lost credit cards being picked up and identity being stolen from

What is Identity Theft?

Somewhere in the United States, a criminal is stealing someone’s identity as you read this sentence.

Identity theft is a major crime that occurs all too often, leaving its victims in financial distress.

Though criminals use technology tactfully to perpetrate identity theft on a global scale, there are surefire strategies you can use to protect yourself from identity theft and to recover quickly if you fall prey to it.

Whether you’re a conscientious individual looking to shield yourself or an unfortunate target, here’s everything you need to know about identity theft.

What Is Identity Theft?

lost credit cards being picked up and identity being stolen fromIn order to combat identity theft, you need to first understand what it actually entails.

Identity theft is the act of stealing one’s personal information to carry out fraud or other criminal activities.

Identity thieves often use people’s names, social security numbers, birthdays, credit card or account numbers, and login information to gain access to their funds.

They then use that information to open accounts, obtain credit, file taxes, and commit other types of fraud that can be damaging to the victim’s finances.

Effects of Identity Theft

Identity theft damages your finances is more ways than one, affecting both your daily life and long term finances.

If you’re the victim of identity theft, here are some of the consequences you can expect to encounter as you work to recover.

Credit Score

Perhaps the most devastating impact of identity theft is the blow it delivers to your credit score.

Whether someone gets your credit card number and makes purchases with it, opens a credit card and spends in your name without making payments, or applies for loans in your name, your credit score can take a massive hit.

You will need to start monitoring your credit if this happens to you to help you build your credit back up.

Financial Loss

In some cases, you may experience an immediate financial loss if someone uses your personal information to access and steal your funds.

With your account number or login information, an identity thief could move money from your checking or savings account.

IRS Issues

When a criminal uses your name to file taxes, there is an unfortunate ripple effect. You could face IRS penalties, an exhaustive investigation, and issues in the future if your tax information is in fraudulent hands.

Loss of Accounts

Once an identity thief has gained access to your financial accounts, you’ll have to go through the hassle of canceling those accounts and opening new ones.

While less traumatic than some of the other consequences, this is an unwanted inconvenience in an already stressful time.

Loss of Privacy

Even if you create new passwords, open new accounts, and get fraudulent ones shut down, your personal information has still been exposed, potentially on a global level.

Time and Energy

Reporting identity theft, freezing and canceling accounts, working with credit bureaus to fix your report, and dealing with IRS inquiries can be incredibly draining and time-consuming.

While you can absolutely restore your good name and potentially recover your financial loss, it might take a great amount of effort to do so.

Types of Identity Theft

Financial Identity Theft

The most common type of identity theft you may be aware of entails thieves taking credit card  or debit card numbers or hacking their way into your bank account to take your money.

But as we briefly mentioned above, there are plenty more ways thieves steal your personal information for their personal gain.

Tax Identity Theft

As highlighted above, this popular form of identity theft involves a criminal filing taxes in your name and keeping the refund you’re owed by the government. The thief also leaves you with a long and arduous recovery process.

Medical Identity Theft

Health insurance is a benefit identity thieves look to steal. In instances of medical identity theft, someone might steal your health insurance card or information to purchase drugs and pay for medical procedures or treatments.

Child Identity Theft

This sneaky form of identity theft often goes unnoticed for years as parents don’t typically sit around checking their children’s credit scores.

Criminals often target children’s Social Security Numbers and use that information to open credit cards and other accounts.

Social ID Theft

Unfortunately, social media is a popular target for identity theft. People can steal your images, name, and other personal information to pose as you on social media, or to create a new persona altogether without your knowledge.

This type of identity theft can be damaging to your reputation, and it can allow thieves to gain inside access to your connections and their personal information.

Criminal Identity Theft

People also use stolen identities to weasel their way out of the consequences of a crime they committed. In these cases, they might present the police with a false name and stolen ID to keep their name clean and their true identity concealed.

Identity theft isn’t limited to the types above. As technology advances and criminals become more tech-savvy, there will continue to be more types of identity.

How Identity Theft Happens

Here’s a brief overview of some of the most common ways identity thieves operate.

