So, what are the steps to take if you are an identity theft victim? First of all, you have to take this seriously. Although you might consider yourself a victim of a crime, you are also considered a guilty victim until you prove that you had nothing to do with the theft. Remember, in an identity theft, someone is going to lose money. It wouldn’t be too difficult for an individual to stage an identity theft. In the eyes of a merchant, you could be the one directly benefiting from those fraudulent charges or withdrawals while claiming to be a victim of identity theft.

As the victim, you have three main objectives:

1) Prove that you are an identity theft victim
2) Get released from any liability
3) Make sure that all information regarding the theft is permanently removed from your credit file

You really have to focus on these three items. It is crucial that all three objectives are achieved. Most identity theft victims don’t achieve the first objective because they don’t go through all of the necessary steps. Most identity theft victims feel that they are protected by the law and are entitled certain protection. It is assumed that once the crime is reported they are covered.

So here is the order of the important steps for you to take.

1) Place an initial fraud alert on your credit file. This is easy to do and can be handled with a quick phone call. You are basically saying that fraud has been committed and you are in the process of gathering facts and filing a police report. In the meantime, you want to be alerted if your credit file is being accessed without your authorization. Remember that a fraud alert is temporary and not failsafe. You want either the extended alert or preferably (if available) the security freeze implemented as soon as possible.

2) If an account has been opened or the theft involves your credit card or bank, notify the appropriate company immediately to close accounts. Every company has a specific department that handles fraud. Make sure that you are contacting the right one.

3) File a report with your local police department. This is extremely important and gives evidence that you are serious about getting your name cleared from this situation. It is also required for almost every step that follows.

4) Create your Identity Theft Report. This is your “case” that proves your innocence. Remember the victim/guilty irony.

5) Turn your initial alert into a credit freeze with the three credit reporting agencies. This is the highest protection that you can have on your credit files.

6) Send the Identity Theft Report to the three credit reporting agencies and request that the information be blocked from your credit file.

7) Send the Identity Theft Report to the merchant that holds the fraudulent account as a follow up to your initial call. This will allow for them to confirm that you were indeed a victim. This should provide all of the information that is needed to conduct the identity theft claim. You can also request the application and any transaction records used in setting up the fraudulent account.

Get a closure letter from the merchant that releases you from liability. This is extremely important and something most people neglect to do. Remember the closure principle.

9) Make sure that all information about the fraudulent account is removed from your credit files at all three credit reporting agencies.

10) Keep a close eye on your credit files and make sure that nothing reappears concerning the identity theft on your account.

Keep a paper trail and, always send all correspondence certified mail return receipt requested.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, certified mail, credit file, credit freeze, fraud alert, Identity Theft, identity theft report, police report, Prudent Money

One strategy for protecting your identity is issuing fraud alerts on your credit reports. Is this a good strategy? Well let’s first talk about how fraud alerts work. In 2003, the Fair Credit Reporting Act was updated with the signing of the Fair and Accurate Credit Transaction Act into law.

The FACT Act established three methods of protection for a consumer to immediately protect themselves from identity theft. The law reads that if you know or suspect that you are a victim of identity theft, then you can place a fraud alert on your credit file. A fraud alert is a red flag for a creditor when they check your credit file for information.

If someone is attempting to open up a credit account in your name, the fraud alert would tell the creditor that there is a high risk of identity theft. As a result, the creditor is instructed to call the consumer and verify identity before issuing credit. A consumer would have to reissue the fraud alert every 90 days.

If you can provide proof that you are a victim of identity theft, you can extend that fraud alert up to seven years.

So, is this an effective way to protect your identity? Reports would suggest that there are times that fraud alerts do not work. I have seen reports that place the percentage of failure between 10 and 25% of the time. It appears that creditors don’t always check and verify the identity of the person opening the account.

So what about the companies that issue fraud alerts on your behalf? Is this effective? Well, it has been documented that these fraud alerts don’t always work. So, that is a concern. If a fraud alert were to fail, you could be a victim of an identity theft for years and not even know it.

This is why credit monitoring makes the most sense. You still need to know that identity theft is taking place. There isn’t a failure rate with credit monitoring as long as the company you are using is accurately reporting to you changes on your credit report.

Fraud alerts by themselves are not the perfect identity theft tool. I wouldn’t want to use any strategy that had that high of a failure rate. If you are committed to preventing identity theft, just know that you will have to partner up with someone monthly to help you. Your money is best spent issuing fraud alerts on your own and having a subsequent company monitor your credit reports.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, credit monitoring, credit reports, Fair and Accurate Credit Transaction Act, Fair Credit Reporting Act, fraud alerts, Identity Theft, prevention, protection, Prudent Money

With identity theft stats getting worse, it is more important than ever to be proactive and partner up with a service that will help you protect your good name.

You can take companies in the identity theft business and break them down into two categories. There are the monitoring companies and the protection companies.

Let’s start with the monitoring companies. This is what you are looking for:

1) Monitors all three credit reporting agencies – Using a system that monitors one is better than nothing. However, it doesn’t allow for the best protection. Creditors don’t always report to all three. You want all three agencies monitored for complete safety.
2) Has alerts – Most companies will alert you when something changes on your credit report.
3) Gives you unlimited access to your credit reports and scores – I think that this is critical. It is important to be able to access your credit reports once a month to check over them and make sure everything remains accurate.
4) Identity theft insurance – Most companies have some form of insurance coverage in the event that you are a victim. This could cover lost wages, loss due to identity theft, etc. You want to look at total coverage, deductible, and amount that they cover for lost wages and for how long. This is the one component that can really affect the price.

