Credit Card Fraud - 5 Tips To Prevent It Happening To You

You had a great weekend. You and your best friend went shopping the mall. At the mall, you picked up some cash at the ATM and you some great bargains at a couple of sales. Afterward, you went out for dinner and drinks to discuss the week's events and gossip about the rest of the crowd. After dinner, you gave your credit card to the waitress, signed the bill, and went home for a good night's sleep.

On Monday, life gets back to normal, and the job beckons. But this Monday is different. With today's mail is your credit card billing statement. Relaxing from work, you review the statement. What's this? There are purchases on the statement for things you know you didn't buy. And the balance is through the roof! What is going on?

You call the credit card company to find out what's happened. They are helpful but not very sympathetic. They note you're near your credit limit and suggest you may a hefty payment this month. They don't understand. You did NOT make those purchases. What can you do now?

If you've been through this before, you know you've been a victim of a crime. Call it identity theft or credit card fraud, it's illegal, and it carries penalties IF the criminal gets caught. Somehow, someone has gotten hold of your personal financial information. They've used your credit and your credit record to steal from both you and the credit card company. The problem is, now the credit card company wants you to pay the bill. If you don't, it will hurt your credit score and make it more difficult to get loans at a good rate or open a new account in the future. You're in a jam, and the criminal who stole your identity is out partying on your good credit.

How could this have happened? Was there someone standing behind you at the ATM, observing you enter your PIN for cash? Or did the waitress leave your card unattended out on a counter at the restaurant? Did you forget your card at the restaurant? Better check your wallet to be sure. You feel violated, as if someone had broken into your home. And this criminal doesn't have a face or a name. You have no idea who or where the identity theft is. And you don't have a clue about what to do about it.

Criminals like this commit identity theft by getting access to your personal information. They can use your birth date, your social security or driver's license number, your account numbers, your PINs, and your passwords to sneak into your accounts and rob you. In 2003, around 10 million people were victims of identity theft, and it cost them a total of $5 billion out-of-pocket. It also cost merchants and financial institutions $50 billion in that year. Each victim of identity theft ended up spending from $500 to $1200 and from 30 to 60 hours of personal time trying to resolve the problem. And these thefts took place over a three- to six-month period.

How can they get away with this malicious crime? It's an increasing problem due to our wonderful technology and the internet. Often, buyers and sellers don't have personal face-to-face contact. Transactions take place over the internet or telephone. The seller doesn't see the identity thief and can't identify them. All the criminal has to do is give them a different shipping address from your billing address. Some identity thieves even submit change of address information to your bank and credit accounts, making it more difficult for you to spot unauthorized transactions.

Why don't people find out about identity theft sooner? You may be surprised, but most people don't check their statements as soon as they get them. They may set them aside, making payments on the balance without reviewing the purchases and giving the thief even more time to run up a big tab.

Even when the theft is discovered, it's very difficult to find the perpetrator. They're using your address and information. Bogus shipping addresses may go to a post office box or postal service. They may even go to a non-existent address. All the thief has to do is monitor for deliveries.

Another reason it's hard to prevent identity theft on your credit cards is that no one knows about it until the monthly billing statement goes out. As mentioned before, only the most diligent credit card holders catch these abuses quickly when they review their statements. Some people assume the credit card company's records are accurate. They may even assume they made the purchase when, in fact, it was an identity thief. Normally, identity thieves who prey upon credit cards make as many purchases as they can in the days immediately following the theft. They can quickly reach your credit limit and often exceed it. You find out about it when your purchases are refused by the company or when the debt collector calls.

Having a little of your personal information gives access to the rest of your information. Identity thieves often misrepresent themselves, calling your bank or credit card company with a piece of personal information to learn more about your accounts. When this happens, you become even more vulnerable. Pretending to be you, they can transfer money out of your accounts, change your address, and apply for mortgages or loans. They may even rent apartments or apply for jobs, masquerading as you.

If you think you've become a victim of identity theft, you should immediately take action to stop the crime or maybe even catch the thief:

1. Immediately file a police report. Do not pass go. Do not wait a day or two. As soon as you're aware of fraudulent purchases or misrepresentations, contact your local police. You can also call the local U.S. Attorney's Office. Identity theft is often considered a federal crime, depending on the circumstances. When you've made your report, be sure to get and keep a copy of it so that you can provide the information to your bank and creditors.

2. File a report with the postal service. This may help you find out where goods were delivered and prevent the continued use of a bogus address.

3. Notify the credit bureau. Immediately inform at least one of the three major credit reporting agencies (Equifax, TransUnion, or Experian). You may qualify for a free credit report. You can also freeze your credit reporting. That way, you will be alerted if anyone makes a credit inquiry or tries to open a new account in your name. There is a small fee for freezing the report, but it's well worth it to protect further abuses.

4. Notify your bank and all your creditors of the crime. Close your accounts and reopen them so that you change all your account numbers. If they'll agree to do it, assign a special password to your account so that transactions can't be processed without your express authorization. And make sure that check verification companies are aware of the problem so that they will not authorize the use of fake or stolen checks.

5. Change your PINs and passwords immediately. If you must keep a written list of them, keep that list under lock and key, and don't share it with anyone. If you keep them in an electronic file, be sure to password protect the file. When you change your passwords, use new ones that combine letters, numbers, and symbols. And for heaven's sake, don't use the standard birth date, anniversary, or pet's name. Think of something unusual, something people who know you won't likely guess.

Identity theft is a serious, and increasing, crime. No one is immune. If you become a victim of this callous crime, you should act immediately to stop the activity and to help law enforcement catch and prosecute the perpetrator. Be sure that every company with which you have financial dealings is aware of the problem. Alert them quickly and get their cooperation in stopping and catching the thief.

We've all heard the nightmare stories from victims of identity theft. Tales of expenses and time lost to repairing good credit abound. In the most extreme cases, identity thieves commit other crimes using their victim's personal information, so you can even get in trouble with the law as a victim of identity theft.

Be vigilant. Be suspicious when it comes to your financial information and accounts. Guard your information carefully. Review financial documents as soon as you receive them, and follow up immediately if you find problems. You may not be able to control every aspect of your financial record, but you can take many common-sense steps to protect it and prevent identity theft from making you the next victim.