Steal that wallet
A thief who takes your wallet can steal your identity, too, and use your good name to run up big bills. Here’s how to protect your money and your credit record — and your sanity — if your wallet is lost or stolen.
Consider this: Your wallet is stolen. You immediately call your bank and credit card company to report the problem, close old accounts and open new ones. You feel fairly confident that the incident is behind you.
But a few weeks later you receive a threatening notice to pay a past-due bill for some merchandise you know you never purchased. Next, your application for an auto loan gets rejected because of a poor credit history, when you know you never missed a loan payment or bounced a check in your life. Shocked, you immediately call one of the major credit bureaus (also called a credit reporting agency), which informs you that numerous accounts have been opened, using your name and Social Security number, and have run up thousands of dollars in debts to stores, credit cards, utilities, and other companies. First the good news: Your actual liability for these unauthorized purchases is limited by law or industry standards. Now the bad news: You still spend many frustrating hours trying to clear your name and straighten out your credit history. A woman at a conference we recently attended said that her husband’s battle with identity theft has been going on for a dozen years! It could happen to you any time, anywhere.
Most of us assume that thieves are interested in cash when they steal a wallet, but in many cases the cash may be the least valuable item. Your wallet can provide a criminal with ready access to sensitive information that can be used to steal your identity, drain bank accounts and make it difficult for you to obtain credit in the future. We’re talking about identity theft, where a thief obtains charge cards or enough personal information to establish new accounts in your name, pretend to be you if arrested, and generally become you for all practical purposes.
Identity theft is on the rise in the United States and, unfortunately, many consumers don’t know how to adequately protect themselves or the contents of their wallets. People too often assume that when a wallet is lost or stolen they simply need to cancel their plastic (credit, debit, and ATM cards) and replace lost identification. But there are other steps, including some preventive measures, that you can take to greatly reduce your chances of becoming a victim.
Here’s a collection of tips that can help you protect against all kinds of financial fraud, even if you never lose your wallet. Remember: A thief doesn’t need to steal your wallet to steal your money and your identity. A sophisticated thief simply needs a little information about you — perhaps one of your credit card numbers, or your Social Security number combined with your mother’s maiden name from your family web site — to make purchases or obtain new accounts in your name. So some of the suggestions in this report can help.
One simple way to protect yourself against identity theft is to limit the amount of confidential information you carry in your wallet. We recommend that you not carry around bank account numbers, personal identification numbers (PINs), passports, birth certificates, and most importantly, Social Security cards. (Although many states continue to use Social Security numbers on drivers’ licenses, this practice is changing.) Avoid giving out your social security number for other than job applications or financial investigations (one friend feels it is no longer prudent to give blood, as the New York Services require it on the form).
Avoid carrying more blank checks than you really need. Not only can a thief cash checks or use them for purchases, but a crook also can make use of the sensitive information often pre-printed on your checks (your address, bank account number, even your telephone number). Many consumers even print their driver’s license number or Social Security number on their checks. That’s a definite no-no, because either number could help a thief apply for a loan, credit card or bank account in your name.
Keep good backup information about your accounts, just in case your wallet is lost or stolen. You’ll want account numbers and phone numbers that can be used to report your losses or request new cards or emergency cash. Some people recommend photocopying your credit, debit, and ATM cards, as well as your driver’s license and passport information. Another approach is to simply list key numbers on a handy sheet of paper, and we’ve given you a start with our checklist.
Keep these numbers in safekeeping or else they can become tools for someone with criminal intent. You’ll also want ready access to these papers, too. That’s why a safe deposit box or other restricted area might not be a good storage place for these numbers in case you need immediate access at night or on a weekend or holiday. If you wish to keep these on your computer, we recommend you store them (as well as your computer passwords) in Bruce Schneier’s Password Safe, which will store them in an encrypted file, available free from https://pwsafe.org/.
If you’re going on vacation, Ken Baebel from the Division of Compliance and Consumer Affairs recommends taking along a list of the toll-free telephone numbers for your banking and credit card companies — but not your card numbers — and keeping the list in a safe place other than your wallet. If you lose your wallet while you’re away from home, having those phone numbers will help you quickly report the problem and get replacement cash or cards.
Why not take a list of card numbers with you on your trip? The card numbers alone can be just as valuable to a thief as the actual cards themselves, if not more valuable. If someone steals your wallet, you’ll probably notice that right away. But if someone steals a list of card numbers from your suitcase, you might not be so quick to realize that, and that just gives the thief more time to run up fraudulent charges.