  1. Stolen credit cards. This form of identity theft could involve the thief literally stealing your credit card from your wallet or getting your credit card information online, which leads to method number 2.
  2. Stolen phone/computer. If someone steals your phone or computer, they may be able to hack into it and access your personal details and account logins, also leaving you without the convenience of your phone or computer.
  3. Stolen mail. Criminals often rummage through mailboxes in the wee hours of the morning or while most people are away at work to access financial account statements, tax documents, and other personal information.
  4. Internet hacking. Hackers use their tech-savvy to hack into the sites which store your private information.
  5. Malware. Computer viruses and malware allow identity thieves to access personal information from your devices.
  6. Data breaches. Sometimes personal information leaks span further than the individual level. Data breaches entail the release of a large group of people’s information to hackers.
  7. Spam/phishing. Spam emails and phishing scams often mimic official messages from your employer, institution, or organization which ask you to share personal information or make payments.
  8. Public wifi. When you log in to public wifi and enter sensitive data to a website, you run the risk of identity theft by skilled hackers.
  9. The dark web. The dark web is a place where criminals share individuals’ personal information, earning money off of your name and financial data.
  10. ATMs. Identity theft occurs all too often at ATMs, where thieves watch for your PIN, snag receipts, and gain access to your checking and savings accounts.

Warning Signs of Identity Theft

No matter how careful identity thieves are, there are some pitfalls they can’t avoid. Here are a few giveaways that could suggest you’re the unfortunate target of identity theft.

If you watch for these signs, you can quickly report the issue and restore your finances, hopefully with minimal consequences.

You may be a victim of identity theft if…

  • Your bank statements don’t add up: When you see withdrawals or charges you aren’t responsible for, take action.
  • Debt collectors are making unwarranted calls: When you start getting inquiries about debts that are in your name but not your responsibility, you should be concerned.
  • Your mailbox is empty: If you’re waiting on bills, a new credit card, or statements from your bank that never arrive, they may have been stolen.
  • Your mailbox is full: Conversely, when you start getting unexplained bills for medical services, purchases, or subscriptions, they could be the result of identity theft.
  • Your credit report changes unexpectedly: When your score suddenly drops or indicates a credit check you know nothing about, something is amiss.
  • Your taxes have already been filed: Getting notified by the IRS that someone has already filed your taxes is a surefire sign of tax fraud.
  • You’re part of a data breach: If you receive word from a company that your data has been breached, you can expect that it’s in the hands of identity thieves.

How to Recover After Identity Theft

When your identity is stolen, it can take more than just a quick phone call or report to completely resolve the issues.

The first step, though, is to report it to the Federal Trade Commission. You can file your report at IdentityTheft.gov or via phone at 1-877-438-4338.

The FTC website will walk you through a series of steps to recover your stolen identity and track your progress along the way.

After filing with the FTC, you should review your credit report and alert the bureaus to the fraudulent activity, applying a 7-year fraud alert.

Once you’ve notified the credit bureaus, you should let all of your lenders know, including any credit card companies where you hold an account.

You should also let your state and federal government agencies know. Finally, you should carefully watch your credit report to make sure there is nothing suspect on it.

How You Can Avoid Identity Theft

There are some strategies you can use to prevent yourself from being targeted by identity thieves.

In addition to carefully watching your mailbox, financial statements, and credit reports, you can safeguard your sensitive information and keep it out of the hands of criminals.

Use your SSN sparingly and try not to keep your card in your wallet. Instead, keep it in a safe place.

You should also take the time to shred your old personal information, like bank statements, bills, receipts, and credit card offers.

Snip your old cards as well, as criminals are willing to rummage through garbage to obtain that information.

Last, take advantage of technological security features. Lock your phone, download firewall software, and think carefully when you create passwords and security questions.

While you may be tempted to recycle passwords and opt for the easiest security questions, don’t. A hacker accessing one of your passwords is bad enough. If they access all of them, it could leave your finances in shambles.

They can also easily find your hometown or mother’s maiden name. Instead, consider a question only you know the answer to.

Be smart, be vigilant, and play your part in protecting yourself from identity theft.

Debit Card Fraud: Why Debit Card Users Are at a Higher Risk for Fraud

Credit card fraud drained $24 billion from the global economy in 2018 — and almost half of fraud victims worldwide are Americans.

But there’s another piece of rectangular plastic in your wallet that thieves, hackers, and skimmers want access to — your debit card.

