What’s worse than filing your taxes? Finding out that your return was already filed and your refund check was already cashed. Yep, that’s definitely worse. Unfortunately, tax season has become the time of year when many first discover that their identities have been stolen.
According to Javelin Strategy & Research’s 2017 Identity Fraud Study, there were 15.4 million U.S. victims of identity theft in 2016, which is 16 percent higher than 2015. It was the highest rate since Javelin began tracking identity fraud in 2003.
So, what should you do if your identity has been stolen? According to the Federal Trade Commission (FTC), you must take immediate action to limit the damage.
What to do right away.
Contact the fraud department of each company (retailer, bank, etc.) where you know fraud occurred. Explain that someone stole your identity and ask them to close or freeze the accounts so no one can add new charges unless you agree. Change logins, passwords and PINS for your accounts.
Contact one of the three credit bureaus to place a free 90-day fraud alert. That company must tell the other two. A fraud alert makes it harder for someone to open new accounts in your name. When you have an alert on your report, a business must verify your identity before it issues new credit in your name.
Get your credit reports from Equifax, Experian and TransUnion. Review your reports and note any accounts or transactions you don’t recognize.
Report identity theft to the FTC. The FTC will create an Identity Theft Report and recovery plan. An identity theft report proves to businesses that someone stole your identity. It also guarantees you certain rights.
File a report with your local police department. Tell the police someone stole your identity and that you need to file a report. Ask for a copy of the police report.
What to do next.
Close new accounts. Ask the fraud department of each business where an account was opened to close the account. Request a confirmation letter and keep a record of who you contacted and when.
Remove fraudulent charges from your accounts. Let the fraud department know which charges are fraudulent and ask that they be removed from your account. Request a confirmation letter and keep a record of who you contacted and when.
Correct your credit report. Write each of the three credit bureaus. Identify what information on your report came from identity theft and ask them to block that information. You have the right to block fraudulent information so that it won’t show up on your credit report and companies can’t try to collect the debt from you. If you have an Identity Theft Report, credit bureaus must honor your request to block this information.
Consider an extended fraud alert or credit freeze. Both can help prevent further misuse of your personal information, but there are important differences between the two. For example, an extended fraud alert allows access to your credit reports as long as steps are taken to verify your identity. A credit freeze stops all access until it’s removed. Though fraud alerts are free to place and remove, there may be small fees associated with credit freezes.
Protective measures to protect against identity theft are important, but they’re not always enough. However, there is insurance that is specifically designed to protect both individuals and businesses against identity thieves and hackers. For example, identity theft coverage can help individuals cover the cost of clearing their name. Cyber Liability and Security Breach (Cyber Perils) coverage can protect businesses against various cyber threats, including the cost of complying with data breach notice laws.
Please contact us if you would like more information about insurance specifically designed to protect against identity theft.
Additional information is also available in our weekly Risk Management Newsletters.