Protecting yourself from identity theft
Before I go too far into things, I want to differentiate between two primary kinds of identity theft.
The first kind of identity theft is when someone fraudulently uses your credit card. It may seem scary, but trust me; it’s not much of a problem. With this form of identity theft you call the credit card company and report the fraudulent charge(s) as soon as you find them; you don’t lose any money or have lasting problems. This form of identity theft happens a lot and compared to other forms of identity theft, this isn’t a big deal. The credit card company simply removes the charge from your account and sends you a new credit card.
The second kind of identity theft, called new account fraud, is when a criminal starts opening up new credit accounts or accessing other credit accounts in your name. This is a huge deal, is extremely hard to fix, and can make your life suck for quite some time.
There are other kinds of identity theft (like medical identity theft), which I may discuss at a later time. This article deals primarily with financial identity theft.
Identity theft is lucrative for the criminal, takes time to discover, and causes lasting damage to a person’s credit. The victim spends massive amounts of time disputing accounts, making phone calls, writing letters, etc. It’s hugely stressful and makes future access to credit difficult and potentially more expensive.
What do criminals need to steal my identity?
In reality, a determined criminal only needs your name. There is a case where a guy was able to obtain all the information necessary for committing identity theft with only a name. He was able to get Social security numbers, addresses, dates of birth, call up the credit card companies and get details on recent charges, and more. Oh, did I mention he did this while in jail?
Yes – he did this on a pay phone in jail. Do a search on “James Rinaldo Jackson” if you want to know more about him. While Mr. Jackson now works for the other side, there are many, many people out there with the skills to gather bits of personal information and bundle those bits into something that can be used against you.
Paranoid yet?
My point is this: This article has good hints and tricks, but you’re somewhat screwed if a knowledgeable criminal specifically targets you. In that case, you’re going to need more help than I can give. If you are in that situation you need to hire a professional who specializes in handling those situations, or consider changing your identity and moving to New Zealand – YMMV. Oh, and don’t bother with generic identity protection companies like lifelock either. Companies like lifelock are mostly useless and offer a false sense of security– but I’ll get to that later.
Most of us don’t have to worry about being specifically targeted because that much effort is just not that lucrative. Generally speaking, you get specifically targeted for being famous, seriously pissing off the wrong person, or getting cocky in articles about being some kind of minor deity when it comes to protecting people from identity theft (like Todd Davis, the CEO of a credit protection company did).
If you are not one of the above, let’s talk. . . .
Grab a rum and coke or a glass of wine (your choice) – this is going to take a little time and I want you to be relaxed as we go through this.
. . . don’t worry, I’ll wait.
Ready?
Ok – first off, the companies that deal with credit and your personal information don’t give a shit about you. Seriously – they could not care less. What they care about is making money, lobbying congress to keep the status quo, and avoiding bad press–in that order. The government isn’t doing much either, mostly because of priority two (lobbying congress to keep the status quo). While there are a few new laws, most of the effective provisions have been delayed, watered down, or both at the behest of lobbying by the credit cartel.
Second off – the people who commonly steal your identity are people you know. A neighbor’s kid, an uncle with money problems, that sort of thing. Yes, there is always that faceless Internet theft ring based in Russia/China/Dundalk the TV blabs about; but I’m here to say what no one else is saying and what you may not want to hear: Your identity is just as likely to be stolen by an acquaintance.
In short, it’s up to you to protect yourself. . . .Oh, and go buy a safe for your important papers.
Identity Kung Fu
Protecting yourself entails making it painful for others to access or use your credit. If it’s more time consuming to steal your identity than someone else’s, you will be left alone. Think of it a little of like the angel of death during Passover: All you need is to perform a little sacrifice.
In this case, it’s a $5 – $10 sacrifice to each of the three evil credit reporting agencies. You know. . . to placate them.
No, seriously. This works even if you aren’t an Israelite trapped in ancient Egypt.
But before we do that, you want to get a current copy of your credit reports; again from the three evil credit agencies. This can be done for free, but they do make it a mildly painful procedure.
