financial identity theft.
7 Steps to Recover from a Financial Identity Theft
As soon as you suspect that you are hit by a financial identity theft, you should immediately take these steps to clear or minimize the further losses and settle things up with the affected creditors.
Here are the following steps to follow when hit by financial identity theft:
Request for Fraud Alert: Call each of the three credit agencies and request them to put a fraud alert on your credit reports. The active 90 days of the fraud alert will let the potential lenders know that they need to be careful if someone tries to obtain a line of credit from them in your name. You can get the fraud alert period extended for 7 years by submitting your police complaint or complaint with Federal Trade Commission to the credit agencies.
Check Your Credit Reports: You’ll automatically receive credit reports from each of the three agencies after putting a fraud alert in your credit file. Check for any unfamiliar information in it – opening of new accounts, any hard inquiries, unaccounted payment history, or any personal information that you can’t vouch for. Use an identity theft report to get fraudulent information removed from your reports.
Freeze Your Credit Reports, If Necessary: If you find any irregularity or proof of theft in your credit report and if you believe there is risk of another accounts being opened in your name, you should completely lock down your credit information. Freezing prevents the credit report from being released to the new creditors which allows you to save your account from being mutualized by a third person. To initiate a credit freeze, you will be required to contact each credit agency separately and provide them information such your SSN, date of birth, etc., and a small fees.
File a Complaint with Police and the FTC: Though you are not obliged to file a report with the police or an affidavit with the Federal Trade Commission (FTC), having one will help you a lot when you contact your creditors for settling the dispute over any identity theft related activity in your account. So, fill out the ID theft complaint and affidavit form at its website and take a print out of your records. Along with the police report, it will serve as your ID theft report that will help you dispute fraudulent accounts.
Send Your ID Theft Report to the Creditors & Agencies: Notify your creditors about your victimization and include a copy of ID theft report in it. By doing so, you’ll be directing your creditors for not showing your credit report to the credit reporting agencies. Send a copy of your ID theft report to the credit reporting agencies as well. This will lead the agencies to block fraudulent accounts from appearing on your credit report.
Contact Other Agencies or Organizations: If the identity theft involves the use of your Social Security Number, your driving license, or some other type of identification number, then you should notify the respective agencies or organizations of the theft. These other than financial information can also be used by thieves for fraudulent activities. You can go to the Department of Motor Vehicles to get a new number. You can also ask for a personal earnings and benefits statement from the SSN department to check for accuracy.
Change Passwords of All Accounts: This is to be done right when you suspect of any identity theft activity in your accounts. Change passwords of all your account or add one where you haven’t been using any. While resetting or setting a password, remember to create a long password that includes letters, symbols, and numbers. Never use obvious passwords like the last four digits of your SSN number or driving license number, or your birth year. Also, create a master password and use it to keep all other passwords safely at one place, like an online or offline password saving service.
Identity theft of any sort, including the financial ID theft, is a crime and there are laws that guarantee to secure your finances from such fraudulent activities and punish those who commit such frauds.