How to Recover from Financial ID Theft

By Tara Swords

You know that your online bank account was pillaged or your credit card was stolen while you were on vacation and used for an unauthorized shopping spree. The sense of violation you feel can be pretty overwhelming-but don't lose any time. You need to act immediately to shut down the thief and reclaim your name.

Fortunately, the Internet-which often is blamed for the increase in ID theft-is also filled with resources to help you report financial identity theft and start cleaning up the damage. Here's how to surf your way toward ID-theft recovery.

Step No. 1: Check out the best online identity theft resources
At IdentityTheft online, the Identity Theft Prevention and Survival web site, you'll find some helpful tips from Mari Frank, an attorney and author who not only specializes in helping ID theft victims, but also learned the hard way when her identity was stolen several years ago. She says dealing with financial ID theft, "is overwhelming" but there are steps you can take to get back on track.

In addition to Frank's site, the Identity Theft Resource Center web site gives tons of advice about steps to take when your financial accounts have been compromised. The site details how to organize your case, deal with the emotional turmoil you'll feel, and handle hounding collections agencies.

At The Privacy Rights Clearinghouse web site, you'll also find information about legislation that protects your rights when your identity is stolen. For a quick list of all the steps you can take to bounce back when your financial accounts are hit by criminals, be sure to check out the site's What To Do When It Happens To You: A Guide for Victims.

Step No. 2: Contact the credit bureaus
You no longer need to spend hours on the phone to alert the three major credit-reporting agencies that your wallet or mail has been stolen or that your accounts have been hacked. Instead, log on to their web sites and request that they place a "fraud alert" be placed on your account. At Experian, you can fill out an online form that will put a 90-day fraud alert on your report while your case is investigated. Then Experian will automatically notify the other two bureaus, TransUnion and Equifax, for you. As a result, whenever someone tries to get credit in your name, your fraud alert status requires the creditor to call you to get permission.

Via the web, you can also get free copies of your credit report from each agency. Scour them and report anything suspicious.

Unfortunately, Frank says, some companies ignore fraud alerts. If your thief continues to use your credit, consider putting a more stringent "security freeze" on your account. Nobody will be able to access your credit report for any reason unless you give permission.

"The freeze is much more drastic, but it's also safer," says Frank, who is also author of From Victim to Victor: A Step-by-Step Guide For Ending the Nightmare of Identity Theft. Ask the credit bureau whether you're eligible for a freeze. To remove a freeze or fraud alert, though, you might have to write and mail an old-fashioned letter in some cases-check the bureau's web site to find out.

Step No. 3: Alert your creditors
Most of your financial account providers-a.k.a. your creditors-probably have web sites. These web sites can cut down some of your ID theft recovery work. So if your bank account has been breached, get to your bank's web site and either find its contact information or use an online form to report the theft. The same goes for credit accounts, cell phone accounts, student loans or mortgages.

Use your creditors' web sites to pull up a list of your most recent changes. Armed with this information, call your creditors to report every suspicious charge that you know or believe you didn't make. Also report every account you didn't open and every loan you didn't apply for in the first place.

After you notify creditors about existing accounts that were breached, change your passwords and personal security questions right away. (To save time, some of your creditors allow you to do this step online as well.)

Step No. 4: Notify the Social Security Administration
At the Social Security web site, you'll also find a link to report ID fraud. The site will explain what to do and direct you to an online complaint form for the Federal Trade Commission. If the thief stole your Social Security number, it might be pretty tempting to request a new one. But that new number won't necessarily give you a fresh start-it might just cause you more nightmares.

"You don't want to change your Social Security number because it's linked to so much about you," Frank says. "If you change it, it will still link back to your other information [and old Social Security number], which will just look more suspicious."

Step No. 5: Contact the U.S. Postal Inspection Service
If your identity was somehow stolen through the mail, or if you suspect someone changed your mailing address without your permission, visit the USPS web site and click the Miscellaneous Forms link. Next select the Mail Fraud Report and complete it.

But don't assume that the government will resolve your case for you, Frank says.
"At sites like the Federal Trade Comission's web site 'Fighting Back Against Identity Theft', they'll take complaints but they won't do a thing to help you," Frank says. "People often feel frustrated that nothing was done."

Instead, Frank says, be devoted to clearing your own name. Stay in regular contact with the government or creditor investigators on your case. Refuse to pay fraudulent charges. Document every related conversation you have, when you had it, what you discussed, and with whom you spoke.

Step No. 6: Don't pay up until the disputes are resolved
As long as fraudulent charges are in dispute, you shouldn't pay them. Federal law protects ID theft victims from pushy creditors and, worse, nagging collection agencies. If debt collectors are making your phone ring off the hook, explain the situation verbally and in writing, and ask to fill out a fraud affidavit.

If this is happening to you, go to the Privacy Rights web site for more tips on how to deal with debt collectors, along with sample letters you can use, (see Fact Sheets > Debt Collection Practices).

Though Frank herself says she spent more then 500 hours contacting companies, organizing her case, and fighting charges when her ID was stolen, she says you can reclaim your identity with some perseverance and research. And with some time spent online using the efficient resources at-hand, hopefully you can do more than bounce back from financial ID theft-you can buy some of your time back as well.

Tara Swords is a business and technology writer based in Chicago who regularly writes for the Chicago Tribune, Diversity/Careers in Engineering & Information Technology magazine and several high-tech publications.