(By the way – I’ll stop calling the credit reporting agencies evil when they stop being evil)
The procedure is to go to http://www.annualcreditreport.com. Follow the steps to get one credit report from each of the three evil agencies. Be careful not to fall for their other offers or ‘deals’. Come back here when you’re done.
Ok – now that you have copies of your credit reports, we’re going to turn access to them off. . disable them. . . throw the switch. This is where that $5-$10 sacrifice per evil agency comes in. Before anything else, I need to lay down the rules:
1) Once you lock your credit files, you have to pay to unlock your credit files (even if you only want to for a short period of time). If you try to get credit to buy a house, a car, obtain store credit, or buy a new cell phone, you will need to unfreeze your credit at each evil agency in order to be able to read your file. This is the whole point of a credit lock – it keeps people out.
2) Companies already on your credit report will still be able to look at your credit report. There is not much you can do about this; however, the credit lock will still prevent someone from obtaining credit in your name.
3) You need to lock your credit at ALL THREE credit agencies. In Nov 2007 I was able to buy a car with two out of three credit reports locked. If I can do it, someone pretending to be you can do it. Don’t skimp – either do them all or don’t bother.
4) You should not need to unfreeze your credit report to get your annual credit report.
5) Don’t lose your PIN or passwords like I did. It took me months to straighten things out. I had to prove who I was, pay them to lift the credit freeze (via snail mail) then pay them to put it back on again. Theoretically you only have to pay them to generate a new PIN, but Equifax is run by mentally deficient chipmunks who simply removed the freeze then denied I asked to have a new PIN generated. . but I digress.
Now, the rules for creating a credit lock (also called a credit freeze) depend on the state you live in. In most states you can now do this on the web. My suggestion is to try the web first. If that doesn’t work, you’re going to have to go all previous millennia and use something your parents called a ‘Post Office’. (It’s how people communicated in ancient times. ) Either way, the fees vary by state – usually $5-$10 per evil credit reporting agency.
The sites:
• Mentally deficient chipmunks Equifax – https://www.freeze.equifax.com
• TransUnion – https://annualcreditreport.transunion.com/fa/securityFreeze/landing
• Experian – http://www.experian.com/freeze
When on these sites – pay attention! They may try to sell you identity theft protection or credit monitoring. Don’t fall for their spin. You want a credit freeze and only a credit freeze. Anything else is simply lining their pockets.
If you get denied on these sites you may have to go the postal route. For directions on creating credit locks using mail, go to the consumers union web site at: http://www.consumersunion.org/campaigns/learn_more/003484indiv.html#MD. By the way – this is a great consumer advocacy site.
What if I lose my PIN / password / file number?
Well, you’re about to get acquainted with the post office if you lose your PIN. Here are the directions from one evil credit reporting agency (Equifax):
https://help.equifax.com/app/answers/detail/a_id/240/noIntercept/1
If you lose the PIN that was issued to you when you added the Security Freeze to your credit file, you may request a new one in writing.
Please provide proof of identification, such as a copy of your driver’s license, passport, birth certificate or other proper identification forms.
A fee may be required for residents of some states for a replacement PIN. Please review the Security Freeze Fees that provides the various fees. Please submit your request in writing to:
Equifax Security Freeze
P.O. Box 105788
Atlanta, Georgia 30348
The other agencies have similar methods, although I was able to get TransUnion to reset a PIN over the phone. . .And while convenient – I believe that is also a problem. Remember that story of James Rinaldo Jackson?
With identity protection nothing is perfect, but a credit freeze raises the bar significantly for committing identity theft. Does a freeze make identity theft impossible? Heck no, but it makes stealing your identity harder than most others, and that’s usually enough to protect you from new account fraud.
UPDATE:
there is a great article on Consumer Reports about the likelihood of being a victim of identity theft. If you remove credit card fraud and focus only on the “new account fraud” (true identity theft), the odds are less than 1%. That said, I have personally experienced credit card fraud around 5 times now. I mostly blame DefCon.
http://blogs.consumerreports.org/money/2010/12/identity-theft-exaggerations-department-of-justice-study-credit-card-banking-accounts.html
-Cary