If you've never lost a credit card or had one stolen from you, you may feel like credit fraud is not your problem. But the truth is, credit fraud affects us all! Defined as theft and fraud committed using a payment card, when criminals obtain goods or cash through credit fraud it is the credit card issuer (Chase, Amex, etc) that bears the burden of the loss by charging all cardholders higher fees and interest rates. A stolen account number can often be just as effective for a criminal as a stolen credit card, especially if information such as the expiration date or your billing address is also available to the thief.
And if you don't check your accounts daily, you might want to reconsider that habit! You may not know someone is using your account until unexpected charges or cash advances show up on your monthly statement. Criminals can steal credit account numbers in many different ways:
- Collecting them in telephone or Internet scams
- Copying them from credit cards when the owner isn't looking
- Gathering them from discarded receipts or account statements in people's trash (dumpster diving)
Identity theft describes when someone uses your personal information, such as your name and Social Security number, to either take over current credit accounts or open new ones using your identity. Gathering info via dumpster diving, described above, is a tactic used often by identity thieves. A thief can rent an apartment, take a job, or even commit crimes using your name. Sadly, the identity fraud generally involves using your good credit rating - without your knowledge. Two Tactics used by identity thieves include:
- Stealing personal information and then using it to apply for credit
- Stealing pre-approved credit card offers from your trash and sending them in with a change of address.
A clever identity thief can use your name and information for months without your knowledge, often making the minimum payments on any accounts they've opened so as to keep that credit line available longer. You might not find out what is happening until they max out YOUR credit and stop paying the bill. At that point, the creditor sends collectors out to find you to settle the debt.
Checking your credit report regularly is one of the few ways to catch identity theft before it goes that far. Just as reviewing your credit card statement can reveal charges you did not make, reviewing your credit report can reveal activity on accounts you don't use or new accounts you did not open, alerting you to the possibility of identity theft. Stay tuned - next week we'll discuss 10 FREE things you can do to protect yourself from credit fraud and identity theft.
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