For many consumers, debit card fraud is worse than credit card fraud because it can empty your checking account — and because debit cards don’t always have built-in fraud and identity theft protection like credit cards.

Debit Card Fraud: How Did It Happen To You?

Many cardholders don’t know they’ve been a victim of debit card fraud until fraudulent charges start appearing on their bank statements or online banking platforms.

So how did someone gain access to your checking account through your debit card?

Card Skimmers

A card skimmer installed on gas pumps, point-of-sale terminals, and ATM machines may have recorded your debit card number.

Retailers and banks have upped their security to fight skimming over the past few years — but cardholders should still be on the lookout for skimmers before they swipe their cards.

If a card payment terminal looks weird, take a closer look. It may have a skimmer attached.

Cards with security chips and RFID frequencies have frustrated skimmers recently.

But we all still come across retailers whose point-of-sale card readers accept only magnetic stripe swipes which are vulnerable to skimming.

Stolen Mail

Most financial institutions mail your new debit card when your old one expires or when you open a new checking account.

If someone intercepts your new card in the mail you might not notice the card is missing until the unauthorized charges start coming through.

Debit cards normally come in unmarked envelopes, and this helps. But you still never know who’s looking through your mailbox.

The U.S. Postal Service now offers “Informed Delivery.” You’ll get an email every morning letting you know what to expect in your mailbox that day.

This service can help you know when to expect your debit card to arrive in the mail.

If someone stole your debit card via the mail, the thief would still have to activate the card

This extra step can prevent amateur fraudsters, but serious scammers can get over this hurdle.

Online Shopping

Shopping online is now part of life for most Americans, especially during the coronavirus pandemic.

When you pay online people near and far could intercept your account number, especially when you’re shopping on a site without cybersecurity measures.

Never shop on a public WiFi network — at the library or at a coffee shop, for example — and make sure your online retailers use secured servers.

Your browser should warn you if they don’t.

A Data Breach

Even when you shop carefully online, look out for skimmers at gas pumps and ATMs, and keep a close eye on your snail mail when you’re expecting a new debit card, your account information could still find its way into the wrong hands.

Data breaches at retailers, universities, government agencies, and firms like Yahoo! and Uber have exposed all sorts of personal financial data to hackers over the years.

In some cases, even Visa and Mastercard pin numbers have been stolen.

Data breaches are particularly attractive to hackers because some companies have sensitive financial data about millions of Americans.

Often, after a data breach, a financial institution or retailer will let you know and offer fraud prevention measures such as free credit monitoring for a year.

Get a Free Copy of Your Credit Report

I’m a Victim of Debit Card Fraud. Now What?

If your credit card is lost or stolen, you can’t lose more than $50 in unauthorized transactions.

After all, the money the fraudster spends on your account was never yours, to begin with. It belonged to your credit card company.

But when a scam artist makes fraudulent charges on your debit card, it’s your money on the line. The theft could empty your bank account.

How can you get the money back?

Report Debit Card Fraud to Your Bank Immediately

Debit card fraud can’t cause too much permanent damage to your monthly budget if you report the theft of your card — or the fraudulent transactions — within two business days.

In fact, the Federal Trade Commission says you have zero liability — that is, you won’t be responsible for any unauthorized transactions — if you report your lost or stolen card before the transactions start happening.

If you discover/report the loss of your debit card within two business days of noticing fraudulent transactions, you could be responsible for up to $50 in charges.

The longer you wait to report the theft of your card, the more responsible you’ll be for the unauthorized charges.

If you report a debit card loss within 60 days of your bank statement being mailed to you, you could lose up to $500 in unauthorized transfers.

If you don’t report the fraud within 60 days, you risk unlimited loss. You could lose all of the money in that account and the unused portion of your maximum line of credit for overdrafts.

The thieves could overdraft your account if you wait more than two months to report it.

At any point, once you report the loss or theft of your debit card to the card issuer, you’re not responsible for additional unauthorized use.

Your Bank May Tell You About the Fraud

Most banks have fraud detection services in place on their debit cards. If your bank notices fraudulent or potentially fraudulent activity on your account, you’ll get an automated phone call.

It’s easy to accidentally trigger a fraud alert if you travel, use your card sporadically, or if you use the same card repeatedly for similar transactions online.

If you miss a phone call from the bank, be sure to return the call ASAP.

