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Identity Theft: how you can lose your identity & what to do if it happens to you.

You've just hung up the telephone after an angry exchange with a creditor who claims you owe $1200 for a recent computer purchase, which you know you didn't make. How can that be? You might be the victim of identity theft.

Identity theft can happen through account takeover or name fraud. Account takeover occurs when a thief steals your current credit account information, like your credit card, and makes purchases either with the card (stolen from you) or using the account number and expiry date. You find out when you get your monthly credit card statement with charges on it that you didn't make.

Name fraud, or application fraud, happens when someone uses your SSN and good credit rating to open new accounts, usually credit applications, to make purchases in your name. You don't usually know about this until it's too late, when you're trying to buy a new home, car, or get a credit card and discover ID thieves have been there before you.

How to prevent identity theft

According to the Better Business Bureau's 2005 report on ID theft, thieves get your personal information in really simple ways: when you wallet is lost or stolen, when friends, family members, or other people, who have access to your personal information, steal it and misuse it. Usually, ID thieves get your personal information by traditional channels (like digging through your mailbox) and not electronic ones, like the Internet.

Your protection checklist

ID theft cost Americans a whopping $52.6 billion last year. But, there are steps you can take to protect yourself.

Some do's

• If your correspondence comes to a mailbox, make sure it locks
• Photocopy everything in your wallet or purse, or at least make a list of your ATM/credit cards, driver's license, and critical medical information
• Password protect your palm pilot and back up your information regularly
• Close unused bank accounts
• Remove your name from any pre-approved credit lists
• Remove your name from the telephone book (and don't forget the reverse directories)
• Opt out from any pre-approved offers of credit from the three consumer credit reporting offices by calling 888-5OPTOUT (888-567-8688)

Some don't's

• Don't carry multiple credit cards; limit yourself to one or two
• Don't carry your SSN with you
• Don't have your driver's license or SSN printed on your checks—that's just the information a thief, peeking over your shoulder at the grocery store, needs to steal your identity
• Don't just toss out expired credit cards, pre-approved credit applications, bill statements, or anything else carrying your personal information-shred it or cut it up completely

Reporting identity theft

Should this happen to you, contact the police and file a report immediately. Also contact the Federal Trade Commission. The next actions you should take are these:

• Cancel all your credit cards
• Call the consumer credit agencies and have a fraud alert placed on your credit file. This will alert future creditors that you have been the victim of ID theft.

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