Finding your bank account overdrawn is bad. Finding it overdrawn by thousands in fraudulent charges? Much worse. It happened to me several years ago, and the worst part is that I could have discovered it much sooner. The good news? You can avoid making the same mistake I did—and detecting identity theft early can save you hours of time and thousands of dollars.
According to a report published in 2013 by the Bureau of Justice Statistics, most identity theft victims who catch the theft early (for example, before the thief opens a new credit card in the victim's name) spend less than a day resolving the issue. But the time needed to solve financial and credit-related problems caused by identity theft went up as the severity of the crime escalated—and, predictably, so did victims' emotional distress.
In my case, my husband and I had visited a local restaurant, where—unbeknownst to us—the server had skimmed our debit card. Skimming is the act of scanning a credit card with a hand-held device that captures the information in the card's magnetic strip. The thief can then sell the information to a credit card fraud ring.
Detecting identity theft early can save you hours of time and thousands of dollars.
The next morning we left town for the holidays, and I neglected to monitor our online bank accounts every day while we were gone. Upon our return, we found our checking account depleted by dozens of charges from stores we'd never visited, all made over a two-week period. Although we did eventually get our money back, had I noticed earlier, I'd have saved myself a lot of time and stress.
Here are the top five red flags for identity theft. If you notice any of these signs, acting quickly can minimize the damage.
The top five red flags for identity theft:
- Errors on your bank or credit card statements—for example, charges you didn't make, even for small amounts
- Discrepancies on your credit report—accounts you didn't open, loans you never applied for, or denial of a credit application
- Not receiving bills or other mail—or receiving bills for goods and services you didn't purchase
- Calls from creditors for unpaid bills you didn't rack up yourself
- A letter from the IRS saying the wage amount on your Social Security statement doesn't match the amount you filed on your tax return
Errors on your bank or credit card statements
Don't wait for a monthly statement to reconcile your bank account or credit card. View your accounts regularly online and note any charges that seem unusual, even for very small amounts. "Small charges may occur in advance of a larger one, as the crook is testing the account to see if a charge will go through," says Gail Cunningham, vice president of membership and public relations for the National Foundation for Credit Counseling. "A small charge can be the first hint that worse things are yet to come." If you notice any suspicious charges, contact your bank or credit card company immediately.
Errors in your credit report, or denial of an application for credit or a loan
Discrepancies on your credit report—accounts you didn't open, new cards you didn't apply for—are a red flag. And if you know you have good credit, but you're suddenly turned down for a loan or other application, someone else may have damaged your credit. You are entitled to one free copy of your credit report every year from each of the national credit reporting firms (Equifax, Experian, and TransUnion); by staggering your requests, you can check your report for free every quarter. You can also visit annualcreditreport.com, the only credit site authorized by the federal government. Beware of scams like signing up for "free" credit reporting services that charge you for unnecessary monitoring or other not-so-free services.
Not receiving bills or other mail—or receiving bills for goods and services you didn't purchase
"Identity thieves will steal victims' mail—and in some cases change their mailing address via the Post Office to a fraudulent address they've set up," says security consultant Robert Siciliano. In other scams, thieves may purchase goods and services under your name or max out your credit card, letting the bills go straight to you. Take careful note of your incoming and outgoing bills and statements, both in your inbox and your mailbox. If bills are more than a few days late or don't come at all, look into it.
Letters or other contact from the IRS
If your Social Security statement says you earned more than you actually did, someone may be using your Social Security number for wage reporting. You might also file your taxes only to receive a notice that a filing has already been made under your Social Security number—that's a sign that someone used your stolen number to walk off with a tax refund.
Creditors hounding you
If you're receiving calls about unpaid bills you know nothing about, or problems with credit accounts you never opened, it's likely that someone has used your name and other identity attributes to rack up debt. This is a good time to check your credit report and scrutinize all your account statements as outlined above.