Articles Posted in Identity Theft

Identity theft fraudsters used to steal consumers’ credit card information and run up charges. They still do, but now the fraudsters are stealing identity information to file fraudulent tax returns to get tax refunds in large numbers. In 2015, about 43% of the Federal Trade Commission’s complaints were related to use of stolen identities to get others’ tax refunds. Fraudsters also use someone else’s children as dependents in filing their tax returns to lessen their tax liability. Other crooks claim a tax refund using a deceased taxpayer’s information. Still others give their employers’ other persons’ social security numbers when providing information for wages.

In 2015, the FTC received 490,220 consumer complaints for identity theft of which 228,854 complaints were for tax or wage identity theft.

Fraudsters are increasingly calling taxpayers on the phone claiming to be IRS employees. The fraudsters try to intimidate people into agreeing to give out their credit card information leading to fraudulent charges on the card. The fraudsters tell people things like the sheriff will be coming to the door or they will go to jail if they don’t agree to pay immediately. (IRS never calls consumers to demand tax payments. If anyone wants to know if they owe taxes, they can call IRS at 1.800.829.1040).

Parents should periodically check their children’s credit reports. The reason is that fraudsters sometimes steal the kids’ identity. They know that children likely won’t notice their identity has been stolen and parents don’t typically check their credit reports. A good time to check is when a child is 16. At that point, there is time to take action to correct the reports.

Children should not have credit reports and so if there is a credit report it may be because someone has stolen the child’s identity. A research firm found that one in 40 households with children under the age of 18 had at least one child whose personal information was affected by identity theft.

According to Credit.com the reasons to be concerned about such identity theft include the possibility a debt collector may harass a child to pay a debt, a child might not be able to open a checking account due to negative credit history that does not belong to the child, or when the child applies for a driver’s license, the child may find someone else has obtained a license in the child’s name.

CreditCards.com has an informative a report on a proposed rule that could help kids replace stolen Social Security numbers. An incredible number of kids’ social security numbers have been stolen so the thieves can get employment, credit cards, or to collect tax refunds.

Thieves like to steal kids’ socials because usually no one checks their credit reports. A Carnegie Mellon University report estimated that 10% of children have had their socials used by someone else. This is a rate 51 times higher than adults!

Persons seeking to change their social security numbers have met great resistance from the Social Security Administration. Currently, anyone seeking new Social Security numbers must show they were “recently disadvantaged” by an unauthorized person using their identity.

The FTC has a report out on a survey of 3,000 identity theft victims and their experiences dealing with the credit reporting agencies. The survey indicated that many consumers start out not knowing how the dispute process works under the Fair Credit Reporting Act. This is not surprising given the complexity of the matter and the counter intuitive requirement that the consumer contact the credit bureaus directly rather than going through the creditor that is reporting the inaccurate information.

Among the identity theft victims who contacted the credit bureaus, 40% did not know they had the right to dispute to ask the credit bureaus to investigate and correct inaccurate information on their credit reports. Of those who did dispute the information on their credit report, 52% said the information was correctly removed, 29% said the information was not removed and 18% were not sure.

Of those who said the inaccurate was removed, 39% were either somewhat or very dissatisfied with the process. The main reason for the dissatisfaction was that the inaccurate information was not removed. Only 42% were able to get information removed with a single contact to a credit reporting agency while 24% needed three to five contacts. 4% had to contact a credit bureau six or more times to get the information removed!

Identity theft often results in accounts showing up on the victim’s credit reports. When that happens, a first step is to go to the local police to report the theft and get a report. A next step is to send a copy of the report to each of the credit bureaus with a letter asking that the fraudster’s accounts be deleted.

Police reports are important in this process because under the FCRA, 15 U.S.C. § 1681c-2, a credit bureau must block the reporting of any incorrect information in a consumer’s file upon receiving: “(1) appropriate proof of the identity of the consumer; (2) a copy of an identity theft report; (3) the identification of the information by the consumer; and (4) a statement by the consumer that the information is not information relating to any transaction by the consumer.”

