Lesson 9: Identity Theft

Summary:

It can happen to anyone, and pretty much anyone else can do it to you
Assume your identity is already compromised
Initial problems can include “Hard Inquiries” that pop up on your credit monitoring, accounts or addresses on your credit report that should not be there, charges on your accounts that you did not authorize, letters from companies that you have not initiated contact with, etc.
You must be your own investigator to find out what accounts are compromised
You must notify the fraud departments of any accounts that are affected
File Fraud & ID Theft reports with the credit bureaus, FTC & local police
Dispute all transactions you did not authorize
File an extended fraud alert and actively monitor all your accounts and credit reports
To limit the damage before or after an incident, you can place a Freeze/Lock on your consumer credit files with each company (including Experian, Transunion, Equifax, Innovis, LexisNexis, etc.)

Wise Credit Management is a free Bible-based class that teaches how credit really works by showing factual information directly from the Credit Bureaus and FICO, and simplifies the subject to show everyone how to build good credit or handle bad credit. The class is fairly comprehensive and focused on getting good credit to qualify for a good mortgage rate and terms. WiseCreditManagement.com is a free community for members to take the class, join local groups (online or in person) for mutual support, and to find local professionals who volunteer to use their skills to assist members to success.

I am not a lawyer or Credit Repair Organization.

Home ownership is the way most Americans build wealth and a lack of education about credit is a huge contributor to the growing “Wealth Gap” in our country. Wise Credit Management is focused on teaching how to get good credit and qualify for a good mortgage rate and terms.

My work is protected by the “fair use” section of U.S. Copyright Act.

Micah 2: 1-3 ~ Woe to those who plot evil in their beds and carry it out in the morning, because they can. ~

Identity theft is a very common crime. According to Experian, 1 in 20 (5%) of Americans yearly have their identity stolen. Many times, the crime is committed by someone sitting behind a computer screen or given access to private documents that should be secured. Think about it, every school you attend or Doctor’s office you ever go to will ask for information that could be used to commit fraud. There are people who really do lay awake at night dreaming up how to steal from you without conscience, “because they can.”

Genesis 27 ~Jacob went to his elderly father and said, I am your son Esau, to steal the blessing and inheritance. ~

To my knowledge, this is the first case of Identity Theft. Thousands of years ago people were claiming to be someone else to get something that wasn’t theirs. Still today it is common to have a family member or someone close to you who gets your information or even your debit card and uses it without your authorization. If that is the case, would you even report it?

Some very common ways your identity is stolen can be from a stolen wallet, stolen mail (from the mailbox or from the garbage) or hacking, which is a universal term for everything from gaining access to company records to getting access to your phone (do you have banking apps on your phone?).

Some common types of identity theft include credit card fraud, unauthorized use, account takeover (like getting your login id and password to your bank account from your phone), renting or purchasing a home and even stealing your tax records to get your refund before you do.

As if that wasn’t enough, just to show you how common it is to have your data compromised, there was a breach of one of the major credit bureaus (Equifax) in September of 2017, 147 million people, including myself, had our identities stolen. What do you get as compensation from Equifax? Credit monitoring from another company that you didn’t want in your life to begin with. I declined to get the monitoring because my system of monitoring works (myFICO.com, Experian, and CreditKarma apps) and I didn’t want yet another company to have my information. As I am writing this book, AT&T had a major problem. I was a customer 10 years ago and they allowed my data to be stolen. I got an alert about it from myFICO.com monitoring. I know my information is compromised and has been many times. My credit reports stay frozen.

My point is, I live in the real world and we should assume our personal information is already available and can be accessed by people who will steal your identity, “because they can.”

To illustrate my point, I am the victim of Identity Theft. One day I went to get my driver’s license renewed and I was informed that there was a warrant for my arrest. It turns out that someone who does not match my description in any reasonable way had used my license when given a ticket with an address I never lived in. When I decided to build a good credit score again, I found multiple accounts and other addresses and phone numbers that were not mine. It took a lot of work, but I learned by doing, and now I’m able to teach from firsthand experience how to protect yourself and recover from Identity Theft.

