An unauthorized charge. A new credit card or loan that you don’t remember applying for. Hard inquiries that show up on your credit report unexpectedly, even though you haven’t been shopping around for credit.
If you’ve ever experienced these, you have probably been the victim of identity fraud.
Identity theft is a financial violation that will be a reality for about one in every 20 Americans this year. According to recent data, an estimated 60 million adults have already been the victim of identity fraud at least once, with credit card fraud being the most common form.
Whether you’re suddenly finding yourself on the receiving end of fraudulent financial activity or simply want to prepare proactively, here are the first six steps you should take if you become an identity theft victim.
We all understand the potential for theft, whether it’s someone stealing your bike from the rack at school or swiping an unattended purse off the table. But what you might not realize is that your identity can be even more valuable to a thief, even if it isn’t a tangible asset.
Identity theft, or identity fraud, occurs when someone else steals your name, likeness, or personally identifiable information (PII) to commit fraud. There are a few different types of identity theft, but financial fraud is the most common.
Identity thieves can use this information to access your bank accounts, make unauthorized purchases on your credit cards, open accounts, take out loans in your name, and more. We typically don’t even learn that this type of fraud is occurring until after the fact — sometimes even years down the line, after loans have defaulted or unpaid bills have gone to collections.
By that time, the damage to our finances and credit can be astronomical, and could take years to repair.
Whether you happen to come across something unusual or have confirmation that your identity has been compromised, here’s what you need to do.
Passwords can be compromised at any time, and may even be sold on the dark web along with your other personal information. If you even suspect identity fraud, it’s smart to change the passwords on all of your important accounts right away.
Try not to use the same password for multiple accounts or include full words, patterns, or other personal details (like your birthdate or address number). If you’re worried about forgetting your new passwords, try a password manager, which can generate nearly crack-proof passwords and store them in a password-protected digital vault for you.
Next, go through each of your financial accounts to see if they have been compromised. This includes your checking account, savings accounts, and credit cards. Look for transactions you don’t recognize, repeated charges, or unauthorized withdrawals — if you see anything amiss, contact your bank or card issuer to file a report.
Time is of the essence here. In many cases, you can get charges reversed or reimbursed as long as you report the fraudulent activity within a certain period of time. Depending on the account (like utility companies or telecommunications providers), you may also need a police report or FTC Identity Theft Report in order to make your claim.
For credit cards and other types of open-ended (revolving) accounts — such as home equity lines of credit or charge cards — your liability is federally limited to $50 as long as you report it within 60 days. Many issuers offer $0 liability, though, as long as you report the fraudulent activity as soon as it’s noticed. The actual time limit can vary from 60 days up to 180 days (or more), depending on the issuer.
When it comes to checking and savings accounts, your liability is federally limited to a maximum of $500, as long as you catch and report the fraud within 60 days.
If someone has tried to open new accounts in your name – or has been successful in doing so — they will show up on one or more of your credit reports. So, it’s important to check these for any fraudulent activity.
You can request a free credit report annually from each of the three credit bureaus (Experian, Equifax, and TransUnion) by going to AnnualCreditReport.com. Comb these over looking for
Accounts you don’t recognize
Hard inquiries you didn’t approve
Names and addresses attached to your edit file that don’t belong to you
If you find any inconsistencies, contact both the lender and the applicable Credit reporting agency.
If you come across anything in your credit report that is incorrect or fraudulent, you will need to file a formal dispute, which can easily be done through each of the reporting agencies. You can submit this request via mail, by providing your personal information and copies of documents related to your dispute, or through an online form.
Here’s where you’ll need to go to initiate an online dispute with:
Equifax (you’ll need to register for an account first, then visit the Dispute Center)
You may also be asked to provide additional information or verify other accounts that do belong to you.
The creditor and credit reporting agency will conduct a review of the account in question. The dispute process can take anywhere from a few days to multiple weeks, during which time the error may remain on your credit. Once the investigation is complete, though, you should see that account removed from your credit history.
“An ounce of prevention is worth a pound of cure.”
In other words, one of the best ways to mitigate the effects of identity fraud is to prevent it from occurring in the first place. You can’t go back in time, of course, and in some cases, even your best efforts could still be thwarted by savvy criminals.
However, you can make efforts to prevent fraud from happening again in the future… or at least make it harder for criminals to succeed.
Freezing your credit is one simple way of doing just that.
You can freeze your credit profiles with each of the three bureaus at any time. When your credit is frozen, lenders and card issuers will not be able to initiate hard inquiries or open new accounts in your name. In order to do either of these things, you’ll need to unfreeze your credit first; if your credit is frozen, though, that means an identity thief also won’t be able to open new accounts in your name.
This won’t prevent someone from fraudulently spending on a credit card account that you already own, but they won’t be able to open anything new in your name. And whenever you are ready to personally request a new account, you can briefly unfreeze your credit with the click of a mouse.
Life is busy, and we don’t always have time to check our credit reports for suspicious activity on a daily basis. This is where credit monitoring really shines.
With a credit monitoring service, you will get alerts when any number of financial situations occur. Depending on the service, these alerts can tell you when:
A new tradeline is opened in your name
An account in your name has been closed
Someone pulls your credit
The balance on one of your accounts increases or decreases
Your credit monitoring service may also tell you if your personal information is compromised or found on the dark web. Security breaches occur every single day, so your information has the potential to be stolen. It can then be sold to potential thieves, who gather this information and use it to steal your identity, your money, or both.
Some monitoring services offer identity theft protection for a monthly fee. Other services are free and may even offer credit score monitoring or other benefits.
In some cases, you could get credit monitoring and alerts through accounts and services you already own, such as the bank that holds your checking account or a credit card issuer.
Identity theft can be frustrating and costly. Unfortunately, it’s also quite common. With millions of Americans’ identities stolen each year, there is a chance that you could find your own information compromised at some point.
Whether you’ve recently discovered that you’re a victim of identity theft or you’re simply planning ahead, knowing what steps you need to take can help you correct the situation, salvage your credit, and prevent it from happening again.
Disclaimer: The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the suitability of any Even Financial product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any information or statistical data sourced by Even Financial through hyperlinks, from third-party websites, are provided for informational purposes only. While Even Financial finds these sources to be accurate, it does not endorse or guarantee any third-party content.