The Warybuyer Guide to Dealing With Identity Theft

Here is my 3 phase battle plan for dealing with identity theft:

Phase 1: Stop the Bleeding

Close The Stolen Accounts. The first step is to immediately close any bank or credit card account that the thief has accessed or may have information about. Phone your bank’s fraud department immediately after you learn of the theft and close any affected accounts. If you lost your wallet or purse and the thief has used one of your credit cards, assume that he is going to use them all and close them before he can.

Get a Fraud Alert to Keep New Accounts From Being Opened. After you have stopped the thief from accessing your existing accounts, you need to stop him from opening new accounts in your name. Contact each credit bureau and have them place a fraud alert on your account. A fraud alert will put any creditor who receives a copy of your credit report or credit score on notice that a request for credit may be fraudulent and that they should take special procedures, typically calling you at a designated phone number to obtain confirmation of the request, to ensure that is not the case. There are different types of fraud alerts with different requirements for placing them on your report and different benefits to you. You can find out more about fraud alerts in the Warybuyer Guide to Credit Report Fraud Alerts.

Follow Up In Writing. After you get off of the phone with each bank and credit bureau, follow up with a letter. It may be important for you to be able to prove that you took prompt action to stop the thief. Banks and credit bureaus generally keep only brief notes of their phone calls and they often omit important details. Your letter may be the only proof you have that you took prompt action. My Letter to Confirm Identity Theft Notice as a good example of the kind of letter you should send.

Phase 2: Gather Evidence and Inform the Authorities

Colombo or Jessica Fletcher? Once you have done what you can to stop the thief, you need to gather evidence to prove your innocence and perhaps catch the thief. You may get some help from a bank employee, but don’t count on it. You’ll have to take responsibility for this yourself.

The first step is to get the documents. Identity thieves leave a paper trail. Follow it. Ask for copies of account statements, checks, charge slips, account applications and any other documents that may have information about the theft. Ideally, you will find signatures or identifying information such as a clerk’s notation of a driver’s license that will establish that you are not responsible for the theft. It is important that you act quickly, as some of these documents, in particular charge slips, are not kept for very long. My Letter to Request Evidence of Identity Theft is a good example of the kind of letter you should send to gather this information

Depending on the nature of the identity theft, a creditor may ask you for a copy of your driver’s license, a police report and/or an affidavit before providing this information. Call before you send your written request to find out what they will require in your situation.

Work the Phones. As you are assembling the paper trail, look for opportunities to find witnesses. You may not find anyone who remembers the thief, but it is worth checking with anyone with entered into a large transaction with the thief. If a salesperson can remember and describe the thief, that will be powerful evidence of your innocence. This is a long shot, but if your thief had a taste for big ticket items, like a car, boat or jewelry and you are able to find the salesperson soon after the transaction, it may be worthwhile. If you do find someone who can describe the thief, get them to put the description and any other facts they remember in writing and sign it. That will allow them to refresh their memory if they have to testify in court later.

Call the Cops. In many cases creditors will want to see that you filed a police report before they will take action to reverse charges because you claim identity theft. If you don’t want to file charges, perhaps because the thief is a family member, you have options. Ask if the creditor will accept the Federal Trade Commission’s Identity Theft Affidavit. Some creditors will accept this in lieu of a local police report. You can also try filing a police report while asking that the thief not be prosecuted. Most police departments have a procedure for this, at least informally. Just ask the officer who takes your report.

Phase 3: Clear Your Name

Dispute the Charges. Once you’ve gathered evidence that the charges aren’t yours, contact the creditors involved and provide them with copies of what you’ve found. Do this promptly, as there are time limits within which you must act. For example, under the federal rules for credit card billing errors, you must notify a credit card issuer of a billing error within 60 days of the date of the first statement on which the error appeared. Be sure to attach copies of all of the evidence you’ve gathered to your dispute letter or form. If you have to fight over this later, you don’t want the creditor to be able to claim that they didn’t understand what you were disputing or that you didn’t provide any evidence to support your claim. Although creditors have customer service numbers for handling these kinds of disputes, you must make your disputes in writing to protect your rights under federal law. It is best to use certified mail so that you can prove receipt of your dispute letters.

Do this even if the creditor has already reversed the charges, just to be sure that it has the evidence in its files in the event of there is a future dispute or the thief tries to access the account again. If the creditor has already rejected your billing dispute, submit the additional evidence you’ve gathered and ask them to reconsider.

Clear Your Credit Report. Check your credit reports to see if the identity thief’s activity appears on them. If the thief opened new accounts in your name, it may take 30-60 days before they appear on your report. If a creditor doesn’t honor your dispute of the charges and treats your account as delinquent, it will generally take 30 days from the date the dispute is denied to appear on your report. You should probably get copies of your reports right after the theft occurs and then every 30 days or so until they are clear. That will allow you to clearly document how the theft affected your credit.

Deal with the Credit Reporting Agencies Directly. Because of the way federal law is written, you have no recourse if a creditor ignores a request it receives from you to correct your credit report. You can only sue a creditor for failing to correct your credit report if it fails to correct the report after you have sent your dispute to a credit reporting agency. It’s a convoluted system, but you’re wasting your time if you don’t follow the rules. You will find more information about dealing with credit reporting agencies on my Credit Reporting pages, including my Warybuyer Guide to Correcting Credit Report Errors. In addition to that Guide and the action letters you’ll find there, you can use my Letter to Clear Identity Theft From Credit Report as an example of the way to dispute identity theft related errors on your credit report.

Don’t Let Debt Collectors Harass You. In the worst case scenario, a bank will refuse to honor your dispute, close your account as delinquent, and sell it to a debt collector. You don’t have to take this. As soon as a debt collector contacts you, dispute the debt. You’ll find more information about this in my Warybuyer Guide to Disputing a Debt. If a debt collector won’t stop contacting you or tries to harass you, my Warybuyer Guide to Stopping Debt Collector Communications and Warybuyer Guide to Stopping Phone Harassment will provide you with tips and Action Letters to help you deal with these problems.