First and foremost, guard your information. Does a doctor really need your SSN? Someone can do a soft credit pull with your Driver’s License, why would you give it to them to swipe it? Let them see it but don’t let them “swipe” it. Why would you need to provide your middle name (credit application) or your mother’s maiden name (a common security question)? Review all of your bank account statements regularly. If someone is taking money out of your account, you need to catch it as soon as it happens. Be extremely careful about your electronic data. As I mentioned before, I decided not to get credit monitoring from the Equifax settlement because I simply do not want yet another company to have my information. As we discussed in Lessons 2 and 3, monitor your credit reports. If you are considering a major purchase soon, it is a good idea to pay for myFICO.com monitoring because you really do want to stay on top of your credit.

What if you find an account that isn’t yours on your credit report? Don’t panic yet. When your credit report is compiled by the bureau, it looks for accounts with your name and/or information on it. Sometimes the algorithm makes mistakes and pulls information that does not belong to you. Sometimes the person who entered the information made a mistake and transposed a digit, giving the file to you and not the right person. Mistakes happen, that’s why the credit bureaus are required to “Investigate” disputes that you submit. You can review Lesson 7 for more details and there is a Disputing class after you graduate. But if the account truly is not yours, you should be able to dispute by phone or through your account with that bureau and have it removed the first time.

Lending Your Credit

When you co-sign for a loan with someone, it is your account too. Yes, you are responsible. It is great when you co-sign with someone and it works out. You may be helping your kids get started or helping someone through a rough time. But just remember, it is your debt, and they need a co-signer because people who do this for a living don’t trust that person enough to lend them the money on their own.

When you make someone an Authorized User (AU) on your account, you are giving them access to the credit line. It places the account on their credit as an AU and gives them the benefit of the credit line you worked to build. Please make sure it is an account you can trust them with, or you are willing to see it get maxed out and pay back whatever they spent. It is your account and your responsibility. Perhaps you can ask the credit card issuer to reduce your credit line when you give them access as an AU, that way you keep the account and its history open on your credit report but limit the potential damage they can do.

How To Handle Identity Theft

Your case might start with getting an alert from your credit monitoring that there was a report inquiry. Perhaps you see phone numbers or addresses that you don’t recognize. You may start getting phone calls or letters from companies that you legitimately had nothing to do with. Your Social Security statement or IRS data may show more income than you earn. When one thing happens you might dismiss it, but it could be a very real red flag that there is a very serious problem.

When it happens to you, try not to panic. The first thing to do is to acknowledge there is a problem that you need to handle. You will likely go through quite a few emotions including anger, fear, anxiety, insecurity, victimization and perhaps betrayal. You lose your sense of safety and security. What if they can take everything from you? Try to remain calm.

The second thing you need to do is understand how bad it is. Was it just one credit card? Did someone get access to your bank account information? You should sit down and write a list of every account you have, including bank and credit accounts. You should get a current copy of your credit report. You should create an account on the IRS website to see how much income gets reported to your SSN. You should open a folder and keep all the information you gather, and any letters and/or a written account of any phone calls you receive from anyone regarding accounts that legitimately are not yours.

If you have lost your wallet, this advice comes a little late. But everyone should keep a photocopy of everything in their wallet, including the phone numbers on the back of credit cards that you can call if you lose your wallet (or God forbid, it gets taken from you by force).

Third, limit the damage. You have a responsibility to notify the fraud department of all the companies for your accounts that could be affected. If you lose your wallet, you need to cancel all the cards inside. If you notice suspicious activity on a credit card, you need to investigate that transaction immediately. Was it one of the kids that did something small and “forgot” to tell you? Or was it a “hacker” that did something small just to see if you would notice?

Fourth, be your own investigator. We will talk about going to the police later, but realize that you will be your best way of finding out what happened. You have to create a log of transactions, credit inquiries, addresses you never lived, an employer you don’t recognize, etc. From that you may start to get a picture of what happened. Could it have been someone who knows you? Could it have been the person you gave your card to at the fast food restaurant? You might not be able to figure it out, but the least you should do is have the information clearly presentable to an investigator when they ask for it.

