Ask John: Identity Theft

No Seriously, I Didn’t Apply For That Car Loan. I think I’ve Been a Victim of Identity Theft.

Background

Please meet Laura, a 41-year-old technology consultant who lives in Jacksonville, FL, with her husband Rupert. Laura and Rupert have been married for 6 years. They are both employed and have excellent credit. They live in a townhouse community with their 2 kids.

Their Dilemma

The townhouse community they live in has their mailboxes located in one central location, like an apartment complex. What they didn’t realize was that late last January someone had broken into the mailbox “bank” and cleaned out the contents of several boxes, including theirs. The timing of the break in was intentional as most tax related forms are mailed and delivered during the last two weeks of January. And, most of those forms have private personal information such as name, address and social security numbers, all of which is a prime target for fraudsters.

One day in June, Laura got a past due notice in the mail from an automobile lender. The letter stated that Laura was currently 1 month past due on her car loan. The problem was that Laura didn’t have a car loan. In fact, both of their cars had been paid off for several years. It appears that Laura has been a victim of identity theft.

Laura called the number on the past due notice and explained to the agent on the other end that she had not applied for a car loan. The agent verified that someone using Laura’s name, address and social security number had applied for a car loan at a local Jacksonville dealership. After further investigation Laura found out that the dealership verifies all applicants by making a copy of their driver’s license.

Now it was getting really scary. Someone was driving around in a new car (a Corvette no less) using her driver’s license. Who knows what else they’ve applied for?

To make matters worse the auto lender has told Laura that it is “up to you” to prove that she is not the person who applied for the loan. Laura was familiar with the term “innocent until proven guilty.” Now she’s living the reality that in most identity theft cases you are considered guilty until you can prove your innocence.

At the advice of a friend, Laura and Rupert got copies of all of their credit reports. The auto loan is on Laura’s reports but not Rupert’s. It seems as if the fraudster has only targeted Laura.

As she suspected, the auto loan shows a $52,000 original loan balance and $1,200 past due. Each month that this drags on will add another $1,200 to the fraudulent past due balance. This is beginning to seriously hurt her credit scores. She knows that she has to get this rectified and fast or her credit will suffer for up to 7 years.

Their Goals

In this case Laura has to accomplish three things as quickly as possible.

1. Convince the auto lender that she is not the person driving around in the new car.
2. Clean the fraudulent account off of her credit reports…permanently.
3. Prevent the fraudster from applying for other accounts in her name.

Step 1 – Convince the auto lender that she is not the person driving around in the new car.

This is easier said than done. Simply calling and saying “it’s not me” isn’t going to do it. Laura ended up having to go down to the dealership and sign paperwork saying that she wasn’t the real customer. Then, she had to make a trip to the police station where she had to fill out more paperwork and submit to an interview with the police.

The police ended up working with the dealership to set up a sting, which eventually lead to the arrest of the fraudster.

That took care of getting the fake Laura off the streets. Now she needed to deal with the auto lender.

Step 2 – Clean the fraudulent account off of her credit reports.

This is going to be tough. Laura needs to now convince the lender that she didn’t apply for the car loan. And, once that’s done she’ll need to get the credit reporting agencies to verify that fact with the lender so that they can remove the car loan account from her credit reports. Further, she’ll need to make sure that the car loan doesn’t “reappear” on her credit reports in the future.

In this case she was able to get help from the dealer and together they convinced the lender that the loan was fraudulent. As advised, she got a copy of every letter and documented every conversation in case she needed to prove it again in the future. She sent a copy of everything to the credit reporting agencies and after filling out yet another stack of paperwork the account was removed from her credit reports.

Step 3 – Prevent the fraudster from applying for other accounts in her name.

In this case the fraudster was caught and is now in jail. However this isn’t always the case. In most cases the fraudsters are never caught or sometimes the fraudsters are family members and charges are never filed.

Here’s what Laura did to prevent credit from being issued in her name again:

• She placed fraud warnings on her credit files. There is a new law in place that requires lenders to verbally validate information before extending credit for any consumers with certain alerts on their credit reports. By placing a phone number in the fraud alert the lender will have to call and verify before they approve the credit. This is a new law and lenders are still perfecting the processes on this one. Sometimes it works and sometimes it doesn’t. In Laura’s case this would have prevented the entire incident from happening. Once the lender called her to verify whether she was, in fact, buying the car she could have said “nope, not me” and it would have ended there. She also would have been clued in that something was wrong.
• She now monitors her credit files diligently. If you’ve been a victim of fraud you are entitled to free copies of your credit reports. This is a reactive way of monitoring your credit but since it’s free you should take advantage of it. Reviewing your credit reports once each year simply isn’t enough. You should review your credit reports with at least as much frequency as you review your bank accounts, your brokerage accounts or your retirement accounts. They are as important.
• She also monitors non-credit databases. While there are three credit reporting agency databases, there are thousands of non-credit databases. Some examples are government/courthouse records, DMV, Social Security Administration and National Change of Address. There are very few services that monitor these databases. They are expensive but the peace of mind is worth it. In her case Laura thinks it’s worth every dime.
• She’s thinking seriously about taking her credit files “off line.” These services don’t exist yet but they are coming soon. Essentially these services will remove your three credit reports from the credit reporting databases and set them aside until you want to put them back in play.

If you have no plans to apply for credit, insurance or employment in the next 6 months then you should make your credit files completely inaccessible by anyone during this time. It would be impossible for someone to obtain credit in your name because you wouldn’t have a credit file or a credit score that the lender could pull as part of the application process.

Once you are ready to apply for something where your credit file is needed, all you would have to do is contact the credit reporting agencies and have them put your credit files back on line. There will probably be fees associated with these services. Keep your eyes open for them.

How To Prevent This From Happening To You

There are scores of tidbits that you’ll hear from experts about how to make your personal information more secure; shred all documents with personal information, don’t fall for phishing scams, don’t give out your personal information on the phone, etc. The reality is that if a fraudster wants to get you, he’s going to get you. Your personal information is simply too accessible. Your best defense against becoming a victim is to make yourself less attractive than everyone else.

For this Real Stories™ installment we have the benefit of looking back and seeing the incident play out in its entirety. The fraudster agreed to a plea bargain where she confessed exactly how she obtained Laura’s and hundreds of other consumers’ personal information.

In this case Laura’s exposure was the townhouse mailbox. The fraudster had been taking mail out of the poorly secured boxes using a key fashioned out of a knife. She was able to come and go as she pleased and remove mail from the back of the mailboxes without anyone seeing.

She timed the thefts toward the end of the month when paychecks and bills were most commonly received. And during the last 2 weeks of January she was hitting the jackpot on a daily basis by stealing W2s, 1099s and other tax-related documents.

She used this information to apply for and receive a state-issued driver’s license which she then used to apply for automobile credit and drive away in a $52,000 Corvette.

Needless to say Laura quickly rented a mailbox at her local post office and immediately changed her mailing address everywhere that had her townhouse address. She figured that if one thief was smart enough to figure out that townhouse mailboxes weren’t secure then another fifty could do the same. She’s absolutely correct.

Summary

Laura’s story has a happy ending compared to most of the other situations of true name fraud. She was able to get her credit files and credit scores restored. And, the crook is now behind bars. Unfortunately this isn’t always the case. In fact, it’s much more common for the fraudster to get away with it and leave you fighting with the credit reporting agencies for months.

And, sadly, in most cases you are guilty until you can prove yourself innocent.

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