Wake Up to the Nightmare of ID Theft

Kiplinger's Personal Finance

Identity theft has become an American epidemic,not unlike a virus spreading out of control. Accordingto an article in ,the Federal Trade Commission (FTC) estimatesthat 27 million Americans, or one of eight adults, havehad their identities stolen over the past 5 years.

Identity theft is costly, both in time and money.The FTC estimates the financial tab for identity theftat $50 billion a year. And while businesses pick upthe bulk of those charges, victims also pay in theform of time, embarrassment, and emotional distress,attempting to restore their credit. The medianamount of time spent cleaning up the damage causedby identity theft is 120 hours.

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More often than not, it's perpetrated by organizedfraud rings. According to the article, theserings are adept at stealing or buying information inbulk and squeezing the dollars out of each stolen identity.And the manner in which this occurs is frightening,because members of these fraud rings are livingand working among us. Fraud rings will often plantan employee in a mortgage lender's office, a company'shuman resources department, or even a physician'soffice. The purpose is to have someone insidewho can easily obtain Social Security numbers, creditcard numbers, or other vital personal information.

What's disheartening is that few cases of identityfraud are prosecuted, and offenders of nonviolentfinancial crimes often serve little time. And once afraud ring has your personal information, there'salways a chance they could strike again even afteryou've cleared your name and record the first time.

Changes Congress made to the Fair CreditReporting Act enable consumers to obtain one freecredit report a year from each of the three creditbureaus. Consumers will also be able to opt out ofhaving financial firms share their personal informationfor marketing purposes, and creditors will haveto inform consumers before reporting negative informationto credit bureaus.

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In the interim, if you believe you've been a victimof identity theft, suggests you take the followingsteps:

•File a report with your local police department,which gives you "victim" status.

•Contact the FTC (877-382-4357; www.consumer.gov/idtheft) to file a complaint and notify creditorsabout fraudulent accounts in your name.

•Get reports from the three credit bureaus—Equifax(888-766-0008; www.equifax.com), Experian(888-397-3742; www.experian.com), and TransUnion(800-680-7289; www.transunion.com)—and requestthat a fraud alert be placed on your credit file.

•Contact the fraud departments at banks, creditcard companies, and anywhere else you have anaccount, and ask them to require a PIN or passwordfor all transactions or changes to your accounts.

Remember:

Additional help on how to clear your name can beobtained by contacting the Privacy Rights Clearinghouse(www.privacyrights.org) and the Identity TheftResource Center (www.idtheftcenter.org). It's your name and your personal information. It doesnot belong in anyone else's hands.