Financial first aid: how to report identity theft

As anyone who’s had their identity stolen can tell you, it can be scary, but it is far from insurmountable. Given how often it happens, you can be sure that everyone—from banks to credit reporting agencies—understands how identity theft works and wants to help you get back on your feet. If you've been the victim of identity theft, hang in there. You can minimize the damage and prevent it from happening again. 

What is identity theft? 

When someone uses your personal or financial information without your permission, it’s identity theft. Here are some examples of how identity theft can happen: 

• You hand a waiter your credit card at your favorite restaurant. After walking to another area of the restaurant, he scribbles down the information on the card, including your name, account number, expiration date, and CVV code. Later, he uses the card to make purchases online or sells it to someone else who uses it. 

• You and your romantic partner keep your finances separate. Despite this, she notes your bank account and routing numbers. She uses this information to order checks in her name by ordering from a third-party printing company.  

• You’ve broken your leg and your niece thoughtfully offers to move into your home for a few weeks. While there, she comes across your Social Security number. Since she already knows your full name, birthdate, and address, she uses the Social Security number to open a credit card you know nothing about.

• You receive a call from a scammer who claims to represent your bank. They tell you there’s a good chance your account has been compromised and promise to help. The scammer says they’ll fill you in on the details of what’s happened, but first, they need to “verify you’re the account holder.” Once you’ve given them your name, address, and Social Security number, they find an excuse to cut the call short. By the time you’ve hung up, they’ve sold your personal information online to someone who intends to drain your accounts.

Identity theft is a crime

Whether the person who steals your identity is a stranger or a family member, identity theft is a crime and is never acceptable. However, the person whose identity has been stolen often pays the consequences. 

The fallout from identity theft can include: 

• An emptied bank account

• Maxed-out credit cards

• New loans opened in your name

• Damaged credit score

• Financial stress 

If you’ve had your identity stolen, you’ve done nothing wrong. Chances are, you never expected it to happen because it’s not something you would ever do. 

Even if you live totally off the grid, there’s no surefire way to protect yourself from identity theft. However, you can make it more difficult for a scammer to steal your identity and do damage that requires fixing your credit report. Learning to spot identity theft can help minimize its damage before the scammer can cause more chaos.

Step 1: Check your credit reports

Whether you're concerned about identity theft or not, keeping track of your credit report is essential. Here's how credit reports work: Each month, your creditors make a report to one or more of the "big three" credit reporting agencies—Equifax, Experian, or TransUnion. These monthly reports serve as a snapshot of how well you manage your finances. For example, if you make your car payment on time, that goes into your credit report. If you're 30 days late paying a credit card, that also goes into your report. If you default on a loan, creditors can see it in your report. 

Your credit report is vital because it contains information lenders use to determine whether to loan you money. It also offers landlords a sense of whether you'll pay rent on time. Even some employers order a credit report when determining whether to hire someone whose job involves handling money. 

In short, your credit report is essential, and you want to ensure its accuracy. Just as importantly, your report can indicate whether someone has stolen your identity. 

How can I tell if someone stole my identity?

First, order all three credit reports for free by logging onto a site like AnnualCreditReport.com. Then, with your credit reports in hand, look for:

• Accounts you don't recognize

• Suspicious charges

• New credit inquiries

• Change of address you didn't authorize

Let's say there are two credit cards listed on the report that you did not open or a credit inquiry from a mortgage company even though you're not trying to buy a home. Anything out of the ordinary can indicate that someone else has accessed your private information and is using your identity to steal your credit and money. 

Step 2: Report identity theft to the Federal Trade Commission 

If you spot something suspicious, it's important to report it to the Federal Trade Commission (FTC). You definitely won't be alone—the FTC logged more than 1 million identity theft cases in 2023. The FTC has decades of experience helping identity theft victims recover, and making a report to the agency is easy. 

