Practical Advice on Identity Theft and Removing Unauthorized Accounts

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bankshowerThe boilerplate advice I keep reading at the end of every article about the Equifax hack is… Everybody freeze their credit! That certainly is an option, but perhaps it might be overkill to expect 150 million people to do that? The credit reporting agencies seem to make it an painful experience on purpose, charging you $10 a pop x 3 bureaus for freezing/thawing. Some good news: Equifax just announced a new free instant lock/unlock feature, which probably wouldn’t have happened if it wasn’t for this breach.

For a more practical perspective, I recommend bookmarking the post Identity Theft, Credit Reports, and You by Patrick McKenzie. He has real-world experience in helping others deal with the credit bureaus and navigating the Fair Credit Reporting Act (FCRA). My notes:

  • You don’t need to do anything just because your data was leaked or might have been leaked and nothing has actually happened.
  • Don’t pay money for credit monitoring.
  • If you find unauthorized charges on an credit card you opened yourself, just call your bank or card issuer. This shouldn’t be a big headache.
  • If you find an account NOT opened by yourself, either due to fraud or some sort of clerical error, then read the entire post for detailed instructions. You need to create a paper trail because this could easily turn into a big headache.

A lot of nuance is covered and sample text is helpfully included, such as:

On August 5th, 20XX I accessed my credit report from Experian, numbered 1234567. It shows an account with your institution in my name, with account number XXX123. I am unaware of the full account number. I have no knowledge of this account. I did not open it or authorize anyone to open it.

Please correct this tradeline and confirm this to me in writing within the timeframe specified by law. If you cannot correct this tradeline, provide me with your written justification for why your investigation concluded that this tradeline was accurate.

Here are some important things to note if you have to deal directly with a financial institution regarding an unauthorized account:

  • Do not call. Communicate only via written letters sent by postal mail to their official address. Create a paper trail. Keep a scan/copy of everything.
  • Never pay debt which isn’t yours, even if you are being harassed.
  • Never speak to debt collectors on the phone, either. Just ask for their address and hang up so you can communicate in writing. You are not breaking any laws if you hang up on them.
  • You can do this. In his experience, most issues were resolved after 2-3 letters send via certified mail/return receipt.

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  1. Another option to help move this process along is to call/email board members of the bank your identity fraud person opened an account. I did this years ago and it was resolved within weeks instead of months/years. Obviously this approach works best when dealing with credit unions vs mega banks. But just wanted to throw out that option.

  2. Very helpful post, thank you

  3. I followed the advice of Clark Howard and the Bogleheads Forum, basically freeze the big 3. Where I live it was free and I seldom need to open new lines of credit, so no big deal. If I need credit I will unfreeze. For me it’s peace of mind. The crooks have the data and they can wait years to use it, maybe after I let my guard down.

  4. I had my identity stolen just about a year ago. It was a frightening experience but in retrospect I’m pleased with how quickly and easily it was resolved and how little (or no) effect there was on my credit scores.

    It started on one Saturday when I received in the mail a new Nordstroms credit card. I don’t shop at Nordstroms, ever. At first I thought it was just some kind of promotional loyalty card but then I realized it was an actual store credit card. I called Nordstroms and told them what happened and they immediately closed the account and sent me the forms to file a fraud report. They also told me that someone opened the account in person to buy merchandise at a store in the state directly to the north in a town just minutes from where I lived from 2000-2003. Interesting.

    Next I pulled all three credit reports and saw some unfamiliar accounts. One was at Best Buy, and fortunately their credit provider had flagged and blocked the account. They told me the person had applied for credit in their store in the same shopping center as the Nordstroms above (on the same day) and confirmed that the person had my full name, SSN, phone number, DOB, but made a mistake trying to furnish my address, which was slightly off, which is how they flagged the transaction.

    I froze my credit with all three bureaus and filed a police report at the local station. I also went online and filled out a file with the FTC’s identity theft website and notified the IRS my identity had been stolen.

    Within a few days a few more fraudulent accounts showed up in my credit history, accounts that were opened before the freeze but took a week or so to show up on my credit report. One was for TJ Maxx in a town in my area and another was at a T-Mobile store in the city in which I work. Someone had gone into T-Mobile and signed up for service and bought two smart phones in my name. I was able to got to the store and have them print out the actual receipt and see how this fraudster had forged my signature. All of the accounts were closed as fraudulent with, at most, an affidavit or copy of the police report.

    All the financial institutions I spoke to had clear protocols for handling this and acted quickly to resolve it. I think this may happen a lot.

    After the initial 3-month credit freeze ended I renewed for another three months. Since then my credit has been unfrozen. I worry sometimes that my info may be out there and someone may try to make use of it again, but I think this was more a crime of opportunity and once it became clear that they would get turned away the criminals moved on. I have a few different banks that give me my credit score each month (I watch it like a hawk) and my score didn’t dip at all during that period or thereafter.

    It’s probably a good idea to use certified mail, but I did all of this over the telephone. Iwrote down everyone I spoke to and got case and confirmation numbers for everything, and it seemed to work out okay.

  5. I agree with Mr. Wheat, thank you very much for the post!

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