Identity Theft Prevention & Recovery
By Nina Reilly, Staff Accountant, Tax & Business Services
Recent cyber-attacks involving companies such as Target and Neiman Marcus remind us that identity theft and credit card fraud occurs every day. Major companies have become victims of criminal security intrusion, which affects not only the success of their business, but their customers. Every day hackers steal credit and debit card data, personal information including names, addresses, e-mail addresses, phone numbers, and most importantly Social Security numbers and dates of birth. Cybercriminals steal this information, auctioning it to other cybercriminals who open new lines of credit using stolen identities. Once this occurs, it’s extremely difficult to completely remove stolen personal information from the internet.
Not only do hackers steal credit card information to make personal purchases, they also file tax returns using stolen identification to receive fraudulent refunds. In almost every case, the legitimate taxpayer is unaware this has occurred until they file their return and are notified by the tax authorities a return has already been filed in their name.
As a result of these breaches, many have asked what precautions should be taken to improve security measures and what to do once one’s identification is stolen. Our suggested action plan is to combine prevention with aggressive reporting.
How can you prevent identity theft?
- Review monthly statements: Be diligent in checking your credit card bill every month. This will enable you to detect erroneous charges to your account.
- Order and review your credit reports: By ensuring the information in your credit reports is correct and up to date, you have a better chance of detecting any signs of identity theft. At AnnualCreditReport.com you can request your free credit reports annually from TransUnion, Equifax and Experian. These three credit agencies are required by law to provide you one free credit report a year. Order your reports annually and review them carefully. Make corrections as required.
- Shred documents with personal information: Shred account statements and destroy expired credit cards to prevent criminals from finding your information in your trash. You can find inexpensive shredders at office supply stores such as Staples and Office Max.
- Secure your personal information: Keep important documents such as your Social Security card and credit cards you may not be using in a safe place. Secure your online passwords by changing them regularly, making them difficult for anyone but yourself to crack.
- Be careful how you handle paying your bills: Use online payments when possible. If you must use regular mail, be smart about how you post it. Depositing mail in a secure mailbox or by hand to the Post Office is certainly better than leaving mail unattended in a private mailbox on your house or by the curb, especially when important confidential information is included.
- Avoid doing business with unfamiliar entities: Don’t make online purchases if you are not familiar with the company or you cannot be sure their website is secure. If a “lock” icon appears on the status bar of your internet browser, your information is safe.
- Protect personal data saved to your computer: Install firewalls and virus detection software so hackers can’t access personal information you have saved.
- File your tax returns early: By filing early, chances of someone else using your information before you do is diminished. File electronically through a secure website. Request your refund through direct deposit so criminals don’t have the opportunity to steal your refund check.
- Transfer personal information from your computer: Transfer personal files to other mediums, such as CDs or flash drives, and store them in a safe place. Deleting information from your hard drive prevents criminals from accessing it when you dispose of the computer.
- Identify scams and alert the appropriate government agencies: Criminals send mailings or create e-mails pretending to be from government agencies. If you come across a scam claiming to be from the IRS, the U.S. Postal Service, or the FBI you should report it. Forward the letter or the link to the contacts listed below.
IRS email@example.com USPS firstname.lastname@example.org or 877-876-2455. FBI http://www.ic3.gov/complaint/default.aspx
What do you do if your identity is stolen?
- Notify your bank: Cancel your checking and savings accounts. Obtain new account numbers and ATM passwords. Stop payment on any outstanding checks you are unsure of.
- Contact all your credit card issuers: Get replacement cards with new account numbers to make sure your card can no longer be used by someone else.
- Put a fraud alert on your accounts: Call the fraud units of the three credit reporting companies, Experian, Equifax and Trans Union. Request your accounts be flagged with a fraud alert so new credit can’t be granted without your approval. Advise each agency of the specifics of your identity or credit card theft.
- Call your telephone, electrical, gas and water utilities: Alert these companies that someone may attempt to open new service under your name.
- Seek legal assistance: If required, engage counsel to determine whether your rights have been violated under various credit, banking, and SSN laws.
- Report the identity theft: After you take proactive steps to minimize potential damage, file the appropriate reports. The earlier youfile these reports, the faster the problem can be solved.
How to file a report
- Filing Identity Theft Affidavits: Download the Identity Theft Affidavit, Form 14039, or request a copy by calling toll-free 1-877-ID-THEFT (438-4338). Use this form to report the theft to three credit bureaus, Experian, Equifax and Trans Union, as well as to credit card companies and other sources of credit.
- Report stolen checks to Telecheck: This check guarantee company will flag your file so fraudulent checks wil1 be turned down. For more information visit http://www.firstdata.com/telecheck/index.htm or call the Telecheck fraud, identity theft, and forgery line at 1-800-710-9898.
- Report the fraud to the IRS: Submit a copy of your valid government-issued identification, along with a copy of a police report and/or a completed IRS Form 14039, Identity Theft Affidavit, which should be faxed to the IRS at 1-855-807-5720. You can also contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.
- In appropriate circumstances, report the fraud to the local Police Department, Post Office and FBI. It is important to keep a copy of the police report and save originals. This will make it easier to prove your case to credit agencies and financial institutions.
- Report fraudulent use of your Social Security number to the Social Security Administration’s Office of the Inspector. Go to http://oig.ssa.gov/contact-oig to submit a reporting form. This report should only be filed in the most extreme situations.
- Keep a log: Keep track of all conversations, including dates and names when discussing your identity theft with credit agencies, authorities, or credit issuers. Keep all notes and documents so they can be submitted as needed to defend any claims against you or to clear your credit history.
- Apply for an IRS Identity Protection PIN number: This IRS pilot program is available to taxpayers in Florida, Georgia and the District of Columbia- the three U.S. jurisdictions with the highest per-capita percentage of identity theft. The PIN number is used to avoid delays in filing returns and refunds.
Identity theft creates financial hardship, credit destruction, and generally frustrates each affected party’s financial future. Repairing your credit history can be a long and arduous effort. You should do everything you can to protect your identification. If it is compromised, stop the damage from compounding and take immediate steps to begin the repair process.
Are you a victim of identity theft?
If you receive a notice from the IRS, please call the number on that notice. If not, contact the IRS at 800-908-4490 or fill out the IRS Identity Theft Affidavit, Form 14039.
Social Security Administration’s Office of the Inspector General
If you suspect someone of committing fraud, submit a report form at: https://www.socialsecurity.gov/fraudreport/oig/public_fraud_reporting/form.htm
Social Security Fraud Hotline
P.O. Box 17785
Baltimore, Maryland 21235
Report Suspicious IRS Related Emails
Report suspicious online or emailed phishing scams to: email@example.com.
For phishing scams by phone, fax or mail, call: 1-800-366-4484.