Protecting Yourself Against Identity Theft

Identity theft has been the top consumer fraud complaint lodged with the Federal Trade Commission for seven years straight. Here's how to avoid becoming a statistic:

Scour your accounts. Identity theft comes in two basic flavors. Someone either gains access to an existing account or poses as you to get a loan or open a new account. To protect yourself, closely monitor your accounts for anything fishy—a charge you didn't make, a withdrawal you didn't take out. Spend a few minutes each month reviewing your statements to make sure your accounts haven't been invaded. If you spot a problem, call customer service immediately.

Check your credit reports. Most likely, you have a report on file at one of the three major credit bureaus: Equifax (800-685-1111), Experian (888-397-3742), or TransUnion (800-888-4213). If an identity thief has opened any accounts using your personal information, it will show up in your report. Get a free copy of your records from all three credit bureaus every year at AnnualCreditReport.com or 877-322-8228. You can receive them all at once or request a report every four months to monitor your accounts throughout the year. If you have children, run the same check using their Social Security numbers. Identity thieves love to open accounts under children's names because the crime can go undetected for years. It's also smart to make sure your parents' reports are in good shape; again, thieves love to prey on the unsuspecting.

Make life harder on would-be criminals. Placing a fraud alert on your credit report can slow down thieves. An alert serves as a signal to potential creditors to be extra careful granting any new cards or loans on your account. But it's important to understand that alerts don't force the creditor to go the extra mile to protect you; they're merely a suggestion. You can put a free 90-day alert on your accounts by calling one of the credit bureaus, which is required to send your request to the other two. It's up to you to renew your alert every three months. A seven-year fraud alert is available only to someone who has already become a victim of identity theft.

Freeze out thieves. A security freeze is the most powerful way to protect your personal information, but not all states allow you to set one up. To put a freeze on your credit reports, you must contact the three credit bureaus separately in writing. Unless you've been victimized, there may be a charge to put a hold in place. And because it keeps prospective creditors from looking at your accounts, they won't have access to the information they need to grant new loans or issue new credit cards. If you're applying for one, you will first need to call the credit bureaus and have the freeze lifted so creditors will be able to check your record. And be aware that a freeze locks you out too.   

Find out more on putting a freeze on your credit report.

The credit reports on file at the three credit bureaus—Equifax, Experian and TransUnion—are your personal financial résumé. One of the best ways to protect yourself from identity theft is to freeze your credit reports so unauthorized people can't sneak a peek. That can be incredibly helpful when an identity thief is attempting to get a credit card or a loan using your name and financial information. Any time a credit card issuer or lender wants to size up how good a customer you're likely to be, they check your credit report. If they can't see it, there's very little chance they would consider offering you—or someone impersonating you—a new card or loan.

Criminals who gain enough personal data about you—a Social Security number, a birth date, a current address—can apply for cards or loans as if they were you; the business assessing their application checks your credit report. If the request is approved, that's when your financial life becomes a nightmare. It can be months or years until you realize someone is masquerading as you and has, in effect, ruined your credit. Many people find out the horrible news when they're applying for a home or car loan and are shocked to realize their credit is a mess because of the thief who has run up all sorts of unpaid debt in their name.

If you put a freeze on your credit report, it means virtually nobody—not a credit card issuer, lender, or even a prospective employer—can view it until you personally "lift" the freeze and grant them access. Even if a thief steals some of your personal info, their plans will be thwarted as soon as they try to pose as you and the lender can't take a look at "their" credit report.

The bad news is that not all states allow them and, to be honest, it can be a bit cumbersome to initiate one. That said, once you have the freeze in place, you typically just need to make one phone call or go online to lift it. When you're in the market for a mortgage or credit card, you can temporarily remove the freeze to let a creditor see your report.

Find out if your state allows credit freezes.

How do you put a freeze on? The credit bureaus list the requirements on their websites, but you may have trouble finding them. Here are the specifics:

Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348

• Send request by certified mail.
• Include full name, current and previous addresses for past two years, proof of current address (such as a utility bill), Social Security number, and date of birth.

Experian
P.O. Box 9554
Allen, TX 75013

• Send request by certified or overnight mail.
• Include full name with middle initial and Jr./Sr., etc.
• Include current address and previous addresses for past two years, Social Security number, birth date, and two proofs of residence (government-issued ID such as a driver's license and a recent utility bill, insurance statement, or bank statement).

TransUnion
Fraud Victim Assistance Department
P.O. Box 6790
Fullerton, CA 92834

• Send request by certified or overnight mail.
• Include full name with middle initial and Jr./Sr., etc.
• Include current address and previous addresses for past two years, Social Security number, and birth date.

For non-victims, there is typically a fee of $5 to $20 to enact a freeze, as well as a fee to temporarily lift or permanently remove it. (In some states, these fees are waived for senior citizens.) Costs and rules vary from state to state. The best way to find the information for your state is to go to the Consumers Union website: consumersunion.org/campaigns/learn_more/003484indiv.html. Scroll down to find your state, then click on the link with more information on how to put on a freeze.

If you live in a state that doesn't allow consumers to freeze their reports, you should contact your state and federal representatives to find out why your state doesn't think it's important to allow residents to take steps to protect their financial identities.

How to Protect Your Good Name
In 2006, identity theft accounted for 36 percent of more than 600,000 fraud complaints lodged with the Federal Trade Commission (FTC). To help decrease your odds of becoming a victim, visit the FTC website for more information at www.ftc.gov.

Currently, the following states allow consumers who have not yet been victims of identity theft to put a credit freeze on their accounts at the credit bureaus:

California
Colorado
Connecticut
Delaware
Florida
Illinois
Indiana [as of September 1, 2007]
Kentucky
Louisiana
Maine
Maryland [as of January 1, 2008]
Minnesota
Montana [as of July 1, 2007]
Nebraska [as of September 1, 2008]
Nevada
New Hampshire
New Jersey
New Mexico [as of July 1, 2007]
New York
North Carolina
North Dakota [as of July 2007]
Oklahoma
Pennsylvania
Rhode Island
Tennessee [as of January 1, 2008]
Utah [as of September 1, 2008]
Vermont
West Virginia [as of July 2007]
Wisconsin
Wyoming [as of January 1, 2008]

The following states allow only victims of ID theft to use a credit freeze:

Arkansas [as of January 1, 2008]
Hawaii
Kansas
Mississippi
South Dakota
Texas
Washington