Here's how:

• Log in to the FTC's IdentityTheft.gov website

• Click on the “Get Started” button

• Follow the guided steps to report what's happened

If you have a police report or any other documentation related to the theft, or a written timeline of events, have it handy. The amount of time it takes to complete the report depends on how much detail you enter. You should be able to get it done in a few minutes to half an hour.

What's great about the FTC site is that it provides a clear plan to help you get back on your feet. To locate that plan, go to the homepage and click “or browse recovery steps.” 

Do I need to file a police report for identity theft?

As mentioned, identity theft is a crime, no matter who committed it. Making a police report creates an official record of the crime. You’ll need documentation of this report when dealing with banks, credit agencies, or debt collectors. According to the FTC, you should bring the following when you visit your local police station:

• Copy of your FTC identity theft report 

• A government-issued photo ID 

• Proof of address, like a mortgage statement, rental agreement, or utility bill

• Any proof you have of the theft. For example, if you have bills, IRS notices, or late payment notices, take those along. 

Step 3: Contact all three credit bureaus 

Inform the three major credit reporting agencies—Equifax, Experian, and TransUnion—of what's happened. Each credit bureau provides an easy way to dispute fraudulent activity on your account. No matter what the identity thief has done in your name, you have the right to dispute it. Further, ask the credit bureaus to place both a fraud alert and credit freeze on your account.

What’s the difference between a fraud alert and a credit freeze?

One tells creditors about the identity theft, and the other blocks access to your credit report. Here are the details.

Fraud alert: Once a fraud alert has been placed on your account, any creditor who checks your credit report is informed that your identity has been stolen. Before a creditor can open a new account, issue an additional card, or increase the credit limit on an existing account, they must take careful steps to verify the identity of the person asking. 

Credit freeze: Unlike a fraud alert, a credit or security freeze prevents new creditors from accessing your credit file at all. For example, if a scammer tries to open a new credit card in your name, the credit card company can’t check your credit or open a new account. 

A credit freeze is essential to protect your identity from thieves. However, while a freeze is in place, you cannot apply for new credit because creditors cannot see your report. It's not until you lift the freeze that a credit report can be obtained.

A note about credit freezes: Scammers can easily steal an identity from a child. After all, who checks a child’s credit report? If you have a child under 16, you can also consider placing a freeze on their credit. The freeze stays in place until you instruct the credit bureaus to remove it, or the child turns 16 and can request it themselves. 

Step 4: Contact the Social Security Administration

If there's any chance someone has your Social Security number, call the Social Security Administration (SSA) at 800-772-1213 and ask them to block electronic access. Once blocked, no one can log in to your Social Security account and make changes. When it’s time to unlock the account, call the SSA again. 

Step 5: Dispute any fraudulent accounts 

Contact the companies where fraudulent accounts were accessed or opened and request they immediately close them. Also, ask for written confirmation that the accounts will not negatively impact your credit. 

Step 6: Protect yourself from identity theft 

It's understandable to worry about what could happen if someone steals your identity and your credit score drops. However, it's important to remember how survivable identity theft is. In addition to the steps mentioned above, the following can help protect you from having your identity stolen again.

• Store documents with your personal or financial information in a safe place.

• Leave your Social Security and Medicare cards at home unless you need them for a specific reason.

• Never share personal, financial, or health plan information over the phone, on the Internet, or through the mail unless you initiated the contact. 

• Pick up your mail promptly, and ensure any mailbox you use is secure.

• Shred receipts, pre-approved credit offers, and similar documents.

• Use strong passwords for all of your accounts, and carefully safeguard them.

• If you sell, give away, or dispose of a computer or mobile device, remove all personal information stored on it.

• Open and read your bank account and credit card statements. Look for unauthorized withdrawals or charges.

• Review your Social Security and IRS accounts for accuracy. 

• Never share information with anyone who calls, emails, texts, or otherwise contacts you asking questions. For example, it's no one's business what your middle name is, what street you grew up on, where you bank, what your Social Security number is, or any other intrusive question they may ask.