Then there is the new breed of identity theft protection companies. Take the guy who gives out his social security number in commercials and dares someone to steal his ID. This company is doing nothing more than activating fraud alerts on your credit reports every 90 days. You are paying them to make this phone call for you. In my opinion, they are doing something you can do for yourself. It is not a good use of money.

A fraud alert prompts a creditor to call you first in order to alert you that someone is trying to take out credit in your name. The problem is that this doesn’t always work. Also, according to the law, it is intended to be used if a consumer THINKS they could be or they already are a victim of identity theft.

If you are living in the state of Texas, you could take one step further and place a credit freeze on your credit reports. There is a cost associated with freezing and “un-freezing” your credit. However, this is the most effective way to protect your credit reports.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.

Tags: Bob Brooks, credit report, credit reporting agencies, Identity Theft, identity theft protection companies, Proactive, Prudent Money

The Texas Legislature really got something right. Due to the increased threat of identity theft, they passed a law that gives Texas consumers the greatest possible protection against identity theft.

The Federal Law allows for consumers to freeze their credit files in the event that they have become a victim of identity theft. It is the equivalent of putting a lock on your credit reports. The consumer has to “un-freeze” the credit reports in order to gain access. A lender cannot check your credit with a credit freeze in place.

Thus, traditional identity theft is almost impossible.

The Federal Law states that the consumer has to present a police report in order for this to take place.

State legislatures are allowed to change the law in their state. Thus far, 34 other states have found the Federal Legislation on identity theft ridiculous because everyone should have the right without cause to lock up their credit reports and keep them private.

Now, Texas has passed this very consumer friendly provision. In Texas, you can now place a credit freeze on all 3 credit reports and prevent anyone from checking your credit. If you need to apply for credit, you would simply “un-freeze” the reports.

This has to be done individually with all 3 credit reporting agencies. What is the downside? It does take away the ability to buy something on credit at a moment’s notice. However, that is not such a bad thing. There is also a cost associated with this process. You might pay up to $10 for locking and unlocking your credit file.

Does that mean that by freezing your credit, identity theft cannot happen? As advanced as ID thieves are in stealing identities, I would never assume that it could not happen. I would still have your credit monitored by a good credit monitoring company such as http://www.truecredit.com/.

Tags: Bob Brooks, credit monitoring companies, credit reporting agencies, credit reports, federal law, Identity Theft, police report, Prudent Money, state legislatures, Texas Legislature

I had a question come up regarding the new Truecredit (http://www.truecredit.com/) credit file lock. I have commented in the past on how Lifelock (http://www.lifelock.com/) works. Lifelock is simply putting fraud alerts on your credit reports every 90 days in order to help you fight identity theft.

As a review, the law states that you may only issue a fraud alert in the event that you are a victim of identity theft or you think that you might be a victim of identity theft. It doesn’t say that consumers should just apply a fraud alert because of general identity theft concern. So, this is a company taking advantage of a gray area in the law. If you don’t have an ethical issue with it ( I do by the way) then you can do it for free for yourself.

I have always stated that Truecredit is an outstanding company. So, I don’t want you to get these two programs mixed up. Truecredit are just stating that the company will put a lock on your TransUnion credit reporting agency credit report and not all three. They are not issuing fraud alerts.

TransUnion owns Truecredit. They can easily offer this program due to the ownership. Thus, TransUnion can elect to lock a consumer’s credit file outside of whatever the law says. Is it a benefit? Truecredit doesn’t charge for it. Locking up 1 of the 3 in a sense is a false sense of security. An identity thieve can still access the other two credit reporting files. In a business of aggressive marketing, it is probably Truecredit’s way to stay up with the competition without taking the low road like Lifelock.

Tags: Bob Brooks, Credit lock, fraud alerts, Identity Theft, LifeLock, Prudent Money, Truecredit

I am hearing of more and more instances where companies and governmental agencies have had personal information for individuals stolen. Identity thieves are very smart individuals. At the rate that this information is missing, they are apparently getting smarter.

Following an internal audit of the U.S. Census Bureau, the following was discovered:

217 laptops
46 portable data storage devices
15 handheld devices

All of the above was discovered to be stolen or missing from inventory. They audit shows that this started back in 2003.

You would think an agency associated with the Government would be even more protective.

What can you do about it?

The simple solution is to have your credit monitored. The first place the majority of identity thefts occur is with a simple credit check. If there is anything out of the ordinary happening with your credit report, you would be notified.

I have many ask who I trust. I only trust www.Truecredit.com. Although I have appeared in their national advertising campaign, I receive no monetary compensation for promoting their business. In fact, we have arranged to pass on any promotional fees that we would receive to Prudent Money listeners.

If you go to this link, you can get $ 5 off their 3 in 1 credit report package. They have some great packages. The most important is the credit monitoring for all 3 agencies. I think that everyone should have this service. They also have a package where you get the credit monitoring along with unlimited views of your credit reports. I cannot think of a better combination!

Credit monitoring along with being pro-active with your credit reports represents the first line of defense to Identity Theft!

Tags: Bob Brooks, credit reports, Gevernment, Identity Theft, promotional fees, Prudent Money, www.truecredit.com