More than 20,000 Texans a year are victims of identity theft scams
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Lewisville, Texas, school teacher Tina Bode's ex-boyfriend cost her more than $25,000. The unemployed man used Bode's social security number to open four credit cards in her name, then maxed out each card. Bode was left with mountains of debt and phone calls from collection agencies.
"While I was at work, he was out applying for credit cards in my name," said Bode. "He would fill out all my information, then put his name under additional cards so he had his own card, but was not responsible for the debt."
There's nothing unusual about her experience. In 2003, Bode's was one of more than 20,600 identity thefts reported in Texas, according to the Federal Trade Commission (FTC). Texas ranked second to California in the number of identity thefts in the United States in 2003.
The problem may be growing. Nearly 215,000 identity theft complaints were reported nationwide in 2003, up from 162,000 in 2002. Identity theft cost victims, businesses and financial institutions $50 billion in 2003, according to the FTC's Identity Theft Survey Report.
Technically, a person's identity is stolen when someone has taken personal identifying information and uses it to obtain, use or transfer money with the intent to harm or defraud another, said Esther Chavez of the Office of the Attorney General's Austin Consumer Protection office.
There are several ways to steal someone's identity: stolen wallets and purses, personal information taken from homes, stolen mail, and phone and Internet-based scams. The most common method is "Dumpster diving," said Rod Griffin, manager of public affairs for Experian credit agency.
"Criminals are looking for an easy way to make a living through bank statements and credit card statements," he said.
The FTC reports that barely half of all identity theft victims know how their personal information was stolen. If unusual charges begin appearing on monthly statements, or if new bills for unfamiliar accounts start showing up, Chavez and Griffin recommend taking action.
The first thing a victim should do is contact law enforcement and file a police report. Many banks and credit card companies require these reports to expedite clearing up incorrect credit reports, Griffin said. Only 31 percent of identity theft victims filed a police report in 2003, according to the FTC.
"There is no state law that says you have to give [credit card companies] a police report, but if you want to persuade them, they'll want a police report beyond your saying that this is a problem," Chavez said.
Next, Griffin recommends victims contact one of the three credit agencies, Equifax (1-800-525-6285), Experian (1-888-397-3742) or TransUnion (1-800-680-7289) to automatically set up a fraud alert on their accounts and to obtain a copy of their credit reports.
A fraud alert, which lasts for 90 days, greatly diminishes access to credit and eliminates any access to instant credit, which is offered by many cell phone dealers, Griffin said. An alert also requires lenders to call the victim and verify identity information before granting credit to anyone using the victim's name.
"The key is identifying the person at the point of application in order to stop fraud," Griffin said.
The three agencies can work with victims and contact lenders directly to make sure fraudulent accounts are removed from a credit report and to make sure they aren't reported again. With a police report, credit agencies can begin removing fraudulent accounts immediately, Griffin said.
Victims can also place a file freeze on their credit reports that prevent any access to credit history. Griffin cautions consumers to use this as a last resort as credit applications will be turned down for the next seven years for both the consumer and any thief.
Name of the game
Stealing someone's identity is a state and federal crime punishable by fines and jail time, but enforcing these laws is difficult and the number of cases continues to rise, Chavez said.
"It's difficult to track down who the thief is," she said. "The name of the game is prevention. You can reduce the chance that you can be a victim by taking some very simple precautions."
Chavez recommends collecting all credit card and automated teller machine (ATM) receipts and shredding them. The most common-sense method is to buy a shredder and use it, Griffin said. Both Griffin and Chavez suggest consumers analyze all monthly statements for unusual charges and check credit reports for suspicious accounts.
Chavez encourages consumers to pick up new checks at the bank instead of having them mailed. They also recommend carrying only credit cards and identification cards that are going to be used on a daily basis. Consumers should also never provide personal information to unsolicited phone calls and e-mails, Chavez said.
"Legitimate businesses are not going to call you on the telephone and ask you to provide your social security number and bank account number," she said. "If you're not sure it's your bank, you call them."
Midland attorney Harper Estes fell victim to an unsolicited e-mail scam in July. Using a method called "phishing," the e-mail sender tricks bank customers into giving away personal information by telling them their bank accounts are not secure.
"I received an e-mail from Wells Fargo that said third parties were trying to [get] access [to] my accounts and that they had frozen them and needed all of my information to change the account," he said.
Estes responded to the e-mail, giving out his security numbers, passwords and routing numbers.
"Then about 30 minutes later I thought, 'Why would my bank need my routing numbers?'" Estes said. He immediately called the bank and was able to close his accounts before any damage could be done. "It humbles you a little bit, makes you feel kind of gullible because I've been practicing law for 24 years," Estes said.
Act now, save later
While Estes spent a few weeks cleaning up his accounts, Bode has spent nearly two years cleaning up her credit. Most of her credit companies closed the fraudulent accounts after her ex-boyfriend signed an affidavit admitting to the theft, but one account was already turned over to a collection agency that has not acknowledged the affidavit. Another company allowed her ex-boyfriend to pay a discounted balance to settle and close the account, but left the bad mark on Bode's credit report.
Since the fraudulent accounts were open and delinquent for months before Bode found out, credit companies are more reluctant to write the money off as a loss, Griffin said.
"The longer it's gone on, the longer it is to resolve the issues that have been raised," Griffin said.
Although the three credit reporting agencies share information, it takes time for each one to verify fraudulent accounts with each individual lender on a credit report to determine if the account is fraudulent and should be removed. Until then, the victim is left in limbo, with few options other than waiting it out.
The Texas Legislature has worked to address identity theft issues. In 2003, the Legislature passed Senate Bill 473, which included a Comptroller recommendation to protect social security numbers in public records. The bill also allows victims of identity theft to freeze their credit reports. The Senate Committee on Criminal Justice is conducting an interim study of identity theft and its impact, and will make recommendations to the 2005 Legislature.
In addition, the Texas Silver-Haired Legislature, an advocacy group for senior citizens, made identity theft its top priority. The group will also make recommendations to the 2005 Legislature.