Q&A: Identity theft

May 18, 2001: 10:36 a.m. ET

Ways to recover from one of the fastest growing white collar crimes in the U.S.

NEW YORK (CNNfn) - What do you when bad things happen to your good name? Is it possible that someone can steal your identity by co-opting your credit and Social Security number? What can you do to help yourself and your loved ones when your personal information without your knowledge was wrongly used?

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Question: How do I go about helping my 78-year-old uncle repair his credit after his Social Security identity was stolen?

- Donna

Answer: Identity theft is one of the fastest growing white collar crimes in the country. The Federal Trade Commission (FTC) established a hotline in November 1999 to allow consumers to report incidents of fraud. From November 1999 to March 2001, the FTC has processed more than 65,000 reports from consumers or victims of identify theft. Some of the callers were simply concerned they could become victims; others had actually had their identity stolen.

When the hotline was first opened the agency received about 500 calls a week. That number has now exceeds 2,000 a week. To report incidents of identity fraud consumers can call 1-877-ID-THEFT.

Identity theft can take different forms. Credit card fraud, unauthorized phone or utility services, bank fraud, fraudulent loans, and the taking of government documents or benefits are all examples of identity fraud.

To help your uncle, you should start with guidelines and information provided by the FTC. The agency recommends taking three actions immediately.

First contact the fraud departments of each of the three major credit bureaus, Equifax, Experian and TransUnion. You, or in this case your uncle's account, should be "red flagged" and it should be noted that no new accounts should be opened without permission. You should also ask for a copy of the current credit report. In a few months, request an updated report to make sure no activity has occurred without your knowledge.

Second, contact creditors for any accounts that have been tampered with or may be fraudulent. You should speak to someone in the security or fraud department. Explain the situation, get their name and follow the conversation with a written account.

Third, report the identity theft to the police department responsible for the district where the fraud took place. Identity theft is a crime and should be reported as such. Keep a copy of the report.

There are other agencies that should be contacted and notified of identity theft. Reports should be written to the local postal inspector, social security office and motor vehicles association.

Other steps you can take depend on how the fraud was executed. The FTC is the federal clearinghouse for complaints on identity fraud but not the only place for assistance. Victims are sometimes referred to the Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, National Credit Union Administration, Office of the Comptroller, Office of Thrift Supervision, Department of Justice, FBI, Federal Communication Commission (FCC), IRS and the Secret Service.

The FTC has put together a publication to assist consumers in identifying identity fraud and what to do if it happens to you. It can be read on-line at www.ftc.gov.

Question: Is there any truth to the story that the credit reporting agencies must provide, upon request, a free credit report once a year?

Answer: There is no truth to the story that credit reporting agencies must provide consumers with a free credit report once a year. However, consumers do have specific rights under the Fair Credit Reporting Act. There are times when consumers are entitled to a free copy of their report.

According to that Act, consumers can receive a free copy of their credit report if: a consumer has been denied credit, insurance or employment and request the report within 60 days of notice. A free report also can be obtained if a consumer is unemployed and plans to look for a job within 60 days, is on welfare, or if the report is inaccurate because of fraud.

If an application for credit, insurance or employment is denied because of inaccurate or incomplete credit information then the company who denied the application must provide the consumer with the name and address of the reporting credit bureau. Consumers won't be charged to dispute mistakes or outdated information on a credit report.

There are some things that stay on credit records for extended periods of time. Consumers should be aware of these situations. If you file for bankruptcy, it can stay consumer records for 10 years. A lawsuit or judgment against consumers can be reported for seven years or when the statute of limitations runs out. If a consumer applies for a job over $75,000 that information can stay on a report indefinitely. The same holds true if a consumer applies for more than $150,000 of credit or life insurance.