Consumer Law, Insurance Company Bad Faith, Fair Credit Reporting,
Fair Debt Collection Practices, Personal Injury, Criminal Defense

Identity Theft

A. What Is Identity Theft?

Identity theft occurs anytime someone steals some of your private identifying information and uses it to commit fraud. After the identity thief has pilfered your private identifying information, the impostor can, among other things, procure loans, mortgages, credit cards, and cell phones, open bank accounts (and bounce checks), lease apartments, obtain employment and utility services–all in your name. Identity theft has reached epidemic proportions. In 2003, the Federal Trade Commission (FTC) estimated that in the past year, there were 9.9 million victims of identity theft up from 6.9 million two years prior, and 3.4 million the year before that. The FTC has estimated business lost $48 billion to identity thieves in 2003, while individuals lost $5 billion in out-of-pocket expenses.

“Identity theft is the fastest growing crime in America. Each year, thousands of Colorado citizens and businesses lose millions of dollars to identity theft.” John W. Suthers, Colorado Attorney General.

The overwhelming majority of security experts predict that identity theft will continue to rise for the foreseeable future because it is a relatively low risk crime with a high potential payoff that can be easy to pull off. Identity theft is profitable because the thief is able to get credit in the victim’s name.

Consistent with this prediction, The Identity Theft Resource Center reported on April, 28, 2008, that in the first 90 days of this year, the personal information of more than 8 million Americans was stolen from company, hospital, bank, and government databases.

B. What Happens to Identity Theft Victims?

Very bad things. It can be a devastating crime. One survey showed that identity theft victims spend on average three to four years trying to clean up the mess. An identity theft victim will likely have to fend off obnoxious, hounding debt collectors and defend against possible lawsuits. In addition, the victim’s credit will usually be ruined. Ruined credit can result in serious adverse consequences including:

  • loan denials
  • cancelled credit cards
  • increased cost and otherwise worse terms for consumer credit including auto loans, mortgages, bank loans, & stock portfolio margin loans
  • increased insurance rates
  • lost job opportunities
  • denial of club memberships
  • inability to open bank accounts
  • inability to obtain apartment leases
  • invasion of privacy
  • intangible distress harm

I recommend that victims of identity theft contact an attorney experienced in identity theft and Fair Credit Reporting Act litigation at the outset to provide you with good advise and assistance during this challenging time. This is especially important if you find that, despite reasonable efforts, you have been unable to cause the credit reporting agencies to permanently delete disputed, inaccurate information from your credit reports.

C. The Five Key Steps to Quickly Take if Your Identity has been Stolen

Move Quickly - The faster a consumer/victim discovers and reacts to identity theft the better. On average, 12.3 months elapsed from the initial misuse of the private identifying information until the victim becomes aware of it, and sixteen percent of victims remained unaware of the theft for more than two years. Eighty-seven percent of victims had no personal acquaintance with the thief, and eighty percent were unaware of any event such as a loss or theft of a wallet that would explain how the thief got their identity information.

At a minimum, listed below in chronological order are the five key steps to quickly take if you suspect that you have become a victim of identity theft:

  1. Pull and Review your Credit Reports from each of the Big Three as explained in Pulling Your Credit Report. In an identity theft case, carefully review the tradeline and inquiry sections of your credit reports. If the thief who stole your identity has opened accounts in your name (or even attempted to do so), this activity will be immediately recorded in the inquiries section. If the thief has, in fact, already opened accounts using your private information, then these accounts will appear in the tradeline section of your credit report with one caveat: it could take several weeks or months for a newly opened account to be inserted into your credit file. Unfamiliar accounts listed in the tradeline section and/or unknown companies in the inquiries section are telltale signs that you may be a victim of identity theft. Certainly, at least further investigation of the matter would be warranted.

    If the thief has opened an account in your name and then defaulted by not paying the creditor as agreed, these accounts may be reporting as “delinquent” or “charged off” by the creditor. A “charge off” usually occurs when an account becomes six months delinquent though it may happen sooner. Charged off accounts are typically packaged into bundles of debt by creditors and then sold to collection agencies. This is why identity theft victims are often hounded by debt collectors.

  2. Order a Fraud Alert from each of the Big Three -- Equifax, Experian and Trans Union.

  3. Obtain a Police Report. Report the crime to your local police or sheriff’s department. You might also need to report it to police department(s) where the crime occurred if it’s somewhere other than where you live. Give them as much documented evidence as possible. Make sure the police report lists the fraudulent accounts . Get a copy of the report, which is called an “identity theft report” under the Fair Credit Reporting Act. Keep the phone number of your investigator handy and give it to creditors, debt collectors and others who require verification of your case. Credit card companies and banks may require you to show the report in order to verify the crime.

  4. Complete Fraud Affidavit

  5. Dispute the inaccurate, fraudulent information as explained in Disputing Errors

There are other things that can be done including putting a “freeze” on your credit reports with Equifax, Experian, and TransUnion. By freezing your credit reports, you can prevent credit issuers from accessing your credit files except when you give permission. This effectively prevents thieves from opening up new credit card and loan accounts.

Credit freezes are one of the most effective tools against economic ID theft available to consumers. They allow you to lock your records and select a code that only you know and can use to temporarily “thaw” your credit. That added layer of security means that thieves can’t do anything with your information even if they are able to attain it.

In addition, if fraudulent accounts have been opened in your name, contact the creditors and close these fraudulent accounts. You may provide these creditors with a copy of the Identity Theft Police Report and/or the Fraud Affidavit.

The above-listed five steps should be quickly done in every case of identity theft.