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Recovering from identity theft
If you suspect your identity has been stolen, act fast as time may not be on your side.
August 5, 2004: 1:42 PM EDT
By Deshundra Jefferson, CNN/Money staff writer

NEW YORK (CNN/Money) - You've been duplicated.

Some way, somehow, somebody got their hands on your social security number or another critical piece of identifying information and used it to become you.

Approximately 7 million adults were victims of identity theft in 2003 -- the latest figures available -- according to Gartner, Inc. That equals 19,178 people a day, 799 per hour, or 13.3 a minute, according to the Identity Theft Resource Center (ITRC) in San Diego.

Imitation may be the highest form of flattery, but it's hardly becoming. Your new double may be jeopardizing your financial security by opening new lines of credit or procuring unsecured loans under your name.

A damaged credit report could prevent you from obtaining a student or home loan, securing a more favorable interest rate on an existing loan, or even getting a job. If you suspect your identity has been stolen, act fast as you want to limit the amount of damage that has already been done.

1). Get a credit report. Under the Fair Credit Reporting Act (FACT Act) consumers who believe that their identity has been stolen can receive a free credit report. Many experts say that the first step to recovering from identity theft begins here.

"Until you have that credit report you are not going to know the extent of the damage," said Helen Foster, an attorney with the division of financial practices at the Federal Trade Commission.

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You can order a report online from all three major credit bureaus -- Experian, Equifax, and TransUnion.

Read through your report carefully and note any discrepancies. Are there any accounts that you don't recognize? Are there any addresses listed that you haven't lived at? Or were there any credit inquiries that you didn't initiate?

2). Issue a fraud alert report. If you've answered "yes" to either one or all of those questions, consider filing a fraud alert report with any one of the major credit bureaus, as someone else may be borrowing your financial information.

A fraud alert report won't prevent you from opening any new credit accounts, but it will add an extra step to the process. If, for example, a would-be thief were to file a new credit card application using your name and social security number, the credit card issuer would contact you before establishing a new account.

3) Contact the creditors. Also, contact the creditors who issued the fraudulent accounts to dispute the charges. You have 60 days from the day you receive your credit card or banking statements to contest any charges. After that you are likely to be held liable for any false charges.

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Some creditors will require you to file a police report even if local law enforcement is unable to conduct a full investigation. Filing a police report also provides you with further documentation that a crime has taken place and may later prove useful in court.

Foster also advises identity theft victims to register a report with the FTC. The FTC doesn't investigate such crimes but maintains a database of identity theft victims in order to assist local law enforcement agencies. Filing a ID Theft Affidavit may also help you dispute any unauthorized accounts.

The process, of course, sounds much more straightforward than it really is. Repairing a damaged credit report can take several months, if not years. According to the IRTC, victims spend an average of 600 hours and $1,400 in out-of-pocket expenses trying to clear their good financial name.

"The ones who are serving life sentences are victims," said Linda Foley, ITRC's co-executive director. A victim of identity theft, Foley says her financial records are still mixed with those of her former boss, the person who stole her identity some seven years ago.

"Who said stop except for me? The merchants don't make police reports," she added. "I am the one who is putting my hand up and saying, 'No more.'"

The FTC is hoping that the new Fair and Accurate Credit Transactions Act (FAIR Act) will help reduce identity theft and make it easier for victims to repair their credit.

Personal Debt
Identity Theft
Crime, Law and Justice

A key provision of the law allows consumers to order one free credit report a year from each of the major credit bureaus, yet not all consumers will get that free report right away. The statute takes effect in December, for those living on the West coast, and will be gradually phased in for the rest of the country over the ensuing nine months.

Two other provisions worth noting: creditors must provide copies of business records related to fraudulent accounts or transactions to consumers and credit bureaus cannot report allegedly fraudulent account information once a consumer establishes his identity has been stolen.

Additionally, President Bush recently signed a new bill into law that imposes a mandatory two-year prison sentence on identity thieves who commit a felony while impersonating someone else. Thieves using stolen identities to commit terrorist acts will receive a minimum of five years in prison.

"Prosecutors across the country report that sentences for these crimes do not reflect the damage done to the victim," Bush said at the signing ceremony for the Identity Theft Penalty Enhancement Act. "Too often, those convicted have been sentenced to little or no time in prison."

It's too early to tell how well these measures will work, even then, the burden of proof still rests with you.  Top of page

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