Sooner or later the bank will freeze your debit card if you don’t confirm the questionable charges really are yours.

When this happens you can miss automatic payments on your bills which can lower your credit score.

How Credit Card Protections Work

This post is about debit card fraud, but I think it’s interesting to point out the difference between debit card and credit card fraud protections.

If your credit card or credit card number is stolen, federal law offers you simple protection: You’re liable for up to $50 in unauthorized transactions.

This protection comes with one important caveat — you must report your card’s theft to your credit card issuer.

Some credit card companies won’t charge you the $50 and are vigilant about being on the lookout for fraud and alerting customers when they see potential credit card fraud.

How To Prevent Debit Card Fraud

The best insulation from debit card fraud is, of course, to stop using your debit card.

Instead, you could use a credit card for all your regular expenses like groceries, gas, utility bills, and dining out.

But regardless of your card’s credit limit, you should spend only what you can afford to pay off each month.

Along with lessening your exposure to fraud, you can also claim some nice credit card rewards each month.

You could still use your debit card when necessary: to withdraw cash from an ATM for example.

Here are ways to help prevent debit card fraud:

  • Monitoring Online Banking: Chances are good your bank has a robust online banking platform or a mobile banking app. If so, your financial institution could send you a text or an email every time a large transaction happens. If you didn’t initiate the transaction, you’ll know to take a closer look.
  • Checking for Skimmers: Don’t let your guard down at gas pumps or retailers where card swiping is still the point-of-sale method. If something on the card reader looks odd, let the station attendant or cashier know.
  • Declining Saved Account Numbers: Modern web browsers make online shopping so easy. They save your debit card numbers for easy access next time you’re ready to buy something. But unless you’re almost certain your laptop, desktop, tablet, or mobile phone is invulnerable to theft, don’t use this browser feature.
  • Avoiding Reading Off Numbers Aloud: I have heard people read off their entire debit card numbers, expiration dates, and security codes over the phone while sitting in a waiting room where anyone could hear. Sure, you don’t expect someone behind a potted plant to be writing down your digits, but you just never know.
  • Trying to Keep Your Card Within Sight: Restaurants and drive-thru windows come to mind here. Your server or cashier takes your card and then disappears for several minutes. You can never know for sure what’s happening during that time. So be sure to use a credit card or cash in these situations.
  • Ignoring Emails from Retailers: Scam artists often send emails that look like they’ve come from a familiar retailer. But clicking a link to buy a product actually directs you to a phishing site that steals your debit card number.
  • Using Only bank-affiliated ATMs: ATMs in gas stations and random parking lots are more likely to have lax security than the ATM outside your local bank branch. If you have an online banking account with no ATM network of its own, opt for the ATMs at leading national banks when you need to withdraw cash. (Many online banking accounts reimburse you for fees at other banks’ ATMs.)
  • Shredding Your Card Statements: Some bank statements show debit card information. You should shred these statements after saving them for a year rather than tossing them into recycling. Also, be sure to shred your old debit cards. Often, only the expiration date changes on your new card. A thief could easily guess the new expiration date.
  • Changing Your PIN Sometimes: Changing your PIN on your debit card takes a little more effort than changing your email password. You’ll probably have to make a phone call to the bank or credit union to confirm your identity. But if a data breach exposes your debit card number and its PIN, having changed your PIN could save you a lot more trouble.

Checking Your Credit Report Can Provide Early Detection

Not every debit card theft causes immediate fraudulent transactions.

If your credit report starts showing hard inquiries for new credit you didn’t apply for, it’s likely someone has stolen your financial profile.

The same person may also have your debit card information but hasn’t gotten around to shopping yet.

If you detect identity theft, notify law enforcement and put a freeze on your credit and on your credit and debit cards.

How do you check your credit report? The FTC ensures you can get one free credit report each year from all three credit bureaus — Experian, Equifax, and TransUnion. Just visit annualcreditreport.com to access your reports.

You can also monitor your credit using a free app such as Credit Sesame or Credit Karma.

Credit Freeze vs. Credit Lock vs. Fraud Alert – What Are the Differences?

Checking your credit report at least once a month to make sure thieves haven’t opened accounts in your name may not be enough to protect your personal information and thus your credit score.

Credit monitoring services can also help, as can checking bank and other financial statements for unauthorized charges on credit cards.

