What can I do to protect myself when I am the victim of identity theft?
You have several options, and the sooner you take action the better your chances of reducing any major damage. First, immediately contact your bank and credit card issuers to alert them to fraudulent charges or a lost/stolen card. The bank or credit card issuer may not protect you from all losses if there has been an unreasonable delay in notifying them.
Next, the three credit bureaus – Experian, Transunion and Equifax – can block new activity and warn banks, insurance companies, lenders, and anyone who checks your credit that there is potential fraud. You can request the bureaus place a 90 day fraud alert on your credit. The fraud alert is a free service that locks down your credit for 90 days. You may be able to renew it, but its main benefit lasts for 90 days. An extended alert for 7 years is available, however, you must have a police report on the identity theft. For deployed military personnel, you can also have an active duty alert placed on your credit. Either the fraud alert or active duty alert should be placed with all three credit bureaus.
A more drastic step is to place a freeze on your credit. This usually involves writing a letter to each credit bureau and requesting the freeze. The freeze is permanent and prevents accounts from being opened. If you need to use your credit to open a new account, you will receive security PINs to provide to the financial institution to override the freeze. In many states, there is a fee to process the freeze request unless you have a police report on the identity theft. It may not always be clear when to go to the police on identity theft. Generally, I would recommend making a police report if your wallet or identifying information is stolen or if accounts are being fraudulently opened in your name. Be sure to also contact the DMV if your driver license is stolen.
R. Joseph Ritter, Jr. CFP® is President of Zacchaeus Financial Counseling, Inc., a 501(c)(3) non-profit organization serving low-income households and households in crisis with financial planning and financial coaching services.