It can ruin your credit. And that's just the beginning
Dialing for dollars. To make matters worse, two weeks after Frank notified the bank that the account was fraudulent, the bank sold it to a collection agency, and she and her children started receiving threatening phone calls and letters. It didn't stop there. The card triggered an avalanche of preapproved credit offers to the phony Frank's mailbox: One different address on a credit account was all it had taken for one of the credit bureaus to switch Frank's credit-file address to the impostor's. "They came to her like candy," says Frank. Some credit bureaus won't change a file address until three creditors report a new address, but a criminal on a spree can quickly cross that threshold.
It's not easy getting a credit report back on track. "The credit bureau says contact the creditor, the creditor says contact the credit bureau, and the consumer just gets ping-ponged back and forth," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group in Washington, D.C. The bureaucracy can be maddening: Grant recently received a letter from the credit bureau Experian saying it was reinserting a disputed item. The letter did not say which of the 19 accounts it referred to.
One of the few weapons victims have to protect them is a "fraud alert," which credit bureaus will put in consumer credit files. This notifies anyone who pulls the report that the subject is a victim of fraud and that he or she should be called to verify any credit application. The alert isn't foolproof. Edwin Walters, of San Francisco, says two credit issuers opened accounts for someone using his name in February despite the fraud alerts posted in his credit files--and even though he already had cards from both. "It just doesn't make sense," says Walters.
Credit bureaus might want to step up their efforts at finding a solution before more aggrieved consumers turn to the courts. Last month a Clarksdale, Miss., man won a lawsuit against Trans Union for failing to clean up his credit report. The award: $4.5 million.
Meanwhile, the credit reporting industry has formed a task force to tackle identity theft. Among solutions being considered are taking files of theft victims off line and sharing fraud alerts among credit bureaus more quickly. Individual creditors are also taking steps to stem their losses and prevent future ones. In San Francisco, Cellular One routinely flags suspect applications and compares details with credit reports. That's how Tiffany Dela Rosa in San Francisco found out her identity had been compromised: Last year a woman applied for service using Dela Rosa's identity, but Cellular One's fraud department thought the application looked suspicious and phoned her to check. Moreover, it alerted competitors in the area that they might be the next targets.
Identity theft is a crime that comes back to haunt its victims, and many are taking determined measures to prevent its recurrence. Grant and her husband have taken an unusual vow: When they have children, they will not get them Social Security numbers--even though that means no tax deduction. To her way of thinking, safeguarding her children's identity is far more valuable.