But what may help the most are three tools that are common in the credit world but may not be so familiar to consumers:

  1. Fraud Alerts
  2. Security Freezes
  3. Credit Locks

It is not necessary to use them at the same time, but knowing how each can prevent the fraudulent use of your credit data can help you choose the protection that’s best for your situation.

Here’s a breakdown of how each works:

What is a Credit Freeze?

Also called a security freeze, a credit freeze is an extra step beyond a fraud alert that can offer more protection. It can cost $2 to $12 to start, lift or remove a credit freeze, though most states require it to be free for ID theft victims.

A credit freeze does what the name implies — it “freezes” or locks access to a credit file against anyone trying to open a new account or get new credit in the person’s name. It’s more severe than a fraud alert. If you think your information or credit cards have been stolen and you’re at high risk of fraud, a credit freeze may be worthwhile.

It blocks most lenders from seeing your credit history and can be the best way to protect against fraud.

But that protection comes with a price. It also shuts out companies that you may want to do business with, such as lenders, insurers, and cellular service providers that may want to check your credit report before doing business with you. To get around that with a credit freeze on, you have to temporarily lift the freeze with a PIN and set a date for the freeze to be reinstated automatically.

Banks that you already have accounts with can still check your credit report under a credit freeze, as can collection agencies and certain government agencies.

A credit freeze may be free, depending on the state you live in and your circumstances. If you’re the victim of identity theft and have filed a police report, you may receive a free credit freeze.

Otherwise, you may have to pay $2 to $12 to lift the security freeze at each credit bureau. You may also have to pay to get a replacement PIN so you can log into your account to access information about the freeze.

These voluntary freezes are offered to all consumers, even if state law (such as Mississippi) explicitly offers security freezes only to ID theft victims, according to Consumers Union.

The length of a credit freeze may depend on state law. To end a freeze before it expires, you’ll have to follow specific steps.

Another caution

Before starting a credit freeze, you should know that it may delay approval for new credit, since creditors won’t be able to view your credit report. So if you’re planning on buying a car soon and need an auto loan, you may want to wait until after your loan is approved. Until then, a fraud alert may be your best protection.

What is a Credit Lock?

A credit lock is similar to a credit freeze and should be easier to use than a freeze. It’s offered by a credit reporting company and allows users to lock and unlock the account online easily instead of having to verify their identity each time a lift or security freeze is done.

Credit locks usually require an annual fee, such as around $60. Equifax is waiving its locking and unlocking fees through Nov. 21, when it will end its offer of free credit monitoring, according to CNBC.

A credit lock lasts for as long as you pay the annual fee.

The lock only works for the credit reporting company that you start it with, requiring credit locks to be done with each company if you want all of your information to be locked.

You can name specific companies to be approved for access to your Equifax credit report, for example. So if you plan on applying for an auto loan and expect Auto Company XYZ to check your credit, then you can approve its access on your Equifax credit report through a credit lock.

What is a Fraud Alert?

This is a free alert you can place with one of the three major credit reporting bureaus — Equifax, Experian or TransUnion. Once the alert is placed with one bureau, it will pass it on to the other two.

A fraud alert is a notice put on your credit report warning prospective lenders that you’re the victim of identity theft. Lenders who see this warning should take extra steps to verify your identity before giving credit to someone claiming to be you. For example, a bank may try to contact you in various ways and verify your identity before approving you for new credit.

An initial fraud alert lasts for 90 days. It can be renewed for another 90 days after the first alert expires. It can also be extended for seven years if you’ve been the victim of identity theft.

The 90-day alert allows you to get a free credit report from each credit bureau each time you renew the alert. That’s in addition to the free annual credit report consumers are already entitled to from each credit reporting bureau.

Mix and Match Creidt Protections

Among the three choices — fraud alert, credit freeze, and credit lock — know that you can do more than one at the same time.

A fraud alert is free and can be your first step to help stop ID theft. If you’re at high risk for fraud, a credit freeze can also help, though it can be costly and cumbersome to stop and start. A credit lock may be easier, but it can cost more.

You should also consider credit monitoring. For this, check out our top picks for credit monitoring services.

Whatever methods you choose, don’t leave protecting your personal information to the credit reporting agencies or anyone else. Keep regular tabs on your credit report and be on the lookout for fraudulent activity.