A consumer in a lawsuit against a credit agency known as Early Warning System lost the case because he failed to file an “identity theft report” to the bureau. The judge explained that the FCRA defines that term precisely. To qualify, the report must be a document meeting the following conditions: “(A) that alleges an identity theft; (B) that is a copy of an official, valid report filed by a consumer with an appropriate . . . law enforcement agency . . .; and (C) the filing of which subjects the person filing the report to criminal penalties relating to the filing of false information if, in fact, the information in the report is false.” 15 U.S.C. § 1681a.

Identity thieves steal identities by retrieving credit card offers from trash cans and the filling sending them in using their own addresses. Law professor Jeff Sovern reports that

he told his class the Fair Credit Reporting Act requires the credit card issuers to allow consumers to opt out of the applications (15 U.S.C. § 1681b(e)), thus reducing the likelihood that an identity thief will steal their identity.

But most people don’t opt out and instead tear up the applications and his students brought up a MSNBC story about how a consumer tore an application up, then taped it back together, and sent it in using a different address. Chase sent him the credit card anyway.

The FTC reports that identity theft was the number one consumer complaint it and other federal agencies it and they receive from consumers in 2010. The agency annually publishes what it calls the Sentinel Network of consumer complaints. Last year, 6,460 California residents reported they were the victims of identity theft, which was 17% of all consumer complaints. Younger consumers were victims more often than older persons. California was # 3 in the U.S. in terms of complaints of identity theft among the states adjusted for population.

Equifax has a judgment against it for more than a million dollars to a Bay Area man whose identity was stolen. While the consumer was hospitalized, an impostor used his identity to open fraudulent accounts. He found the fraudulent accounts on his credit reports from Experian, Equifax and TransUnion and disputed them. (See my blog on why to dispute in writing, Certified Mail, Return Receipt..

Equifax went to trial. The identity theft victim told the jury about trying to get Equifax to correct his report. Other witnesses testified about his damages. His expert explained why Equifax’s procedures fail to meet the requirements of the Fair Credit Reporting Act.

The jury agreed with the identity theft victim. It awarded him over $6,000 for economic damages, $315,000 for non-economic compensatory damages and $700,000 for punitive damages. The consumer does not have to worry about paying his attorney either. The Fair Credit Reporting Act makes Equifax liable for all his attorney’s fees and court costs.

Frequently people ask me how they can get the credit bureaus to correct inaccurate information on their credit reports. I always tell them to dispute inaccurate credit reports via letter sent Certified Mail, Return Receipt. Why do that, you ask, when I can dispute on-line or by phone? If you look at their websites, you know the credit bureaus encourage consumers to phone or email. It is almost impossible to find an address to mail a written dispute letter to.

There are COMPELLING REASONS to do your disputes in WRITING, Certified Mail, Return Receipt. If you have put it in writing and kept a copy and obtained a receipt you can prove exactly what information you provided and that they received it.

You want to provide the credit bureau with as much information as possible so it can conduct a thorough investigation. If you have names and phone numbers of people they should contact, provide them. If you have documents that prove your claims, enclose copies..

A new report by West Point prof Gregory Conti urges the military to reform its practices to protect service members from identity theft. Conti reports that service members and their families are burdened with a work environment that shows little regard for their personal information resulting in frequent theft of their identities.

The Navy and Marines have recently made efforts to limit the use of social security numbers. Military ID cards no longer include the number. But Conti the situation had not really dhanged: “The farther you get away from the flagpole at headquarters, those policies get overturned by operational realities..

Social security numbers are useful to identity thieves because they serve as crucial identifiers interfacing with banks and credit card companies. The thieves open accounts in the service members names leading to ruined credit reports and problems for military personnel getting security clearances or promotions.