LAW TARGETS IDENTITY THEFT

You open your mail and suffer a horrible shock. A credit card statement appears for a card you never applied for and, worse yet, the statement includes a bill for thousands of dollars of merchandise that you never purchased. When you check your credit record, you find dozens of unpaid bills that aren’t yours. You are refused loans, housing, cars, and even job opportunities on the basis of a terrible credit record that isn’t your fault. Welcome to the not-so-wonderful world of identity theft.

What Is Identity Theft?
Consumers should be aware of the growing problem (some have called it an epidemic) of identify theft or ID theft. It occurs when a person takes another’s personal information to commit fraud or theft. If your credit card has been out of your hands (for example, taken by a waiter), someone may run it through a small device that can read the magnetic stripes on the back of credit cards. These devices, called “skimmers,” are readily available, and sell for around $300. The “skimmer” can then load the data onto another credit card to use at will. The identity thief then makes purchases and ruins the victim’s credit by not paying the bills.

There is also a new type of identity theft called phishing. The word comes from an analogy: fraudsters use email lures to “fish” for confidential passwords and financial data from a “sea” of Internet users. A typical example is when a consumer receives an e-mail telling her that she needs to update her account information for a bank or PayPal account. The e-mail contains a link. If the consumer clicks on the link, she is directed to a copycat website (which looks like a bank’s website) that asks for personal account information. The consumer might be asked to fill in her credit card details, address and password. This information will then be used for identity theft. Up to one in twenty people who receive such an email fall for the scam.

The Law
The good news is that federal laws have been passed to make identity theft a crime. Identity theft is illegal under the Identity Theft and Assumption Deterrence Act of 1998. The Fair and Accurate Credit Transactions Act provides that consumers can issue a one-call fraud alert to one of the three nationwide consumer-reporting agencies, Equifax, Experian, or Trans-Union. The fraud alert requests creditors to contact you before opening any new accounts or making any changes to your existing accounts. Another provision of the law requires financial institutions and creditors to institute “reasonable policies and procedures” for “red flag” guidelines regarding identity theft. In 2004, the Identity Theft Penalty Enhancement Act was signed into law. It provides greater penalties for identity thieves. It creates the crime of “aggravated identity theft” punishable by up to two years in prison when committed in connection with other felonies.

Many states have also passed ID theft laws. Arizona passed the first such law in 1996. You can contact a local consumer protection agency or attorney general’s office, or ask your lawyer, to learn more about the laws in your jurisdiction.

How to Avoid Identity Theft
Being aware of the risk of identity theft and looking out for it is one way in which you can reduce the risk of it happening to you. There are several steps you can take to minimize exposure to identity thieves:

1. Sign new credit cards as soon as they arrive. Cut up and throw away expired credit cards. Destroy all unused pre-approved credit applications.

2. Keep a list of your credit card numbers, expiration dates, and the toll-free telephone number of each card issuer in a safe place, so that you can report missing or stolen credit cards and possible billing errors

3. Use passwords for your bank and credit card accounts. Do not use easily obtainable passwords such as your mother’s maiden name or the name of your spouse.

4. Don’t lay your credit card down on a counter or table. Hand it directly to the clerk or waiter. Keep an eye on your card after you give it to a clerk. Make sure that he or she imprints only one charge slip and, if he or she makes an error and has to imprint a second charge slip, tears up the first one. Take your card back promptly after the clerk is finished with it, and make sure that it is yours.

5. Never leave your credit card or car rental agreement in the glove compartment of a car. Never leave your credit card in an unlocked desk drawer, grocery cart or hotel room.

6. Open credit card bills promptly, and compare them with your receipts to check for unauthorized charges and billing errors. If your monthly statement doesn’t arrive on time, call the issuer immediately.

7. Write or telephone the card issuer promptly to report any questionable charges. As a practical matter, most consumers would prefer to call the card issuer’s 800 number for billing questions, and most disputes can be settled in this way. (You can find the correct 800 number on your billing statement.) However, written inquiries will leave a better paper trail and better preserve your legal rights. Written inquiries should not be included with your payment. Instead, check the billing statement for the correct address for billing questions. Either a written or telephone inquiry must be made within 60 days of the statement date.

8. Never give your credit card or checking account number over the telephone unless you make the call. Never put your credit card number on a postcard or on the outside of an envelope.

9. Do not write your credit card number on your check, and do not allow the merchant who takes your check to do so either.

10. If any of your credit cards goes missing or is stolen, report the loss as soon as possible to the card issuer. Follow up your telephone calls with a letter to each card issuer. Send each letter by certified mail and keep a copy. The letter should contain your credit card number, the date the card went missing and the date you called in to report the loss.

11. If you do not receive a bill from a regular creditor, contact your creditor to make sure that they still have your current address. An identity thief may have changed your billing address.

Steps to Take if You are a Victim
If you discover that you are a victim of identity theft, you should take immediate steps. First, notify the card issuer. Contact the fraud departments of any one of the three major credit bureaus, and ask them to place a fraud alert on your card. Close the accounts that have been opened without your knowledge, or any accounts of yours that have been tampered with. Call the Federal Trade Commission’s Identify Theft Hotline toll-free at 1 877 IDTHEFT. Then, file a police report. Make sure you get a copy, so that you can show it to your creditors as evidence of identity theft. Your lawyer can help you take any of these steps.

If you are a victim of identity theft you will have to spend time and money to repair your credit record and clean up the mess made by an identity thief. The best offense is a good defense: be aware of identity theft; keep close track of your credit card records; and report any suspicious activity on your card immediately.

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