Fifth, you have to report it to the authorities. File an Initial Fraud Alert with the credit bureaus. Then file an Identity Theft Report with the FTC. (identitytheft.gov). Then take your file, write out a summary of what you have and take it to your local police to file a Police Report and get a Case Number for your file. You need to do these things to have your credit card company or anyone else take you seriously when you claim Identity Theft. Give the Case Number you got from the police to all the affected companies. File disputes with the credit bureaus like we discussed in Lesson 7, but in addition to there being inaccurate information you have the documentation from the FTC and your Police Report with a Case Number. Also, this is my suggestion: file a personal statement with each of the credit bureaus that states your identity has been compromised and include your personal telephone number. That way, if this someone tries to get credit again, a loan officer could read your personal statement about identity theft and notify you and the authorities of this criminal activity.

Last, but not least, file an Extended Fraud Alert with the bureaus. Some people keep their files locked permanently. It is a way to stay on constant guard against Identity Theft.

The Fair Credit Reporting Act gives you the right to stop companies that operate as “Consumer Reporting Agencies” from selling your information to companies that do not have a relationship with you already. You can block applications for new credit but you cannot block companies you already “owe” or have a customer relationship with from looking at your file. It will not stop debt collectors from reporting on existing debt. This is a way to stop identity theft, but it can also be a barrier to developing new credit.

I have seen it work correctly. My reports are “frozen” with the bureaus and one day I got alerts from CreditKarma and TransUnion (Credit Wise) that someone tried to do a hard inquiry but was blocked. It turned out that a company I have an existing account with accidentally made a hard inquiry on all of it’s customers when updating its system. That company took the inquiry off it’s customers’ credit reports and apologized, but the inquiry never hit my credit report because my credit reports are frozen.

To “Freeze” your credit reports, you can go to the individual websites of each company. The Consumer Financial Protection Bureau (CFPB) has a list of all the bureaus and their contact information. We will focus on the most important ones here. You should have made accounts with Experian, TransUnion and Equifax during lesson 2. You can easily freeze your files from your account.

You can also unfreeze your files to allow your credit to be checked. You can actually set a specific date or a time window which your files remain open and automatically refreeze afterword.

Equifax also has other companies that have and sell your information. DataX and CoreLogic Teletrack are both owned by Equifax. You are supposed to be able to request a freeze online but you might need to do so by calling or writing a letter with a form from their website.

Lesser-Known Companies

SafeRent is formerly CoreLogic Rental Properties Solutions. Innovis is a lesser-known credit bureau. Advanced Resolution Services (ARS) processes inquiries for VISA and it is helpful to lock this bureau if you need to dispute inquiries from VISA. Verisk Analytics provides loss history to insurance companies. Verisk Financial (LCI) provides bankruptcy information primarily to TransUnion and cannot be frozen.

LexisNexis (SageStream) is a larger topic and is discussed in its own lesson because it provides information to insurance companies through its Comprehensive Loss Underwriting Exchange (CLUE) Report and it also provides insurance risk scores. The Accurint Report provides information mainly to debt collectors. You should request a copy of its Consumer Disclosure Report (CDR), which is its name for your credit report, but it contains so much more information. Your addresses, phone numbers, email addresses, schools attended, properties owned and/or sold, court records from bankruptcy or even criminal records. Bad information on these reports can increase your insurance rates or help collection companies pursue you.

Public Access To Court Electronic Records (PACER) provides bankruptcy (BK) information and cannot be frozen. This is my personal observation, but if you do get a bankruptcy “cleaned” off your credit but an underwriter finds out that you have a BK from a few years ago that is not being considered in your score, they know you had your credit cleaned and represent more risk than your scores would indicate. That is a reason to decline your mortgage even after pre-approval. Underwriters look at these and other reports after pre-approval.

ChexSystems provides information about consumer use of checking accounts and other bank accounts. This is where a history of writing bad checks could be stored. TeleCheck monitors for bad checks. Early Warning is a bank account transaction fraud monitor. It owns “Zelle” and is co-owned by multiple major banks (Bank of America, US Bank, Wells Fargo, etc.). You are allowed to review this report but you can’t freeze it.

Did you know there were so many companies that keep detailed records on everything you do in your financial life? My point is that you can limit your exposure to fraud and identity theft, but you cannot stop it. Your information is probably out there already. Stay on constant guard, monitor your credit, periodically review your credit reports and when something does happen, handle it correctly. My lawyer didn’t know enough to tell me to file reports about identity theft and it wound up costing me further down the line.

Next: Complete the Lesson 9 Quiz (first make sure you completed the Lesson 8 Quiz)