Identity Theft and Your Credit Report

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By: Robert S. Sola

         Recent news about the theft of credit and debit card information from customers of Target raises the specter of identity theft.  The sad truth is that anyone may become a victim of identity theft.  And the consequences can be devastating, both emotionally and financially.  However, there is a strong federal law protecting victims of identity theft – the Fair Credit Reporting Act (“FCRA”).  The FCRA can help victims mitigate or eliminate the consequences of identity theft and get their lives back on track.

Protecting Your Identity

Thieves can use many different techniques to steal your identity including stealing your wallet or mail, “phishing” your personal information by getting you to respond to fake emails or telephone calls, hacking into online credit information maintained by large companies, or responding to preapproved offers of credit sent to your old address.

Once the thief has your personal identifying information it can be used to open credit accounts, obtain utility or other services, incur hospital charges, or obtain tax refunds.  If a thief obtains your credit card information they can charge items to your account.

There are several steps you can take to try and prevent identity theft.  These include reporting stolen credit or debit cards immediately, reviewing your billing statements regularly for any fraudulent charges, shredding documents that include personal information, making sure that you only use websites that are secure, and refusing to provide any personal identifying information to anyone who makes unsolicited calls or emails to you.

It is also important to check your credit report at least once annually.  You can obtain a free credit report from each of the three major credit reporting agencies, Equifax, Trans Union and Experian, once a year.  You can get your report online through annualcreditreport.com or by calling 877-322-8228.  I would advise that rather than getting all three reports at the same time each year, that you stagger your requests so that you get a report from each of the three agencies every four months.  That way you can review your reports more frequently and spot any inaccurate information.

You should review your credit reports closely for any information that is incorrect or does not belong to you.  This includes public record information such as judgments or tax liens, account information such as credit cards or loans, personal identifying information including names or initials, addresses, dates of birth, social security number and employer, and “inquiries.”  “Inquiries” is the term used for the list of those companies who have obtained your credit report.  If you see any inquiries that do not belong to you, that could mean that your credit report was sent to someone who should not have seen it.

What You Should Do If Your Identity Is Stolen

            If you find your identity has been stolen, you should take steps to immediately prevent the thief from making fraudulent charges in your name.  If the thief has opened a new account in your name, you should contact the creditor and tell them that you want to close the account because it was opened fraudulently.  If the fraudulent charge is on one of your previously existing accounts, you should dispute those to the creditor.  Be sure to send your dispute to the address on your billing statement that is listed for such disputes, which may be different than the address to which you send your payment.

Next, you should file a police report regarding the identity theft.  Do this at your local police department.  Provide them with all information you have regarding the theft including the fraudulent accounts or services.  Make sure to get a copy of your police report.  This is very important because sending the police report to credit reporting agencies and creditors will help ensure that the fraudulent information does not remain on your credit record.

You can also place a security freeze on your credit report.  This will prevent your credit report from going out to any potential creditor, so you may not want to take this step if you intend to seek credit.

You can also contact the credit reporting agencies and ask them to put a fraud alert on your credit report.  If you have your fraud alert on your credit report then a potential creditor is not supposed to open a new line of credit without first contacting you to make sure you are actually seeking the credit.  My experience is that these fraud alerts are often not effective.  However, putting a fraud alert on your credit report will give you a stronger case if you end up having to take legal action against one of the credit reporting agencies or a company that granted credit to an identity thief.

Many creditors require that you fill out a fraud affidavit and return it to them before they will agree you are not liable for the fraudulent charges. Although you are not obligated to submit such an affidavit, I would advise that you do so if requested.  You should also send the creditor a copy of the police report.

There is no need to purchase a credit monitoring service.  Victims of identity theft are entitled to a free credit report every year in addition to the annual free credit report available to every consumer.

Rights For Victims Of Identity Theft Under The Fair Credit Reporting Act

The Fair Credit Reporting Act (“FCRA”) is the federal law that governs the national credit reporting agencies (“CRAs”): Equifax, Trans Union and Experian.  It also governs creditors, collection agencies and other businesses that furnish information (“furnishers”) to the CRAs.  The FCRA provides victims of identity theft with numerous rights.  Consumers can bring legal claims against the CRAs and furnishers if they fail to comply with the FCRA.

            The most important right is the blocking of information on a credit report that resulted from identity theft.  A CRA must block the reporting of any fraudulent information within four business days of receiving a dispute from a consumer that contains:

  • Identification of the fraudulent information;
  • A copy of an identity theft report (an identity theft report is an official, valid report filed by the consumer with a federal, state or local law enforcement agency including the post office);
  • A statement by the consumer that the information is not related to any transaction by the consumer; and
  • Appropriate proof of identity.

The CRA must notify the furnisher of the information that it has blocked the information as fraudulent.  The CRA will also notify the two other national CRAs that it has blocked the information.  The consumer should receive a letter from the CRA stating that the information has been blocked.

If the consumer sends the CRA the required materials and the CRA does not block the disputed information within four days, the consumer can bring a legal claim against the CRA.

A second right available to victims of identity theft is to have a fraud alert placed on their credit report.  A fraud alert is a notation on the credit report notifying the person who receives the report that the consumer has been a victim of identity theft and needs to be contacted before new credit is extended.  A CRA must add an initial fraud alert that remains on the file for at least 90 days, if the consumer requests an alert and the consumer asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or a related crime, and provides appropriate proof of identity.

The CRA must refer the information regarding the fraud alert to the two other national CRAs.  The CRA must also notify the consumer of their right to a free copy of their credit report.

The consumer also has a right to an extended fraud alert.  This is an alert that will remain on the report for seven years.  The CRA must add an extended fraud alert if the consumer requests one and submits an identity theft report regarding the identity theft, and appropriate proof of identity.  In addition to the extended fraud alert, the CRA must exclude the consumer from promotional lists for five years.  This will prevent the consumer from receiving unsolicited offers of credit in the mail.

The CRA must also refer the information regarding the extended fraud alert to the other two national CRAs.  Finally, the CRA must notify the consumer of the right to obtain two free credit reports during the following 12-month period.

Conclusion

            Victims of identity theft should not have to suffer the additional damages of inaccurate credit reports.  If a consumer has disputed the fraudulent information to the CRAs and the furnishers, and the credit report is still not accurate, the consumer should contact an attorney experienced in handling FCRA cases to help them in asserting their rights under the FCRA.