Consider canceling any credit cards you don’t really need or use. Among the reasons: A thief can dust off a dormant card and use card numbers and other personal information to make purchases or get a new card. You’ll only find out about the problem when the collection notices arrive at your address.
Never give out personal information (such as your Social Security number, credit card numbers or your address) over the telephone unless you initiate the call, and it’s to a well-known and trusted outfit. Also, try not to provide personal information when using a check or plastic for purchases at a cash register. An increasing number of states prohibit merchants from requiring personal details.
Don’t just toss away those credit card applications you receive in the mail and don’t intend to apply for. Shred them — in fact shred anything that has your name on it: Shredders are pretty cheap these days — . Crooks can easily use these applications to establish accounts in your name and then change the mailing address so you’re unaware of the fraud until it’s too late. Also, if you don’t want to receive unsolicited credit card applications in the mail, by law you can demand that your name be removed from the marketing lists that credit bureaus sell to credit grantors looking for new customers. To opt out of these mailings, call any one of the following credit bureaus at these toll-free numbers specifically established for this purpose: Equifax at (800) 556-4711, Experian at (800) 353-0809, or Trans Union at either (800) 241-2858 or (800) 680-7293.
Review your credit card bills and your checking account statements as soon as they arrive, to ensure that no fraudulent activity is taking place. Also, make sure you are actually receiving a statement from your creditors every month. If no statement arrives, that could be a sign that someone has changed your billing address for fraudulent purposes. Finally, periodically request a copy of your credit report and check for signs that someone has opened accounts in your name. The three major credit bureaus and their toll- free numbers for requesting copies of your credit report are: Equifax at (800) 685-1111, Experian at (800) 682-7654, and Trans Union at (800) 888-4213. If you’ve been denied credit, you may be entitled to a free copy of your report. If you haven’t been denied credit, the most you can be charged is $8.
While it may seem obvious, it can’t hurt to mention a few basic words about protecting your wallet: Don’t take out your wallet until you actually need it, and don’t forget your wallet in a restaurant, store, or any public place. Never put your wallet down alongside a cash register, in a phone booth or even on top of your car. A good rule of thumb is that if your wallet is out, your hand should be attached to it.
If you’ve already been victimized
If your wallet disappears, there are limits to how much you will have to pay for the charges made by a thief. In some cases you may owe nothing. But you can help limit your liability and reduce potential losses for merchants and banks (which get passed back to consumers in the form of higher costs for goods and services) by doing the following:
• Immediately call your credit and charge card companies on their toll- free numbers and explain the situation. You may not have to pay for fraudulent charges if you notify the card issuer quickly (usually within two business days of discovering the loss or theft).
• Instruct your card companies to close your accounts. Why close them instead of just asking for fraudulent charges to be removed? For one thing, it’ll be difficult for the card issuer to identify and prevent all fraudulent purchases. Also, it’s good to have your credit reports show that an account was closed at customer’s request instead of lost or stolen. The latter could intimate that you somehow were at fault. And follow up your phone conversations with letters to the card companies to ensure an adequate paper trail. Keep a detailed log of phone calls and letters to avoid confusion and to show you made the notifications.
• After you’ve closed your credit card accounts, open new ones with new account numbers and PINs. Replace your old ATM card with a new one, and change your existing PIN to one that cannot be easily guessed by a thief. Your birth date or portions of your Social Security number, telephone number, or street address usually are poor choices for PINs.
• Canceling your credit card may not be enough to stop crooks from applying for new accounts. That’s why you also should contact the three big credit bureaus and have them flag your file as one belonging to a possible fraud victim. This warning will caution credit grantors to check with you before approving new loans or cards in your name. You should call all three credit bureaus, and follow-up in writing.
• Immediately notify local police where the wallet was lost or stolen. Also worth calling: the Social Security Administration (for replacement of Social Security and Medicaid cards and to note that your ID may be being used fraudulently), the Department of Motor Vehicles to get a new driver’s license, and your telephone and utility companies in case a thief uses a utility bill as proof of residence when applying for new credit cards).
There’s no doubt about it: Preventing identity theft takes at least a small amount of effort. But victims of lost wallets and identity theft can tell you that the efforts we’ve described would be far preferable to the many hours you would spend trying to erase a criminal’s fingerprints from your credit record. Remember: Your name and good credit history are among your most valuable assets. Protect them.